Toward Digitally Integrated Inter-Organizational Control Systems: An Exploration of Barriers A Qualitative Interview Study Authors Josef Johansson Oscar Jebsen Setterberg Supervisor Henrik Agndal Master´s thesis in Accounting and Financial Management Spring 2025 Graduate School, School of Business, Economics and Law, University of Gothenburg, Sweden Acknowledgements Firstly, we would like to express our sincere gratitude to our supervisor, Henrik Agndal, for his continuous support, valuable guidance, and constructive feedback throughout the course of this thesis. His insights have been instrumental in shaping the direction and quality of our work. We would also like to extend our heartfelt thanks to all the interview respondents who generously shared their time, perspectives, and experiences. This research would not have been possible without their openness and contributions. We are equally grateful to the individuals who helped us get in contact with these respondents and facilitated access to the right people. Lastly, we would like to acknowledge the members of our thesis seminar group, whose thoughtful comments and suggestions have been essential in refining our arguments and improving the clarity of our report. Their input has contributed meaningfully to the development of this thesis. Gothenburg, May 22, 2025 ———————————— _________________________ __ _ Josef Johansson Oscar Jebsen Setterberg _ Abstract Title: Toward Digitally Integrated Inter-Organizational Control Systems: An Exploration of Barriers. A Qualitative Interview Study Background and Problematization: As digital transformation reshapes how firms operate and collaborate, new forms of inter-organizational control are emerging, enabled by shared digital platforms, real-time data, and integrated workflows. Although digitally integrated inter-organizational control systems (IOCS) offer considerable potential for improving collaboration and efficiency, their widespread implementation remains limited. Much of the existing literature has concentrated on internal aspects of digital transformation, with relatively less attention given to the specific challenges that emerge when control mechanisms must span firm boundaries. This study responds to that need by examining the persistent barriers organizations encounter as they attempt to develop digitally integrated control systems within inter-organizational contexts. Purpose: The purpose of this thesis is to explore and explain the common barriers that hinder firms from progressing toward more advanced digitally integrated inter-organizational control systems. The study aims to extend classical control theory by applying a digital transformation lens, while also offering practical guidance to firms engaged in cross-boundary digitalization efforts. Research Question: What barriers hinder the progression towards digitally integrated inter-organizational control systems? Methodology: We adopt a qualitative, inductive research design, grounded in the Gioia methodology. Fifteen semi-structured interviews were conducted with decision-makers from nine different firms engaged in inter-organizational collaborations. Conclusion: This study identifies a set of persistent and interacting barriers that prevent firms from realizing the potential of digitally integrated IOCS. At the intra-organizational level, outdated systems and fragmented capabilities lock organizations into rigid control environments that are difficult to adapt or connect externally. At the inter-organizational level, uneven digital maturity and power imbalances force compromises that dilute the value of integration. Externally, regulatory demands and institutional pressures add uncertainty and slow momentum. These barriers do not act in isolation, they reinforce one another, creating a systemic resistance to change. Our findings suggest that progress toward digital IOCS depends less on technology itself and more on an organization’s ability to align internal practices, partner relationships, and institutional expectations in a coordinated and flexible way. Keywords: Digital transformation, inter-organizational control, control systems, digital maturity, appropriation and coordination, Gioia methodology, barriers to collaboration, platform integration. Table of Contents 1. Introduction....................................................................................................................................... 1 1.1 Background and Problem Discussion..........................................................................................1 1.2 Purpose and Contribution............................................................................................................ 2 2. Literature Review...............................................................................................................................3 2.1 Conceptual Foundations.............................................................................................................. 3 2.2 Challenges to IOC: Dekker’s Twin Problems............................................................................. 5 2.3 Digital Transformation................................................................................................... 8 2.4 Digitally Integrated IOCS: Toward a New Control Architecture................................................9 3. Method section..................................................................................................................................11 3.1 Research Design........................................................................................................................ 11 3.2 Data Collection.......................................................................................................................... 12 3.2.1 Sampling and Respondent Selection................................................................................12 3.2.2 Interview Method and Procedures................................................................................... 13 3.3 Analysis Method: Gioia Methodology...................................................................................... 14 3.3.1 Overview of the Gioia Method........................................................................................ 14 3.3.2 Coding Process and Model Development........................................................................14 3.3.3 Visual Model.................................................................................................................... 15 3.4 Limitations, Research Quality and Ethical Considerations....................................................... 16 3.4.1 Limitations....................................................................................................................... 16 3.4.2 Research Quality and Trustworthiness.............................................................................16 3.4.3 Ethical Considerations..................................................................................................... 17 4. Empirical Findings and Analysis....................................................................................................18 4.1 Intra-organizational Barriers......................................................................................................18 4.1.1 Legacy Systems and Working Methods...........................................................................19 4.1.2 Resistance to Digital Change........................................................................................... 20 4.1.3 Limited Digital Capability............................................................................................... 22 4.2 Inter-organizational Barriers......................................................................................................24 4.2.1 Digital Maturity................................................................................................................24 4.2.2 Information Security Concerns........................................................................................ 26 4.2.3 Power Imbalance..............................................................................................................27 4.3 External Barriers........................................................................................................................29 4.3.1 Regulatory Compliance....................................................................................................29 4.3.2 Industry Conditions..........................................................................................................31 5. Discussion..........................................................................................................................................33 5.1 Revisiting Dekker’s Twin Problems Through a Digital Lens................................................... 33 5.2 Relating the Model to Theories of Inter-Organizational Control.............................................. 34 5.2.1 Transaction Cost Economics............................................................................................34 5.2.2 Resource Dependence Theory......................................................................................... 35 5.2.3 Relational and Social Capital Theory.............................................................................. 35 5.2.4 Institutional Theory..........................................................................................................36 5.3 Answering the Research Question: Integrating the Model........................................................36 6. Conclusion.........................................................................................................................................38 6.1 Summary of the Study and Main Findings................................................................................38 6.2 Theoretical Contributions.......................................................................................................... 38 6.3 Practical Contributions.............................................................................................................. 39 6.4 Avenues for Future Research.....................................................................................................40 7. Reference List................................................................................................................................... 41 8. Appendix........................................................................................................................................... 47 8.1 Interview Guide......................................................................................................................... 47 8.1.1 English............................................................................................................................. 47 8.1.2 Swedish............................................................................................................................ 48 8.2 Gioia Model Components..........................................................................................................51 8.2.1 First Order Codes............................................................................................................. 51 8.2.2 2nd Order Themes............................................................................................................52 8.2.3 Aggregated Dimensions...................................................................................................53 8.2.4 The Gioia Model.............................................................................................................. 54 Tables and Figures Table 1: Summary of foundational theories in IOC Research..........................................................4 Table 2: Explanations of Appropriation and Coordination problems.............................................. 5 Table 3: Appropriation and Coordination Risks summarized.......................................................... 7 Table 4: Overview of interviewed study participants.....................................................................13 Table 5: Interview guide themes.................................................................................................... 14 Figure 1: Digitally Integrated IOCS Barriers.................................................................................18 1. Introduction 1.1 Background and Problem Discussion Digital transformation (DT) is fundamentally reshaping how firms create, deliver, and govern value across industries. Defined as the process through which organizations leverage digital technologies to transform business processes, cultures, and customer experiences (Vial, 2019), DT has evolved from a technical upgrade initiative to a strategic necessity. As companies deploy tools like cloud computing, IoT, and real-time data analytics, they unlock new opportunities not only within the firm but across entire supply chains and business networks. In particular, these technologies enable the possibility of seamless, data-driven collaboration between firms, offering the potential for faster responsiveness, greater efficiency, and more agile coordination across organizational boundaries (McKinsey & Company, 2016; World Economic Forum, 2023). These developments have important implications for inter-organizational control. As digital infrastructures mature, they support the integration and automation of control processes between firms, reducing manual tasks, closing information gaps, and improving joint performance monitoring (Son et al., 2021). Leading firms already report benefits: so-called “Supply Chain Masters” have achieved around 20% higher performance in cost, agility, and service compared to peers (Capgemini Research Institute, 2022). The concept of digitally integrated inter-organizational control systems (IOCS), which refers to the formal and informal control mechanisms that are supported or enacted through digital platforms, represents a major leap toward collaborative governance in distributed environments (Dixit et al., 2024). Yet uptake remains limited. A recent McKinsey survey found that while 60% of companies report visibility into tier-one suppliers, integration across deeper supplier tiers remains limited, highlighting persistent gaps in the digital interconnection of planning systems (McKinsey & Company, 2024). The literature on DT is extensive, but largely focused on intra-organizational change, such as internal process automation, ERP system upgrades, or AI-supported decision-making (Capaldo et al., 2021). In contrast, the intersection of DT and inter-organizational control has received relatively less attention. While classical IOCS research has long explored coordination and appropriation problems in collaborative settings (Dekker, 2004), these studies typically focus on relational or contractual solutions and often predate the latest wave of digital innovation. More recent work highlights that digital platforms, real-time data sharing, and automated interfaces can support more integrated forms of control between firms. However, these studies are often conceptual or limited in scope, calling for more grounded empirical research into how such integration unfolds in practice (Van Hoek, 2021). Despite the technological potential and growing strategic relevance of inter-organizational digital systems, adoption of digitally integrated IOCS appears to lag behind expectations. For example, although firms increasingly connect their internal systems to analytics dashboards or workflow tools, few extend these systems outward to supply chain partners, customers, or collaborators. Emerging evidence points to persistent obstacles, ranging from interoperability issues and cybersecurity concerns to organizational resistance and power asymmetries, but a comprehensive understanding of these barriers is lacking. In particular, existing research does not yet explain how these obstacles interact or why so many firms fail to realize the promise of integrated digital control. This is consistent with recent findings from Gartner (2024), which show that less than half of such digital initiatives deliver their intended outcomes, often due to unresolved integration 1 and governance challenges. This underscores the need to examine what prevents firms from successfully building and sustaining digitally integrated IOCS. 1.2 Purpose and Contribution The purpose of this study is to identify and explain the barriers that shape firms’ ability to build digitally integrated inter-organizational control systems, thereby extending IOCS research with a digital-transformation lens and offering actionable insights for practitioners who wish to develop digitally integrated IOCS with other firms. Accordingly, we pose the following research question: - What barriers hinder the progression towards digitally integrated inter-organizational control systems? Guided by a qualitative, inductive design and employing the Gioia methodology (Gioia et al., 2013), the authors will collect and analyse interview data from organisations engaged in ongoing inter-organizational collaborations at varying levels of digital maturity. The theoretical contribution lies in elaborating the dynamics and interactions among various barriers and their influence on the design and functionality of IOCS under digital transformation conditions. From a practical standpoint, the study contributes by providing managers with a framework for identifying, prioritizing, and mitigating barriers. This framework will guide managerial decision-making processes, aiding organizations to effectively sequence their investments and strategic actions toward successful collaborative digital-transformation initiatives. The remainder of the thesis is structured as follows. Chapter 2 reviews relevant literature on inter-organizational control, digital transformation, and the theoretical frameworks guiding our analysis. Chapter 3 outlines the methodology, including the research design, data collection, and analytical procedures. Chapter 4 presents the empirical findings and analysis, organized around the three aggregated dimensions of barriers. Chapter 5 offers a theoretical discussion that relates our model to Dekker’s twin problems and extends key theoretical perspectives. Finally, Chapter 6 concludes the thesis by summarizing our contributions, highlighting practical implications, and suggesting avenues for future research. 2 2. Literature Review To investigate the barriers to digitally integrated IOCS, this chapter reviews key literature across four areas. First, we outline foundational perspectives on inter-organizational control. Next, engage in Dekker’s (2004) twin problems of appropriation and coordination, which provide a structured way to understand interorganizational risk. Third, we examine how digital transformation reshapes classical assumptions, and finally, we develop an integrated perspective that connects the literature to our study’s research question. 