Professional Documents
Culture Documents
ABSTRACT: The key information processing building blocks for yesterday's organi-
zations were typewriters, carbon paper, filing cabinets, and a government mail service.
The constraints of these crude information processing technologies often required
workers to be located under one roof and organizations to arrange themselves as
efficient, but relatively change-resistant, management hierarchies. Those legacy or-
ganization designs have persisted despite fundamental changes in information pro-
cessing technology. Tomorrow' s successful organizations will be designed around the
building blocks of advanced computer and communications technology. The success
of these organizations will come from the ability to couple to, and decouple from, the
networks of knowledge nodes. These networked organizations will link, on an as-
needed basis, teams of empowered employees, consultants, suppliers, and customers.
These ad hoc teams will solve one-time problems, provide personalized customer
service, and then, as lubricant for subsequent interactions, evaluate one another's
performance. In the network organization, structure will dominate strategy, credentials
will give way to performance and knowledge, and human resources will be the only
sustainable advantage. Despite the promise, networked organizations present difficult
Journal of Managemeni Ir^ormation Systems i Spring 1994, Vol. 10, No. 4, pp. 25-57
Copyright © ME. Sharpe, Inc., 1994
26 SnUCKA L. JARVENPAA AND BLAKE rVES
1. Introduction
THE MANAGEMENT PRESS PUTS INFORMATION TECHNOLOGY at center stage in a
fundamental transformation of organizational life. Successful organizations are in-
creasingly described as moving towards a dynamic network form [e.g., 22,61,75,80,
82]. Organizations such as General Motors, IBM, Siemens, and Sears achieved their
past success as semipermanent hierarchies focused on multiyear strategic objectives
selected by a small cadre of senior executives. Today, these organizations find
themselves outflanked by agile organizations that, like chameleons, can dynamically
adapt to unanticipated changes in their turbulent environments or to opportunities
revealed through interactions with customers. Advanced information and communi-
cations systems define the boundaries of these new organizations and serve as their
nervous systems. "The winners and losers in the battle for customers" will be
determined by "the incremental differences in companies' abilities to acquire, distrib-
ute, store, analyze, and invoke actions based on information" [22, p. 50].
Described as "spider's webs" [80, 82], dynamic network organizations are spun from
small, globally dispersed, ad hoc teams or independent organizational entities performing
knowledge or service activities. They reshape themselves dynamically as customer
requirements change or as the environment evolves. Network nodes are added to the web
when they can add value, and are disengaged as they are no longer required.
Infonnation technology (IT) is simultaneously an enabler and a strategic instigator
ofthe new organization form. "The threads of the global web are," according to Robert
Reich [82], "computers, facsimile machines, satellites, high resolution monitors, and
modems—all of them linking designers, engineers, contractors, licensees, and dealers
worldwide" [p. 111]. The activities of independent nodes in a network are coordinated
through "a continuously updated information system so that contributions can be
mutually and instantaneously verified" [60, p. 65]. Without the existence of technol-
ogy that permits the point person or point team to "access all the information needed
to serve the customer completely," the implementation of the network type organiza-
tion is unlikely [80, p. 134].
In addition to enabling the global web, information technology is fueling the rise of
the new network form of organization [22]. Global communication networks and
databases increase the mobility of information and knowledge and promote the
dispersal of value-adding processes around the globe. Organizations can extract
information and knowledge components of their production inputs and business
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 27
processes, and move them around the world without inctming major time delays or
transportation, reproduction, or inventory costs. Information technology is also weav-
ing the customer into the ever changing web that collectively adds value from locations
throughout the world. Using common high bandwidth communication networks,
knowledge-based systems, and extensive databases, customers play a direct role in the
design, production, and/or the delivery of the product or service [37, 80]. VTI Inc.
uses its worldwide network to work with clients to create application-specific inte-
grated circuits [80]. From his or her office, a Motorola customer uses a sales
representative's notebook computer to codesign a pager from 29 million possible
combinations [77].
