Governance Of Inter-organisational Relationship In Business Ecosystems

The telecommunication industry in Ghana has developed steadily and has grown to an appreciable level in a very short period of time.In 1994,the Government deregulated the sector by establishing a five-year comprehensive "Accelerated Development Program." to restructure the industry.After the deregulation,the telephony industry,particularly the mobile communication sector has experienced tremendous changes.Following the increasing changes in the consumers' requirements for products and services,companies in the telecommunication sector have been challenged to develop new business models to meet their changing needs.Firms operating in this fast changing telecommunications network environment need to build new businesses relationships as quickly as possible to create or to sustain competitive advantages.To achieve this,organisations have to work together in a complex organisational network known as business ecosystem,where both internal and external capabilities are integrated to create value for the end user.This phenomenon of complex transaction relationships requires that the mobile network operators embrace the concept of business relationship governance and its implications.Therefore,as the importance of inter-organizational relationship and cooperation in mobile telecommunication is increasing,the concept of boundary choice has been a matter of concern.However,there has been a dearth of theoretical accounts on the application of the concept of ecosystem governance on small platform owners like the mobile network operators.The overarching objective of this study is stemmed out from the quest to fill the knowledge gap identified in the review of extant literature on ecosystem relationship governance,and the need for the broader application of the theory in the current domain of research to examine how and why mobile network operators govern their relationship around their ecosystem.The MNOs(platform leaders)have to exercise governing mechanisms in their ecosystem so as to be able to organize the common action of the ecosystem members to achieve the intended shared goal.Therefore,governance mechanisms are the unit of analysis and the relationship is the unit of observation.Five specific objectives were developed to help achieve the broader objectives.The first was to identify the determinants of relationship governance structure available to influence the relationships between MNOs and ecosystem members,and the second was to determine the interactive or moderating relationship effects of the determinants of relationship governance structures in influencing the choice of governance structures between the MNOs and the partners.The next was to examine the governance mechanisms that are in use by mobile network operators to influence relationship with different actors around their ecosystem,while the other is to compare the governance mechanisms used to influence relationships with different categories of ecosystem members in the mobile network operators' ecosystem.As a fact finding exercise,the descriptive survey research design method through questionnaire was used to achieve the intended objectives between February and June,2017.A total of 630 completed questionnaires with valid responses for the survey were received.The study initially performed preliminary analysis by conducting exploratory factor analysis to reduce the data using SPSS version 23.Subsequently a structural equation modelling was performed on the examination of the proposition of the transaction cost theory,and there after canonical correlation analysis was also performed on relationship governance in business ecosystem.Empirical results from the examination of the proposition of the transaction cost using structural equation modelling were found as the followings: Firms with greater transaction investment would pursue greater level of vertical integration: Degree of vertical integration would be higher for firms with higher transaction uncertainty;There was a positive relationship between transaction frequency and the degree of integration;The positive relation between transaction uncertainty and vertical integration became stronger when asset specificity increased;The positive influence of transaction frequency on vertical integration became stronger when asset specificity increased.All these hypotheses were supported to corroborate with the scholars that argue that transaction cost theory is an empirical success story that can be relied and used for transaction governance decisions.The empirical research also showed the following results: Authority and contract-base governance mechanisms were preferred over trust-base governance mechanism;Trust or contract-base governance mechanisms were preferred over authority-base governance mechanisms;Authority or contract-base governance mechanisms were preferred over trustbase governance mechanism;In a relationship between the MNOs and technology providers,trust or contract-base governance mechanisms were preferred over authority-base governance mechanisms;In a relationship between the MNOs and the banks,trust or contract-base governance mechanisms were preferred over authority base governance mechanisms;Authority or contract-base governance mechanisms were preferred over trust-base governance mechanisms in a relationship between the MNOs and the distributors.One of the main innovations points stemming from the study is the ability of the study to thoroughly examine all the independent transaction dimensions in the same study to determine the choice of governance mechanisms and the comparison of the effect of each dimension.Another innovation point stems from the methodological perspective.Researchers of business ecosystem have predominantly used a narrative approach for their studies.The few that have used quantitative approaches for their studies only adopted one technique.The lack of quantitative integration limits a full understanding of the relative importance of the transaction dimensions regarding governance choice.The application of structural equation model and canonical correlation analysis model to conduct an empirical research over a large scale in this domain and discipline is a novelty.These approaches resulted in significant gains of inferential power over traditional narrative and non-robust approaches.Another innovation of the present study is the choice of the research domain and the development of theory.There has been a dearth of theoretical studies regarding governance around the MNOs ecosystems.The study hypotheses formulated could lead to theory development when further empirical studies are performed on them.One of the policy implications from the study is the main argument of transaction cost theory that,the choice of governance mechanism is dependent on the efficiency of such chosen governance mechanism to reduce cost in the transaction.Following this reasoning,firms that have large capabilities are likely to engage in unethical business practices under unfavourable conditions such as technological uncertainty to reduce transaction cost.They are likely to reduce competition by vertically or horizontally acquiring competitors,suppliers,or customers so as to enjoy monopoly.This unethical business practices have implication for industry regulators and anti-trust bodies.Policy makers can consider designing policies restricting and sanctioning firms that indulge in unethical business practices.Another implication is that industry regulators can design policies to restructure the telecommunication industry to allow entry of industry participants in order to improve efficiency and as well reduce monopolistic powers of existing industry players.