Managing information asymmetry in public–private relationships undergoing a digital transformation: the role of contractual and relational governance

Abstract

PurposeInter-organisational governance is an important enabler for information processing, particularly in relationships undergoing digital transformation (DT) where partners depend on each other for information in decision-making. Based on information processing theory (IPT), the authors theoretically and empirically investigate how governance mechanisms address information asymmetry (uncertainty and equivocality) arising in capturing, sharing and interpreting information generated by digital technologies.Design/methodology/approachIPT is applied to four cases of public–private relationships in the Dutch infrastructure sector that aim to enhance the quantity and quality of information-based decision-making by implementing digital technologies. The investigated relationships are characterised by differing degrees and types of information uncertainty and equivocality. The authors build on rich data sets including archival data, observations, contract documents and interviews.FindingsAddressing information uncertainty requires invoking contractual control and coordination. Contract clauses should be precise and incentive schemes functional in terms of information requirements. Information equivocality is best addressed by using relational governance. Identifying information requirements and reducing information uncertainty are a prerequisite for the transformation activities that organisations perform to reduce information equivocality.Practical implicationsThe study offers insights into the roles of both governance mechanisms in managing information asymmetry in public–private relationships. The study uncovers key activities for gathering, sharing and transforming information when using digital technologies.Originality/valueThis study draws on IPT to study public–private relationships undergoing DT. The study links contractual control and coordination as well as relational governance mechanisms to information-processing activities that organisations deploy to reduce information uncertainty and equivocality.

Guest editorialEmerging research and future pathways in digital supply chain governance

“…From a technological point of view, the articles accepted in this special issue focus on a variety of enabling technologies, shedding light on their impact on several supply chain processes. Aben et al (2021) investigate the role of sensors used to collect data in the context of road infrastructure maintenance. The study highlights the information uncertainty generated by the large amount of data, and in turn the need to develop specific governance mechanisms related to contractual control and coordination, especially in a complex context such as private-public relationships.…”

“…Interestingly, the special issue is also characterized by the adoption of a variety of research methods, i.e. Delphi (Hohn and Durach, 2021), multiple case study (Keller et al, 2021;Aben et al, 2021) and survey (Yang et al, 2021;Paolucci et al, 2021;Faruquee et al, 2021;Son et al, 2021). This variety of methods highlights that research on governance in the context of digitalized supply chains is not exclusively at an exploratory stage; it seems research is advancing towards the development and testing of complex models to grasp the dynamics and implication of digital transformation in the context of buyer-supplier relationships.…”

“…However, different patterns are shaped by specific types of digital technologies (network technologies vs digital-physical interface technologies). Aben et al (2021) analyze how governance mechanisms address information asymmetry (uncertainty and equivocality) arising in capturing, sharing and interpreting information generated by digital technologies. In this case, smart sensors are used to collect data about the health of Dutch infrastructure networks.…”

“…The relational view used in Faruquee et al (2021) provides the basis to understand collaborative approaches in the relationships between communication, trust, joint problem solving, digital transformation and supply chain resilience. Information processing theory (IPT) is adopted in Aben et al (2021) to investigate the need to address information asymmetry through specific governance mechanisms.…”

“…(2) Governance challenges posed by equivocality and uncertainty of information generated by digital technologies (Aben et al, 2021);…”