We shall explore here the opportunities and challenges the transformation to the
dynamic network form presents to the infonnation systems field. The article is
organized as follows. To illustrate the nature of this transformation, we present a
scenario in section 2 of what a network organization of the future might look like. In
section 3 we rely on that scenario, other examples, and scholarly and popular writings
to discuss the organizational design, strategy, and human resource management of tbe
dynamic network. Here we also begin to surface the requirements of infonnation and
information technology within the network organization. In section 4, we build on
those requirements to suggest challenges for information systems practice and re-
search. In the concluding section we view the network organization from the perspec-
tive of the information systems executive.
Our focus is on businesses operating globally, although we envision further blurring
of lines between domestic and multinational organizations. Increasingly, "domestic
firms" will participate as knowledge nodes in a global network even if their assets are
owned (an unlikely scenario) by people of only one nation.
2 . 1 . Underlying Assumptions
Scenarios are based on assumptions about certain future states and trends. We have
integrated writings from a variety of disciplines to come up with the assumptions that
serve as the foundation for our scenario. In Tables 1, 2, and 3, we present those
assumptions that we feel have relevance to the transformation of a network organiza-
tion. The assumptions are only illustrative of future states and trends. They focus on
technology, the environment, and organization life a decade or more in the future. The
evolution in the deployment of the technology is, we believe, central to many of the
assumed changes in the organization and the environment.
28 SIRKKA L. JARVENPAA AND BLAKE IVES
Our scenario is set ten to fifteen years in the future. Some aspects of it, particularly
the technology features, will materialize far sooner; others, including many of the
organizational innovations, will take longer to come to fruition and may take another
form. The scenario depicts organizational life for The Worldwide Group, a manage-
ment consulting firm, and for some of its business partners. We will spend an evening
with a globe- trotting consultant who finds herself sharing responsibility for a market-
ing initiative that must be executed in less than 18 hours. The scenario is not intended
to predict with any accuracy the future of the consulting industry. Instead, we use it
to paint a picture that relies for its pigments on reasonably well grounded assumptions
about the future of organizational life. The scenario provides an outline within which
to explore information management policies and such broader societal concerns as
ethics, privacy, and loss of personal autonomy.
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 29
Resource deployment
• Human intellect most valuable asset [2, 22, 80]
• Cosmopolitan management team [2, 82]
• 24-hour window for work day [30, 34]
• Virtual work teams and managers [30, 90]
• Self-managed work teams [33]
• Personalization of human resource management [93]
Organizational strategy
' Mass customization [22, 24, 25, 76]
• Core competencies and capabilities [79, 91]
Environment
• Increasing environmental uncertainty/turbulence [49, 75]
• Information economy: knowledge as the new source of wealth [97]
• Work growing independent of workplace [35]
• Decreasing economic role of the national government [97]
• More diverse work force [35]
• Nations will seek competitive advantage by investments in education and knowl-
edge infrastructure [35]
Competition
• Continued shortening of product life cycles [75]
• Economic power from services and service industries [80, 82, 97]
• Globalization to reap economies of scale and scope [14, 86]
• Reemergence of entrepreneurship/startups [94]
be provided by a flight attendant serving food and drinks from a cart that might be
only slightly more intelligent than we are familiar with today. As we will see, however,
communications systems will often be used to replace or to supplement transportation
systems.
Rodgers barely noticed the selection of soft classical music that served as background
to her audio system. Her personal profile, stored in her assistant—or was it the
airline's frequent flyer database—had chosen the type of music and preset the volume
based on her personal preferences. The personal profile would also suggest that her
morning coffee be served with cream but no sugar. With the touch of another icon,
Rodgers began to make arrangements for her brief stay in Oxford. This was a spur of
the moment transatlantic crossing, so she had left with no hotel reservations. The elec-
tronic reservation agent her firm subscribed to had meanwhile booked her into the
charming guest house she had been so delighted with during her last visit to Oxford.
Using the travel agent's virtual reality simulator, she wandered into the rooms with
open doors (available to be rented this evening) and selected one with lovely pink
wallpaper, a canopied bed, and a view of one of the colleges. She then booked a car to
pick her up at Heathrow and transport her to Oxford. She could have looked at a short
video segment showing where to meet the cab. Closer to the time of arrival, she could
even look at a prerecorded introduction to her driver or talk to him or her directly. As-
suming on-time arrival, which the onboard computer informed her was 95 percent
likely, and normal early morning traffic, she would arrive in Oxford five hours before
her meeting with Professor Fearl and the prospective customer. For the first two hours
of the fiight there was a great deal of work that needed to be completed. But first she
called home to talk to her husband and proudly watched her littlest one take a few
more faltering steps around the living room.
