Markets, Hierarchies, and the Evolving Nature of Interorganizational Cooperation

Abstract

The decreasing cost of IT has encouraged organizations to seek new ways of cooperating with members of the supply chain and other key strategic partners. This increased cooperation is giving rise to a new type of interorganizational system (IOS). Before the advent of the Internet, IS integration required significant investments on the part of organizations participating in an IOS. Such heavy investments, in turn, necessitated close strategic cooperation in the non-IS domain as well. Thus, IS integration went hand-in-hand with non-IS (relational) integration in the pre-Internet era. However, advances in Internet technology have commoditized IS integration to a significant extent, thereby allowing the uncoupling of IS integration and relational integration. It is now possible for organizations to have IS integration without developing strong non-IS linkages. We propose a framework to account for this recent shift and present a typology for classifying interorganizational systems based on the segregation of IS and relational integration. We also verify the typology in case studies of four large firms.