A TRANSACTION COST VIEW OF DECISION-SUPPORT SYSTEMS

Research and practice in decision support systems have often been said to focus too much on individual decision-making, when decisions actua lly are made by groups. Another shortfall of current research is the a bsence of any established theory or framework on which to base it. A t hird shortfall is the lack of connections between theory and actual im plementation in terms of information technology. The first two problem s in particular are addressed in this study. Decision-making is consid ered to be a group activity-rather than an individual activity-in whic h as a matter of fact a contract between the decision-makers is establ ished. The contracts incur transaction costs, which may or may not be covered by the extra value gained by the contract. Transaction costs i n the contract formulation phase should be eliminated, and information technology in its various forms is a principal means by which to achi eve this end. Different kinds of technologies support different kinds of contracts. This is why decision-makers should understand the nature of their decision-making situation and select the information technol ogy tools most suitable for the situation. The different factors causi ng transaction costs in decision-making-contracting-are identified, an d the means to eliminate them by information technology are presented. This study is based on a transaction cost perspective of organization s. Information technology is seen as a primary means to lower transact ion costs. Thus, the necessary theoretical framework so often missing in information technology research is provided. The results of the stu dy stem from empirical research, the aim of which was to investigate a nd to understand information technology from the viewpoint of transact ion costs.