2.1 Conceptual Foundations Control is a fundamental concept in organizational theory, referring to how one actor influences another to achieve desired outcomes. Traditionally, control has been viewed within single organizations, managed through internal hierarchies, rules, and procedures (Anthony, 1965; Ouchi, 1979; Merchant & Van der Stede, 2017). However, as companies increasingly collaborate in networks and partnerships, control must also extend beyond organizational boundaries. In these inter-organizational settings, no single company has complete authority over the others, creating new challenges for maintaining effective control (Gulati, 1998; Provan & Kenis, 2008; Dekker, 2004). Inter-organizational relationships involve two or more independent companies working together through formal agreements, such as contracts or joint ventures, or informal connections, such as trust-based partnerships and collaborative networks, to achieve goals they cannot easily achieve alone. These relationships often involve both cooperation and competition, requiring careful balancing to maintain mutual benefit and stability (Dekker, 2004). To manage these complex relationships, companies rely on inter-organizational control systems (IOCS). These systems combine formal controls, such as contracts, performance metrics, and auditing processes, with informal controls, including trust, ongoing communication, and shared norms and values. Effective IOCS ensure clear expectations, reduce conflicts, and support smooth collaboration without merging the partnering companies into a single entity (Langfield-Smith & Smith, 2003; Chenhall, Hall & Smith, 2013). Research on inter-organizational control draws from multiple theoretical traditions, each emphasizing different aspects of how control is achieved between firms, and often resting on contrasting assumptions. While these theories are not always fully compatible, together they offer complementary insights that contribute to a more comprehensive understanding of the field. This suggests that adopting multiple perspectives may be necessary to fully grasp complex situations within the domain. A summary of these foundational theories, their main focus areas, and the control mechanisms they typically suggest is provided in Table 1 below. Transaction Cost Economics (TCE) assumes actors are opportunistic and aims to minimize transaction and production costs through detailed contracts, monitoring, and safeguards (Williamson, 1975, 1985; Fjeldstad et al., 2012). In contrast, Resource Dependence Theory (RDT) views organizations as politically motivated entities that seek to manage power asymmetries by securing access to critical external resources, often by establishing ownership ties or technical linkages (Pfeffer & Salancik, 1978; Hillman, Withers & Collins, 2009). From a different perspective, relational or social-capital theory assumes that cooperation is achievable through trust, shared norms, and strong interpersonal ties. This theory favors informal 3 mechanisms such as open communication and joint problem-solving, which can reduce monitoring costs and foster long-term collaboration (Granovetter, 1985; Nahapiet & Ghoshal, 1998; Poppo & Zenger, 2002; Cao & Lumineau, 2015). Finally, institutional theory emphasizes the role of external pressures, regulatory, normative, and cultural, in shaping how organizations design control structures. These pressures push firms toward adopting widely accepted practices, even when such practices are not optimal in economic terms (DiMaggio & Powell, 1983; Scott, 2014). Theory What it focuses on Typical control solutions suggested Reducing the combined production Draft detailed ex‑ante contracts, Transaction Cost + transaction costs that arise from add monitoring clauses, specify Economics (TCE) opportunism and asset specificity penalties and safeguards Managing a firm’s dependence on Take equity stakes, gain board Resource Dependence critical external resources held by seats, build technical interfaces Theory (RDT) other organizations to secure and stabilize access Encourage open Using trust, shared norms, and communication, informal Relational / interpersonal ties to cut transaction problem‑solving, joint teams, Social‑Capital Theory costs and support long‑term relationship‑building instead of cooperation heavy formal monitoring Adopt widely accepted Conforming to regulatory, industry, practices, follow standards and Institutional Theory and societal pressures to gain certifications, mirror peer legitimacy and stability governance structures Table 1: Summary of foundational theories in IOC Research These theories often complement each other but can also create tensions. For instance, detailed contracts recommended by TCE might signal mistrust, damaging relationships that rely heavily on trust-based controls. Similarly, resource control mechanisms suggested by RDT, such as restrictive information gateways, may create conflicts with institutional pressures related to fairness or data protection (Casciaro & Piskorski, 2005; Villena, Revilla & Choi, 2019). Complicating these dynamics further is the issue of measurement difficulty. Many outcomes of inter-organizational relationships, such as innovation or reputation, are challenging to measure or verify clearly. Such measurement problems amplify risks of opportunism and highlight the value of relational controls that support cooperation when exact monitoring is difficult (Alchian & Demsetz, 1972; Dyer & Chu, 2003; Dyer & Singh, 1998). In recent years, digital transformation has begun to significantly alter the landscape of inter-organizational control by reducing certain traditional barriers and simultaneously introducing new complexities. As firms integrate digital tools into their operations and collaborations, traditional assumptions about control, transparency, and coordination are being reexamined. This evolving context brings us to the concept of digitally integrated inter-organizational control systems, which we explore in more detail after reviewing the classical control challenges that have long hindered such collaborations. 4 2.2 Challenges to IOC: Dekker’s Twin Problems When two or more companies collaborate, they typically face two main problems that make cooperation challenging. Dekker (2004) labels these as the appropriation problem and the coordination problem (Table 2). Clearly understanding these twin challenges helps explain why effective inter-organizational control systems (IOCS) are difficult to achieve and sustain in practice. These problems are not only conceptually distinct but also involve specific types of risks and control responses, which are summarized in Table 3 for ease of comparison and reference. Dekker’s Problem Simple explanation Core question it raises Worry that once you invest, the partner might act selfishly and “take a bigger “How do we protect ourselves Appropriation slice of the pie” (e.g., renegotiate prices, from being exploited?” hide information, use bargaining power). Difficulty in lining up tasks, goals, and timing across two organizations, even “How do we keep our actions and Coordination when they trust each other (e.g., objectives in sync?” interdependent processes, differing priorities, external shocks). Table 2: Explanations of Appropriation and Coordination problems The appropriation problem stems from concerns that partners may act in their self-interest instead of working toward joint goals. Simply put, companies fear being exploited once they commit resources to the partnership. This problem, rooted in transaction-cost economics (Williamson, 1985), typically includes concerns such as opportunism, information asymmetry, and power imbalances. Opportunism clearly illustrates the appropriation problem. Opportunism arises particularly when companies invest in specialized assets, such as unique software, that cannot easily be repurposed for other customers or uses. Under such circumstances, one party can exploit the other by renegotiating terms after investments have been made, a phenomenon known as the "hold-up" risk (Williamson, 1985). Empirical evidence, particularly from industries like automotive manufacturing, demonstrates that suppliers exposed to hold-up risks often respond by demanding risk premiums or withholding effort (Jap, 1999; Roehrich & Caldwell, 2012). Firms typically manage these risks by employing detailed contracts, explicit performance milestones, and financial guarantees designed to reduce the likelihood of opportunistic behavior. Another major concern under appropriation is information asymmetry, where one partner holds critical information hidden from the other (Baiman & Rajan, 2002). Such hidden information can lead to unfair advantages, such as suppliers exaggerating their costs to secure higher profits (Agndal et al., 2023). Companies may manage these risks by adopting open-book accounting practices, joint audits, or third-party certification processes. However, these measures increase complexity, clearly illustrating how measurement difficulties, situations where critical aspects of transactions like quality or innovation outcomes cannot be easily measured or verified, can heighten appropriation concerns (Alchian & Demsetz, 1972). 5 Power imbalance also falls under the appropriation issue, reflecting dependency asymmetries as discussed in resource dependence theory (Pfeffer & Salancik, 1978). Power imbalance occurs when one partner controls essential resources, giving it leverage to enforce less favorable terms on weaker partners (Casciaro & Piskorski, 2005). In automotive supply chains, powerful manufacturers with high bargaining power often force suppliers into price reductions, harming relationships and triggering retaliatory behaviors (Villena, Revilla & Choi, 2019). Firms counter these risks by diversifying suppliers, creating reciprocal investments, or maintaining long-term agreements to mitigate power dynamics. While appropriation concerns center on fear of exploitation, the second challenge identified by Dekker, the coordination problem, focuses on aligning tasks and activities across organizational boundaries. Even when partners trust each other, they may fail due to challenges coordinating complex, interdependent activities. A significant coordination difficulty is task interdependence, described clearly by organizational theorists such as Thompson (1967). This occurs when tasks in one firm directly impact tasks in another. For example, automotive firms historically faced severe disruptions from seemingly minor design changes, as these cascaded into larger scheduling and production issues (MacDuffie & Helper, 2006). Companies attempt to address these challenges through detailed production schedules, electronic data interchange (EDI) systems, and integrated cross-company teams designed to improve real-time communication and coordination. Additionally, firms often encounter goal misalignment, arising when partners prioritize different objectives or timelines (Cyert & March, 1963). Public-private partnerships exemplify this problem. Public entities emphasize long-term community benefits, while private partners prioritize short-term financial returns, leading to frequent conflicts (Reuer & Devarakonda, 2017). Firms try to align divergent goals through performance-based contracts or shared revenue formulas, though these can be challenging and expensive to implement. Coordination is also disrupted by environmental uncertainty, which includes sudden changes in demand, unexpected regulatory shifts, or external disruptions like natural disasters. Such events make even well-planned agreements hard to maintain (Dekker, 2004). Finally, the issue of relational risk, uncertainty about long-term trust and commitment, also complicates coordination (Das & Teng, 1998). Even strong initial trust can diminish over time due to managerial changes, misunderstandings, or new conflicts. Research by Poppo and Zenger (2002) and Cao and Lumineau (2015) suggests effective relationships balance formal mechanisms, such as contracts and rules, with informal mechanisms, such as trust, communication, and shared norms. Too much formality can signal distrust and weaken relational ties, while too little can expose firms to vulnerabilities (Lumineau & Henderson, 2012). Companies address relational risk through regular joint meetings, open communication, and collaborative problem-solving routines that reinforce trust and facilitate coordination. 6 Problem type Specific risk What it means (short) Typical control responses A partner exploits investments in Opportunism / Detailed contracts, milestone specialized assets after hold‑up payments, financial guarantees commitment Information One side hides or distorts critical Open‑book accounting, joint asymmetry cost/quality data audits, third‑party certification Appropriation Key outputs (e.g., quality, Agreed‐upon metrics, shared Measurement innovation) are hard to verify, KPIs, collaborative evaluation difficulty raising mistrust panels Dominant partner uses resource Supplier diversification, Power imbalance leverage to force unfavorable reciprocal investments, long‑term terms agreements Shared production schedules, Task Activities in one firm tightly EDI systems, cross‑company interdependence affect those in another teams Performance‑based or Goal Partners pursue different revenue‑sharing contracts, joint misalignment priorities or time horizons planning Coordination External shocks (demand swings, Environmental Flexible contracts, buffer stocks, regulation, disasters) disrupt uncertainty scenario planning plans Regular joint meetings, open Trust may erode over time due to Relational risk communication, balanced formal changes or conflicts + informal governance Table 3: Appropriation and Coordination Risks summarized Together, Dekker’s twin problems of appropriation and coordination clearly show why inter-organizational collaboration often remains challenging and highlight the need for establishing control mechanisms between the participating parties. Firms typically respond by combining formal control mechanisms, such as detailed contracts and monitoring procedures, with informal mechanisms, such as trust-based routines and relational governance, to manage these risks (Dyer & Singh, 1998). Importantly, the balance between these approaches is dynamic, evolving with experiences and changing conditions. Without adequate control mechanisms to manage these risks, collaboration efforts may falter, partners may hesitate to integrate, or existing partnerships may suffer from inefficiencies, mistrust, or misalignment. In this sense, the absence of effective mechanisms to mitigate appropriation and coordination problems can act as a significant barrier to the implementation of IOCS, particularly in digitally integrated settings where interdependencies and complexities are often amplified. Understanding these traditional challenges provides a necessary baseline to appreciate how digital technologies transform them. The following section explores how digital transformation interacts with and alters these challenges. 7 2.3 Digital Transformation Digital transformation represents a fundamental shift in how organizations operate and collaborate, driven by rapid advancements in digital technologies. It goes beyond merely adopting new digital tools, it involves rethinking organizational processes, customer interactions, and business models to leverage technologies like artificial intelligence, big data analytics, cloud computing, and the Internet of Things (Omol, 2023; Kraus et al., 2021). In the context of inter-organizational relationships, digital transformation means using these advanced technologies to enhance cooperation, streamline joint processes, and create greater transparency and coordination across organizational boundaries. However, integrating digital transformation in inter-organizational contexts presents significant challenges. Internally, one major barrier is the fragmentation of control systems. Organizations often adopt new digital solutions incrementally and in isolation, leading to misaligned processes and data silos that impair coordination and decision-making (Cosentino, 2022; Adomako & Nguyen, 2024). Moreover, traditional management control systems, typically designed around consistency and stability, clash with the flexibility and agility required by digital transformation (Omol, 2023; Nottbrock et al., 2022). This tension often compels organizations to redesign their control frameworks to better accommodate rapid innovation and adaptability. Inter-organizational coordination further complicates digital transformation. Effective collaboration between multiple organizations demands integration and interoperability of different digital systems, often creating substantial technical and managerial complexity. A significant concern here is managing data accuracy, security, and ethical use across organizational boundaries (Cosentino, 2022). Such accountability challenges are magnified due to differing operational practices, legal frameworks, and cultural differences among collaborating firms. Although collaborative digital platforms can enhance transparency and trust, they also expose organizations to new vulnerabilities and dependencies (Li et al., 2023; Seppänen et al., 2024). Externally, digital transformation places pressure on organizations through competitive dynamics, evolving customer expectations, and regulatory demands. Companies increasingly see digital transformation as a strategic necessity to remain competitive, responsive, and compliant with emerging standards and regulations such as GDPR or the EU Data Act (Kraus et al., 2021). Additionally, digital environments require heightened attention to cybersecurity and privacy, as interconnected digital systems are more vulnerable to security breaches and misuse of sensitive data. Thus, successful digital transformation demands not only internal readiness but also strategic adaptation to external pressures and requirements. Digital transformation reshapes the traditional inter-organizational control challenges described by Dekker’s twin problems of appropriation and coordination (Dekker, 2004). Technologies like real-time data sharing, blockchain smart contracts, and automated monitoring can reduce risks associated with opportunism by enhancing transparency and making performance measurement more precise. At the same time, these technologies might increase dependency on particular digital platforms or data owners, potentially amplifying power imbalances or creating rigidities that hinder flexibility. Digital tools can streamline coordination, yet integration complexity and cybersecurity concerns can introduce new coordination risks and uncertainties. 