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References
As mentioned before (see chapter 1.4), the preparatory works of Anding, 2004, Köhler, 2005, and Schulze, 2005 on content reutilization have motivated and influenced this research study to a great extent.
In this study, we follow the definition of MILGROM AND ROBERTS who mean by an efficient option a situation for which there is no available alternative that is universally preferred in terms of the goals and preferences of the people involved (Milgrom/ Roberts, 1992, p. 22).
Examples for the application of transaction cost theory to make-or-buy problems are Dibbern, 2004, Ang/ Straub, 1998 and Picot/ Maier, 1992.
In NIE literature, the authority system of hierarchies is said to be the more efficient structural mechanism to safeguard against opportunistic behavior than formal authority through market contracts: First, firms have more powerful control and monitoring mechanisms available to detect opportunism and facilitate adaptation. Second, organizations are able to provide rewards that are long term in nature to reduce the payoff of opportunistic behavior. Third, the organizational atmosphere promotes a culture of solidarity and team spirit as well as socialization processes that may create convergent goals between parties and reduce opportunism ex ante (Rindfleisch/ Heide, 1997, p. 32). In summary it may be said that hierarchies (i.e. rule-driven systems) are more transaction cost efficient than markets (i.e. price-driven systems) when opportunistic behavior in asset-specific transactions may potentially be high, as they cope more easily with the reduction of shirking or cheating costs of employees through the imposition of direct or indirect behavioral constraints (e.g. incentive systems).
Seminal works in the methodological and ontological comparison of different organization theories were written by Morgan, 1980 and Burrell/ Morgan, 1979.
Sub-theories of NIE, in particular the TCT, are frequently interpreted within the scope of organization theories as well (e.g., Picot, 1992). For the purpose of this study, though, an analytical separation between theories that provide economic, strategic, and residual efficiency criteria was performed to clearly distinguish between different explanatory sources of content allocation.
The basic ideas in behavioral organization theories stem from the learning approach to psychology which states that the observation of behavior is the best way of investigating psychological and mental processes (e.g. Watson, 1913; Skinner, 1938).
The conceptual papers of Bloomfield/ Coombs, 1992 and Markus/ Pfeffer, 1983 point to this lack of empirical investigations.
The basic pattern of contingency research in MIS research is adopted from Weill/ Olson, 1989, p. 63.
This structuring approach stems from Dibbern, 2004 who in turn adopted the Cheon/ Grover/ Teng, 1995 approach. Papers with technical arguments in the content allocation decision were assigned to the organizational category, since the variable “Technology” represents a major situational variable in contingency research (e.g., Hickson/ Pugh/ Pheysey, 1969; Lucas/ Baroudi, 1994).
The re-analysis of state-of-the-art literature in the field of IT-related resource allocation could identify only few studies (e.g. Bloomfield/ Coombs, 1992) investigating the effects of power on the allocation of data. Furthermore, when power constructs were considered, no study could really determine whether centralized departments tended to resist decentralization tendencies in order to retain a high degree of power (e.g. Olson/ Chervany, 1980, p. 65). This supports the view advocated in this study to shed’ selected’ rays of light on the allocation problem from a rationalistic perspective.
WILLIAMSON has called these three factors “attributes” of transactions, as may be seen from the following statement: “Firms seek to align transactions, which differ in their attributes, with governance structures, which differ in their costs and competencies, in a discriminating (mainly transaction costs economizing) way” (Williamson, 1991, p. 79).
WILLIAMSON explicitly did not confine transaction cost analysis to inter-firm contractual relationships arguing that “[...] substantially the same factors that are ultimately responsible for market failures also explain failures of internal organizations” (Williamson, 1973, p. 316).
Or as WILLIAMSON put it: “The overall objective of this exercise essentially comes down to this: for each abstract description of a transaction, identify the most economical governance structure — where by governance structure I refer to the institutional framework within which the integrity of a transaction is decided” (Williamson, 1996, p. 169).
For a more developed formalized presentation of this trade-off see Masten/ Meehan/ Snyder, 1991.
OUCHI elaborates on this notion of transaction by specifying transactions as the exchange of goods or services between different departments in companies or between different companies (Ouchi, 1979).
