The Contingent Role of Centrality in IT Network Governance: An Empirical Examination

Since the importance of collaboration across organizational boundaries for firms’ competitive success continues to grow dramatically, research on inter-organizational relationships has become prominent in business and information systems (IS) research. Particularly inter-organizational networks have been widely recognized by both academics and practitioners as an important form of multi-organizational governance. Those networks rely heavily on integrated information systems in order to generate value from co-creation, co-development, and co-innovation. Therefore, the integration of IS across partnering organizations has become the backbone of collaboration in inter-organizational networks. Despite the efforts invested in the field of IT governance arrangements, research still lacks empirical evidence on the relationship between governance choices and different internal and external network factors and their influence on governance effectiveness. Thus, this study sets out to expand the understanding of how network organizations can effectively develop and manage IS integration in order to co-create value. It contributes with a characterization of IT network governance arrangements along the dimension from highly centralized to highly decentralized IT related decision making in networks. Moreover, by drawing on contingency theory this paper develops a theoretical model proposing effective governance arrangements according to six contingency variables. A multiple case study methodology is applied in order to validate the theoretical relationships, and the data supports the basic structure of the research model. Our findings suggest that network size, network structure centralization, functional diversity, network trust, IT infusion, and IT competence are important factors for the understanding of effective IT governance arrangements in inter-organizational networks. The paper offers insights into the causal mechanisms behind the theoretical relationships and is a first step towards a more differentiated perspective on contingent governance structures in inter-organizational networks.