Across the p.isle she saw a passenger looking briefly at an electronic advertisement for
The Worldwide Group. The advertisement she knew would boast that, "Worldwide
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 31
"Tara, you should recognize Baker-Knight's name; you worked with him five years
ago on a project when he was the head of the development labs at Ray Software Ltd.
and you were working for that unmentionable systems integration house. It was that re-
lationship, and your familiarity with the software industry that caused your name to
spit out when our U.K. people ran this through the relationship-identifier system.
"Empire is a high-growth company that, up to this point, has been very profitable.
Fearl believes there is a strong likelihood of followup business with Empire. Baker-
Knight feels Empire is poorly positioned to operate in the integrated global manner re-
quired by their customers and has not taken advantage of the economies achievable
through advances in software engineering or by reliance on facilities in Eastern Eu-
rope, China, or similar environments. He believes Empire will require the kind of
wholesale organizational reengineering that Fearl has apparently been discussing in
the Templeton program. I've checked our global customer file and see that although
we have not yet assigned a worldwide customer team to Empire, we have had several
small, but promising, engagements with them both in Europe and the Pacific Rim. We
have done nothing here in the U.S. where several of their major facilities are located. I
was therefore pleased when the U.K. asked foi you to act as the primary contact per-
son with Baker-Knight. Frankly, I suspect they would rather use one of their own peo-
ple, but the relationship system protocols gave us first crack at it.
"I've checked your availability over the next two days and it appears that we can reas-
sign most of your responsibilities to other associates. Hopefully, you can pick up the
32 SIRKKA L. JARVENPAA AND BLAKE IVES
remainder from your airplane seat or hotel room. Your contact person in the U.K. is
Jeremy Wainright, a partner in otir London office. Jeremy has worked closely with
Fearl in the past, but has had no previous contact with Empire or Baker-Knight. I have
tentatively contracted with Mary Ellen Smith to serve as your special research assis-
tant. Mary Ellen is a doctoral student at the University of Caiifomia at Irvine who
worked for us several years ago and still participates in special projects. If you so
agree, she will be at your disposal for the next 48 hours, working out of her home.
You might ask her to use our files and external sources to pull together an information
brief on Empire, their major and potential competitors, industry trends, and so on. You
may also wish to draw upon our industry expert network here and in Europe, as well
as rely on our multimedia modules for knowledge about executive education, global
business, and software development."
Rodgers then listened to the forwarded messages from Professor Fearl and from Jer-
emy Wainright in the London office. From corporate records, Rodgers learned that
Wainright was young for a partner but very successful. He appeared, as she did, to
work "out of the box," specializing in projects that required pulling together diverse re-
sources from throughout Europe or other parts of The Worldwide Group's world.
From past experience, she knew this background would be helpful in landing the eon-
tract but also in divvying up any rewards. The firm's reward system still did not fully
reflect either the increasingly global nature of many projects or the use of temporary
teams pulled together from throughout the firm to land contracts such as the Empire
opportunity. Revenue sharing deals were now often negotiated at the operating level
and then approved later at higher levels. Well, at least Wainright knew the informal
rules. From Wainright's 360-degree personnel assessment data, Rodgers also learned that
he was a self-starter, had a penchant for detail, was highly motivated, and cotild be counted
on to deliver. Peers, clients, subordinates, and supervisors, however, were somewhat less
enthusiastic in ralings of Wainright's marketing and relationship-building skills.
