Posted Content•
Modularity in Technology and Organization
TL;DR: While characteristically "Austrian" themes such as entrepreneurship, economic calculation, tacit knowledge and the temporal structure of capital are clearly relevant to the business firm, Austrian economists have said relatively little about management, organization, and strategy.
Abstract: While characteristically ‘Austrian' themes such as entrepreneurship, economic calculation, tacit knowledge and the temporal structure of capital are clearly relevant to the business firm, Austrian economists have said relatively little about management, organization, and strategy. This innovative book features 12 chapters that all seek to advance the understanding of these issues by drawing on Austrian ideas.
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TL;DR: In a recent special issue on digital innovation management as mentioned in this paper, the authors proposed four new theorizing logics, or elements, that are likely to be valuable in constructing more accurate explanations of innovation processes and outcomes in an increasingly digital world.
Abstract: Rapid and pervasive digitization of innovation processes and outcomes has upended extant theories on innovation management by calling into question fundamental assumptions about the definitional boundaries for innovation, agency for innovation, and the relationship between innovation processes and outcomes. There is a critical need for novel theorizing on digital innovation management that does not rely on such assumptions and draws on the rich and rapidly emerging research on digital technologies. We offer suggestions for such theorizing in the form of four new theorizing logics, or elements, that are likely to be valuable in constructing more accurate explanations of innovation processes and outcomes in an increasingly digital world. These logics can open new avenues for researchers to contribute to this important area. Our suggestions in this paper, coupled with the six research notes included in the special issue on digital innovation management, seek to offer a broader foundation for reinventing innovation management research in a digital world.
1,274 citations
Cites background from "Modularity in Technology and Organi..."
...While the extensive research on product modularity offers the “mirror hypothesis”—that a product’s modular structure should be aligned with the product development organization—most complexities associated with the interdependence of outcome and process organization are ignored (e.g., Baldwin and Clark 2000; Danese and Filippini 2010; Langlois 2002; Sanchez and Mahoney 1996; Schilling 2000; Staudenmayer et al. 2005)....
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...…be aligned with the product development organization—most complexities associated with the interdependence of outcome and process organization are ignored (e.g., Baldwin and Clark 2000; Danese and Filippini 2010; Langlois 2002; Sanchez and Mahoney 1996; Schilling 2000; Staudenmayer et al. 2005)....
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TL;DR: In this article, an integrative framework is proposed to advance management research on technological platforms, bridging two theoretical perspectives: economics, which sees platforms as double-sided markets, and engineering design, which see platforms as technological architectures.
1,074 citations
01 Mar 2011
TL;DR: In this paper, the MIT Open Access Articles collection at https://dspace.mit.edu/handle/1721.1/127236 is updated with an updated license.
Abstract: A version of this paper with an updated license is available in the MIT Open Access Articles collection at https://dspace.mit.edu/handle/1721.1/127236.
870 citations
TL;DR: An agent- based simulation in which multidepartment firms with different designs face environments whose turbulence and complexity the authors control is constructed, suggesting how future empirical studies of organizational design might be fruitfully coupled with rigorous agent-based modeling efforts.
Abstract: We use an innovative technique to examine an enduring but recently neglected question: How do environmental turbulence and complexity affect the appropriate formal design of organizations? We construct an agent-based simulation in which multidepartment firms with different designs face environments whose turbulence and complexity we control. The model's results produce two sets of testable hypotheses. One set pinpoints formal designs that cope well with three different environments: turbulent settings, in which firms must improve their performance speedily; complex environments, in which firms must search broadly; and settings with both turbulence and complexity, in which firms must balance speed and search. The results shed new light on longstanding notions such as equifinality. The other set of hypotheses argues that the impact of individual design elements on speed and search often depends delicately on specific powers granted to department heads, creating effects that run contrary to conventional wisdom and intuition. Ample processing power at the bottom of a firm, for instance, can slow down the improvement and narrow the search of the firm as a whole. Differences arise between our results and conventional wisdom when conventional thinking fails to account for the powers of department heads--powers to withhold information about departmental options, to control decision-making agendas, to veto firmwide alternatives, and to take unilateral action. Our results suggest how future empirical studies of organizational design might be fruitfully coupled with rigorous agent-based modeling efforts.
