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Information, Organization and Management
●Arnold Picot Ralf Reichwald ●
and ManagementInformation, Organization
Rolf Wigand
© 2008 Springer-Verlag Berlin Heidelberg
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e-ISBN 978-3-540-71395-1
Prof. Dr. Dres. h.c. Arnold Picot Ludwig-Maximilians-Universität Munich Munich School of Management
and Management Ludwigstr. 28 VG II 80539 Munich Germany [email protected]
Prof. Dr. Prof. h.c. Dr. h.c. Ralf Reichwald Technical University of Munich TUM - Business School Information, Organization and Management Leopoldstr. 139 80804 Munich Germany [email protected]
Prof. Rolf Wigand Ph.D. University of Arkansas at Little Rock CyberCollege 258A ETAS Building 2801 South University Avenue Little Rock, AR 72204-1099 USA
ISBN 978-3-540-71394-4
Library of Congress Control Number: 2008925000
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reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication
are liable for prosecution under the German Copyright Law.in its current version, and permissions for use must always be obtained from Springer-Verlag. Violations
Preface and Acknowledgements
This book has a long history. The three authors’ research foci are in related areas and they have worked together on numerous projects in organization research, or-ganization design, information systems and the use and application of information and communication technologies. In addition they exchanged ideas for over 25 years. This occurred in the form of publications, at conferences in joint sessions and on joint panels in Europe and North America, by guest lectures and through visiting professorships at their respective universities. Toward the end of the 1980s the idea to write a book jointly and publish it simultaneously in English and German emerged from this cooperation. After numerous meetings, the authors were fascinated at the time by the idea to utilize new communication media in this project enabling virtual teamwork and, in a sense, practice what they preach.
Transatlantic telecooperation, however, proved itself at times more difficult than anticipated: The complexity of this book project, the rapid development of the new technologies and their deployment resulted in substantial changes of the subject matter addressed and demanded an intensive dialogue among the authors. The subsequent development of the concept and content of the book had to be clarified and discussed. The boundaries and limits of telecommunication and tele-cooperation, as well as the book project reached a crisis stage.
During a most productive, week-long meeting in April 1994 in the Brewster Inn at Casenovia Lake in New York the project was revitalized and a new conceptu-alization together with a new work plan materialized.
Throughout these efforts we gained an experience that may also be a subject topic for this book: The authors encountered the boundaries and limits, but also the support potential of information and communication technology, especially the Internet and its e-mail and file transfer services. This technology enabled the for-mation of a virtual team, as well as the accomplishment of a complex project. All of this was only possible of course on the basis of commonly shared values and trust which were developed initially through face-to-face interactions. The general recognition that complex projects have to pass through a serious crisis before they find a suitable and goal-directed conclusion can certainly be confirmed in our case.
The realization of our project may in part be attributed to the engaged coopera-tion of our respective research teams. The innovative concept of the “boundary-less firm” and the opportunity to help shape the new “management leadership in the Information Age” excited and motivated them to contribute to this book in
VI Preface and Acknowledgements
some fashion. These teams too were virtually connected and thus contributed essentially to efficient geography- and time-expanding coordination of the final product. In this fashion we were enabled to bundle knowledge and this cooperation approached the limits of co-authorship. The individual authors worked on the development of various chapters in numerous locations throughout the world and while on various sabbatical and research leave projects as well as on numerous long transatlantic and transpacific flights.
A surprisingly difficult aspect turned out to be our desire to publish this book in English and German simultaneously. The creation of both language versions really was not all that difficult. Some portions of the book were written right from the beginning in German while others started in English. Consequently a “twolanguage” manuscript was available that in each case was further developed by the other authors and their teams and was translated and adapted. The English and German versions are therefore not literal translations of each other. They differ also content-wise as appropriate for the country-specific audience and their respective “textbook culture”.