8 2.4 Digitally Integrated IOCS: Toward a New Control Architecture Digitally integrated inter-organizational control systems (IOCS) represent a new generation of control architectures that leverage advanced digital technologies, such as real-time data analytics, cloud platforms and Internet of Things (IoT), to coordinate and govern collaboration across firm boundaries. These systems promise significant improvements in transparency, responsiveness, and efficiency by embedding control mechanisms directly into shared digital infrastructures. For example, firms may connect systems through APIs that enable automated data exchange and validation across organizational boundaries, allowing real-time inventory checks, performance monitoring, or compliance reporting. Other implementations might include shared dashboards or automated procurement systems that integrate ERP platforms. Unlike traditional IOCS that rely on contracts or trust-based routines, digitally integrated systems shift control into the code, the data pipelines, and the interfaces through which partners interact (Dixit et al., 2024; Nottbrock et al., 2024). Yet while the technological potential is clear, implementation remains uneven. Empirical studies and industry reports confirm that few firms have moved beyond internal transformation to build truly integrated digital control mechanisms across organizational boundaries (McKinsey, 2023; Gartner, 2024; Seppänen et al., 2024). In part, this reflects the complex terrain of digital collaboration: interdependencies multiply, systems must interoperate, and control becomes increasingly distributed and infrastructural. Classical theories of inter-organizational control, such as transaction cost economics, resource dependence theory, or relational governance, offer valuable insights but do not fully anticipate the control challenges introduced by digitalization (Roehrich et al., 2020; Yang et al., 2021). Theoretically, digital integration transforms the logic of control. It promises to reduce appropriation risks, such as opportunism and information asymmetry, through transparent data sharing, automated monitoring, and shared platforms (Li et al., 2023; Yang et al., 2021). At the same time, it introduces new forms of dependence, raises questions of system ownership and interpretive power, and creates rigidities that complicate coordination. What emerges is not simply a more efficient control system, but a new configuration of control in which formal, informal, and digital mechanisms intersect in unpredictable ways (Seppänen et al., 2024). This evolution raises fundamental questions about how inter-organizational control should be theorized in the digital era. As outlined in the introduction, our central research question is: What barriers hinder the progression toward digitally integrated inter-organizational control systems? While earlier sections discussed the technical and organizational landscape of this transition, answering this question also requires us to contextualize existing theoretical frameworks within digitalization for explaining emerging barriers. As our literature review has shown, traditional frameworks offer complementary but fragmented perspectives. TCE focuses on minimizing transaction costs under opportunism, RDT emphasizes how control emerges from power asymmetries, relational theory highlights trust and joint routines, institutional theory attends to legitimacy and external pressures. But what happens when control is no longer merely contractual or relational, but infrastructural? How do these theoretical lenses help us understand control that is encoded in system design, access rights, or interoperability protocols? 9 Moreover, Dekker’s (2004) twin problems of appropriation and coordination remain relevant but are reshaped by digital transformation. Appropriation risks may now stem from architectural dominance or platform control rather than asset specificity. Coordination challenges may arise not only from task interdependence or goal divergence, but also from technical fragmentation, digital capability gaps, and institutional complexity (Nottbrock et al., 2024; Seppänen et al., 2024). Recent studies have begun to identify the growing importance of platform governance, system-level alignment, and capability asymmetries in shaping inter-organizational performance and collaboration (Roehrich et al., 2020; Li et al., 2023). These developments underscore the need for empirical research that not only documents such frictions, but also theorizes how they emerge, interact, and potentially reconfigure classical control logics. To address our main research question in a theoretically grounded way, we therefore pose two supporting sub-questions. These are not separate lines of inquiry but tools to refine and extend existing theoretical perspectives so they can better illuminate the barriers we seek to explain: Supporting Sub-Questions: ● How does digital transformation reshape the classical problems of appropriation and coordination in inter-organizational control? ● How do digitally integrated IOCS challenge or extend established theoretical perspectives such as TCE, RDT, relational/social capital theory, and institutional theory? This study responds to these questions by empirically investigating the barriers that hinder the progression toward digitally integrated inter-organizational control systems. In doing so, we aim to bridge fragmented insights across control theory, extend existing frameworks into the digital era, and provide both researchers and practitioners with a grounded understanding of the dynamics shaping digital collaboration. 10 3. Method section 3.1 Research Design This study investigates the barriers that hinder the development and implementation of digitally integrated inter-organizational control systems (IOCS). These systems, enabled by digital platforms and data infrastructures, represent a growing yet complex shift in how firms coordinate and govern cross-boundary activities. Exploring why many firms struggle to implement such systems requires attention not only to technical infrastructure, but also to organizational routines, inter-firm power relations, and regulatory pressures, factors that interact in varied and often opaque ways. To address this complexity, we adopt a qualitative, exploratory research design. The objective is not to test predefined variables, but to develop a rich understanding of how organizations experience and interpret the frictions that arise as they attempt to digitally connect control processes across firm boundaries. Qualitative inquiry is particularly well suited to this task, as it allows researchers to explore multi-layered phenomena, such as organizational change or digital transformation, in contexts where mechanisms may be ambiguous, contested, or situational (Maxwell, 2013; Patton, 2015). Given the complexity and context-dependence of the topic, semi-structured interviews were chosen as the primary data collection method. These allow for flexibility in probing participants’ experiences, while ensuring that key themes, such as control, digital integration, and inter-organizational coordination, are systematically addressed. Importantly, the semi-structured format supports discovery: it enables respondents to surface and elaborate on concerns that may not have been anticipated by the researchers, which is especially valuable in settings where the challenges are not yet fully codified or where language and framing may differ across organizational actors (Kvale & Brinkmann, 2015). A cross-sectional perspective was selected to capture insights from multiple firms operating in diverse industries. This design facilitates a broad exploration of how different organizational conditions may influence the experience of barriers to digital integration. However, the purpose of the study is not to conduct sector-based comparisons or to attribute challenges to specific industries. Rather, we seek to identify commonly experienced barriers that may arise across a range of business contexts. While industry conditions were found to shape certain external constraints, as reflected in one of our analytical themes, the study uses these insights to enrich, not segment, the model. In this sense, industry is treated as a contextual backdrop, not as a comparative variable of analysis. The study is guided by an inductive logic and employs the Gioia methodology (Gioia et al., 2013), which supports structured theory-building from qualitative data. By grounding analysis in participants’ own language and perspectives, this approach facilitates the development of a conceptually rich and empirically grounded framework of the barriers to digitally integrated IOCS. 11 3.2 Data Collection 3.2.1 Sampling and Respondent Selection To address the study’s aim of identifying and explaining the barriers to digitally integrated inter-organizational control systems (IOCS), we adopted a qualitative interview approach supported by a purposeful and iterative sampling strategy. Given the complexity of inter-organizational control and the need to explore experiences across diverse collaborative settings, participants were selected based on their roles and direct involvement in digital initiatives with external partners. Specifically, we targeted individuals in finance, procurement, and digital development roles who held responsibility for or exposure to inter-organizational collaboration, systems integration, or digital strategy. We included participants from large European firms, primarily operating in Western Sweden. This regional focus reflects the practical constraints of the study’s context, while still encompassing multinational organizations with global reach. Our intention was not to compare specific industries but to capture a wide spectrum of experiences with digitally integrated IOCS across sectors. Most of the participating firms reported annual revenues exceeding 200 million SEK, reflecting a level of digital maturity and resource availability likely to support inter-organizational initiatives. Participants were selected using a combination of purposive and snowball sampling. Initial contacts were identified through professional and academic networks, including the authors’ university faculty and industry contacts. These individuals were approached via LinkedIn or email and provided with a one-page description of the study’s purpose, research design, and confidentiality measures. Informed consent was obtained from all participants. Subsequent participants were recruited through referrals, often from earlier study participants who recommended colleagues or contacts with relevant insights. This snowball sampling approach enriched the dataset by including multiple perspectives within the same firm, allowing for triangulation of experiences and identification of cross-role tensions or synergies. Fifteen individuals agreed to participate, representing a diverse mix of perspectives across industries such as automotive, logistics, pharmaceuticals, manufacturing, housing, and consulting. Participants held a range of roles, including CFOs, procurement managers, digital transformation leads, and IT specialists, from nine different companies, all of whom contributed their insights. This role and sectoral diversity enabled the study to capture both strategic and operational views on the challenges of implementing digitally integrated IOCS, consistent with the research’s exploratory and interpretive purpose. Table 4 below provides an overview of the study participants, including their professional role, industry affiliation, date of the interview, and its duration. The identifier for each interviewee consists of a number (1–15) indicating the chronological order of the interviews and a letter (A–I) denoting the firm from which the study participant originates. This labeling structure allows for anonymized cross-reference of firm-level insights throughout the empirical analysis while preserving the confidentiality of individual participants. 12 Interview: Role Industry Date Length Firm 1A Accounting Manager Homebuilding 2025-02-13 32 min 2A Purchaser Homebuilding 2025-02-21 31 min Electrical Components and 3B Project Manager 2025-02-26 44 min Equipment 4C Purchaser Automobile Manufacturers 2025-02-27 25 min 5C Purchaser Automobile Manufacturers 2025-02-27 33 min 6C Purchaser Automobile Manufacturers 2025-03-06 26 min 7D CFO Logistics Infrastructure provider 2025-03-06 41 min Research and Consulting 8E Vice CEO 2025-03-06 42 min Services Industrial Machinery, Supplies 9F Digital Specialist 2025-03-10 30 min and Components 10G Business Partner Pharmaceuticals 2025-03-12 27 min 11G Business Partner Pharmaceuticals 2025-03-12 45 min 12H CFO Health Care Equipment 2025-03-12 39 min 13I CIO Automotive Retail 2025-03-26 43 min Head Digital 14D Business Logistics Infrastructure provider 2025-04-01 42 min Transformation 15A CFO Homebuilding 2025-04-02 39 min Table 4: Overview of interviewed study participants 3.2.2 Interview Method and Procedures All interviews were conducted remotely via Microsoft Teams to facilitate scheduling and minimize geographic constraints. Interviews ranged from 25 to 45 minutes and were audio-recorded with participant consent. Recordings were transcribed and anonymized, removing all personally identifiable or company-specific details to ensure total confidentiality. Even shorter interviews proved useful in confirming or elaborating on key themes, though longer sessions generally allowed for more comprehensive discussion of challenges and experiences. Each interview was audio-recorded and transcribed, with participants providing informed consent. The interviews were held in Swedish, but the quotes illustrated in the analysis were translated to English. To encourage openness and protect confidentiality, all transcripts were subsequently anonymized, removing identifiers such as personal names or firm-specific information. This approach reassured participants about the sensitivity of sharing internal processes and obstacles related to IOCS integration. 13 The interview guide was designed based on the study’s research question and existing literature on interorganizational collaborations, digital transformation, and automation (e.g., Dekker, 2004; Yang et al., 2021; Adomako & Nguyen, 2024). It comprised five thematic blocks as illustrated below in table 5. The full interview guide in English and Swedish can be found in the Appendix: Theme How this theme informs the research question Establishes respondent context and relevance for exploring Introduction inter-organizational control issues. Organizational Identifies internal digital maturity, infrastructure, and readiness for Digitalization inter-firm integration. Interorganizational Reveals current control mechanisms, integration gaps, and frictions Collaboration in partner relationships. Digitally Integrated Surfaces concrete digital integration efforts and the barriers IOCS encountered during implementation. Provides forward looking insights into perceived risks and Future Outlook opportunities shaping IOCS adoption Table 5: Interview guide themes This structured yet open-ended approach allowed study participants to reflect on how digital technologies had shaped their inter-organizational collaborations, what frictions or barriers had emerged, and how they made sense of ongoing transformation processes. While not all participants used identical terminology, recurring patterns were identified across interviews, forming the foundation for the analysis detailed in Chapter 4. 3.3 Analysis Method: Gioia Methodology 3.3.1 Overview of the Gioia Method This study applied the Gioia methodology (Gioia et al., 2013) to analyze qualitative data collected through interviews. The method is designed to support inductive theory development in underexplored domains by allowing researchers to stay close to participants’ language while progressively building conceptual abstraction. In this context, the Gioia approach was well suited for capturing the complex, multi-level nature of the barriers to digitally integrated IOCS, enabling us to surface insights that might not emerge from more deductive approaches. As discussed in our research design and sampling sections, the method aligns with our aim to understand emerging patterns in a setting characterized by organizational, technological, and institutional complexity. 3.3.2 Coding Process and Model Development All interviews were transcribed and anonymized prior to analysis. We then followed the three-step Gioia coding structure to move systematically from participant statements to conceptual categories and, ultimately, to a data structure. In the first step, both researchers independently conducted open coding of each transcript, highlighting any expressions, situations, or reflections that were relevant to control, collaboration, or digital transformation. This resulted in a large number of first-order codes that used 14 participants’ own language, such as “Outdated systems are too complex to replace,” “IP protection limits data sharing,” or “Homebuilt systems limit integration and scalability”. These initial codes were then compared, merged where appropriate, and discussed collaboratively to ensure consistency and shared interpretation. Next, we clustered the first-order codes into second-order themes that captured more abstract patterns. For instance, codes related to Excel usage, custom workarounds, and analog routines were grouped into the theme “Legacy systems and working methods”. This process involved extensive back-and-forth between the raw data and emerging categories, guided by questions such as: What barrier is represented here? What is the organizational or relational mechanism involved? In the final step, second-order themes were grouped into aggregate dimensions based on their underlying locus of influence. Three aggregate dimensions emerged: intra-organizational barriers, inter-organizational barriers, and external barriers. This model structure provided a coherent lens through which the different types of barriers could be interpreted and compared. Importantly, we ensured that each second-order theme was supported by multiple codes across different organizations and roles, thus meeting Gioia’s criteria for breadth and robustness. Throughout the process, coding decisions were continuously revisited as new transcripts were analyzed. In several instances, concepts were refined, relabeled, or merged based on new evidence or comparative logic. The structure thus evolved through an iterative movement from first-order informant language to researcher-generated categories and back again. The Gioia methodology thereby enabled us to build a grounded, empirically driven framework of the barriers to digitally integrated IOCS, reflecting both the diversity of cases and the conceptual coherence of emergent themes. Concepts and themes were narrowed to align with the study’s focus, with any outlier concepts excluded. The first-order analysis produced 43 categories. Through the second-order analysis, these were distilled into 8 overarching themes, which were then grouped into 3 aggregated dimensions. A detailed summary of each step is provided in Section 8.2, Gioia Model Components, in the Appendix. 3.3.3 Visual Model To visualize the results, we translated the coding hierarchy into a data structure diagram using Draw.io. This visual representation served two purposes: first, it informed the structure of the analysis chapter by aligning each second-order theme with a corresponding empirical section, and, second, it provided transparency in how raw data informed the conceptual model. The final model highlights not only the specific barriers encountered but also their distribution across organizational levels, suggesting that successful IOCS development requires coordinated efforts across intra-organizational, inter-organizational, and external domains. To enhance readability and provide a clear reference point for the analysis, the model is presented at the beginning of Chapter 4, Empirics and Analysis, (Figure 1). 