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 the
primary functions of procurement, sales, and information technology support
functions in the value chain model. Utilizing data from 113 firms doing business
on the Internet, the findings indicate that firm resources have a significant
impact on decisions to outsource or internalize electronic value chain functions.
Specifically, firms with a greater reliance on sales intermediaries were found to
deploy fewer technical e-commerce resources than firms less dependent on sales
intermediaries. Moreover, the number of intermediary procurement functions
was positively related to investment in web-based human resources. The results
also suggest that firms experiencing lower levels of transaction frequency utilize
more types of Internet sales methods.