Strategic Choices in the Development of Interorganizational Information Systems

This paper discusses two critical strategic choices that a firm must make in developing interorganizational information systems (IOISs)—what kind(s) of IOIS(s) to develop, and how to develop the IOIS(s). With respect to the kinds of IOISs, it proposes a typology of three different types of IOISs: electronic monopolies, electronic dyads, and multilateral IOISs. With respect to development approach, a firm can develop an IOIS competitively or cooperatively. Based on a case study of the development of IOISs in the aircraft parts industry, two sets of transaction characteristics—demand uncertainty and market variability—were found to influence the choice of IOISs. Two factors—strategic significance of the IOIS, and size and bargaining power of the firm—were found to influence the choice of development approach. The observations from the case study are used to develop a set of propositions about when a firm will choose a particular IOIS and whether a cooperative or a competitive approach will be used.