Does information technology governance strengthen or weaken contract control in digital platform relationships?

Abstract

PurposeThis study investigates both direct and moderation effects of two dimensions of contract control and information technology governance on platform participants' financial performance.Design/methodology/approachUsing data collected from 384 platform participants from China's two largest digital platforms, hierarchical regression is used to validate the conceptual model and hypotheses.FindingsThe empirical results show that contract completeness and information technology governance independently improved financial performance, while contract enforcement had an inverted U-shaped effect on financial performance. Furthermore, information technology governance amplified the positive effect of contract completeness, but not of contract enforcement, on financial performance.Originality/valueThis study advances the literature on partnership control by showing the interactive role of information technology governance and contract control. It also enriches research on information technology usage by revealing how information technology governance benefits business partnerships. Finally, it extends transaction cost theory by demonstrating that different dimensions of contracts have different effects on governing interfirm relationships.