For conceptual and content contributions we thank in particular Robert Benjamin, Wolfgang Burr, Juan-Ignacio Conrat, Burkhard Hermens, Gerhard Hesch, Claudia Höfer-Weichselbaumer, Wolf-Guido Lutz, Donald A. Marchand, Kathrin Möslein, Johann Niggl, Hans Sachenbacher and Dianne Lux Wigand. For their valuable editorial support we thank, Rudolf Bauer, Nico Grove, Hans Koller, Johann Kranz, Barbara Kreis, Rahild Neuburger, Heiner Röhrl, Sven Scheuble and Birgitta Wolff. Carsten von Glahn, Tanja Ripperger and Angela Shelley contributed in various translation efforts expertly and with much enthusiasm. Markus Böhme, Christine Bortenlänger, Martin Braig, Jorun Cramer, Hermann Englberger, Christine Graap-Lippert, Florian Haase, Beth Mahoney, Florian Pfingsten, Ulla Raithel, Dieter Riedel, Peter Rohrbach, Andrea Schwartz, Eckhard Wagner, Axel Wiemers and Stefan Zeilner contributed and assisted in the creation and design of figures, as well as other editorial tasks. We thank Ilse Evertse, the editor and proofreader of this book. The authors thank Mary L. Good, Dean, College of Engineering and Information Technology, as well as Dan Berleant, Chair, Department of Information Science and Robert B. Mitchell, Chair, Department of Management, all with the University of Arkansas at Little Rock for their continued support. Last, but by no means least, we would like to thank Mr. Jerry L. Maulden and the Jerry L. Maulden-Entergy Endowment for continued support as well as Nico Grove and Johann Kranz for the coordination and the finishing of the book. We would like to thank them all sincerely for their excellent and much committed work and cooperation with the authors. The responsibility for content and potential errors remains of course with the authors exclusively.
It was surprising for us that in spite of all sorts of globalization and digitalization efforts in the publishing and media fields apparently no model for tandemsolutions in the management literature exists within English and German language regions. Numerous discussions and meetings were necessary until two equally respected and expert publishing houses agreed to become cooperative partners for
VII Preface and Acknowledgements
this project. John Wiley & Sons, Ltd. as the publisher of the 1997 volume for the English-language region and Gabler Verlag is the publisher of the book for the German-language region. This German edition is now in its 5th edition and has enjoyed great success in the German speaking regions of the world. We would like to thank Dr. Reinhold Roski and Mrs. Roscher (Gabler) for their and their colleagues’ always constructive and cooperative work. We appreciate especially the support and cooperation by Dr. Werner Müller and his team with Springer Verlag for the present book. The earlier mentioned first version of the book has been substantially changed and revised and, for all intents and purposes, the current version more than ten years later is indeed a very different book.
We welcome of course any sort of feedback on this book and would like to thank our readers in advance. They can reach us at the addresses specified on preceding pages and, of course, via e-mail.
Munich and Little Rock, March 2008 Arnold Picot ([email protected])
Ralf Reichwald ([email protected])
Rolf T. Wigand ([email protected])
Table of Contents
Preface and Acknowledgements .............................................................VTable of Figures......................................................................................XIIIAbbreviations........................................................................................ XVII
Chapter 1
Information, Organization, and Management: The Corporation Without Boundaries ..................................................... 1
1.1 Changes in Competitive Environments and Corporate Structures............... 31.2 Transition to New Organization and Management Models ......................... 71.3 Structure and Special Features of This Book............................................. 12
Chapter 2
Market Dynamics and Competition: The Fundamental Role of Information .......................................................................................... 19
Case Study Chapter 2: The Rise and Fall of Netscape.......................................... 21
2.1 Why Corporations and Markets? ............................................................... 222.2 Markets and Entrepreneurship ................................................................... 282.3 Theories of Organization ........................................................................... 342.4 Information and Network Economy .......................................................... 512.5 Changes in Firms and Markets Through Improvement in
Information and Communication Technology........................................... 582.6 Implications for Management.................................................................... 62
Chapter 3
Fundamental Information and Communication Models: Insights into Communication and Information Behavior .................... 65
3.1 The Importance of Information and Communication inOrganizations............................................................................................. 67
3.2 Selected Models of Information Behavior................................................. 683.3 Selected Models of Communication Behavior .......................................... 753.4 Task-Medium-Communication.................................................................. 893.5 Knowledge Models.................................................................................... 98
X Table of Contents
3.6 Information, Communication, and Trust ................................................. 1023.7 Implications for Management.................................................................. 111