Wainright had spoken to Fearl again later in the day and had forwarded that interac-
tion to Rodgers. Wainright had provided the names of several Empire people in the
U.S. and Europe with whom the firm had an ongoing relationship. One of these rela-
tionships, Rodgers noted, pertained to software development productivity. Linking in
to her firm's central databanks (i.e., a vital part of its organizational memory), she
pulled up all the reports related to the project. Among them was a presentation that
had been prepared for and delivered to a technical directions steering committee in
Tokyo just three months before. The findings paralleled Baker-Knight's concerns
about both software development productivity and global reach. Among the recom-
mendations was a call for a management education program and a major relook at the
Pacific Rim development facility. The presentation also identified a major threat from
a systems integrator who had targeted the intemationai freight business for a major
systems integration effort. Rodgers sent an urgent message to the Tokyo partner who
had worked with Empire on the project. Although he was vacationing on a cruise ship
in the Caribbean, the messaging system located him using a geographical positioning
technology and forwarded the message which was provided in both English and Japan-
ese. Rodgers attached the correspondence related to the current project and requested
a quick update and a one-minute summary of the original findings that might be used
tomorrow to help promote the current scheme. She then downloaded the complete text
of the Tokyo presentation into her personal assistant, electronically highlighting key
sections that would be useful tomorrow if the Tokyo connection didn't pan out. As it
was now early in the morning in England, Rodgers resisted the temptation to wake
Wainright, but left a message for him to call her the next morning while she was en
route to Oxford. She also forwarded to him a copy of the Tokyo results.
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 33
Rodgers then tumed her attention to the dossier on Empire prepared by Mary EUen
Smith over the last several hours. As Rodgers anticipated after reviewing her qualifica-
tions file. Smith had produced a rich assortment of documents on Empire as well a
fine overview report. Rodgers entered an electronic reminder to give Smith high
marks when she and the assistant went through the postproject audit. But Rodgers
now required specific information concerning talent that might be willing and able to
participate in the education progiam. Using the global paging service, Rodgers re-
quested Smith to call her. Then she. Smith, and an executive education specialist in
Boston talked through the talent requirements. She needed a list of names within the
firm, within academia, and among independent consultants who were qualified to par-
ticipate in a program such as this. She would require data on fees, availability, areas of
specialty, and evaluations from pievious progiams. Where available, she also wanted
to see short segments of these individuals performing before executive audiences.
Smith would use Gopher IV, a knowbot, to search through faculty expertise files
among all the top-tier business schools around the world. Rodgers asked Smith to
identify five to ten talent candidates and the education sjjecialist to assign someone to
prepare short candidate venues for the program. Prototype venues would include both
lush and economic single-site locations at a midpoint between Empire's many facili-
ties, a European option—^probably at Templeton, and regional locations. Each option
would also require the usual teleconference hookup, thus permitting participants
and/or talent to remain at their home locations but to participate from the now com-
mon conference rooms equipped with multiple video cameras and giant flat screens on
two walls. It was unlikely that Knight-Baker would take a personal interest in the
venue but Rodgers remembered that he kept people on the ball by dipping down into a
level of detail she had found surprising. Using her personal assistant to link to the up-
loaded files from The Worldwide Group's hundreds of other personal assistants, she
discovered that Knight-Baker had a summer home in Bermuda, a piece of infonnation
she passed on to the education specialist as a possible mid-Atlantic resort venue.
Before signing off, the education consultant had downloaded into Rodgers' personal
organizer, a multimedia presentation that the firm had recently used to sell a some-
what similar education project to another client. This boilerplate would save a great
deal of effort and cost in preparing for tomorrow's meeting.
While she waited, Rodgeis prompted the assistant to identify an initial list of individu-
als who might add value to the program. Using just her firm's database, she checked
on availability over the next six months and watched video clips of several professors
working with an executive audience. She called one in Oregon who had worked with
her and Baker-Knight years before. His enthusiasm foi the planned program and obvi-
ous respect and fondness for Baker-Knight were so great that she asked him if she
could use his automatically lecoided remarks, and contagious smile, during her presen-
tation tomorrow. Rodgeis then contacted Cinko Kolors, a multimedia services com-
pany to which hei firm often outsourced graphics work. Cinko Kolois front-ended for
a variety of small, often one-peison, graphics consultants that tended to work out of
small towns, artists colonies, or lesoit locations. These graphic artists provided multi-
media artistic talent while Cinko Kolors marketed services, kept the artists' technol-
ogy up to date, took care of the bookkeeping, and provided technical expertise and
tiaining. Inducements from the Singapore govemment, coupled with that island
nation's superior infoimation technology infrastructuie, had led Cinko Kolois to estab-
lish their legal headquarteis there.