The explanations of MILGROM AND ROBERTS give further insight into the comprehension of transaction costs in this study: “The transaction costs of coordination [...] include not only the direct costs of compiling and transmitting information, but also the time costs of delay while the communication is taking place [...]. Because this communication can never be perfect, there are also transaction costs of maladaptation that occurs because decision makers have only insufficient or inaccurate information” (Milgrom/ Roberts, 1992, p. 29).
WILLIAMSON describes the comparative analytical logic of TCT as follows: “Transaction cost economics is based on discriminating alignment hypotheses, according to which transactions, which differ in their attributes, are aligned with governance structures, which differ in their cost and competence, so as to effect an economizing result” (Williamson, 1999, p. 1090).
The interaction of behavioral assumptions and transaction dimensions is described in detail in Rindfleisch/ Heide, 1997 and will therefore not be elaborated any further.
According to TCT logic, the reason underlying contract termination in market transactions is that the opportunistic behavior of the transaction partner may outweigh the efficiency advantages of market systems. The more specific the deployed assets in a market transaction, the more the exchange partners are locked into the transaction as switching costs would be very high. For that reason, the hierarchical organization (or vertical integration) of this transaction is preferred, since administrative fiat against opportunistic behavior exist that prevent “[...] self-interest seeking with guile” (Williamson, 1981, p. 554).
Centralized content allocation, for instance, simplifies the access to precise pieces of content at any level of granularity and enables editors to analyze and synthesize content within context of other pieces of relevant content more easily (Schek, 2005).
The administration of highly reutilized content in one location reduces coordination expenses, as standardization costs in form of redundancies or inconsistencies between distributed content repositories do not have to be incurred to such an extent (Mertens, et al., 2005, p. 60; Fischer, 1999, p. 194).
Editors researching for archived content modules and bundles are much more effective when looking up content at a centralized access point that provides standardized metadata and GUIs. Even in the case, that content is only logically, but not physically integrated, the organization of decentrally-deployed content would produce higher administration costs (e.g. exchange protocols). Organizing media content decentrally may, for example, cause additional governance structures to be implemented due to the necessity of more vigorous administrative controls (Leblebici, 1985).
In this study, production costs are examined not from a traditional neoclassical or micro-economical perspective (e.g., Marshall, 1890; Commons, 1931; Varian, 2002), but from a comparative institutional perspective. That is, the analytical focus lies on investigating the variance in production costs in dependence of the form of content allocation and not of input-output relations.
Further arguments for the production cost advantage of centrally as opposed to decentrally deployed content are given in Benlian/ Hess, 2004.
WILLIAMSON put it as follows: “The cost of specialised governance structures will be easier to recover for large transactions of a recurring kind” (Williamson, 1984, p. 206).
There is a close link between specific resources and specific assets, as defined in transaction cost theory (Foss/ Knudsen/ Montgomery, 1995, p. 10).
Thus, content allocation is interpreted as a dynamic capability that exerts an influence on the value of content resources for it may lead to enhanced resource exploitation (Eisenhardt/ Martin, 2000, p. 1107).
According to PORTER, firms employ different strategies in order to expand and defend their rents (or benefits) against current and emerging competitors in the market (Porter, 1985). In general, rents can be defined as the positive difference between the revenue that a firm creates through selling its products and/or services and the costs incurred by generating revenue. Firms that succeed in the market are said to have at least a short-term competitive advantage.
In this study, firm performance or rents are neither Ricardian rents nor monopoly rents (Mahoney/ Pandian, 1992, pp. 365ff.). They rather emerge from the fact that resources are deployed in a location where they can efficiently support primary activities in the content workflow. If content is leveraged in their first-best instead of their second-best use, so-called quasi-rents are yielded.
Strategic value or significance of content will broadly be defined as the degree to which media content contributes to generate a sustained competitive advantage. A link to transaction cost theory is given through the linkage of the concepts of strategic value and asset specificity, as (above-normal) rent-generating resources are most often too asset-specific to allow contracting (Silverman, 1999, p. 1109).
Of these four characteristics, only strategic value and inimitability are ultimately important. Rareness is important only if a resource is valuable and exists only if the resource cannot be imitated by competitors (Hoopes/ Madsen/ Walker, 2003, p. 890). As inimitability is not focused in this study as the content allocation decision is related to intra-firm problems, only strategic value strikes to the heart of the content allocation problem within a RBV analysis.