Chapter 4
The Potential of Information and Communication Technologyfor Corporate Development.................................................................. 115
4.1 Benefits and Adoption Levels of Technology ......................................... 1174.2 Information and Communication Technology Development Trends ...... 1194.3 Information Deployment Within the Firm............................................... 1524.4 Information and Communication Systems .............................................. 1644.5 Implications for Management.................................................................. 181
Chapter 5
The Dissolving of Hierarchies – Modularizing the Enterprise .......... 183
Case Study Chapter 5: The “Spaghetti Organization” of Oticon ........................ 185
5.1 Fundamentals of Modularization............................................................. 1865.2 Implementation Forms of Modularization ............................................... 1945.3 The Competitive Advantage of Modularization from the
Theoretical Model Perspective ................................................................ 2085.4 The Role of ICT in Modularization ......................................................... 2215.5 Implications for Management.................................................................. 230
Chapter 6
Dissolution of the Company – Symbiosis and Networks.................. 233
Case Study Chapter 6: Colliers International Property Inc. – An Example of a Worldwide Entrepreneurial Network...................................... 235
6.1 The Basic Idea of Hybrid Organization Structures.................................. 2366.2 Explaining the Development of Hybrid Organizations.............................. 2376.3 Implementation Forms of Hybrid Organizations..................................... 2466.4 The Role of ICT....................................................................................... 2596.5 Implications for Management.................................................................. 265
Chapter 7
New Forms of Market Coordination – Electronic Markets ................ 271
Case Study Chapter 7: Covisint – An Electronic Marketplace for the Automobile Industry ........................................................................................... 273
7.1 Basic Concept of Electronic Markets ...................................................... 2747.2 Types of Electronic Markets.................................................................... 276
XI Table of Contents
7.3 Approaches for the Explanation of Electronic Markets........................... 2857.4 The Role of Information and Communication Technology..................... 3127.5 Implications for Management.................................................................. 313
Chapter 8
Overcoming Location Boundaries: Telecooperation and Virtual Enterprises................................................................................. 317
Case Study Chapter 8: “The Worldwide Group” – A Future Work Scenario? ..... 319
8.1 The Fundamental Idea of Dispersed Organizations................................. 3238.2 Implementation Models of Dispersed Organizations .............................. 3308.3 Explanatory Approaches for Dispersed Organizations............................ 3528.4 The Role of Communication and Information Technology..................... 3608.5 Implications for Management.................................................................. 363
Chapter 9
People in the Boundaryless Organization: New Demands on Employees and Managers .................................................................... 369
9.1 People in the Boundaryless Organization ................................................ 3719.2 New Roles of Customers, Employees, and Managers in the
Boundaryless Organization...................................................................... 3769.3 How Communication and Organization Change Affect People .............. 3849.4 Tackling the Future Organization and Its Challenges for People ............ 4039.5 ICT and the New Role of People Within Boundaryless
Organizations........................................................................................... 4189.6 Implications for Management.................................................................. 420
Chapter 10
Controlling the Boundaryless Enterprise: Strategies and Control Systems .................................................................................... 423
Case Study Chapter 10: The Virtual Factory of North WestSwitzerland / Mittelland ...................................................................................... 425
10.1 Strategic Challenges for Boundaryless Organizations............................. 42710.2 Controlling Challenges in Boundaryless Organizations .......................... 43310.3 Interface Coordination in the Boundaryless Organization....................... 43610.4 Area of Tension Between Direct and Indirect Management.................... 44010.5 Controlling Systems ................................................................................ 44610.6 Implications for Management.................................................................. 475
References ............................................................................................. 477Index ....................................................................................................... 533
Table of Figures
Fig. 1.1. Potential for innovation, competitive markets, and innovation strategies ..............................................................................................3
