Re-Engineering the Dutch Flower Auctions: A Framework for Analyzing Exchange Organizations

Abstract

This paper specifies a generalizable model of exchange processes and develops\na process-stakeholder analysis framework to evaluate alternative market\ndesigns. This framework is applied to analyze a number of information\ntechnology initiatives in the Dutch flower markets. The Dutch flower\nauctions are the world's leading centers for trading cut-flowers and potted\nplants. We undertake a cross-case analysis and apply our framework to\nanalyse successes and failures in the introduction of new IT-based trading\nmechanisms in these markets. Based on our study, we develop a number of\ntestable propositions on: the separation of physical and informational\nprocesses in trading, the responses of stakeholders to changes in available\ninformation due to IT initiatives, and economic and incentive conditions\nrequired for adoption of new trading processes. Finally, our detailed cases\nillustrate the institutional and incentive constraints, and complexities\nencountered in the introduction of new electronic markets.