INTERACTION OF TECHNOLOGICAL AND INSTITUTIONAL CHANGE IN THE DEVELOPMENT OF AN ELECTRONIC COMMERCE SYSTEM IN CHINA'S PHARMACEUTICAL DISTRIBUTION CHAIN : A Transaction Cost Perspective

In this paper, we describe the introduction of electronic commerce into the drug distribution industry inChina. This case is especially interesting because massive institutional changes coincide with the introductionof a new technology. For these reasons, it becomes possible to study the interaction of technologicaland institutional change in real time and in their real-life context. We use two alternative transaction costtheoreticperspectives on the interaction between institutional and technological change as our theoreticalframework. The case study suggests that the rationale which motivates introduction of a new technology inthe context of institutional change may be different from the rationale which underlies the practices whichdevelop on the basis on the newly introduced systems and institutions.