The economic logic underlying the concept of content reutilization is either to minimize the unit costs of the first-copy by increasing the overall output or to skim off consumer rents more effectively by exploiting differentiation advantages (Schulze, 2005, p. 22).
Technical aspects such as performance, reliability, and security issues essentially back these insights (Tanenbaum/ van Steen, 2002). Further light on the technical issues will be thrown in chapter 4.2.4 when analyzing contingency effects on content allocation behavior
Resource relatedness refers to the ‘presence of similar activities and shared resources’ across business units of a firm and represents a logic by which a firm’s different lines of business (or industries) are interconnected (Davis/ Thomas, 1993, p. 1334).
The majority of findings point to the superiority of related as opposed to unrelated diversification (e.g., Nayyar/ Kazanjian, 1993; Grant, 1988). Thus, “[...] more “related” diversification supports more extensive exploitation of application-specific resources than does unrelated diversification” (Silverman, 1999, p. 1109, p. 1110).
When businesses (a) and (b) share some common factors of production, they achieve’ synergies’ or ‘economies of scope’ because their joint production costs are less than the sum of their stand-alone production costs: i.e., Cost (a, b) < Cost (a) + Cost (b) (Teece, 1980, p. 224). The term’ synergy’ has also been used synonymously with the term ‘economies of scope,’ and conceptualized in terms of the sub-additivity of production costs.
Superadditive value synergies between businesses (a) and (b) make their joint value greater than the sum of their standalone values: i.e., Value (a, b) > Value (a) + Value (b) (e.g., Nayyar, 1992, p. 220).
HENDERSON and COCKBURN use the term “architectural competence” to describe these dynamic capabilities (Henderson/ Cockburn, 1994).
The similarity of tasks and activities and their impacts on transaction costs are further discussed in Picot et al., 2002, p. 237.
See for example http://www.w3.org/TR/xmlschema-1/
See for example http://www.w3.org/Style/CSS/
For an overview of general benefits of product modularity see Gershenson/ Prasad/ Zhang, 2003.
The relatedness factors applied in this study are slightly modified compared to TANRIVERDI’s first order factors that actually refer to product, customer, and managerial knowledge relatedness (Tanriverdi, 2005, pp. 101–103).
In CT terminology, variables such as differentiation and integration are termed contingency factors, or simply contingencies. A “contingent” proposition is one, which hypothesizes a conditional association of two or more independent variables with a dependent outcome (Fry/ Smith, 1987). In the case of LAWRENCE AND LORSCH (Lawrence/ Lorsch, 1967), differentiation, integration, and environmental uncertainty are independent variables influencing economic performance as dependent outcome. In this connection, it is assumed that successful organizations are aligned in a small number of typical patterns.
The basic pattern of the contingency approach in MIS research is adopted from Weill/ Olson, 1989, p. 63.
The concept of ‘fit’ is conceptualized as assumed premise underlying a congruence between context and structure, which is statistically tested with correlation or regression coefficients of context on structure (Drazin/ Van de Ven, 1985, p. 516).
Here, fit is defined as the interaction between pairs of organizational context-structure factors. The interaction between these factors in turn affects performance. Statistically, the correlation between context-structure interaction terms and performance measures are examined in MANOVA or regression equations (Drazin/ Van de Ven, 1985, p. 517).
As a guideline for the management and development of information systems and architectures, the ISA-model boils down the different contingencies, an organization has to consider, to conceptually separated layers (Krcmar, 2003, p. 42). Analogous conceptual models are for example the architectural framework of ZACHMAN (Zachman, 1997) or, on a more abtract level, the concepts of Information Systems Management of St. Gallen (Österle/ Brenner/ Hilbers, 1992).
The results further indicate that the IT of an organization with a conservative competitive strategy is more centralized than that of an organization with an aggressive competitive strategy. To be more specific, the user departments of a conservative organization have less responsibility for their IT activities than the user departments of an aggressive organization (Tavakolian, 1989, p. 314).
Similarly, CONNER stated, “obtaining [...] returns requires either that (a) the firm’s product be distinctive in the eyes of the buyers [...] or (b) that the firm selling a identical product in comparison to competitors must have a lowcost position” (Conner, 1991, p. 132).
EIN-DOR AND SEGEV, for instance, looked at the degree of organizational centralization and its relationship to MIS centralization (Ein-Dor/ Segev, 1982).