636 citations
Cites background from "Modularity in Technology and Organi..."
...…information technology has standardized some interfaces and has enabled managers to conduct more transactions across organizational boundaries rather than within them, leading, for instance, to more modular organizational forms (Drucker 1988, Sanchez and Mahoney 1996, Hitt 1999, Langlois 2002)....
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...On the other, information technology has standardized some interfaces and has enabled managers to conduct more transactions across organizational boundaries rather than within them, leading, for instance, to more modular organizational forms (Drucker 1988, Sanchez and Mahoney 1996, Hitt 1999, Langlois 2002 )....
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Posted Content•
01 Jan 2003TL;DR: In this paper, the authors develop a formal simulation model that allows them to carefully examine the dynamics of innovation and performance in complex systems and highlight an asymmetry in this trade-off, with excessively refined modules leading to cycling behavior and a lack of performance improvement.
Abstract: The problem of designing, coordinating, and managing complex systems has been central to the management and organizations literature. Recent writings have tended to offer modularity as, at least, a partial solution to this design problem. However, little attention has been paid to the problem of identifying what constitutes an appropriate modularization of a complex system. We develop a formal simulation model that allows us to carefully examine the dynamics of innovation and performance in complex systems. The model points to the trade-off between the destabilizing effects of overly refined modularization and the modest levels of search and a premature fixation on inferior designs that can result from excessive levels of integration. The analysis highlights an asymmetry in this trade-off, with excessively refined modules leading to cycling behavior and a lack of performance improvement. We discuss the implications of these arguments for product and organization design.
614 citations
References
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Book•
01 Jan 1990TL;DR: Douglass C. North as discussed by the authors developed an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time.
Abstract: Continuing his groundbreaking analysis of economic structures, Douglass North develops an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time. Institutions exist, he argues, due to the uncertainties involved in human interaction; they are the constraints devised to structure that interaction. Yet, institutions vary widely in their consequences for economic performance; some economies develop institutions that produce growth and development, while others develop institutions that produce stagnation. North first explores the nature of institutions and explains the role of transaction and production costs in their development. The second part of the book deals with institutional change. Institutions create the incentive structure in an economy, and organisations will be created to take advantage of the opportunities provided within a given institutional framework. North argues that the kinds of skills and knowledge fostered by the structure of an economy will shape the direction of change and gradually alter the institutional framework. He then explains how institutional development may lead to a path-dependent pattern of development. In the final part of the book, North explains the implications of this analysis for economic theory and economic history. He indicates how institutional analysis must be incorporated into neo-classical theory and explores the potential for the construction of a dynamic theory of long-term economic change. Douglass C. North is Director of the Center of Political Economy and Professor of Economics and History at Washington University in St. Louis. He is a past president of the Economic History Association and Western Economics Association and a Fellow, American Academy of Arts and Sciences. He has written over sixty articles for a variety of journals and is the author of The Rise of the Western World: A New Economic History (CUP, 1973, with R.P. Thomas) and Structure and Change in Economic History (Norton, 1981). Professor North is included in Great Economists Since Keynes edited by M. Blaug (CUP, 1988 paperback ed.)
27,080 citations
TL;DR: The Economic Institutions of Capitalism as mentioned in this paper is a seminal work in the field of economic institutions of capitalism. Journal of Economic Issues: Vol. 21, No. 1, pp. 528-530.
Abstract: (1987). The Economic Institutions of Capitalism. Journal of Economic Issues: Vol. 21, No. 1, pp. 528-530.
16,767 citations
TL;DR: In this paper, the authors argue that what firms do better than markets is the sharing and transfer of the knowledge of individuals and groups within an organization, and that knowledge is held by individuals but is also expressed in regularities by which members cooperate in a social community (i.e., group, organization, or network).
