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Institutions and Enterprise Interoperability

(2nd version of a) Contribution to the Workshop 11g:

Enterprise Interoperability Cluster:
Advancing European Research in Enterprise Interoperability

Jan Goossenaerts
Pragmeta Knowledge Clout

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts

• Interoperability is key to competitiveness strategy (i2010), but how does

this relationship translate into a research roadmap and implementation
(research & technology)?

• Introduce a Multi-level Perspective for the Enterprise Interoperability


• Refine and strengthen views expressed in earlier "perspective" reports /

INTEROP D4.1 "Scientific Integration conceptual model and its
application in INTEROP“

• Leverage knowledge on socio-technical transition pathways

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
the Hague Hygienic Transition 1893 – a mirror?

Aspect hygienic transition Interoperability transition

Landscape industrialization drew more workers to cities knowledge-intensivity induce the use and
developments who lived in filthy slums without sanitary exchange of more information during enterprise
facilities processes; Globalization
Technological substitution (sewer systems replaced substitution of data access routines in
innovations cesspools), but no disruption regarding the application software by routines that comply to
technology (some additional know-ledge had the standard; no disruptive innovations seem to
to be developed about the shape of sewer be needed
pipes, sewer slopes, flow speeds and soil
Pre-transition health was seen as an individual responsibility interoperability and data exchange capabilities
responsibility are seen as an individual responsibility
Dominant software providers: innovation depends
on "proprietary solutions"
Landscape 1850: hygienist doctors found statistical studies about the cost of non-interoperabilities;
pressures correlations between infectious diseases broad strategies to become knowledge-based
and filthy environmental conditions; society; reducing the waste in enterprise
...: Pasteur's micro-organism theory provided processes;
a causal explanation of the spread of economists & legal experts recognize economic
infectious diseases inefficiencies induced by tactics of dominant
....: hygienist doctors team up with engineers software providers
(who could develop alternative technical Open source
designs) to form a coalition of sanitary
(Pre-transition) city authorities wanted to limit involvement governments want to keep involvement in industry
regime insider in public life to keep taxes low for the middle low, in order not to distort the market
attitudes class that had the right to vote (15% of the mechanism; also they want to reduce spending
population) tax-payer's money

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
business in need of an interoperability
transition in the socio-technical landscape

- society & its institutional gaps;
governance patchwork IPR regimes;
Landscape macro
aged content practices;
immature generic models;
coping with globalization

- discipline & meso

Socio-technical Regime C sector Many sectoral regimes;
commons much fragmentation (standards);
Socio-technical Regime B MDD: little reuse;
(laws, dominant software providers
Socio-technical Regime A models,
meso seek rents from path dependence
standards,..) & lock-in

micro Many non-interoperability costs;
many missed improvements;
Networks of actors - labs & firms slow innovation; rapid erosion;
high switching costs

- persons pico
Source: Geels, F. W., Schot, J., (2007),
“Typology of sociotechnical transition pathways”,
Research Policy 36, pp. 399-417.

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
From Value/Risk equation to allocation of initiative
• Firm and Person: "Self" re-engineering for interoperability
– "hidden assumption in Value Proposition for EI?"
– is this realistic in polarized market? options

Sector: Sectoral Self-regulation
– Vertical Information System Standard
• Examples:
– eResidential Mortgage Industry(Markus et al., MISQ August, 2006)
– STEP ISO 10303 AP 214 in Automotive industry
• firms in different roles, with similar options/risks per role
• align heterogeneous interests; achieve critical mass; government pressures can help
– suitable tactics available
– delay due to supplier rethoric of "innovation grounded in proprietary standards"
– fragmentation due to ICT ferment and bottom-up

• Landscape: incremental or radical government regulation

– in the case of horizontal threats to members in the economy
– Example:
• International information security standards (Backhouse et al, MISQ August, 2006
– Incremental Design: "Enabling Legislation: New Approach to standardization; institutional basis
for sector organizations so as to reduce (intra-sector) fragmentation
• on suppliers?
• on sectors with adverse factors?
• for firms operating in many sectors?
• on fragmentation?