3.4 Limitations, Research Quality and Ethical Considerations 3.4.1 Limitations First, the study did not include both parties in any given inter-organizational relationship. As a result, our model is built from single-firm perspectives and reflects how one side of the 15 relationship perceived barriers. This limits the ability to capture potential misalignments, conflicting incentives, or contested interpretations that may emerge in dyadic or multilateral collaborations. Second, our sample was skewed toward large firms operating in Western Sweden, most with annual revenues exceeding SEK 200 million. These organizations were intentionally selected due to their higher likelihood of engaging in digitally integrated IOCS. However, the perspectives of smaller firms or those in earlier stages of digital maturity are underrepresented, which may limit the transferability of our findings to other organizational contexts. Third, the duration of our interviews, ranging from approximately 25 to 45 minutes, was sufficient to cover our core themes and enabled follow-up probing. However, shorter interviews may have constrained deeper exploration of complex or sensitive topics. Longer sessions could have offered richer accounts of the digitally integrated control systems themselves within organizations. Fourth, the study relied solely on interview data, meaning that all insights are based on participants’ recollections, perceptions, and interpretations rather than direct observation of digital interactions or collaboration practices. This limits our ability to corroborate accounts with behavioral or process data and may overlook informal practices not explicitly described by respondents. Fifth, we acknowledge the risk of researcher bias, as we were co-creators of the empirical material. Our backgrounds as graduate students in the field may have shaped our interpretations or follow-up prompts during interviews. To mitigate this risk, we maintained a reflexive stance throughout the research process, regularly reviewed our coding jointly, and incorporated feedback from peers and our supervisor to ensure analytical consistency and minimize the influence of predefined assumptions. Sixth and finally, the cross-sectional nature of the study provides only a snapshot of organizations’ current perceptions. While this approach allowed us to compare barriers across a range of firms and roles, it does not capture how these barriers may evolve over time or how firms adapt their practices. Future longitudinal studies would be better positioned to analyze how firms overcome or reframe barriers as digital transformation efforts progress. 3.4.2 Research Quality and Trustworthiness In light of the methodological and contextual limitations discussed above, we actively sought to reinforce the quality and integrity of our study by applying established criteria for trustworthiness in qualitative research: credibility, transferability and dependability (Shenton, 2004). Credibility refers to the extent to which the findings accurately capture participants’ realities. We addressed this through triangulation of perspectives, interviewing individuals in diverse roles (e.g., CFOs, procurement managers, digital specialists) across multiple firms and industries. The semi-structured format enabled respondents to speak freely while ensuring that core themes were consistently explored. In line with the Gioia methodology, coding began with participants’ own terminology, and representative quotations were included in the empirical chapter to ensure transparency between raw data and interpretation. Additionally, the researchers jointly coded the data and regularly revisited transcripts to validate emerging patterns and reduce bias. This process 16 helped mitigate the limitation of relying on single-firm perspectives and ensured that key themes were not solely shaped by the researchers’ own interpretations. Transferability concerns the extent to which findings may be applicable to other settings. While generalizability is not the aim of qualitative research, we have provided sufficient contextual detail, such as firm size, industry, and respondent roles, to allow readers to assess the relevance of our findings to their own environments. The study’s focus on large European firms engaged in digital collaboration reflects a context in which the research question is highly salient, supporting analytical transfer. While our sample was skewed toward large firms, we believe the contextual detail we provide allows for meaningful transfer of insights, addressing the limitations of sector-specific representation. Dependability relates to the consistency and stability of the research process. We addressed this by maintaining a clear, stepwise structure in our analytical approach. The Gioia methodology offered a replicable coding framework, moving from first-order concepts to second-order themes and aggregate dimensions. Coding was conducted iteratively and documented in shared logs, allowing the development of the model to be traced from raw transcript segments to final categories. Internal discussions, cross-checking of interpretations, and peer debriefings further ensured consistency in data handling and theme development. Maintaining clear records of coding decisions was particularly important given the limited interview duration and single-point-in-time data collection, helping to ensure stability in our analysis. 3.4.3 Ethical Considerations Beyond ensuring methodological rigor, we also recognized that our roles as co-creators of the data introduced ethical responsibilities. Ethical considerations were therefore integral to minimizing potential harms and maintaining the trust of our participants throughout the research process. The study was conducted in accordance with the ethical principles outlined by the Swedish Research Council (Vetenskapsrådet, 2002), which include requirements for transparency, consent, confidentiality, and limited use of collected data. All participants received a one-page information sheet detailing the study’s purpose, their rights, and the voluntary nature of participation. Informed consent was obtained prior to all interviews. To ensure confidentiality, all interviews were anonymized during transcription. Identifiable data, such as names, company affiliations, or locations, were removed. Audio recordings and transcripts were stored securely and will be deleted upon project completion. No data has been or will be used outside the scope of this thesis. 17 4. Empirical Findings and Analysis This chapter presents the empirical findings from the conducted interviews, analyzed using the Gioia methodology. The chapter is structured around the three aggregate dimensions that emerged from the coding process: Intra-organizational, Inter-organizational, and External barriers. Each dimension is broken down into its underlying second-order concepts, which are illustrated through representative first-order quotes. The full data structure is illustrated in the Gioia framework below (Figure 1). Figure 1: Digitally Integrated IOCS Barriers 4.1 Intra-organizational Barriers The first category of barriers identified relates to internal organizational conditions that shape how firms engage with digitally integrated inter-organizational control systems (IOCS). These challenges, including outdated infrastructures, cultural resistance to digital change, and limited digital capability, restrict a firm's ability to develop, align with, or contribute to shared control architectures across organizational boundaries. As foundational enablers of digital readiness, these intra-organizational factors influence whether formal and informal control mechanisms can be successfully extended into collaborative digital environments. 18 4.1.1 Legacy Systems and Working Methods Across sectors and organizational sizes, participants described how legacy systems and ingrained working methods limit not only internal efficiency but also the capacity to participate in digitally integrated inter-organizational control systems. These systems, ranging from outdated enterprise resource planning (ERP) software to homegrown platforms, tend to be rigid, poorly documented, and resistant to change. Yet the issue is not purely technical. What emerged from the interview data was a picture of control environments shaped by historical decisions, resource path dependencies, and deeply embedded routines that now inhibit organizational flexibility. These conditions become especially problematic in inter-organizational contexts, where effective digital control requires real-time data sharing, standardized interfaces, and cross-firm interoperability, capacities that many legacy structures simply cannot support. This barrier was especially prominent in mature firms with long operational histories (4C, 5C, 6C, 9F) though its effects were evident across organizations of all sizes and sectors (1A, 8E, 10G, 11G, 12H, 13I, 14D). While participants described the issue in different ways, they ultimately acknowledged that their legacy systems posed a technological obstacle for digitally integrated IOCS. One participant captured the paralysis these systems create: “We have systems dating back to the early seventies at [firm]. They have become so complex that no one dares to touch them, fearing that everything will break down if we try to replace them” (5C). This form of technological lock-in reflects more than outdated infrastructure, it illustrates how systems evolve into organizational black boxes, where the risk of change outweighs the perceived benefit. In such settings, the fear of systemic collapse overrides efforts to modernize, even when collaboration with external partners demands it. Another interviewee highlighted how the legacy issue extends beyond software to include records and workflows: “Just as the whole organization has learned to work with [our current system] over three years, a new system is coming. The question then becomes what happens with all the agreements stored in the old system - how will we even find them?” (4C). This underscores the dual burden of legacy: not only must technical migration be managed, but historical data and institutional knowledge embedded in old systems must be preserved and made interoperable. Without such continuity, inter-organizational control efforts risk fragmentation, as firms operate on different informational baselines. More subtly, several respondents pointed to how digitization layered on top of legacy structures can paradoxically introduce more rigidity rather than less. “You get stuck if you don't click the exact right box - you can’t proceed. It has become incredibly bureaucratic, especially since digitalization” (5C). In these cases, digital systems become extensions of outdated processes rather than drivers for transformation. Formalization increases, but without strategic redesign, digital control becomes rule-bound and brittle, limiting responsiveness in both internal and cross-organizational coordination. This rigidity becomes even more problematic when firms attempt to scale or integrate externally. As one interviewee put it, “The system we have works for us internally, but it's entirely home-built. It’s hard to connect it to partners or scale it beyond our team. Every change has to be coded by one of our few internal developers” (9F). The control system here is not portable, it is 19 handcrafted, resource-constrained, and incompatible with broader digital ecosystems. This makes inter-organizational integration costly, fragile, and largely one-sided, often requiring partners to absorb the burden of adaptation. Even firms that had made incremental improvements still described the cumulative effect of years of patchwork development: “We have on this side quite old systems... which have since been further developed, [...] well, but they do tend to get a bit complex and fragmented after a while” (13I). Fragmentation, in this context, becomes the hidden tax on digital progress. Systems that once fit internal needs evolve into unwieldy infrastructures that inhibit real-time control, cloud integration, or cross-platform visibility, key enablers of digitally integrated IOCS. These observations can be understood through long-standing insights from transaction cost economics. Legacy systems increase the internal cost of coordination, but they also make inter-organizational collaboration more risky and resource-intensive, especially when integration requires customizing interfaces or reengineering outdated processes. Moreover, from the perspective of institutional theory, legacy systems may be understood as organizational inertia in its most tangible form: norms, structures, and routines become materialized in software and workflows that resist change, even when external demands shift. The result is a form of technical and procedural path dependency that constrains the design space for new control architectures. Interestingly, digital transformation may sometimes obscure rather than address legacy issues. Surface-level digital tools may give the appearance of progress, even when deeper integration challenges, such as interoperability and shared monitoring, remain unresolved. Yet for digital control to function across organizational boundaries, integration must go deeper: it must involve interoperable data schemas, flexible workflows, and shared monitoring protocols. Legacy systems, when left intact, prevent this foundation from forming. Thus, legacy systems and working methods represent a foundational intra-organizational barrier to digitally integrated inter-organizational control systems. They limit the interoperability, adaptability, and visibility required for shared control, forcing firms to either rely on manual workarounds or accept partial integration. In a control environment that increasingly depends on mutual real-time access and standardization, such fragmentation could erode both coordination capacity and trust, making collaborative digital control more costly, less reliable, and in some cases, altogether unfeasible. 4.1.2 Resistance to Digital Change While digital transformation is often approached as a matter of tools, platforms, and architecture, our data revealed that resistance to digital change is frequently rooted in more intangible cultural dynamics, habits, preferences, and perceptions of risk embedded in daily work. What emerged was not outright opposition to technology, but a deep-seated preference for familiar routines, a reluctance to abandon established systems, and in some cases, fatigue from the constant churn of digital initiatives. This resistance was particularly evident among long-tenured staff and within organizations that had already undergone repeated rounds of transformation. From an inter-organizational perspective, such resistance creates a hidden friction: it slows the internal adoption of standardized routines and undermines the shared behavioral foundation that digitally integrated control systems require. 20 Ultimately, these digitally integrated IOCS, designed to enhance control and efficiency, like all other systems, depend on their consistent, everyday use by people within the organization. When they are not actively used, such systems inevitably fall short of their intended impact. This concern was raised in multiple accounts (4C, 5C, 6C, 9F, 14D). One recurring theme was the pull of familiarity. “People who’ve been around for a long time often want to keep using their old systems... when you're used to something, it's just simpler than switching to something new” (5C). This statement, echoed across multiple cases, illustrates how digital change is experienced not as progress, but as disruption, particularly when existing systems, however outdated, still “work” for local tasks. The issue is not just cognitive load, but emotional investment in legacy practices, which becomes a barrier when integration efforts demand behavioral realignment. Another participant explained, “We have the tools, but they’re used differently, and many revert to what feels comfortable” (9F). This reflects a broader pattern of fragmented adoption, where the presence of digital systems masks a lack of cultural embedding. In such environments, informal workarounds and uneven usage dilute the reliability of control processes. For inter-organizational coordination, where mutual consistency is key, this divergence in system use introduces misalignment, data is entered differently, workflows are bypassed, and shared routines collapse under variation. Digital change also surfaced as a political and emotional disruption. “Of course, it becomes a heavier operation... my initiatives steer the processes in a different direction, and that’s not always appreciated” (14D). Here, the resistance is not about the technology per se, but about perceived control and autonomy. New systems often redistribute decision-making power or force departments to relinquish control over their preferred methods. In this way, digital tools become a symbol of managerial centralization or external pressure, making resistance an act of cultural defense. In some cases, resistance stemmed from frustration with constant system changes. A respondent described how after years of learning one system, employees were told to switch again: “We have to replace this [current system] now? After the whole organization has spent three years learning it and working with it, a new system is coming in.” (4C) This quote could be understood as “change fatigue”. The sentiment here is not about the system itself, but the exhaustion that comes with continuous adaptation. When digital transitions are frequent and perceived as poorly managed or lacking clear benefits, employees lose trust in new initiatives. This erodes internal commitment and lowers the likelihood of successful inter-organizational integration, where trust in both the technology and the change process is essential. These experiences reinforce the persistence of analog workarounds and interpersonal communication, practices that remain deeply embedded and preferred no matter how well-designed the new system is. This resistance also manifests in a preference for informal communication, which is perceived as more efficient and less constrained, where one participant highlights that he prefers to call the guy at the other organization rather than interacting through the interorganizational control system. “You sort out almost everything by talking to people directly… it’s so much quicker” (5C). These informal practices, while effective in closed teams, do not scale across organizational boundaries. They resist formalization, leave no digital trace, and reduce the potential for shared 21 accountability. When informal interactions dominate, inter-organizational control suffers from invisibility, activities are executed, but not monitored, decisions are made, but not documented. This observation can be related to insights from relational control theory, particularly the idea that effective collaboration may rely on shared norms, mutual understanding, and joint routines However, based on participant accounts, it seems that digital tools may not automatically reinforce these informal controls and instead need to be actively aligned with them. Where resistance persists, digital systems are either ignored or used symbolically, undermining both formal and informal control mechanisms. In this sense, resistance to digital change could be seen as introducing relational risk, not necessarily due to a lack of trust, but because the digital tools intended to facilitate trust are not consistently used. From an institutional lens, resistance also reflects a clash between old and new logics. The push toward data-driven, process-based control systems runs counter to long-standing norms of autonomy, expertise, and flexibility. This is particularly acute in organizations where digital control is viewed as externally imposed or disconnected from professional identity. As institutional theory suggests, practices that are misaligned with established norms may become decoupled, adopted in form but not in substance. Several accounts in our material appeared to reflect such patterns: digital platforms exist, but could be selectively used, circumvented, or resisted outright. In relation to our research question, resistance to digital change constitutes a fundamental intra-organizational barrier to digitally integrated IOCS. It prevents the consistent internal adoption of shared routines, reduces the credibility of digital data streams, and disrupts the cultural cohesion needed to participate in cross-boundary control. While technology may enable integration, culture determines whether that integration is trusted, embedded, and sustained. Without cultural alignment, even well-designed control systems may remain underutilized, inconsistently interpreted, or selectively adopted, potentially exposing inter-organizational collaboration to inconsistency or reduced accountability. 