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

Purpose - Inter-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/approach - IPT 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. Findings - Addressing 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. Originality/value - This 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 informationprocessing activities that organisations deploy to reduce information uncertainty and equivocality.

Automated summary

Inter-organisational governance is crucial for information processing during digital transformation. This study suggests that addressing information uncertainty requires contractual control and coordination, while information equivocality is best addressed through relational governance mechanisms. The research highlights the importance of identifying information requirements to reduce uncertainty and equivocality in decision-making processes.