Transforming Enterprise: The Economic and Social Implications of Information Technology

525 Pages·2004·2.55 MB·English

by  William H. Dutton, Brian Kahin, Ramon O'Callaghan, Andrew W. Wyckoff

Transforming Enterprise
Transforming Enterprise
The Economic and Social Implications of
Information Technology
edited by William H. Dutton, Brian Kahin, Ramon
O’Callaghan, and Andrew W. Wyckoff
The MIT Press
Cambridge, Massachusetts
London, England
© 2005 Massachusetts Institute of Technology
All rights reserved. No part of this book may be reproduced in any form by any
electronic or mechanical means (including photocopying, recording, or informa-
tion storage and retrieval) without permission in writing from the publisher.
This book was set in Sabon by SNP Best-set Typesetter Ltd., Hong Kong.
Printed and bound in the United States of America.
Library of Congress Cataloging-in-Publication Data
Transforming enterprise : the economic and social implications of information
technology / edited by William H. Dutton . . . [et al.].
p. cm.
Includes bibliographical references and index.
ISBN 0-262-04221-5 (alk. paper) — ISBN 0-262-54177-7 (pbk. : alk. paper)
1. Information technology. 2. Information technology—Social aspects.
I. Dutton, William H., 1947–.
T58.5.T75 2005
303.48¢33—dc22
2004055178
10 9 8 7 6 5 4 3 2 1
Contents
Preface ix
Brian Kahin
Introductory Essays xiii
Technological Innovation in Organizations and Their
Ecosystems 1
Ramon O’Callaghan
Continuity or Transformation? Social and Technical Perspectives
on Information and Communication Technologies 13
William H. Dutton
I Transforming the Economy 25
1 Intangible Assets and the Economic Impact of Computers 27
Erik Brynjolfsson and Lorin M. Hitt
2 Projecting Productivity Growth: Lessons from the U.S. Growth
Resurgence 49
Dale W. Jorgenson, Mun S. Ho, and Kevin J. Stiroh
3 The Impacts of ICT on Economic Performance: An International
Comparison at Three Levels of Analysis 77
Dirk Pilat and Andrew W. Wyckoff
II Knowledge and Innovation 111
4 New Models of Innovation and the Role of Information
Technologies in the Knowledge Economy 113
Dominique Foray
vi Contents
5 Using Knowledge to Transform Enterprises 131
Richard O. Mason and Uday M. Apte
6 Transformation through Cyberinfrastructure-Based Knowledge
Environments 155
Daniel E. Atkins
III Networks and Organizations 177
7 Toward a Network Topology of Enterprise Transformation and
Innovation 179
Panagiotis Damaskopoulos
8 IT-Enabled Growth Nodes in Europe: Concepts, Issues, and
Research Agenda 199
Ramon O’Callaghan
9 Supernetworks: Paradoxes, Challenges, and New
Opportunities 229
Anna Nagurney
IV Sector Transformation 255
10 Transforming Production in a Digital Era 257
John Zysman
11 Automotive Informatics: Information Technology and Enterprise
Transformation in the Automobile Industry 283
John Leslie King and Kalle Lyytinen
12 The Role of Information Technology in Transforming the Personal
Computer Industry 313
Kenneth L. Kraemer and Jason Dedrick
13 IT and the Changing Social Division of Labor: The Case of
Electronics Contract Manufacturing 335
Boy Lüthje
V Community and Society, Home and Place 359
14 Public Volunteer Work on the Internet 361
Lee Sproull and Sara Kiesler
15 The Internet and Social Transformation: Reconfiguring
Access 375
William H. Dutton
Contents vii
16 Impersonal Sociotechnical Capital, ICTs, and Collective Action
among Strangers 399
Paul Resnick
17 The Tech-Enabled Networked Home: An Analysis of Current
Trends and Future Promise 413
Alladi Venkatesh
18 The Social Impact of the Internet: A 2003 Update 437
John P. Robinson and Anthony S. Alvarez
19 Charting Digital Divides: Comparing Socioeconomic, Gender,
Life Stage, and Rural-Urban Internet Access and Use in Five
Countries 467
Wenhong Chen and Barry Wellman
Appendix 499
Introductory Address 501
Rita Colwell
Keynote Address 503
John Marburger
Keynote Address 509
Donald L. Evans
Contributors 513
Index 515
Preface
Brian Kahin
Over the years, research on IT-enabled change has followed changes in
technology and the market. In the 1980s researchers looked at the phe-
nomenon of personal computing in work, education, and recreation. In
the 1990s, the growth of the Internet raised a much broader set of ques-
tions, with different institutional and policy implications. The use of the
World Wide Web for advertising, promotion, and, finally, consumer
transactions drove household use to mass medium levels, while the emer-
gence of the Web technology as infrastructure for business reframed the
problem of linking computers and productivity.
Quickly internationalized but colored by American entrepreneurship,
the Web triggered vigorous discourse around principles and policies for
“global electronic commerce.” Measuring this phenomenon while under-
standing the social and economic implications became a priority for pol-
icymakers as well as businesses. The focus on electronic commerce was
overshadowed by a more general research-based case that there was dis-
cernible “digital economy.” This digital economy embraced the IT sector
and extended into every other sector. It served as the principal driver for
a “new economy” characterized by sustained productivity gains that
defied the traditional boom and bust of the business cycle.
But there was a bust, and it took the wind out of this ever-expanding
phenomenon. Yet with the bust comes the possibility of a new set of
insights about the essential and ephemeral aspects of all that has gone
before.
The exuberance that characterized information technology in the late
1990s is in short supply today. Spam, viruses, worms, and denial of
service attacks dominate the news, echoing anxiety about terrorism in
the tangible world. Change, such as it is, is led not by start-ups but by
x Kahin
the leaders of the old economy. New applications and opportunities are
few. Absorption and consolidation are the order of the day. Investment
in underlying infrastructure has collapsed. Litigation rises as blame is