4.1.3 Limited Digital Capability Across several of the cases studied, digital capability constraints appeared to be a notable barrier, not only in terms of available technology, but in firms’ ability to use and align that technology in inter-organizational contexts (5C, 7D, 8E, 9F, 12H, 15A). What surfaced was not a simple skills gap, but a more embedded issue of fragmented digital infrastructure, uneven system ownership, and most importantly an underdeveloped ability to exploit the potential of digital tools. These limitations weakened firms’ internal ability to co-design, engage in, or maintain integrated control architectures across organizational boundaries. One recurring issue was the uneven distribution of digital competence within organizations. As one interviewee described, “A lot of people have been around for a long time… digital competence doesn’t always come naturally in those cases” (5C). This reflects not only generational skill gaps but also a deeper inertia in knowledge systems, where existing operational logic is often mismatched with new digital requirements. Such internal limitations make it difficult for firms to participate in shared control routines, especially when digital coordination requires decentralized, real-time decision-making or collaborative use of data platforms. 22 Beyond human capital, respondents also pointed to structural deficits in digital infrastructure. “We have a huge job to do internally… our IT landscape is very lacking, and we’re fully aware of that” (9F). Importantly, this awareness was not accompanied by clear roadmaps or sufficient investment to close the gap, suggesting a form of digital underpreparedness that extended beyond competence into capability. The lack of system maturity directly inhibits the implementation of interoperable dashboards, reciprocal KPIs, or shared monitoring tools, mechanisms central to digitally integrated inter-organizational control systems. Even when tools were available, they were not always effectively utilized. “The CRM system is there, but we haven’t yet made the most of its potential” (15A). This underutilization reflects a kind of passive control failure: systems exist, but their governance structures, such as incentives for data quality, clarity of system ownership, or routines for cross-boundary use, remain underdeveloped. As firms increasingly rely on shared digital environments for control, the mere presence of tools is insufficient, their active embedding into collaborative routines becomes essential. This underscores that understanding why and how systems are used is just as critical as having them in place, to fully utilize them. A more complex variant of this barrier appeared in environments with distributed or unclear IT governance. One participant noted, “It’s a complex environment in terms of system ownership... we have some systems we run locally and others controlled centrally from [Country], and they don’t always integrate well” (15A). Such fragmentation not only slows digital coordination but creates confusion about accountability for system performance. In control terms, when different parts of an organization manage IT in disconnected ways, it becomes harder to build dependable shared systems with partners, which in turn weakens the ability to monitor performance or share data in a controlled, consistent, and trustable manner. These examples collectively point to a deeper problem: firms lacking internal digital capability cannot meaningfully engage in inter-organizational control co-design. The barrier is not only technical, it is managerial and organizational. Limited digital capability reduces a firm's capacity to influence shared control architectures, potentially making them dependent on more capable partners or third-party intermediaries. This may introduce asymmetries in decision-making and monitoring power, potentially reducing autonomy and increasing the risk of misalignment in expectations and enforcement mechanisms. From a theoretical standpoint, these observations can be interpreted through the lenses of resource dependence theory and relational control perspectives. While RDT traditionally focuses on access to external resources, the interview data show how internal resource deficits, such as poor digital readiness, may invert typical dependencies, forcing firms to adopt subordinate roles in inter-organizational arrangements. Furthermore, a lack of digital fluency may limit a firm’s ability to establish relational norms through technology-mediated practices such as joint dashboards, workflow integrations, or shared analytics This may not only reduce trust-building potential but may also lower visibility into partner performance, which could echo classic concerns around information asymmetry and coordination failures. What is especially noteworthy is how these capability gaps persist even in firms that are undergoing digital transformation. This suggests that internal digital development is often decoupled from inter-organizational strategy. While prior literature on inter-organizational control 23 has emphasized formal contracts and relational trust as coordination mechanisms, these accounts suggest that such mechanisms may be difficult to enact in digital form without adequate internal digital capability. In the context of digitally integrated IOCS, limited digital capability represents a pivotal constraint. It encompasses not only fragmented or outdated infrastructure but also a lack of organizational ability to fully leverage digital tools for coordination, performance monitoring, and cross-boundary integration. As a result, firms often struggle to both contribute to and adopt shared control routines, leading to poor interoperability and, in many cases, the superficial or symbolic use of digital systems. 4.2 Inter-organizational Barriers The second category captures challenges that emerge in the inter-organizational space, that is, between firms operating within collaborative networks. These barriers are shaped by differences in digital maturity, information security concerns, and power imbalances between firms. The themes presented here illustrate how mismatches between partners, power asymmetries, and a lack of common standards can hinder the development and functioning of digitally integrated IOCS across firm boundaries, or defer any integration at all. 4.2.1 Digital Maturity While many firms in our study showed strong internal ambition around digital transformation, the broader network context often introduced friction, particularly when collaboration required coordination with partners at lower levels of digital maturity (1A, 3B, 4C, 7D, 8E, 10G, 12H, 15A). Rather than a lack of willingness, what emerged was a misalignment of digital capabilities across interdependent actors. This misalignment disrupted efforts to establish shared systems, standards, and control routines. In this sense, digital maturity gaps did not simply delay implementation, they constrained the design of inter-organizational control itself, by reducing the set of feasible coordination mechanisms that could be jointly adopted. One interviewee, reflecting on a digital integration initiative with suppliers, noted, “We’re in dialogue trying to get them to use this… but they’re behind, which slows things down more than we’d like” (9F). This illustrates a scenario in which a focal firm’s internal readiness outpaced that of its partners, resulting in project stagnation and forced compromise. Despite technical preparedness, progress was bottlenecked by a lack of alignment in technological capacity, an increasingly common condition as digital tools become more complex and expectations for integration grow. Such maturity gaps were not only about capability but also about traction and follow-through. In describing several collaborative digitalization initiatives, another respondent explained: “We’ve been part of several collaborative projects with the goal of automating flows… but nothing has actually happened yet” (14D). Here, shared intent existed on paper, but implementation faltered, often due to the absence of mutually developed routines and shared ownership of digital processes. This reflects a deeper inter-organizational inertia, where low maturity on one side limits the ability to formalize control linkages on both sides. In more operational contexts, the mismatch in digital maturity was even more pronounced. As one respondent put it, “The [subcontractors] barely want to take a photo and send it via email, so 24 they’re even less inclined to use a system or download an app” (1A). The implications here go beyond minor workflow issues: low digital uptake among subcontractors fundamentally undermines the viability of digitally enabled monitoring, data-sharing, or exception handling. These low-maturity actors effectively operate outside the digital control system, making real-time oversight or performance tracking impossible. This introduces blind spots in otherwise integrated processes and increases reliance on informal or manual follow-up mechanisms. The organizational cost of imposing more advanced routines on digitally immature partners was clearly recognized: “There’s a risk of losing suppliers or subcontractors if we require overly complicated digital routines” (1A). This suggests that even when control goals are clear, focal firms are compelled to adapt control design downward to retain relationships, ultimately compromising on transparency, standardization, or accountability. These trade-offs suggest a critical tension: the more varied the digital landscape across firms, the less scalable and reciprocal digitally integrated control becomes. The phenomenon of uneven digital maturity brings a unique inter-organizational challenge into focus: how can digitally integrated control be standardized when partners do not share a baseline capability? While traditional IOCS literature has focused on coordination and goal alignment, these observations hint at an infrastructural variant of those challenges, one grounded not in strategic divergence, but in technological disparity. From a transaction cost economics perspective, firms might be seen as mitigating coordination risk by opting for simpler, less interdependent routines. Yet such adaptations may lead to underuse of available digital affordances, reducing the potential value of integration. Similarly, a relational-control perspective might interpret digital maturity gaps as a hindrance to the development of shared norms and routines, not necessarily due to mistrust, but due to the absence of common platforms and practices. Interestingly, asymmetries in digital maturity may not only create coordination difficulties but can also introduce subtle appropriation risks that can undermine trust and slow progress toward integration. When only one partner in a collaboration has the capability to contribute to, interpret, or act on system-generated data, the balance of control becomes skewed. This potentially creates a new form of information asymmetry, where the digitally mature partner gains disproportionate visibility and decision-making power. As a result, the more advanced firm may either dominate the control process, making unilateral decisions and setting the terms, or withhold further integration until other partners “catch up”. Both scenarios have important consequences: the former places the burden of control on one side and risks opportunistic behavior, while the latter stalls collaboration and erodes momentum. Critically, the digitally less mature partner may recognize this imbalance and become reluctant to commit to deeper integration, fearing they will be locked into systems they do not fully control or understand. This could be seen as a hybrid barrier, rooted in coordination challenges but carrying appropriation implications, that risks freezing development if partners anticipate an uneven distribution of benefits, risks, or influence in future control architectures. In sum, uneven digital maturity appears to function as a distinct and persistent barrier to digitally integrated inter-organizational control systems. It reduces the alignment space for digital routines, undermines reciprocal control structures, and creates interdependencies that are more fragile than the technologies intended to support them. As long as firms operate in ecosystems where 25 technological progress is uneven, digital control will be constrained not by intent or investment, but by the slowest node in the network. 4.2.2 Information Security Concerns While digital technologies promise transparency and data-rich collaboration, several interviewees described how information security concerns place hard limits on such openness, particularly in inter-organizational settings where intellectual property, sensitive research, or confidential processes are involved. The reluctance to share data was not driven by mere conservatism or unfamiliarity with digital tools, but by concrete risks: industrial espionage, data leaks, and reputational damage. This resulted in either selective participation in digital platforms or the deliberate withholding of data in otherwise collaborative projects. In short, security concerns appeared to shape what information could be made visible across firm boundaries, shaping the architecture of control from the outset. This widespread reluctance to share even basic data or establish routine digital connections directly undermines the foundational infrastructure required for digitally integrated IOCS. While the specific concerns varied, from protecting intellectual property to minimizing cyber risk, the outcome was consistent: constrained transparency and reduced willingness to engage in shared control environments. This appeared across different cases (7D, 8E, 9F, 12H). One respondent from the pharmaceutical research sector offered a candid account of protective behavior: “We have patent issues around our tech… we need to hold back results because pharma giants try to get the research for free” (12H). In this context, collaboration exists in the shadow of competition, where the appropriation problem is not hypothetical but embedded in everyday practice. The decision to limit information sharing reflects a strategic control choice, fearing that visibility will not lead to coordination, but exploitation. This fundamentally undermines the premise of shared control systems that rely on transparency to align incentives and reduce monitoring costs. Other participants described more diffuse, but no less consequential, anxieties about the digital environment itself. “You don’t know what might leak out of the server… some partners are reluctant to use these digital systems” (8E). Even when firms do not view their partners as predatory, the architecture of data transmission and storage introduces vulnerability. This could be viewed as a form of system-level distrust, where concerns appear to focus less on partner intentions and more on the integrity of the infrastructure used to facilitate control. As systems become more distributed and cloud-based, the locus of control shifts away from known relational mechanisms toward technical environments whose risks are harder to assess and even harder to mitigate. The implications for control are especially clear when risk management protocols are foregrounded: “You need to do a risk assessment. What happens if the info ends up in the wrong hands? Classify it, is it confidential?” (8E). Here, formalized control systems are not being enhanced by digitalization but made conditional upon it. In effect, the adoption of digital control tools, such as shared databases or real-time monitoring dashboards, may become contingent on legal, ethical, and strategic classifications of information. The firm’s willingness to participate in digital integration depends on its ability to segment access, create firewalls, or define confidentiality levels, an approach that limits rather than enables seamless collaboration. 26 These insights resonate with the concerns raised in both transaction cost economics and institutional theory. From a TCE standpoint, the sharing of sensitive data may introduce potential for opportunism, and the lack of enforceable safeguards in digital systems may exacerbate fears of appropriation. Firms may thus resort to control mechanisms that limit exposure, reducing the richness and frequency of data exchange, which in turn increases coordination costs and slows responsiveness. From an institutional perspective, security practices are not purely technical, they are also shaped by compliance norms, regulatory demands, and industry-specific pressures (e.g., GDPR, trade secret laws). In high-stakes environments like pharmaceuticals or critical infrastructure, these institutional constraints could become design principles for IOCS, constraining how formal controls like performance metrics or automated monitoring can be deployed. What is especially striking, however, is the duality of trust and control in this context. Classic relational control models emphasize that trust reduces the need for formal monitoring. Yet in digital collaborations, trust in systems (e.g., cloud security, encryption) must be established independently of interpersonal trust. These observations could suggest that in many cases, this system trust is lacking, or at best, unevenly distributed across partners, creating an additional axis of vulnerability that classical IOCS frameworks often understate. Ultimately, information security concerns introduce a structural barrier to digitally integrated IOCS. They constrain the depth and breadth of data that can be shared, force firms to choose between transparency and self-protection, and limit the use of advanced digital tools that rely on open access. While security concerns are rational, they reshape the logic of control: in environments where risks cannot be sufficiently mitigated, firms are incentivized to fragment rather than integrate their systems. As a result, digital inter-organizational control becomes selective, partial, and conditional, driven not only by capability or culture, but by strategic calculation in the face of persistent uncertainty. 