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

Tom Aben, Wendy van der Valk*, Jens K. Roehrich, Kostas Selviaridis

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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), we theoretically and empirically investigate how governance mechanisms address information asymmetry (uncertainty and equivocality) arising in capturing, sharing and interpreting information generated by digital technologies.
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. We build on rich datasets including archival data, observations, contract documents and interviews.
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 using relational governance. Identifying information requirements and reducing information uncertainty is a prerequisite for the transformation activities that organisations perform to reduce information equivocality.
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 of information when using digital technologies.
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
JournalInternational Journal of Operations and Production Management
DOIs
Publication statusAccepted/In press - Jun 2021

Keywords

  • ditigal transformation
  • information asymmetry
  • contractual governance
  • relational governance
  • public-private relationships
  • Information Processing Theory

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