Cinko's Kolors ensured that the customer received worldwide piesentation consis-
tency, copyiight clearances, a standard of quality, and onsite piesentation equipment
34 SIRKKA L, JARVENPAA AND BLAKE IVES
for the end user. Because of the lateness of the hour and short time horizon, Cinko's
Kolors first offered Rodgers an artist on Kuai. Rodgers viewed several short segments
of the artist's work and then, using Cinko Kolor's database, gained assurance of his
ability to deliver in a timely fashion. From her own firm's files Rodgers retrieved and
reviewed a previous project for which this same artist had received high marks. Satis-
fied, Rodgers forwarded logos from her own firm, as well as that of Empire along
with names, titles, pictures of Templeton, pictures of Empire's corporate headquarters,
and the information that would permit the artist to access the previous multimedia pre-
sentation. Cinko Kolors would coUect, and share with the original multimedia design
consultant, a standard fee if that presentation were modified for reuse. Through the
next hour Rodgers and the multimedia artist discussed the initial storyboard for the
ten-minute marketing presentation. Site venues, talent presentation clips, and seg-
ments from her would be forwarded to a companion multimedia artist in London who
would complete the work. The final rough cut of the promotional piece would be avail-
able for Rodgers' review upon arrival in Oxford. Cinko Kolors would ensure that pre-
sentation equipment was available both at her guest house and at Templeton. That
would stiU leave several hours for final edits and perhaps even inputs from Fearl,
Wainright, the firm's European managing director, or the Japanese partner who had su-
pervised the Tokyo project and was now cruising the Caribbean.
Rodgers wrote up a summary of her activities thus far and forwarded it and the vari-
ous working documents and contact people to Wainright and The Worldwide Group's
database. She also took the liberty of recording a 5:30 A.M. wakeup call for him. If the
human resources profile on him was accurate, she could trust him to pick up the ball
and move it forward while she caught a little sleep. She set a relative wakeup call for
herself for 45 minutes before the plane touched down in London. Her personal profiler
would ensure that a gentle voice would awake her with some sweet words of encour-
agement.
As the flight attendant arrived with the port wine, Rodgers reviewed the personal
assistant's profile of Tom Baker-Knight. When she came to work for The Worldwide
Group, the infonnation in her old portable had been transferred to the assistant and,
for all she knew, to the Group's central databanks. Although she had been far less ex-
perienced in those days, she had had the sense to record the wine Baker-Knight had or-
dered and so much enjoyed five years before. She forwarded the name and year to
Wainright, who with his alleged penchant for detail, perhaps might be motivated to
get an Oxford wine merchant to embellish the Templeton College wine cellar before
tomorrow's meeting. Sipping her port with some satisfaction, she downloaded a short
story into the audio system and reclined the seat,
be provided by the various artists the firm represents. Miles and Snow [61] define the
network organization as consisting of "the collective assets of several firms making
contributions at various points of the value chain" [p. 55]. Others describe the
'"virtual corporation' [as] a tightly knit 'family' of independent companies that,
for many purposes, functions as one" [68, p. 40].
Network organizations are described by words such as "open" [94], "virtual" [22],
and "dynamic" [60]. "Open" emphasizes the fluid and flexible nature of the network
inside and outside the knowledge nodes. The legal organizational boundaries of the
nodes have become highly secondary. Information and knowledge exchanges between
nodes of the same legal entity are indistinguishable from those of different legal
entities.^ The web relies to a large extent on public communication services, standard-
ized interfaces, and local personal computer services for exchanging information and
knowledge across nodes.
"Virttial" makes the concept of organization itself a tenuous one. In our scenario,
the problem solving web set up to service Empire has no permanent homebase. Its
current homebase might best be described as Tara Rodger's airplane seat. To Reich
[82], the spider's web has "no 'inside' or 'outside' the corporation, but only different
distances from its strategic center" [p. 96]. The strategic center itself is constantly
changing. The notion of "virtual" challenges the traditional view of a multinational
organization as seeking to gain financial advantage by internalizing transactions
related to capital, product, and knowledge [83]. In the network organization, it may
no longer make sense even to discuss the design of an organization unless we can talk
about knowledge economies of scale.
"Dynamic" refers to the continuously changing mix of partners in the family. The
coupling and decoupling of nodes reaches outside any particular "legal" organization.
