Which Move to the Middle: Industry Consortia or Private Exchanges?

Which Move to the Middle: Industry Consortia or Private Exchanges?

Susan A. Sherer (Lehigh University, USA) and Yuliang Yao (Lehigh University, USA)
Copyright: © 2006 |Pages: 16
DOI: 10.4018/jebr.2006040102
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The move-to-the-middle hypothesis has been used to predict firm structures, suggesting that firms will move to more outsourcing but from a reduced set of stable partners (Clemons et al., 1993). Extending this hypothesis to predict electronic marketplace structures, we suggest that both industry consortia and private exchanges represent a move to the middle by reducing transaction costs and risks. In industries with highly interdependent relationships, industry consortia may be more successful because of their reduction of coordination costs without corresponding increases in transaction risk. Within an industry, companies may choose to participate in both types of marketplaces. Product characteristics moderate the relationships between the transactions costs and risk and the type of marketplace.

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