Designing Control Mechanisms for Value Exchanges in Network Organisations

Abstract

Contracts and organizational controls to monitor contract compliance are important tools to enhance trust in a fair business transaction in network organisations and electronic commerce in general. In this chapter, we propose a design methodology for such contracts and supporting controls, utilizing inter-organisational value models. We argue that a framework for designing control mechanisms should include three steps: design of an inter-organizational value model, analysis of possible violations of contractual obligations underlying this value model, and design of control mechanisms to detect or prevent such violations. It is shown how the e³-value methodology, which was developed to design business value models, can be extended to model obligations of parties. We use concepts and ideas from deontic logic (the logic of obligations and permissions) to develop an extension of e³-value called e³-value+. The e³-value+ approach is a design tool for modelling violations of obligations, which can be used in contract drafting and contingency planning for inter-organisational collaboration in network organisations.