At one moment, aparticular node can be a partner in the knowledge network; at another
moment, it may be a competitor or a customer. Tara Rodgers, her boss, and Professor
Fearl assembled a network of nodes for addressing a particular customer's unique
problem in a timely fashion; once that problem is addressed, this configuration of the
network will disappear and its individual nodes become available for attachment to
other network configurations. Any particular configuration of the problem-solving
web is dependent on the customer requirements. Both Davidow and Malone [22] and
Larsson and Bowen [56] call for "thinking in reverse"; customer requirements should
be the starting point of thinking how a problem-solving web should be structured.
The more permanent nodes of a network organization focus on knowledge and
service activities rather than manufacturing or production activities [80, 82]. These
latter functions are often brokered as easily substituted commodities. In the electronics
industry, firms that have practiced outsourcing (i .e., buying their products ready-made
or purchasing a large share of their parts from suppliers) are proving to be considerably
more profitable than those firms that are vertically integrated [36, 81]. Even some
integral intellectual assets might be outsourced if an organization cannot produce them
at world-class quality and cost level [80]. For The Worldwide Group, such assets might
be the knowledge experts used in the executive education program. For Cinko Kolors
it is the artistic talent employed in the production and display of presentation graphics.
36 SIRKKA L, JARVENPAA AND BLAKE IVES
Quinn [80] calls the network organization the "intelligent enterprise" to emphasize
that the network organizations will increasingly differentiate themselves not on how
they manage physical material or product flows, but on how they manage intellectual
and service pitwesses. Similarly to Reich [82], "The key assets of the network
organization are the skills involved in linking the solutions to particular customer's
problems and the reputation that accrues from that" [p. 98]. This implies that even in
manufacturing organizations, the value-adding processes will increasingly center on
intelligence and service activities—managing technology knowhow, product design,
long-term supplier agreements, business partner alliances—rather than managing
internal productivity [80].
typically bought a shin based on color, sleeve length, and neck size. The customer
was expected to manage his own wardrobe. Today, in an era of mass customization,
the organizations selling garments manage the wardrobe, ensuring that the new shirt
augments the existing wardrobe. In addition, a shirt is individualized to the needs of
the customer. For example, computerized measuring systems measure a man's body
on 40 dimensions (not just three), ensuring that a shirt fitted to not only the body but
to the way the person stands—arms forward, shoulders back, and so on [20],
Mass customization requires a rich information base on the customer attributes and
past activities. Fingerhut, a nonspecialty merchandiser based in Minnesota, serves
over 13 million customers. It captures as many as 1,400 pieces of information about
a household to make detailed predictions about consumer behavior and to engage in
relationship management [6]. Yet, to be useful, these massive databases must be accessible
and meaningful to every knowledge worker who comes in contact with the customs.
Quinn [80], for example, calls for a "Fast-acting 'database system' [that allows] the contact
person to (1) move easily from one specialized data source to another and (2) to mix and
match data in an optimum fashion for each customer" [p. 133].
Mass customization also is the ability to serve the customer at a level appropriate to
the occasion. As The Worldwide Group designs a customer education program, there
are synergistic advantages to being able to view that customer on a global as well as
a local level. Cinko Kolors must deliver a presentation to Worldwide that meets
Worldwide's global consistency and quality standards, but is tailored to the local
context of Templeton. At times the "same" customer is treated as part of one global
entity (i .e., The Worldwide's Group's global presence), sometimes as part of a country
node (The Worldwide Group's U.K. node), and at other times as an individual
knowledge worker (Tara Rodgers). What constitutes a customer changes from one
interaction to another. Data structures must be able to accommodate these multiple
views and meanings and, moreover, allow for their continuous evolution.
Mass customization also changes the role of a customer in the production or service
function. Historically, in a manufacturing-dominated economy, customers were out-
side the production function and viewed largely as a passive source of demand [56].
But personalization may require online customer participation from the first anticipa-
tion of an order, to its specification, to the order itself, to the delivery, to after-service
maintenance, and to in-service measures of effectiveness [52]. For example, Tara
Rodgers requires access to Cinko's database on prior work to qualify the supplier.
