This paper analyzes the fundamental changes in market structures that may result from the increasing use of information technology. First, an analytic framework is presented and its usefulness is demonstrated in explaining several major historical changes in American business structures. Then, the framework is used to help explain how electronic markets and electronic hierarchies will allow closer integration of adjacent steps in the value added chains of our economy. The most surprising prediction is that information technology will lead to an overall shift toward proportionately more coordination by markets rather than by internal decisions within firms. Finally, several examples of companies where these changes are already occurring are used to illustrate the likely paths by which new market structures will evolve and the ways in which individual companies can take advantage of these changes.

... of the leaders in the formalist branch of the New Institutional Economics, made the following observation. ”The incentive based transaction costs theory has been made to carry too much of the weight of explanation in the theory of organizations. We expect competing and complementary theories to emerge- theories that are founded on economizing on bounded rationality and that pay more attention to changing technology and to evolutionary considerations. ” This paper argues that such theories are now emerging. We survey and synthesize a developing perspective that we label the ”capabilities ” view. We argue that this view complements incentive-based theory (1) by considering the problems of imperfect knowledge in production as well as in governance and (2) by considering issues not only of incentive alignment but also of qualitative coordination among holders of specialized, distributed, and often tacit knowledge. Also, focusing on capabilities brings to the fore the idea that routines and similar rule-based forms of institutionalized knowledge may be important building blocks of economic organization. As a result, the capabilities approach arguably connects more fully with the New Institutional

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This paper investigates the determination and consequences of organizational changes (OC) in a panel of British and French establishments. Organizational changes include the decentralization of authority, delayering of managerial functions and increased multi-tasking. We argue that OC and skills are complements. We offer support for the hypothesis of “skill biased ” organizational change with three empirical findings. First, organizational changes reduce the demand for unskilled workers in both countries. Second, OC is negatively associated with increases in regional skill price differentials (a measure of the relative supply of skill). Third, OC leads to greater productivity increases in establishments with larger initial skill endowments. Technical change is also complementary with human capital, but the effects of OC are not simply due to technological change but have an independent role. Key words, organizational change, skills, technology, panel data. JEL classification: L2, J3, O32

Authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses. Collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods. We predict that collaborative relationships ofen assist businesses to produce complex goods, but that the relationships might also cause problems for the collaborating businesses. We find that firms using development-oriented and marketing-oriented collaborative relationships in the hospital sofhvare systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually, but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms. Following a sudden environmental shock, businesses with collaborative relationships for activities central to the shock became more likely to shut down, while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive. The study critically evaluates and tests the widely stated but little-tested argument that interfirm collaboration is usually beneficial. The results address the issue of whether organizational choices affect comparative business performance. This paper investigates the survival of businesses that use collaborative relationships with other firms to commercialize complex goods. A growing literature has identified many benefits of interfirm collaboration. Several recent studies argue that businesses that collaborate closely with other organizations in order to develop and market complex goods will be more successful than businesses that operate independently (Jorde and

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lost the ability to think or speak coherently words which the tongue has to employ in order to express any kind of daily opinion decompose in my mouth like rotten mushrooms.” Hugo von Hofmannstahl

This paper studies redeployment of resources between target and acquiring businesses following horizontal acquisitions. The analysis draws from perspectives that emphasize the strategic importance of resources that are subject to market failure. We define a five-part typology of R&D, manufacturing, marketing, managerial, and financial resources. We show that targets and acquirers frequently redeploy resources following horizontal acquisitions, especially resources that frequently face market failure. We then show that the magnitude of redeployment of each type of resource increases with the asymmetry of the merging businesses ’ relative strength on the resource dimension. The research stresses evolutionary perspectives on business organizations that emphasize the importance of organizational differences in competitive markets. The central premise of our research is that the market for businesses is often more robust than the market for resources. © 1998 John Wiley & Sons, Ltd. Strat. Mgmt. J. Vol. 19, 631–661 (1998)

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This paper studies the properties of real-time decentralized information processing as a model of human information processing in organizations. Real-time decentralized processing---which models the computation of decision rules in a temporal decision pro blem by members of an organization---captures both the cost of computation in terms of the members' time and the constraints imposed by computational delay on the use of recent information. Unlike a batch processing model, it has no single measure of del ay because decisions are computed from data of heterogeneous lags. Furthermore, decentralization does not unambiguously reduce delay, because processing a message precludes processing current data. JEL Classifications: D83, D23 Keywords: real-time computation, decentralized information processing, organizations, bounded rationality Author's address: Department of Economics Princeton University Princeton, NJ 08544-1021 USA Voice: (609) 258-4050 Fax: (609) 258-6419 Email: tvz@Princeton....