Fig. 1.2. New models for innovation strategies................................................10Fig. 1.3. The emergence of coordination forms ...............................................12Fig. 2.1. The organization problem..................................................................25Fig. 2.2. Proportion of transaction costs of the US gross national product.........26Fig. 2.3. Possible results within a market period .............................................30Fig. 2.4. The fundamental entrepreneurial idea as creative bridging
between information spheres ............................................................34Fig. 2.5. (Pure) coordination problem: choice between two norms .................36Fig. 2.6. Motivation problem: the prisoner’s dilemma situation....................37Fig. 2.7. Solution of the motivation problem by means of norms
requiring supervision ..........................................................................38Fig. 2.8. Trade-off between welfare losses through external effects and
transaction costs ................................................................................42Fig. 2.9. Factors influencing transaction costs ..................................................43Fig. 2.10. Examples of alternative decisions for optimizing the delivery of
goods and services..............................................................................45Fig. 2.11. Integrated forms and specificity .......................................................46Fig. 2.12. Overview of principal-agent theory ...................................................50Fig. 2.13. Typology of standardization processes..............................................55Fig. 2.14. Move to the market due to decreasing transaction costs ......................60Fig. 3.1. Information need and information supply..........................................69Fig. 3.2. Confirmation, newness and pragmatic information ...........................71Fig. 3.3. Levels of information transmission analysis......................................76Fig. 3.4. Technical communication model by Shannon / Weaver 1949 ...........78Fig. 3.5. Axioms of communication according to Watzlawick, Beavin
and Jackson 1990...............................................................................79Fig. 3.6. Four sides of a message ......................................................................81Fig. 3.7. The TALK model ..............................................................................82Fig. 3.8. Action types according to Habermas .................................................85Fig. 3.9. The task-oriented communication model...........................................92Fig. 3.10. The media richness model based on Daft and Lengel........................93Fig. 3.11. Media sensitivity and management success ........................................94Fig. 3.12. Comparison of time and activity profiles of upper level managers ......96
XIV Table of Figures
Fig. 3.13. Systematization of knowledge ...........................................................99Fig. 3.14. Trust – trust expectations and actions..............................................104Fig. 3.15. Typical trust categories....................................................................105Fig. 3.16. Structure of the information transfer dilemma.................................107Fig. 4.1. The three-level model of information management.........................118Fig. 4.2. The development of microcomputer processor speed and
storage capacity ...............................................................................119Fig. 4.3. Development of communication technologies ...................................122Fig. 4.4. Worldwide Internet users in November 2007 ..................................125Fig. 4.5. Classification of Internet services ..................................................126Fig. 4.6. Object structure................................................................................129Fig. 4.7. Stages of convergence.......................................................................132Fig. 4.8. Contextual and process-oriented forms of support of cooperative
task accomplishment........................................................................136Fig. 4.9. Three-level architecture of a database system .................................137Fig. 4.10. Synchronous / asynchronous and distributed / not distributed
communication.................................................................................139Fig. 4.11. The client / server concept................................................................143Fig. 4.12. Application system architecture from the client / server
perspective .......................................................................................143Fig. 4.13. Storage needs of digitalized information .........................................146Fig. 4.14. The ISO / OSI 7-layer reference model............................................148Fig. 4.15. Standards for trade, products, and text data exchange .....................149Fig. 4.16. Information intensity portfolio.........................................................153Fig. 4.17. Strategy-oriented development and deployment of information
and communication systems ............................................................154Fig. 4.18. Life cycle model for the production of information ........................156Fig. 4.19. Explanations for the information technology productivity
paradox ............................................................................................158Fig. 4.20. Appraisal problems of networked information and
communication technology.............................................................161Fig. 4.21. Fundamental concept of the evaluation approach of networked
economic efficiency .........................................................................163Fig. 4.22. Organizational forms and macrostructures of information and