Rodgers also forwards material from her own database as well as from Empire and
Templeton (e.g., corporate logos of Worldwide and Empire, and the names, titles, and
pictures of potential industry experts and Templeton faculty) to be used in preparing
for the presentation. All this customer participation in the design, production, and
delivery of the service dramatically increases the volume and complexity of informa-
tion that must be exchanged between the customer and the supplier [56]. Furthermore,
these requirements are difficult to predict. This further fuels the need for highly
dynamic organizational forms and information systems that can integrate and consol-
idate information at the level appropriate for solving a particular customer's problem.
In the network organization, the issues of structure dominate the issues of strategy.
38 SIRKKA L. JARVENPAA AND BLAKE IVES
on the corporate level, but also fed back into the profit centers so that units can monitor
and compare their performance to the sister units.
Network organizations rely heavily on real-time and full access information for
intemode coordination [60, 47]. Vertical authority and control relationships are
replaced by horizontal information flows. Each node in the network is continuously
nourished with real-time infonnation on each other's activities. At Kao, "All company
infonnation (with the exception of personnel data) is stored in a single integrated
database, open to any employee regardless of position" [72]. Additionally, as is
apparent at The Worldwide Group, trust can to some extent be maintained with
information technology enabled organizational memory rather than personal contact; Tara
Rodgers develops such trust in both her British counterpart, her research assistant, and her
graphic artist by reviewing detailed data depicting their success or skills, demons. Row,
and Miller [19] note that within Rosenbluth International Alliance, IT is critical in
providing information on the service quality and performance that support the ongoing
cooperative relationships across independently owned travel agents in 37 countries.
Miles and Snow [61] believe that "underlying all of the positive characteristics of
network structures is the dynamic of voluntarism" [p. 69]. The dynamic network
models assume that "the various components of the network recognize their interde-
pendence and are willing to share information, cooperate with each other, and
customize their product or service—all to maintain their position within the network"
[61, p. 55]. Tara Rodgers, for instance, willingly shares information with her British
and Japanese colleagues, the graphic designer, and others. Cinko Kolors provides Tara
with access to its database which contains historical performance data, samples of
prior work, and availability information on graphic artists.
The network organization assumes a paradigm shift in the role of information in an
organization. No longer is information viewed as an enablement of control or an asset
to be controlled [51]. Rather, the goal is to tum information into knowledge by
marrying human expertise with information. The more sources of expertise brought
to bear on the information, the greater the potential for knowledge generation [72].
Hence, the value of infonnation comes from being shared across knowledge workers,
across knowledge nodes, and across networks. Quinn [80] emphasizes that knowledge,
unlike most resources, increases in value as it is shared: " As one shares knowledge
with colleagues and other internal organizations, not only do these units gain infor-
mation—^linear growth- they usually feed back questions, amplifications, and modi-
fications, which instantly add further value for the sender" [p. 254]. According to
Quinn [80], "Planned knowledge sharing thus creates exponential value-added growth
through 'network benefits' up to the point where individuals encounter information
overload" [p. 254].
There are many different ways to empower workers. Conferring authority is one,
accompanied by expertise and relevant information [47]. The chairman of Motorola
tells his "sales force that they have all the authority of the chairman when they are
with customers" [47, p. 64]. Team organization, where no information differential
exists among members and where everyone acts on equal terms, leads to empower-
ment [2,72]. To others, empowerment means directed autonomy and assumes well-
socialized, trained, and informed employees [8,22].
Employees are considered empowered when they (a) get information about organ-
izational performance, (b) are rewarded for contributing to organizational perfor-
mance, (c) have the knowledge and skills to understand and contribute to
organizational performance, and (d) have the power to make decisions that influence
organizational direction and performance [8]. Companies such as Sony and VeriFone
have installed new financial systems that report daily consolidations of worldwide
sales directly to employees. Firms we are familiar with equip every employee's
personal computer with a window displaying in real time "how are we doing" data
such as the firm's current stock price. Such systems can help focus employee and team
efforts toward the problems and opportunities facing the broader organization. Real-
time feedback and complete information access could also be applied to business
process measures such as order-taken to revenue-collected turnaround times, customer
callbacks, work-in-progress inventory, and so on. For instance, at the Conner Springs
Company, a metal worker is provided with "full and instant access to data about the
jobs he or she is working o n . . . . An employee who spots (or develops) a problem with
a job can go the the computer and put a 'shop hold' on it" [17, p. 57]. Data are thus
provided "to those who need them in their jobs, with no managerial spin, because you
have trained front-line workers [who know how] to use them" [33].
