RE-ENGINEERING THE DUTCH FLOWER AUCTIONS: A FRAMEWORK FOR ANALYZING EXCHANGE ORGANIZATIONS

Abstract

This paper specifies a generalizable model of exchange processes and develops a process-stakeholder analysis framework to evaluate alternative market designs. This framework is applied to analyze a number of information technology initiatives in the Dutch flower markets. The Dutch flower auctions are the world's leading centers for trading cut-flowers and potted plants. We undertake a cross-case analysis and apply our framework to analyse successes and failures in the introduction of new IT-based trading mechanisms in these markets. Based on our study, we develop a number of testable propositions on: the separation of physical and informational processes in trading, the responses of stakeholders to changes in available information due to IT initiatives, and economic and incentive conditions required for adoption of new trading processes. Finally, our detailed cases illustrate the institutional and incentive constraints, and complexities encountered in the introduction of new electronic markets.