4.2.3 Power Imbalance Power asymmetries emerged in the data not merely as a background condition of inter-organizational collaboration, but as an active force shaping the structure, distribution, and outcomes of digital control systems. Across multiple cases (3B, 4C, 8E, 11G, 12H), respondents described scenarios in which dominant actors, often large customers or platform providers, imposed digital mandates on weaker partners. These impositions included the use of proprietary portals, rigid data standards, and analytics requirements that strained the resources and autonomy of smaller firms. In effect, digital control tools became instruments of leverage, not just coordination, concentrating rather than equalizing power. One respondent articulated the structural conditions that give rise to these dynamics: “For it to work, customers and suppliers need to be roughly the same size […] it’s difficult when one party is much, much smaller than the other” (12H). This points to a foundational imbalance in resource capacity, where digital mandates that are trivial for large firms become existential challenges for smaller ones. Instead of fostering joint ownership of digital control architectures, these asymmetries create dependency, forcing weaker actors to comply or risk exclusion. This pressure was acutely felt by firms required to adopt externally imposed systems with little say in their design: “We pretty much had to implement their specific portal and EDI requirements, 27 even though we didn’t have the capacity. We scrambled to hire people just to meet their digital mandates” (3B). Here, control systems are not co-developed but unilaterally specified. The burden of integration is not shared, it is shifted. From a coordination perspective, this limits mutual adaptability, from an appropriation perspective, it signals a potential extraction of value without mutual value creation. Several accounts revealed how these imposed standards operate as gatekeeping mechanisms. As one interviewee noted, “They demand we follow their data standards. If we resist, we risk losing shelf space” (11G). The control system becomes a condition for participation, not a jointly negotiated tool. This redefines the logic of digital integration, from alignment to compliance, and raises important questions about whether the system is controlling performance or reinforcing dominance. The asymmetry in expectations is further illustrated by the one-sided nature of information flows: “If a big client requests advanced analytics, we drop everything to comply. But we don’t get that same courtesy from them, our own requests for shared R&D data are often denied” (9F). In this configuration, the control system serves only one party. Visibility is not mutual, monitoring is not reciprocal. This undermines the possibility of establishing trust-based or data-driven relational control, reducing digital IOCS to instruments of top-down surveillance. Interestingly, firms with dominant positions were often explicit about this leverage. One participant stated plainly, “We have suppliers that simply must conform to our system updates, there’s no negotiation. But for smaller suppliers, it’s a huge cost burden to keep switching” (4C), and went on to add, “I get them to use whatever systems I want… I’m the one with the negotiating power” (4C). These admissions underscore how control systems, far from being neutral enablers of coordination, can function as tools of unilateral enforcement, designed by the powerful, absorbed by the vulnerable. From a theoretical perspective, these dynamics strongly reflect the insights of resource dependence theory (RDT), which suggests that firms with control over critical resources, in this case, digital infrastructure or access to key markets, can structure inter-organizational arrangements in their favor (Pfeffer & Salancik, 1978). Yet what the data adds to this understanding is the realization that digital control systems themselves have become those critical resources. They are no longer neutral tools for enabling joint action but strategic assets through which firms enforce behavioral conformity. This dynamic may even discourage some firms, particularly those with limited digital leverage or organizational flexibility, from entering such collaborations altogether, as the perceived risk of being subjected to unilateral control could outweigh the potential benefits of digital integration. Such accounts raise questions about how well the traditional balance between formal and informal control mechanisms holds in digitally asymmetric collaborations. In cases of stark asymmetry, informal controls such as trust, shared norms, or mutual adjustment become largely irrelevant. Formal controls, contracts, data standards, dashboards, dominate, but in a lopsided fashion. This undermines many of the conditions under which digitally integrated IOCS are expected to thrive: mutual visibility, reciprocal accountability, and adaptive flexibility. These patterns suggest that digital platforms and data routines become embedded within a wider structure of dependence, shaping not just what is controlled, but potentially who gets to decide 28 the terms of control. This implies that digital transformation has a dual edge: while it enables integration, it also amplifies existing power dynamics, making collaborative control contingent on a firm’s ability to resist, absorb, or comply with external impositions. Power imbalances were consistently described as barriers to the development of digitally integrated IOCS. It distorts the collaborative potential of digital control systems by turning tools of coordination into levers of influence. When digital mandates reflect asymmetric interests, they fracture rather than unify control architectures, forcing weaker partners into compliance regimes that inhibit trust, mutual adjustment, and innovation. Without mechanisms for equitable governance, digital integration risks reinforcing precisely the power differentials it could otherwise help transcend. 4.3 External Barriers The final category addresses external barriers that lie beyond the direct control of the organizations involved. These include regulatory demands and industry-specific conditions that shape the structural and institutional context in which digitally integrated inter-organizational control systems (IOCS) must operate. Although external, such forces strongly influence how firms design control architectures, negotiate shared standards, and manage risk across organizational boundaries. In many instances, these institutional forces shape the boundaries of what forms of inter-organizational control are considered feasible, appropriate, or strategically viable. As such, they are essential to understanding the broader environment in which inter-organizational control systems are developed, constrained, or reconfigured in response to digital transformation. 4.3.1 Regulatory Compliance As digital technologies extend deeper into inter-organizational relationships, regulatory compliance has emerged not only as a constraint but as a structural condition shaping the very form of digital integration. This concern was echoed by several participants (3B, 4C, 8E, 10G, 11G, 12H, 14D), who emphasized how legal and regulatory demands, especially those related to data protection, traceability, and certification, both motivate and restrict their digital transformation efforts. This paradox reveals a tension between innovation and oversight: while regulation can legitimize and standardize digital processes, it can also paralyze them when compliance burdens grow faster than capability or experience. The barrier, then, is not regulation itself, but the complexity it introduces into the design and execution of digitally integrated IOCS. This inherent complexity of evolving regulation makes the development of digitally integrated IOCS even more challenging, as firms must navigate shifting legal expectations while designing systems for transparency, interoperability, and accountability. Several participants highlighted how the shift to digital workflows has not reduced regulatory pressure, but increased it. As one respondent noted, “We’ve moved from paper binders to digital gateways, but compliance had to increase alongside that” (10G). This shift illustrates how digitalization does not eliminate the need for formal oversight, it amplifies it. New systems require new forms of auditability, new documentation protocols, and new controls, which must be designed into the system architecture. For inter-organizational arrangements, this means that digital control tools cannot be implemented solely for efficiency, they must also satisfy evolving compliance frameworks. 29 This burden was particularly pronounced in emerging domains such as artificial intelligence, where policy is still catching up with practice. “You need an AI policy… you have to look at what rules we have around this” (8E) reflects a broader uncertainty about how to govern complex digital systems that cross organizational boundaries. In such cases, firms may hesitate to integrate deeply with partners unless there is legal clarity about ownership, accountability, and data rights. This slows down the rollout of automated decision-making or shared analytics, particularly in industries where reputational or regulatory exposure is high. Uncertainty itself became a source of inertia. One participant described how the act of sharing even basic datasets triggered disproportionate administrative overhead: “To share a few data sets creates a lot of process work because we have not done that before. But then you get to the point where you have to legally regulate this. Everything becomes so much more difficult because you don't really dare” (14D). The hesitation here is not due to a lack of trust between partners, but due to the legal ambiguity surrounding data use and liability. This legal friction translates directly into coordination problems: if firms are unsure what is allowed, they either refrain from sharing altogether or invest heavily in redundant validation processes that make integration slower and more fragile. The transition from analog to digital control also surfaces as a competency issue. “You have experience in regulating activity on a [Company activity], but digitally? No” (14D). This quote reveals the institutional lag between existing regulatory routines and the demands of digital governance. Many firms, especially in logistics and manufacturing, are comfortable with physical process control but lack digital equivalents. As digital IOCS increasingly rely on automated monitoring, audit trails, and real-time reporting, the absence of digital compliance routines becomes a barrier, not only to trust, but to operational compatibility. Beyond risk aversion, regulatory compliance also shaped participation by creating hard thresholds for legitimacy. “We have to prove we follow the process… otherwise, we lose the certification” (8E). Here, compliance is non-negotiable, it is tied to market access, partner eligibility, or contractual standing. In such cases, the pressure to “show” compliance adds a layer of formalization to digital control systems that may otherwise have been designed for agility or responsiveness. What could be a flexible, shared digital routine must now be auditable, defensible, and formally ratified, often across multiple jurisdictions or industry standards. Yet amidst these constraints, some firms acknowledged that compliance pressures were pushing them toward greater systematization and awareness. “All the laws and rules around data… mean we’re building better awareness” (11G). This signals a double-edged role for regulation in inter-organizational control. On one hand, it complicates collaboration by increasing procedural burdens. On the other, it encourages firms to formalize their digital practices, reduce ambiguity, and develop control mechanisms that are more robust, replicable, and externally legitimate. From a theoretical perspective, these findings resonate most clearly with institutional theory. Regulation, as an institutional force, shapes not just firm behavior but the structure of inter-firm relationships (DiMaggio & Powell, 1983; Scott, 2014). In the context of IOCS, regulation acts as both a coercive and mimetic pressure: firms adopt standardized systems not only to avoid penalties, but to demonstrate legitimacy to peers, partners, and auditors. However, the interview accounts also complicate this by showing how such pressures can stall integration when legal certainty is lacking or when firms lack the procedural maturity to meet new digital standards. 30 This type of barrier intersects with both Dekker’s appropriation and coordination challenges, depending on how firms perceive legal exposure and procedural demands. On the one hand, fear of legal exposure inhibits openness and data sharing, reinforcing appropriation concerns. On the other hand, the procedural complexity introduced by regulation adds friction to even routine coordination, creating high transaction costs for shared digital control systems. In summary, regulatory compliance stands as a critical external barrier to digitally integrated IOCS. It shapes the design of control systems from the outside in, setting boundaries on what is permissible, traceable, and legitimate. While these constraints can foster discipline and legitimacy, they also raise the entry costs for digital collaboration and force firms to prioritize auditability over adaptability. In light of these accounts, until regulatory frameworks stabilize and digital governance capabilities mature, many firms will continue to navigate a compliance landscape that complicates rather than catalyzes inter-organizational digital integration. 4.3.2 Industry Conditions While organizational readiness and strategic intent are central to digital integration, the broader industry context in which firms operate emerged as a significant structural barrier, one that shapes what kinds of inter-organizational control systems are possible, desirable, or even thinkable. Industry characteristics such as profit margins, innovation pace, regulatory exposure, and supplier maturity set the boundary conditions for digital collaboration. What the data suggests is not simply that some industries move faster than others, but that systemic asymmetries and prevailing institutional logics fundamentally shape how digital control is imagined and implemented across organizational boundaries. This appeared across interviews (3B, 6C,7D ,9F, 12H, 13I, 15A). This was perhaps most starkly illustrated in sectors characterized by fragmentation and low margins. One interviewee explained, “The construction industry is notoriously conservative. Margins can be slim, and there’s a lot of inertia. Even if we want to digitize, the subcontractors might say, ‘Why bother when we barely break even as is?” (15A). Here, the structural conditions of the industry, high price sensitivity, project-based work, and widespread subcontracting, create a rational disincentive to invest in long-term digital integration. The result is a control environment that remains fragmented, informal, and resistant to the standardization that digital systems require. Even within the same sector, digital disparity can be striking. As one respondent noted, “Our sector is a mix of old-school suppliers with stable but declining markets, and then cutting-edge players. Some want the latest IoT tracking, others barely have a website” (9F). This coexistence of legacy and frontier technologies makes it difficult to establish unified control systems that span the ecosystem. In such contexts, interoperability may not just present a technical challenge, it becomes a governance dilemma, requiring firms to design control systems flexible enough to interface with both analog and digital actors without compromising transparency or reliability. In industries such as automotive, the urgency to digitize is shaped less by internal resistance and more by rapid competitive pressures that exceed firms’ readiness. As one interviewee described, “The automotive sector changes rapidly. We get pressured to adopt new tools for efficiency, but often we’re not fully prepared. It’s a race just to keep pace with the competition” (6C). In this context, digitalization becomes a reactive necessity rather than a strategically planned transformation. The speed at which technology evolves, combined with strong institutional 31 expectations for innovation, forces firms to implement new systems before they are fully aligned internally or across partners. This industry-specific acceleration creates coordination challenges, as digital control routines are deployed in fragmented and uneven ways. As a result, even when digital tools are present, their effectiveness in enabling inter-organizational control is weakened by a lack of stability, interoperability, and shared readiness across the network. Beyond sectoral speed and maturity, the data also revealed a perceptual divide within firms about what aspects of digital transformation are seen as valuable. Several respondents differentiated between digital investments that target business offerings and those focused on internal control processes. “The internal journey, which concerns internal processes and how we work with digital issues internally... and then the other one, which is digital development linked to product and business offerings” (7D). The former, while critical for IOCS, often receives less attention and resourcing. The participant continued, “It can be much more difficult to identify a business case for that” (7D), and further described internal control processes as “something big, old, and boring” compared to the “exciting and new” customer-facing innovations (7D). This suggests an important insight: even when digital tools are available, the internal logic of value creation in many industries deprioritizes control infrastructure in favor of market-facing applications. Yet, amid this uneven terrain, pockets of advanced integration do exist. “The control system I sell… can really do everything. […] We have a setup with an engineer who can see what’s going on remotely” (3B), and “They can click ‘sell via us’ in their own system, and that triggers everything on our end” (13I). These examples show what is possible in digitally mature segments of the market, fully automated control flows, real-time coordination, and embedded interoperability. But such sophistication is often confined to niche use cases or dominant players, rather than being industry-wide norms. Viewed through an institutional lens, the interview data points to how sectoral norms, legacy practices, and dominant logics condition the design space for digital control. Institutional environments do not just influence firm behavior, they structure what forms of inter-organizational control are seen as legitimate, affordable, or even intelligible. Such dynamics appear consistent with Dekker’s coordination problem, as misaligned industry clockspeeds and technological heterogeneity make it difficult to synchronize expectations, processes, and monitoring across firm boundaries. Surprisingly, the data also suggest that barriers are not always about absence, but prioritization. Even in firms with access to sophisticated technology, internal investments often go toward customer experience, not control infrastructure. This points to a tension in how digital transformation is conceptualized: while digitally integrated IOCS require inward-facing innovation, many industries continue to treat digital as a front-stage phenomenon, leaving the backstage underdeveloped. In light of our research question, industry conditions appear to emerge as a critical external barrier to digitally integrated IOCS. These conditions shape not only the technical feasibility of integration but the strategic logic that justifies, or defers, investment in shared control architectures. Unless industries evolve toward shared standards, aligned incentives, and more even digital development across actors, inter-organizational control will remain fragmented, partial, and asymmetrically distributed. The challenge is not only technological, it is systemic. 