The Information Society
Companies as drivers of change
Competition and strategy
ICT and Strategy
ICT
acceptance
Competitive advantage
Transaction costs, value chain
The New Capitalism
Drivers of change
Explaining companies
• Theory of the firm
• Transaction cost economics
• Value chain
Theory of the firm (Ronald Coase, 1937)
• Why do firms exist
• Why not the market (companies of 1)
• Why not planning (one big company)
Transaction costs economics (
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Bounded rationality
Opportunism
Asset specificity
(Information asymmetry)
Williamson
)
Bounded rationality (Simon, 1957)
• The capacity of the human mind for
formulating and solving complex problems
is very small compared with the size of the
problems whose solution is required for
objectively rational behavior in the real
world – or even for a reasonable
approximation to such objective rationality
The size of the company
• Vertical integration
• Horizontal integration
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Economies of scale
Economies of scope
Fixed costs
Variable costs
Transaction costs
Market or hierarchy
• Government
• Division structure (General Motors)
• Profit centres
• Wikipedia, Linux
• Information
Value chain (
Porter 1985
)
Value chain
• Does ICT (the Internet) effect the size of
the company?