communication systems...................................................................165Fig. 4.23. Modeling..........................................................................................169Fig. 4.24. Example of a conversation network modeled as an automaton .....171Fig. 4.25. The waterfall model of software development...............................174Fig. 4.26. The spiral model ..............................................................................175Fig. 4.27. The ARIS concept............................................................................178Fig. 4.28. The event-controlled process chain “order entry” ...........................179Fig. 4.29. Simple Petri net model: sheet metal and screws ..............................180Fig. 5.1. A model of Tayloristic work organization .....................................193Fig. 5.2. Tasks of a management holding company .....................................196
XV Table of Figures
Fig. 5.3. Core competencies exemplified by Canon.......................................197Fig. 5.4. Strategic norms for (de)centralization of functions .........................200Fig. 5.5. Fundamental characteristics of the product island and product
segments...........................................................................................201Fig. 5.6. Modularization concepts along the value chain ...............................202Fig. 5.7. The system of overlapping groups...................................................207Fig. 5.8. The systematization of strategies .....................................................209Fig. 5.9. Model of room to maneuver ............................................................215Fig. 5.10. Relationship between production-based problem, production
type, and decision field .....................................................................217Fig. 5.11. Production-based task fields ............................................................217Fig. 5.12. The production types and their characteristics.................................218Fig. 5.13. Production type and degree of freedom with regard to
organization design..........................................................................219Fig. 5.14. Change in the market situation and need for reorganization .........220Fig. 5.15. Virtual linkage between process and functional specialists .............221Fig. 5.16. The requirements of modular, process-oriented organizations in
respect of ICT and potentials for solutions.......................................222Fig. 6.1. ICT support potential in cross-company cooperation ....................242Fig. 6.2. Criteria for the evaluation of the degree of integration....................246Fig. 6.3. Important vertical forms of dominance ........................................252Fig. 6.4. Selection matrix ...............................................................................256Fig. 6.5. Electronic communication relationships..........................................261Fig. 7.1. Internet support of market transaction phases..................................275Fig. 7.2. Three-level model of electronic markets .........................................279Fig. 7.3. Matching in the double auction .......................................................283Fig. 7.4. Information in a taxonomy of goods................................................287Fig. 7.5. Examples of the substitution of information services with
information products........................................................................288Fig. 7.6. US top ten 2006 retail businesses (in billions).................................289Fig. 7.7. US online advertising spending by format ........................................291Fig. 7.8. Ability of electronic markets to support transactions ......................295Fig. 7.9. Winner-takes-all market ...................................................................298Fig. 7.10. System of revenue forms ..................................................................301Fig. 7.11. Examples of the versioning of digital products ...............................303Fig. 7.12. Value chain in the shirt industry ......................................................310Fig. 8.1. Anytime / anyplace matrix ...............................................................324Fig. 8.2. Telecooperation dimensions ............................................................330Fig. 8.3. Four fundamental forms of the spatial flexibility of workplace
design...............................................................................................333Fig. 8.4. Forms of telework............................................................................334Fig. 8.5. Effects of electronic communication on management processes.....337Fig. 8.6. The product range of teleservices .....................................................339Fig. 8.7. Capital and qualification intensity of the supply side ........................340
XVI Table of Figures
Fig. 8.8. Depth of performance of service providers and specificity of service recipients ........................................................................341
Fig. 8.9. Characteristics and implementation principles of virtualorganizations....................................................................................346
Fig. 8.10. Technical developments in work environments regarding flexibility and productivity ...............................................................348