In an example of an empirical study, Olson analyzed the fit between organizational structure and the structure of the MIS services function (Olson/ Chervany, 1980).
See for example the studies of DEWAR ET AL. or AIKEN AND HAGE who found out significant correlations between centralization, formalization, and standardization variables (Dewar/ Whetten/ Boje, 1980, p. 124; Aiken/ Hage, 1968).
This relationship has also been transferred to MIS research. KLATZKY found that organizational size was partially responsible for the decentralization that accompanied automation (Klatzky, 1970). CARTER discovered that organizational size moderated the relationship between MIS and organizational structure in a study of newspaper organizations (Carter, 1984).
In developing a contingency theory of organization, LAWRENCE AND LORSCH introduced the basic concepts of differentiation and integration. As organizations interact with their external environment, they differentiate and develop specialized units that deal with sub-environments. Besides the formal division of labor, subunits develop different frames of reference and belief systems (Lawrence/ Lorsch, 1967; Kieser, 2001, pp. 179–180). In order to achieve unity of effort, differentiation requires integration for achieving organizational objectives. According to NADLER AND TUSHMAN, the dilemma of organization remains how to design and manage both differentiation and integration (Nadler/ Tushman, 1998, p. 14).
Another more elaborated definition stems from WEILL AND WOODHAM, who defines IT governance as “specifying the decision rights and accountability framework to encourage desirable behavior in the use of IT” (Weill/ Woodham, 2002, p. 1).
On the one hand, literature suggests that the federal configuration provides the benefits of both centralization and decentralization (e.g., von Simson, 1990, p. 162; see also Hodgkinson, 1996). On the other, research indicates that organizations adopt a federal configuration when pursuing multiple competing objectives (Brown/ Magill, 1998, p. 190).
LANGOLIS AND SAVAGE emphasized that previous essays on path dependency have focused primarily on the lock-in of technical standards (Langolis/ Savage, 2001). As a result, this body of work has largely ignored the instances regarding the lock-in of standards relating to human behavior. More recent papers, however, have included behavioral forms of path dependence into their analysis (e.g., Barnes/ Gartland/ Stack, 2004).
Several prior works in IS research emphasize the importance of identifying and quantifying moderating effects for the better comprehension of complex relationships (see for example Eggert/ Fassott/ Helm, 2005, pp. 102f.; Chin/ Marcolin/ Newsted, 2003, p. 193; Homburg/ Giering, 1996, p. 47).
A brief introduction into the application of technology in the context of organization research is given in Gillespie/ Mileti, 1977.
IT infrastructure refers to the foundation for enterprise applications and services and is comprised of data, network, and processing architectures (Duncan, 1995). An IT infrastructure influences the reach and range of business opportunities available to firms in applying IT to shape global business strategies (Keen, 1991).
The selection of appropriate infrastructure characteristics is based on prior research works of the author (Benlian/ Hess, 2004) and other relevant contributions in the MIS and computer science literature (see for example Weber, 1998; Dadam, 1996; Rofrano, 1992).
A common measure to track system reliability of fault tolerance is, for instance, the mean time between malfunctions (e.g., Tanenbaum/ van Steen, 2002, p. 28).
Security once meant safe storage of materials, equipment, and money. Today the primary threat is to corporate data. The computing environment was historically controlled by a few knowledgeable professionals in a centralized batch processing mode. Physical security was of paramount importance. Today, almost unlimited access by a large, knowledgeable community of end users from desktop, dial-in, and network facilities creates a new and extremely vulnerable environment. The threats to data and system security include “[...] natural and man-made disasters, errors by loyal employees, and the overt acts of competitors, hackers and creators of computer viruses” (Loch/ Carr/ Warkentin, 1992, p. 174).
In this realm, it is notable that the impact of content specificity on comparative production cost advantages between content centralization and decentralization could have equally been deduced from transaction cost theory and resource-based theory. There are only differences in wording. While resource-based theory always refers to production cost advantages based on specific assets (Bamberger/ Wrona, 1996, pp. 135ff.), transaction cost theory emphasizes production cost disadvantages of the market (here of the decentralization of content) (Conner, 1991, p. 139). However, since specificity is primarily discussed as an attribute of transactions, it was attributed to transaction costs.
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(2006). Causal model specification. In: Content Infrastructure Management. DUV. https://doi.org/10.1007/3-8350-5700-6_3
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