32 5. Discussion This study set out to explore what barriers hinder the progression toward digitally integrated inter-organizational control systems (IOCS). The analysis resulted in a set of interrelated barriers operating across intra-organizational, inter-organizational, and external levels. These barriers, ranging from legacy systems and cultural inertia to digital asymmetries, security concerns, and institutional constraints, illuminate why firms struggle to design and sustain control systems that are not only technologically enabled, but truly integrated across organizational boundaries. While each of these barriers poses distinct operational challenges, they also carry deeper implications for how control is conceptualized, distributed, and exercised in collaborative settings. In this chapter, we interpret our findings through the lens of inter-organizational control theory, particularly by revisiting Dekker’s (2004) twin problems of appropriation and coordination. We then relate our model to four foundational perspectives, transaction cost economics (TCE), resource dependence theory (RDT), relational/social capital theory, and institutional theory, to position our contributions within broader scholarly conversations. Throughout, we demonstrate how our findings collectively advance understanding of digitally integrated IOCS by surfacing novel tensions, hybrid risks, and infrastructural asymmetries that existing frameworks only partially address. 5.1 Revisiting Dekker’s Twin Problems Through a Digital Lens Dekker’s (2004) framework conceptualizes inter-organizational control as a response to two persistent challenges: the appropriation problem, concern that one partner may exploit the other’s investments or shared information for its own gain, and the coordination problem, difficulty aligning activities, objectives, and information across firm boundaries. Our findings suggest that digital transformation reconfigures, rather than resolves, these foundational tensions. In fact, many of the barriers identified in our model represent new variants or intensified expressions of appropriation and coordination risks, shaped by the affordances and frictions of digital infrastructures. The appropriation problem, classically associated with opportunism and asset specificity, now manifests in more distributed and less visible ways. For example, when one partner imposes proprietary platforms, data standards, or analytics routines on others, often through mandates rooted in digital maturity or market power, control becomes asymmetrically encoded into the technical architecture itself. Our findings on Power Imbalance, Information Security Concerns, and Digital Maturity illustrate how appropriation risks no longer hinge solely on contract renegotiation or hidden information, but on systemic disparities in who controls, accesses, or interprets shared systems and digital data. For instance, whereas appropriation risks in classical IOCS might involve opportunistic renegotiation after site-specific investment (the “hold-up” problem), their digital counterpart often appears in the form of mandated system adoption, platform lock-in, or unilateral control over performance data, all of which similarly shift power and constrain reciprocity. These risks are particularly salient in contexts where the more digitally mature firm can shape the structure and flow of information, while the less mature partner lacks the capacity to reciprocate or challenge the imposed architecture. Coordination problems are likewise transformed. Traditional barriers such as goal misalignment and task interdependence now coexist with infrastructural incompatibility and digital 33 fragmentation. Our findings on Legacy Systems and Working Methods, Limited Digital Capability, and Regulatory Compliance highlight how firms struggle to align even basic control processes, such as monitoring, data exchange, or process synchronization, when underlying systems are misaligned, capabilities are uneven, and legal frameworks are ambiguous. Coordination failure in this context often stems less from relational friction and more from technological incongruence and institutional overload. Notably, some barriers in our model blur the line between appropriation and coordination. Asymmetric digital maturity, for instance, may appear as a coordination issue, but it can generate appropriation concerns when control structures disproportionately benefit the stronger party. Similarly, compliance burdens may formally relate to coordination (e.g., aligning systems to legal requirements), but they also serve to exclude firms without sufficient resources to meet evolving standards. These hybrid barriers suggest that the distinction between coordination and appropriation is becoming increasingly blurred in digital contexts, where technical integration is having a growing influence on power dynamics and risk distribution. In sum, our findings support Dekker’s foundational distinction while simultaneously updating it for a digitally transformed landscape. Appropriation and coordination risks remain central, but they are mediated and often amplified by new technological infrastructures, asymmetrical digital capabilities, and institutional complexity. This shows that interorganizational control systems should not only account for relational dynamics and transaction costs, but also the structural and governance features of digital infrastructures. 5.2 Relating the Model to Theories of Inter-Organizational Control To further contextualize the contributions of our findings, we now examine how the barriers identified in our model interact with and extend four dominant theoretical perspectives in inter-organizational control research: transaction cost economics (TCE), resource dependence theory (RDT), relational/social capital theory, and institutional theory. These perspectives have long shaped understandings of how firms govern inter-organizational collaboration. However, when viewed through the lens of digitally integrated IOCS, each framework reveals both explanatory value and theoretical blind spots. Our discussion below shows how digital transformation introduces new control dynamics that require adaptations to these established perspectives. 5.2.1 Transaction Cost Economics TCE posits that firms structure inter-organizational relationships to minimize the combined costs of production and transaction, especially under conditions of opportunism, asset specificity, and uncertainty (Williamson, 1985). While our findings align with TCE’s emphasis on risk, opportunism, and the costs of governance, they also indicate that digital infrastructures introduce new forms of transaction costs, such as system integration, data standardization, and platform dependency, that are not fully captured by traditional TCE concepts. For example, Power Imbalance and Digital Maturity reveal how the adoption of digital platforms, while ostensibly reducing transaction costs via real-time data exchange and automation, can introduce new integration costs, such as the need to meet proprietary interface standards or adapt to partner-imposed EDI systems. These costs are not one-time investments but recurring burdens, especially for smaller firms. TCE’s traditional remedies, detailed contracts and safeguards, may 34 be inadequate in these settings, as digital control architectures often evolve faster than contracts can be negotiated. Moreover, some risks (e.g., information asymmetries embedded in system design) are structural and not easily contractible. Our findings offer a complementary perspective on TCE’s central dilemma, highlighting how digital transformation introduces additional dimensions to how firms evaluate governance choices. Rather than choosing between market and hierarchy, firms increasingly navigate between open and closed digital ecosystems, each carrying different control implications. This calls for an expanded view of governance costs that includes not just monitoring and enforcement, but also integration, compliance, and system interoperability as core components of transactional friction. 5.2.2 Resource Dependence Theory RDT views inter-organizational control as shaped by power imbalances arising from asymmetries in resource access (Pfeffer & Salancik, 1978). While RDT traditionally focuses on financial, human, or physical capital, our findings highlight the growing importance of digital assets, such as control over systems, data, and analytics capabilities, as contemporary sources of power and dependency. In our model, barriers such as Limited Digital Capability and Information Security Concerns reflect how digital resource asymmetries constrain weaker firms’ ability to engage in joint control design. When one firm dictates the terms of integration by virtue of its superior digital infrastructure, less capable partners become dependent, unable to shape the architecture of control or negotiate reciprocal data flows. These dependencies are not only strategic but infrastructural, locking firms into relationships where the cost of exiting or resisting is prohibitively high. This dynamic points to a digital evolution of RDT. The ability to define data standards, own platform infrastructure, or analyze shared information in real time constitutes a form of embedded power. Our findings suggest that RDT should expand its scope to account for digital asymmetries not only as sources of dependence but also as control levers that shape how IOCS are designed, implemented, and sustained. 5.2.3 Relational and Social Capital Theory Relational and social capital perspectives traditionally highlight the role of interpersonal trust, shared norms, and informal routines in facilitating cooperation and reducing the need for formal governance (Granovetter, 1985; Nahapiet & Ghoshal, 1998; Poppo & Zenger, 2002). In classical IOCS contexts, these relational mechanisms often serve as substitutes or complements to formal controls, particularly in environments marked by uncertainty or high interdependence. Our findings confirm the continued relevance of relational trust in inter-organizational collaboration, but also reveal a critical shift in its scope and limitations under conditions of digital transformation. Specifically, the move toward digitally integrated IOCS requires trust to extend beyond organizational partners to the digital systems that mediate interaction, what we refer to as system trust. Across several cases, participants described longstanding and positive interpersonal relationships with partners, yet resisted platform integration or automated routines due to concerns about data misuse, lack of transparency, or fears of losing operational flexibility. In 35 other words, even in the presence of high interpersonal trust, collaboration was impeded when the underlying systems were perceived as opaque, rigid, or insecure. This distinction between interpersonal and system trust represents an important theoretical development. While the former rests on expectations about another party’s intentions and reliability, the latter hinges on beliefs about the functioning and governance of the digital infrastructures themselves. For example, barriers such as Information Security Concerns illustrate how trust in partners can coexist with deep skepticism toward the systems through which collaboration is enacted. Similarly, Resistance to Digital Change often stemmed not from a breakdown in partner relationships, but from discomfort with automated or unfamiliar digital routines, especially when these routines disrupted established informal practices. Together, these findings underscore that system trust is a prerequisite for the successful institutionalization of digital control routines, particularly those involving real-time data sharing, automated monitoring, or joint use of platforms. 5.2.4 Institutional Theory Institutional theory foregrounds the role of external pressures, such as regulation, industry norms, and societal expectations, in shaping organizational practices and governance structures (DiMaggio & Powell, 1983). Our findings affirm this view by demonstrating how sectoral characteristics and regulatory environments significantly influence what forms of digitally integrated control are feasible or legitimate. Barriers such as Regulatory Compliance and Industry Conditions underscore how formal and informal institutions shape firms’ willingness and ability to adopt shared digital systems. In highly regulated sectors like pharmaceuticals or logistics, the need to maintain certifications or adhere to emerging data laws often imposes design constraints on IOCS, limiting transparency, delaying automation, or segmenting access. Similarly, in more traditional industries like construction, institutional inertia and legacy norms slow the diffusion of digital practices and reduce the perceived value of shared control systems. What emerges is a picture of inter-organizational control as not merely a technical or strategic choice, but an institutionally embedded process. Firms must not only negotiate with each other, but also with the broader normative and legal frameworks that shape how collaboration can be structured. This pattern suggests that digital control is not only mimetic (imitating peers) or coercive (responding to regulators), but also highly path-dependent, shaped by prior technological choices, historical working methods, and embedded sectoral logics. Once firms or industries have adopted particular digital infrastructures, standards, or compliance protocols, these tend to become entrenched, even when they no longer optimally support inter-organizational collaboration. This historical embeddedness restricts adaptability and makes it difficult to implement new, more integrated digital control systems without encountering organizational resistance, system incompatibilities, or institutional pushback. 5.3 Answering the Research Question: Integrating the Model This study set out to investigate the question: What barriers hinder the progression toward digitally integrated inter-organizational control systems (IOCS)? Our findings, grounded in a three-part model of intra-organizational, inter-organizational, and external barriers, show that these impediments are not isolated or purely technical, but instead constitute a complex and 36 evolving set of constraints on how control can be distributed, designed, and executed across organizational boundaries. This implies that the challenges to integration are not merely operational, but are fundamentally tied to how control is structured and shared across actors. The model highlights that no single type of barrier, technical, relational, or institutional, can account for the resistance to digital integration. Rather, barriers often interact. For instance, limited internal capability constrains a firm’s ability to engage in collaborative design, which in turn deepens dependency on more powerful partners and increases appropriation risks. Similarly, external regulatory uncertainty often amplifies internal hesitations, discouraging both the willingness and feasibility of data-sharing or automation. What emerges is not a linear control problem, but a web of mutually reinforcing frictions that operate across levels. This interaction between barriers means that overcoming one challenge often requires confronting several others at once, making control in digital collaborations more difficult to coordinate and negotiate than in traditional IOCS settings. Our analysis also reveals that digitally integrated IOCS demand new forms of hybrid control that cut across classical categories. Whereas traditional control systems are often conceptualized as either formal (contracts, KPIs) or relational (trust, norms), digital control architectures embed control directly into platforms, interfaces, and data flows. These architectures are neither fully negotiated nor fully imposed; rather, they are shaped by who designs the system, who owns the infrastructure, and who interprets the outputs. In this context, control becomes infrastructural, exercised through technological design choices and system standards that determine how coordination, monitoring, and accountability are enacted. This highlights the need to view control not just as a behavioral outcome, but as a function of the digital systems through which inter-organizational collaboration now occurs. Critically, our findings suggest that answering the research question is not simply a matter of identifying “barriers to be removed” but understanding the shifting terrain of control itself. Many of the identified barriers, such as digital maturity gaps or power asymmetries, are not temporary frictions but durable features of inter-organizational collaboration under digital transformation. Progress toward integrated control therefore depends not only on upgrading systems, but on rethinking the distribution of authority, visibility, and responsibility across networked actors. It requires a more nuanced understanding of how control logic is embedded into technology, how governance is shared (or withheld), and how organizational actors perceive the risks and consequences of integration. This suggests that achieving digital integration requires firms to develop not only technical capacity, but also an explicit awareness of how control is configured, constrained, and reproduced in digital infrastructures. Taken together, our findings suggest that barriers to digitally integrated IOCS are not simply the result of outdated systems or lagging adoption curves. Rather, they reflect deeper control dilemmas: who gets to define standards, who owns the data, who monitors whom, and under what conditions integration becomes a liability rather than a benefit. Overcoming these challenges requires more than technical solutions, it demands a reorientation of how inter-organizational control is conceptualized, not just as a matter of relational trust or formal contracts, but as a system-level design problem situated at the intersection of technology, governance, and institutional structure. 37 6. Conclusion 6.1 Summary of the Study and Main Findings This study set out to answer the research question “What barriers hinder the progression toward digitally integrated inter-organizational control systems (IOCS)”. Our analysis revealed a set of interrelated barriers that operate on three levels: intra-organizational, inter-organizational, and external. These include internal challenges such as legacy systems and working methods, resistance to digital change, and limited digital capability, interorganizational challenges such as digital maturity, information security concern, and power imbalances, and external pressures stemming from regulatory compliance and industry constraints. The central contribution of our study is the model of barriers. It shows how individual challenges, such as legacy systems, digital maturity gaps, or regulatory constraints, interact and reinforce each other. These interactions illustrate why developing and implementing digitally integrated control systems remains difficult, even when technological capabilities exist. Importantly, our model does not simply list barriers; it structures them into a coherent framework that highlights their interdependencies and the broader dynamics at play. While many of the phenomena we observed, such as digital control becoming more infrastructural or power asymmetries emerging from platform ownership, have been documented in other contexts, our study contributes by contextualizing and organizing these issues within inter-organizational control. By focusing on barriers as the unit of analysis, our framework offers a practical and conceptual tool for understanding why shared digital control systems are hard to realize in practice. The model also serves as the foundation for our theoretical and practical contributions. In the following sections, we outline how our findings contribute to existing literature and inform managerial practice. 