Determinants of Governance Structure For The Electronic Value Chain: Resource Dependency and Transaction Costs Perspectives

Abstract

This paper investigates boundary decisions that determine governance structures,particularly intermediaries and external contractors, for executing theprimary functions of procurement, sales, and information technology supportfunctions in the value chain model. Utilizing data from 113 firms doing businesson the Internet, the findings indicate that firm resources have a significantimpact on decisions to outsource or internalize electronic value chain functions.Specifically, firms with a greater reliance on sales intermediaries were found todeploy fewer technical e-commerce resources than firms less dependent on salesintermediaries. Moreover, the number of intermediary procurement functionswas positively related to investment in web-based human resources. The resultsalso suggest that firms experiencing lower levels of transaction frequency utilizemore types of Internet sales methods.

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