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
Does the Landscape need a radical re-design?

technology based
gaps in an demand-supply interactions demand-supply interactions under
without fit institutions & right-conditioned institutions
expanding utilities for data & knowledge facilitated by utilities designed for
demand for efficient material/energy/financial
content & services flow & people mobility
socio- by business & consumers

technical improvement
misses due to
landscape & high switching costs
as cross-cutting
innovation decelerator;
asset eroder; strategy to lock
incentive destroyer in customers by institution gap
vertical solutions utility gap

supply of content &

service solutions

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
Different viewpoints

• Economics: Increasing returns in information products are

cemented by business models which leverage small
portfolios of intellectual property into the control of markets.
Information products are, however, equally well suited to
other business models in which increasing returns are slight
and competitors are many." (Guy,Rev. of International
Political Economy, 2007)
• Law: property regimes for infrastructure resources
(Frischmann, Minnesota Law Review, 2005); Essential
Facilities Doctrine (Shermann Act, US 19th century);
Competition Law (EU)
• Technology/Suppliers: proprietary architecture & data
standards are essential to deliver innovation to the market

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
Research Needs: sample questions

• roles and their scope:

– person: learning path (as ICT professional or user)
– firm: business development & business/ICT alignment– see the roadmap
– sector: sectoral standards
– government: enabling legislation and fit property regimes
• self-regulation versus government regulation?
– at what territorial level: national? regional? global?
• what are suitable limiting principles on IPR in the Enterprise
Interoperability area?
– reference architectures
– content encoding standards
– content itself
• are "limitless IPR" necessary for the efficient market and its innovative
dynamism? or NOT?

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts
post Civil War US "Regulatory Transition" –
a mirror for the globe's Knowledge economy reform?
Aspect Post Civil War US Regulatory transition Global Knowledge Economy Reform ?
Landscape Scale increase induced by railroads and large Globalization of content and software markets
developments firms; Industrialization and markets; standards wars, digital divide
Institutional The regulatory state introduced in the US, Reference architectures, new content institutions
Innovation limiting the freedom where prior Limiting principles for IPR and content on the
institutions failed to establish justice and basis of infrastructure resource concepts
fairness. (essential facilities doctrine)
Open Source; Creative Commons

Pre-transition Pre-1900 courts as the sole institution securing (smaller) nation-states cannot cope with the tactics
responsibility property rights, and solving related of the global market players;
conflicts Global Institutions (limited in scope)
pressures Railroads & other infrastructure ensure that -Global transportation, financial and ICT
scale-economies can be had; infrastructure enable new economies of scale
Larger firms escape the discipline of the -Studies about (rising) costs of non-
courts and thus contribute to legal interoperabilities
insecurity; and the hollowing out of -Broad strategies to become knowledge-based
economic incentives for a growing fraction Society (i2010)
of society. -Economists & legal experts recognize economic
inefficiencies induced by positions of dominant
(Pre-transition) Freedom as enacted in the US Constitution Dominant software providers: innovation depends
regime insider on "proprietary standards";
attitudes National autonomy; IPR as enacted in US
Constitution; Competition Law (focus on
outcome aspects)
more details on Post Civil War US: Djankov et al (2003);
Glaeser & Shleifer (2003); Grajzl & Murrell (2007)
Journal of comparative economics
Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts

• A multi-level perspective would draw in broader knowledge

resources, articulate stakeholder focus, and enlarge the
solution design space (factor choices & dependencies affecting the
delivery of EI)

• Beyond being outcomes of enterprise transition(micro) in a

demand-supply game, value construction and risk
mitigation are enabled by fit institutions/utilities at
meso&macro level

• ...organizational redesigns (business models) will come to

reflect institutions (Meyer & Rowan, 1978, American Journal of
Sociology); hence ensure the institutions' fitness

Session 11g, 26 October 2007 eChallenges e-2007 Copyright 2010 Jan Goossenaerts