Fig. 8.11. Information technology and organizational flexibility.......................349Fig. 8.12. Generalization versus specialization ..............................................351Fig. 8.13. Basic types of broadband application deployment.........................361Fig. 8.14. Schematic interpretation of the disintegrating value chain ..............363Fig. 8.15. Working model of an idealized “European enterprise” ...................364Fig. 9.1. New roles of employees...................................................................377Fig. 9.2. New roles for management ..............................................................380Fig. 9.3. Images of individuals in business administration ............................389Fig. 9.4. Communication to interpret rules – organization occurs in
people’s minds .................................................................................391Fig. 9.5. Hierarchy of needs...........................................................................396Fig. 9.6. Motivation model by Porter and Lawler ..........................................398Fig. 9.7. Authoritarian and cooperative leadership styles ..............................400Fig. 9.8. The managerial grid .........................................................................401Fig. 9.9. Methods for conveying social competence......................................405Fig. 9.10. Internal endorsement of creativity and primary components of
creativity development .....................................................................408Fig. 9.11. Types of learning .............................................................................412Fig. 9.12. Approaches for the nurturing of organizational learning .................413Fig. 9.13. The organization as a schematic network with positive and
negative feedback loops ...................................................................417Fig. 9.14. “Answer Garden” inquiry process ...................................................419Fig. 10.1. Controlling strategies of the principal-agent theory.........................442Fig. 10.2. Controlling methods for the coordination of work processes........444Fig. 10.3. Valuation rate for internal transfer prices based on internal
transfer goals and valuation situation ................................................452Fig. 10.4. Information and communication systems for virtual companies .....460Fig. 10.5. The stage concept of knowledge management ................................463Fig. 10.6. Three-stage procedure for the evaluation of work systems................466Fig. 10.7. Multi-level model of expanded economic efficiency ........................467Fig. 10.8. Sequence of phases in the expanded efficiency analysis .................468Fig. 10.9. The four perspectives of the balanced scorecard .............................471Fig. 10.10. A balanced scorecard implementation process ................................472Fig. 10.11. Example of a balanced scorecard and its cause-and-effect
relations ...........................................................................................474
Abbreviations
ACD Automatic Call Distributor ACS Automatic Call Sequencer ANSI / SPARC American National Standards Institute / Systems Planning and Requirements Committee API Application Programming Interface ARIS Architecture of Integrated Information Systems ATM Asynchronous Transfer Mode
CATeam Computer Aided Team CBT Computer-Based Telelearning CD-ROM Compact Disc – Read Only Memory CIM Computer Integrated Manufacturing CORBA Common Object Request Broker Architecture CPU Central Processing Unit CRS Computer Reservation System CSCW Computer Supported Cooperative Work CSF Critical Success Factors CTI Computer Telephone Integration
DCF Discounted Cash Flow DGB German Federation of Trade Unions (Deutscher
Gewerkschaftsbund) DIN German Industrial Standard (Deutsche Industrienorm) DQDB Distributed Queue Dual Bus DSS Decision Support System DTB German Futures Exchange (Deutsche Terminbörse)
E-Mail Electronic Mail ECR Efficient Consumer Response EDI Electronic Data Interchange EDIFACT Electronic Data Interchange for Administration, Commerce and
Transport EVA Economic Value Added
FDDI Fibre Distributed Data Interface FTP File Transfer Protocol
GDSS Group Decision Support System GII Global Information Infrastructure
XVIII Abbreviations
GPRS General Packet Radio Service GSM Global System for Mobile Communication
HSCSD High Speed Circuit Switched Data HTTP Hyper Text Transfer Protocol
IEEE Institute of Electrical and Electronic Engineers INMARSAT International Maritime Satellite Organisation IPX / SPX Internetwork Packet Exchange / Sequenced Packet Exchange ISDN Integrated Services Digital Network ISO / OSI International Standard Organisation / Open Systems
Interconnection
JIT Just in Time
LAN Local Area Network
MVA Market Value Added
NC Numerically Controlled NII National Information Infrastructure
ODA / ODIF Office Document Architecture / Office Document Interchange Format
OMG Object Management Group OMT Object Modeling Technique OOA Object Oriented Analysis
PaCT PBX and Computer Teaming PBX Private Branch Exchange PC Personal Computer PCMCIA Personal Computer Memory Card International Association PCN Personal Communication Network POSDCORB Planning, Organizing, Staffing, Directing, Coordinating,
Reporting, Budgeting PPS Production Planning System
RDA Remote Database Access RISC Reduced Instruction Set Computer ROE Return on Equity ROI Return on Investment RONA Return on Net Asstes
SA Structured Analysis SDW Simultaneous Distributed Work SOM Semantic Object Model SONET Synchronous Optical Network SQL Structured Query Language STEP Standard for the Exchange of Product Definition Data
Abbreviations XIX
T / TTS Task / Team Support System TCP/IP Transport Control Protocol / Internet Protocol TQM Total Quality Management
UCD Uniform Call Distributor US-GAAP Generally Accepted Accounting Principles
VRU Voice Response Unit
W-LAN Wireless Local Area Network WAN Wide Area Network WWW World Wide Web
XML Extensible Markup Language