6.2 Theoretical Contributions Our theoretical contributions stem from the model of barriers developed in this study. By empirically identifying how digitalization complicates control across firm boundaries, we offer new insights into inter-organizational control theory under conditions of digital transformation. First, the model contributes to theory by offering a structured approach for analyzing barriers to digitally integrated IOCS. It organizes frictions across intra-organizational, inter-organizational, and external levels, allowing scholars to study these challenges as part of an interdependent system rather than isolated obstacles. While previous studies have examined frictions in governance, alignment, or collaboration (e.g., Roehrich et al., 2020; Nottbrock et al., 2024), our model adds conceptual clarity by organizing fragmented challenges into a coherent structure that links them directly to the development of control systems. Second, the model enables a theoretical extension of Dekker’s (2004) twin problems of appropriation and coordination. Our findings show how appropriation risks now can stem from embedded control asymmetries, such as proprietary data standards, platform lock-in, and architectural dominance, dynamics that shift the locus of opportunism beyond classical asset specificity. Coordination problems, meanwhile, are exacerbated by fragmented systems, uneven 38 digital capabilities, and growing compliance burdens. These extensions build on insights from Yang et al. (2021), who showed how digitalization reconfigures the sources of inter-organizational risk, and from Li et al. (2023), who explored the conditional role of formal contracts and collaboration in mitigating such risks. Our introduction of the concept of hybrid barriers further addresses the gray zone where coordination and appropriation concerns overlap, offering a conceptual tool for better diagnosing digital frictions in asymmetric partnerships. Third, the model allows us to revisit and enrich four dominant theoretical perspectives on inter-organizational control. From a transaction cost economics (TCE) perspective, we extend the notion of transaction costs to include recurring digital integration, governance, and system adaptation costs, costs that are not easily accounted for within classical contracting logic. In relation to resource dependence theory (RDT), we show how digital infrastructure has become a key source of power and constraint, creating new forms of dependence shaped by platform ownership and data control. From a relational and social capital perspective, our findings introduce a distinction between interpersonal trust and system trust. Collaboration may falter not due to relational breakdowns, but because of skepticism or opacity surrounding the digital systems that mediate interaction. Finally, from an institutional theory lens, we show how industry norms, path dependencies, and regulatory frameworks shape the design space for digital control systems, embedding them in sector-specific expectations of legitimacy, auditability, and compliance. Together, these conceptualizations offer an empirically informed response to Roehrich et al.'s (2020) call to better understand evolving governance forms in complex and dynamic networked environments. These contributions advance a more dynamic understanding of inter-organizational control under digital transformation. Our model and theoretical extensions invite future studies to consider not only the behavioral and contractual aspects of control, but also the architectural, relational, and institutional dimensions that shape how control is practically enacted in digital collaborations. This responds directly to recent demands for more integrative and empirically grounded research on digitally mediated governance and inter-organizational collaboration (Li et al., 2023; Roehrich et al., 2020; Seppänen et al., 2024). 6.3 Practical Contributions Our findings also offer a set of practical contributions for managers, system designers, and policy-makers involved in developing or overseeing digitally integrated inter-organizational control systems (IOCS). While many of the specific challenges identified, such as digital maturity gaps, power asymmetries, or regulatory friction, are already known to practitioners, our contribution lies in organizing these challenges into a coherent framework that can be used as a diagnostic and planning tool. The model we propose can guide firms in identifying, anticipating, and addressing key questions across three levels: ● At the intra-organizational level: Do we have the internal digital readiness, capabilities, and governance structures required to participate in shared control systems? Are legacy processes or fragmented responsibilities undermining our ability to engage in digital coordination? 39 ● At the inter-organizational level: Are our potential or existing partners equipped to integrate with us technologically? Are there asymmetries in power, security policies, or digital routines that could create friction, delay, or mistrust? ● At the external level: Are there legal, regulatory, or industry-specific conditions that we need to embed into our control architecture from the outset? Are there sectoral norms or institutional pressures that shape what is seen as legitimate, compliant, or auditable? By translating barriers into these kinds of diagnostic questions, the model can be used as a starting point for project planning, partner selection, or system design. In this way, our contribution is not prescriptive, but enabling: the framework provides a structure for reflective dialogue across internal teams, between firms, and with external stakeholders. It helps make visible the often latent or unarticulated constraints that shape how control is negotiated and enacted in digital collaborations. 6.4 Avenues for Future Research This study has contributed a conceptual model of the barriers that hinder the development of digitally integrated inter-organizational control systems (IOCS), based on cross-sectional interview data from a range of large firms. While the model offers a structured view of common frictions across intra-, inter-, and extra-organizational levels, several avenues remain for future research to deepen and extend these findings. First, longitudinal research could explore how barriers to digitally integrated IOCS evolve over time. Our study captured perceptions at a single point, but many of the identified frictions, such as legacy systems, resistance to change, or trust gaps, may shift as firms progress in their digital transformation journeys. A time-sensitive lens would enable researchers to examine how barriers are gradually overcome or reinterpreted, what sequences of action facilitate integration, and whether new challenges emerge as firms increase their digital interdependence. Such studies could provide valuable insights for designing implementation roadmaps and change management strategies in collaborative digital initiatives. Second, future research should explore the dynamics of digitally integrated IOCS from a dyadic or multi-party perspective. Since our study was based on single-firm accounts, it could not fully capture how barriers are experienced and negotiated across organizational boundaries. In particular, case studies of inter-organizational dyads actively attempting to build digitally integrated control systems could offer rich empirical material on how partners manage tensions, align incentives, and navigate issues such as architectural asymmetry or conflicting governance standards. By tracing how such collaborations unfold in practice, future research could illuminate which relational, technical, or strategic practices are most effective in overcoming the types of barriers identified in this study. Lastly, future research could examine successful cases where digitally integrated IOCS have already been implemented between firms and their suppliers or customers. During our interviews, some participants described relatively advanced digital collaborations, but we were unable to explore these examples in detail. In-depth case studies of such relationships could shed light on the enabling conditions, design principles, and collaborative routines that support effective digital integration across organizational boundaries. This would not only complement research focused on barriers but also provide valuable guidance for firms seeking to emulate these practices. 40 7. Reference List Adomako, S., & Nguyen, N. P. (2024). 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General Digitalisation 2. How would you characterize your organization’s broader strategic approach toward digital transformation? a. key technologies or initiatives that the organization is focusing on? Inter Organizational Collaboration 3. Thinking about your day-to-day activities, can you describe the main operational processes or tasks where you collaborate with external partners (e.g., suppliers, vendors, logistics providers)? 4. How many external partners do you have? And what is the purpose for said collaboration? 5. Can you walk me through how you typically work with external partners 6. In your collaborative work, do you rely on written contracts, or do you also lean on personal relationships and trust? To what degree? 7. Is there a system that helps ensure that the collaboration achieves what it is intended to do? (More relevant towards collaborative work with written contracts) a. Any shortcomings of said current system or collaborative framework. Digitalisation and Collaboration 8. Do you use any specific digital tools, platforms, or technologies (e.g., real-time tracking, specialized software, sensors, or data-sharing systems) to coordinate with your partners? a. More specifically: To what degree is the process automated? 9. In what ways have these tools changed how you communicate or share information with your partners? 10. Has technology affected how much you rely on written rules or personal trust? 47 11. What challenges have you faced in adopting or managing these newer digital tools with external partners? a. Any specific issues like digital adoption immaturity, compatibility of systems, or concerns about sharing too much information/data privacy? b. Are some partners more open or more resistant to digital methods/adoption? 12. Has the use of digital tools changed who makes decisions or how decisions are made between you and your partners? a. Have you or your partners had to update contracts, responsibilities, or processes because of these tools? Future 13. In your view, where is your organization heading next in terms of digital tools or advanced technologies? a. What opportunities or risks do you see in the future for how you collaborate with outside companies? 14. Where is the limit for automated interactions today? Closing 15. Is there anything else you’d like to add? a. Would you recommend speaking with anyone else (inside or outside your organization) who might provide a different or valuable viewpoint on these topics? 8.1.2 Swedish Introduktion 1. Skulle du kort kunna beskriva din roll i organisationen, a. Mer specifikt, i relation till eventuella externa partnerskap eller samarbeten? Allmän digitalisering 2. Hur skulle du beskriva din organisations bredare strategiska förhållningssätt till digital transformation? a. Vilka nyckelteknologier eller initiativ fokuserar organisationen på? Interorganisatoriskt samarbete 48 3. Om du tänker på dina dagliga arbetsuppgifter, kan du beskriva de huvudsakliga operativa processerna eller uppgifterna där du samarbetar med externa partners (t.ex. leverantörer, återförsäljare, logistikleverantörer)? 4. Hur många externa partners hanterar du? Och vad är syftet med samarbetet? 5. Kan du beskriva hur du vanligtvis arbetar med externa partners? 6. I ert samarbete, förlitar ni er på skriftliga avtal, eller bygger ni även på personliga relationer och förtroende? I vilken utsträckning? 7. Finns det något system eller rutiner som säkerställer att samarbetet uppnår det avsedda målet? a. Finns det några brister i det nuvarande systemet eller samarbetets ramverk? Digitalisering och samarbete 8. Använder ni några specifika digitala verktyg, plattformar eller teknologier (t.ex. realtidsövervakning, specialiserad programvara, sensorer eller system för datadelning) i samarbetet med era partners? a. Mer specifikt: I vilken utsträckning är processen automatiserad? 9. Har dessa verktyg förändrat hur ni kommunicerar eller delar information med era partners? På vilket sätt? 10. Har tekniken påverkat hur mycket ni förlitar er på skriftliga regler kontra personligt förtroende? 11. Vilka utmaningar har ni stött på vid införandet eller hanteringen av dessa nyare digitala verktyg i samarbetet med externa partners? a. Finns det specifika problem som digital omognad, systemkompatibilitet eller oro för att dela för mycket information/datasekretess? b. Är vissa partners mer öppna eller mer motvilliga till digitala system? 12. Har användningen av digitala verktyg förändrat vem som fattar beslut eller hur beslut tas mellan er och era partners? Eller systemet som styr? a. Har ni eller era partners behövt uppdatera avtal, ansvarsområden eller arbetssätt på grund av dessa verktyg? Framtid 13. Var går gränsen för automatisering av interaktion idag? 14. Enligt din åsikt, vart är din organisation på väg när det gäller digitala verktyg eller avancerad teknologi? a. Vilka möjligheter eller risker ser du för framtiden när det gäller samarbetet med externa företag? 49 Avslutning 15. Är det något annat du skulle vilja tillägga? a. Skulle du rekommendera att vi pratar med någon annan (inom eller utanför din organisation) som kan ge en annan eller värdefull syn på dessa frågor? 50 8.2 Gioia Model Components 8.2.1 First Order Codes First order Codes Low digital competence among experienced staff Fear of server breaches reduces adoption Low digital literacy among subcontractors Home-built systems limit integration and scalability Sector conservatism and tight margins hinder innovation Fragmented and overdeveloped IT infrastructure Small firms forced to comply with larger firms’ digital mandates Imbalance between partners complicates collaboration Internal digital efforts seen as boring vs. Loss of flexibility due to client-imposed data standards customer-facing ones Rigid digital systems create bureaucratic obstacles Digital collaboration projects often stall Internal resistance to digitally driven process changes Lack of clear business case delays investment Certification pressures drive formalization Digital compliance expertise is lacking Digital investment varies between large and small firms Poor internal IT infrastructure acknowledged New tech requires updated policy frameworks (e.g., AI) Long-tenured staff prefer familiar systems Fear of losing partners due to digital requirements Outdated systems too complex to replace Fragmented system ownership across units or countries Regulation awareness growing due to data laws System update costs disproportionately affect small suppliers Seamless partner integration achieved by few Preference for informal communication over digital Digital maturity uneven across sector actors tools Employees revert to old routines despite new tools Underutilization of digital tools (e.g., CRM) Extended payment terms imposed by dominant Uncertainty about data migration between old and new partners systems Internal vs. external digitalization seen differently Dominant buyers dictate systems without negotiation Advanced product offerings outpace internal systems Need for classification of sensitive information Frustration with constant system replacements IP protection limits data sharing Partner reluctance to adopt new digital tools Compliance burden increases with digitalization Legal formalization complicates data sharing Sector competition drives digital pressure Asymmetrical sharing of digital benefits and data access Table 6: Shows all first order codes derived from interviews 51 8.2.2 2nd Order Themes 2nd Order Themes 4.1.1 Legacy systems and working methods 4.1.2 Resistance to digital change 4.1.3 Limited digital capability Outdated systems too complex to Long-tenured staff prefer familiar Low digital competence among replace systems experienced staff Uncertainty about data migration Employees revert to old routines Poor internal IT infrastructure between old and new systems despite new tools acknowledged Rigid digital systems create Internal resistance to digitally Underutilization of digital tools bureaucratic obstacles driven process changes (e.g., CRM) Home-built systems limit Frustration with constant system Fragmented system ownership integration and scalability replacements across units or countries Fragmented and overdeveloped IT Preference for informal infrastructure communication over digital tools 4.2.2 Information security 4.2.1 Digital maturity concerns 4.2.3 Power imbalance Partner reluctance to adopt new Imbalance between partners digital tools IP protection limits data sharing complicates collaboration Digital collaboration projects often Fear of server breaches reduces Small firms forced to comply with stall adoption larger firms’ digital mandates Low digital literacy among Need for classification of sensitive Loss of flexibility due to subcontractors information client-imposed data standards Fear of losing partners due to digital Asymmetrical sharing of digital requirements benefits and data access Extended payment terms imposed by dominant partners System update costs disproportionately affect small suppliers Dominant buyers dictate systems without negotiation 4.3.1 Regulatory compliance 4.3.2 Industry conditions Compliance burden increases with Sector conservatism and tight digitalization margins hinder innovation New tech requires updated policy Digital maturity uneven across frameworks (e.g., AI) sector actors Legal formalization complicates Digital investment varies between data sharing large and small firms Digital compliance expertise is Sector competition drives digital lacking pressure Certification pressures drive Internal vs. external digitalization formalization seen differently Regulation awareness growing due Lack of clear business case delays to data laws investment 52 Internal digital efforts seen as boring vs. customer-facing ones Advanced product offerings outpace internal systems Seamless partner integration achieved by few Table 7: Shows the first order codes grouped into their derived second order theme 8.2.3 Aggregated Dimensions Aggregated Dimensions Intra-Organizational Barriers Inter-Organizational Barriers External Barriers 4.1.1 Legacy systems and working methods 4.2.1 Digital maturity 4.3.1 Regulatory compliance 4.2.2 Information security 4.1.2 Resistance to digital change concerns 4.3.2 Industry conditions 4.1.3 Limited digital capability 4.2.3 Power imbalance Table 8: Shows how each second order theme is grouped into their corresponding aggregated dimension 53 8.2.4 The Gioia Model Figure 1: Digitally Integrated IOCS Barriers 54