Abstract: How should we understand why firms exist? A prevailing view has been that they serve to keep in check the transaction costs arising from the self-interested motivations of individuals. We develop in this article the argument that what firms do better than markets is the sharing and transfer of the knowledge of individuals and groups within an organization. This knowledge consists of information (e.g., who knows what) and of know-how (e.g., how to organize a research team). What is central to our argument is that knowledge is held by individuals, but is also expressed in regularities by which members cooperate in a social community (i.e., group, organization, or network). If knowledge is only held at the individual level, then firms could change simply by employee turnover. Because we know that hiring new workers is not equivalent to changing the skills of a firm, an analysis of what firms can do must understand knowledge as embedded in the organizing principles by which people cooperate within organizatio...
12,719 citations
"Modularity in Technology and Organi..." refers background in this paper
...“Firms exist,” in this view, “because they provide a social community of voluntaristic action structured by organizing principles that are not reducible to individuals”24 (Kogut and Zander, 1992, p. 384)....
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...“Firms exist,” in this view, “because they provide a social community of voluntaristic action structured by organizing principles that are not reducible to individuals”24 ( Kogut and Zander, 1992, p. 384 )....
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Book•
01 Jan 1890
TL;DR: In this article, the authors present a survey of the general relations of demand, supply, and value in terms of land, labour, capital, and industrial organization, with an emphasis on the fertility of land.
Abstract: BOOK I: PRELIMINARY SURVEY 1. Introduction 2. The Substance of Economics 3. Economic Generalizations or Laws 4. The Order and Aims of Economic Studies BOOK II: SOME FUNDAMENTAL NOTIONS 1. Introductory 2. Wealth 3. Production, Consumption, Labour, Necessaries 4. Income. Capital. BOOK III: ON WANTS AND THEIR SATISFACTION 1. Introductory 2. Wants in Relation to Activities 3. Gradations of consumers' demand 4. The elasticity of wants 5. Choice between different uses of the same thing. Immediate and deferred uses. 6. Value and utility BOOK IV: THE AGENTS OF PRODUCTION. LAND, LABOUR, CAPITAL AND ORGANIZATION T 1. Introductory 2. The Fertility of Land 3. The Fertility of Land, continued. The Tendency to Diminishing Return. 4. The Growth of Population 5. The Health and Strength of the Population 6. Industrial Training. 7. The Growth of Wealth 8. Industrial Organization 9. Industrial Organization, continued. Division of Labour. The Influence of Machinery 10. Industrial Organization, continued. The Concentration of the Specialized Industries in Particular Localities. 11. Industrial Organization, continued. Production on a Large Scale 12. Industrial Organization, continued. Business Management. 13. Conclusion. Correlation of the Tendencies to Increasing and to Diminishing Return BOOK V: GENERAL RELATIONS OF DEMAND, SUPPLY, AND VALUE 1. Introductory. On Markets. 2. Temporary Equilibrium of Demand and Supply 3. Equilibrium of Normal Demand and Supply 4. The Investment and Distribution of Resources 5. Equilibrium of Normal Demand and Supply, continued, with reference to long and short periods 6. Joint and Composite Demand. Joint and Composite Supply 7. Prime and total cost in relation to joint products. Cost of marketing. Insurance against risk. Cost of Reproduction. 8. Marginal costs in relation to values. General Principles. 9. Marginal costs in relation to values. General Principles, continued 10. Marginal costs in relation to agricultural values 11. Marginal costs in relation to urban values 12. Equilibrium of normal demand and supply, continued, with reference to the law of increasing return 13. Theory of changes of normal demand and supply, in relation to the doctrine of maximum satisfaction 14. The theory of monopolies 15. Summary of the general theory of equilibrium of demand and supply BOOK VI: THE DISTRIBUTION OF THE NATIONAL INCOME 1. Preliminary survey of distribution 2. Preliminary survey of distribution, continued 3. Earnings of labour 4. Earnings of labour, continued 5. Earnings of labour, continued 6. Interest of capital 7. Profits of capital and business power 8. Profits of capital and business power, continued 9. Rent of land 10. Land tenure 11. General view of distribution 12. General influences of progress on value 13. Progress in relation to standards of life
11,519 citations
8,910 citations
"Modularity in Technology and Organi..." refers background in this paper
...In a famous example, Alchian and Demsetz (1972) suggest that, if production requires teamwork, and team work means that workers cannot cheaply observe one another’s marginal product, then private incentives to shirk will generate a tragedy of the commons....
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