Strategic choices in the development of interorganizational information systems

This paper discusses two critical strategic choices that a firm must make in developing interorganizational information systems (IOISs)-what kind(s) of IOIS(s) to develop, and how to develop the IOIS(s). With respect to the kinds of IOISs, it proposes a typology of three different types of IOISs: electronic monopolies, electronic dyads, and multilateral IOISs. With respect to development approach, a firm can develop an IOIS competitively or cooperatively. Based on a case study of the development of IOISs in the aircraft parts industry, two sets of transaction characteristics-demand uncertainty and market variability-were found to influence the choice of IOISs. Two factors-strategic significance of the IOIS, and size and bargaining power of the firm-were found to influence the choice of development approach. The observations from the case study are used to develop a set of propositions about when a firm will choose a particular IOIS and whether a cooperative or a competitive approach will be used.