Managing information asymmetry in public–private relationships undergoing a digital transformation: the role of contractual and relational governance: the role of contractual and relational governance

Tom Aben, Wendy van der Valk, Jens Roehrich, Kostas Selviaridis

Research output: Contribution to journalArticlepeer-review

2 Citations (SciVal)

Abstract

Purpose
Inter-organisational governance is an important enabler for information processing, particularly in relationships undergoing digital transformation (DT) where partners depend on each other for information in decision-making. Based on information processing theory (IPT), the authors theoretically and empirically investigate how governance mechanisms address information asymmetry (uncertainty and equivocality) arising in capturing, sharing and interpreting information generated by digital technologies.

Design/methodology/approach
IPT is applied to four cases of public–private relationships in the Dutch infrastructure sector that aim to enhance the quantity and quality of information-based decision-making by implementing digital technologies. The investigated relationships are characterised by differing degrees and types of information uncertainty and equivocality. The authors build on rich data sets including archival data, observations, contract documents and interviews.

Findings
Addressing information uncertainty requires invoking contractual control and coordination. Contract clauses should be precise and incentive schemes functional in terms of information requirements. Information equivocality is best addressed by using relational governance. Identifying information requirements and reducing information uncertainty are a prerequisite for the transformation activities that organisations perform to reduce information equivocality.

Practical implications
The study offers insights into the roles of both governance mechanisms in managing information asymmetry in public–private relationships. The study uncovers key activities for gathering, sharing and transforming information when using digital technologies.

Originality/value
This study draws on IPT to study public–private relationships undergoing DT. The study links contractual control and coordination as well as relational governance mechanisms to information-processing activities that organisations deploy to reduce information uncertainty and equivocality.
Original languageEnglish
Article number7
Pages (from-to)1145-1191
Number of pages47
JournalInternational Journal of Operations & Production Management
Volume41
Issue number7
Early online date10 Aug 2021
DOIs
Publication statusPublished - 8 Sep 2021

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