sought for failure. Moore’s law seems to matter less and less, except to
game players hungry for realism.
Yet deep processes unleashed by information technology continue to
transform human activity. Markets, value chains, firms, transactions,
business models, institutions, innovation, collaboration, standardization,
trust, community—all have been and are being reshaped by information
technology. These changes ripple across the economic fabric within and
across sectors. Instead of the category-killer dot-coms in business-to-
consumer electronic commerce, the manifestations of change are widely
dispersed and often subtle. They twist and turn deep within the firm, in
the relationship between firms, or in social interactions.
Transforming Enterprise looks at change from five perspectives that
correspond to the sections of the book:
1. What is the impact on the economy as a whole? In particular, how
does IT affect productivity? Familiar questions, but we keep learning
more about the answers.
2. What are the implications of IT for the creation and use of knowl-
edge, especially new knowledge that leads to real innovation in products
and services? Knowledge is driving the economy in many ways, while
information technology and the Internet are changing the environment
in which knowledge is developed and managed. Yet both knowledge and
the changing environment for knowledge are very difficult to define and
measure.
3. What are the implications for how enterprise is organized? We see
firms working together with new facility and in new ways, thanks to the
Internet. Not just one on one, but through interlocking and overlapping
networking. Knowledge is shared and marshaled with varying degrees of
immediacy and formality within and across boundaries.
4. To get a practical perspective on how these developments and other
phenomena play out, we take a close look at how business practice and
industry structure have been within particular sectors of the economy.
This line of investigation is now well established and benefits from years
of results and insight.
5. Finally, we look beyond the sphere of business to the implications for
home, community, and society. Here, too, there is now a substantial body
of research but also continual change as the capabilities of the home user
continue to expand.
Preface xi
There is long history behind the Transforming Enterprise project. In
1997, the National Science Foundation and the National Academy
of Sciences developed a broad research agenda on the economic and
1
social implications of information technology. OECD did important
work bringing the economic and social impact of electronic commerce
2
to the attention of the policy community in 1997–1998. The U.S.
Department of Commerce published its defining work on the “digital
3
economy” in 1998. In May 1999, a number of agencies collaborated on
“Understanding the Digital Economy,” a conference that served as a
useful model for mixing industry, government, and academic per-
spectives and making the best current research available to a large
4
audience.
The sudden rise of electronic commerce and a distinct digital economy
demanded attention from a larger policy community concerned with
trade, economic growth, and the influence of the Internet on a wide spec-
trum of communications and information policy issues. The speed with
which these phenomena were developing and perhaps transforming the
whole of the economy seemed to defy, and in fact discouraged, any
well-reasoned public response. After the bust, it became easier to gain
a balanced view of the process of transformation, as well as a better
understanding of how it recalibrates policy frameworks.
We appreciate the many who contributed to making Transforming
Enterprise possible. Principal funding was provided by the Digital
Society and Technologies Program of the National Science Foundation.
The conference was hosted by the Technology Administration’s Office of
Technology Policy in the Department of Commerce. The Center for
Information Policy in the College of Information Studies, University
of Maryland, served as the project manager. The other cosponsors,
each of which contributed in special ways to the project, include the
Information Society Technologies Program of the European Com-
mission, the University of Michigan School of Information, the Center
for Research on Information Technology and Organizations at the
University of California, Irvine, the Berkeley Roundtable on the Inter-
national Economy, the Progress and Freedom Foundation, and the
Interagency Working Group on Information Technology Research and
Development. For further information, the reader is directed to
http://transformingenterprise.com.
xii Kahin
There is still much to learn, but we have a foundation here for empir-
ically grounded public debate about the future of human enterprise. By
strengthening the connections between research and policy, we expect
useful research, sound policy, and a better future.
Brian Kahin
Ann Arbor, Michigan
Notes
1. Fostering Research on the Economic and Social Impacts of Information Tech-
nology, Report of a Workshop. Washington, D.C.: National Academy Press,
1998. http://www.nap.edu/readingroom/books/esi/. See also National Science
Foundation, Division of Science Resources Studies, Social and Economic Impli-
cations of Information Technologies: A Bibliographic Database Pilot Project,
http://srsweb.nsf.gov/it_site/index.htm.
2. OECD, The Economic and Social Impact of Electronic Commerce:
Preliminary Findings and Agenda, 1998, http://www.oecd.org/dataoecd/3/12/
1944883.pdf.
3. This includes the series of internally produced reports beginning with
Lynn Margherio et al., The Emerging Digital Economy, Departments of Com-
merce, Economics and Statistics Administration, 1998, http://www.esa.doc.gov/
TheEmergingDigitalEconomy.cfm.
4. Archive at http://www.technology.gov/digeconomy/; Erik Brynjolfsson and
Brian Kahin, Understanding the Digital Economy, MIT Press, 2000.