The Dual Role of Is Specificity

This study addresses the theoretically neglected role of information system (IS) specificity for application governance, by referring to the allocation of applicationrelated decision authority and task responsibility between business and IT units. Based on the premise of organizational and technical ‘embedding’, and employing a transaction cost theoretic (TCT) lens, we develop the idea that customization and greater functional specificity of an IS lead to both more business unit governance through higher human asset specificity and more IT unit governance through higher technical specificity. Survey data from 76 organizations using different types of Software as a Service provide support for these ideas. Our results unveil a new dualism for explaining IT governance phenomena on the application level. Furthermore, we demonstrate a relevant appropriation of the frequency construct from TCT to this context. Besides practical implications, we outline contributions to IT governance, transaction cost, and IT artifact theories in the IS field.