Not only will the development of skills become more personalized, the performance
of the knowledge worker will be much more closely tied to his or her compensation.
Knowledge work, unlike manual work, consists of creation, manipulation, and com-
munication of symbols. The oulputs of knowledge work and partly the process
accompanying the work can be electronically captured and stored. Personalized
compensation programs can be driven from databases containing the employee's
activities along with evaluations from completed projects. For instance. The World-
wide Group's postproject feedback from peers, subordinates, superiors, and others
provides the basis for such a compensation scheme, though one might anticipate some
cross-cultural resistance to such a scheme. Individually tailored compensation
schemes might also implement what Handy [47] calls "Type Two" accountability,
answering these questions: did the specific employee seize every opportunity, make
all possible improvements to satisfy the customer? But compensation schemes must
also be heavily oriented toward the success of the specific team as well as the specific
individual [33]. A detailed trail of team member activities will provide the ability to
assess the relative contribution of each member to the team activities.
In the network organization, human resource management is likely to be dispersed
to empowered employees and problem-solving teams. Prior research has shown that
when activities of the team members become highly interdependent and interwoven,
only the team itself has enough knowledge of how the actions taken by the members
relate to the results they have produced to carry out the team member development
and evaluation activity. Those outside the team (e.g., at the strategic center of the
network organization) are limited to influencing employee selection [89].
As human resource decisions are delegated to teams, infonnation systems can be
used to diffuse the organization's best expertise on employee hiring, selection,
evaluation, and coaching [9]. Systems can be used to help make and debias perfor-
mance appraisals and salary allocations. They can also play a role in tracking, aging,
and developing skills, as well as in helping teams build individualized performance
targets that are directly linked to customer measures such as satisfaction. Systems
might provide real-time feedback to the team on meeting its targets. Systems are also
seen as keys in enabling employees to manage their own flexible and personalized
benefits packages [9].
Federal Express's PRISM system [74] illustrates an early form of what the person-
alized human resource management systems of the future might look like. PRISM
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 43
provides coaches with direct input and online access of all personnel and skill data
for their team members. All employees can preview their own personnel data in real
time. The system provides online applicant processing, hiring, processing employee
benefits, job posting, bidding, training and testing, safety and security, EEO/affirma-
tive action, and computer-based management by objectives.^ PRISM also encom-
passes interactive video training modules that adapt to the employee's level of
knowledge. The system facilitates relocation of people to jobs throughout the FedEx
world, thus providing employee with a rich set of job opportunities. PRISM also
helps prescribe personalized training and development programs. The system assists
coaches, not the personnel manager or department, to hire employees, track and
manage their skills, and evaluate employees online.
The dynamic network form assumes broad sharing of information at the transaction
level within and across legal organizational entities. Broad sharing requires a
highly adaptive infonnation architecture that can provide anytime-anyplace, mul-
timedia interconnectivity across a constantly changing network of nodes. The
infonnation architecture must accommodate quick coupling and decoupling with
value-adding partners. Information architecture must be independent of any orga-
nization structure.
Allen and Boynton [1] describe two approaches for achieving efficient and
flexible information architecture: the low road, or decentralized approach, and the
high road, or centralized approach. Although both approaches can lead to an
architecture with high information connectivity, Allen and Boynton suggest envi-
ronments appropriate for each. The low road seems appropriate when the needs of
the various businesses are diverse, the relationships among businesses complex,
and the emphasis is on effectiveness and local responsiveness. The high road, with
its centralized architecture, provides a more direct road to sharing, but only when
the business is stable and uniform, with emphasis placed on efficiency rather than
on effectiveness. Given the network organization's needs for mass customization,
flexibility, empowerment, and constant reconfiguration, some sort of modified
low-road approach seems most appropriate. Even this approach as prescribed by
Allen and Boynton assumes agreed-upon definitions for shared data and common
communication interface protocols, as well as "a philosophy of full access to
information" [1, p. 436]. Agreed-upon definitions and common protocols assume
a static or stable business environment and hence go against the environmental
assumptions of the network organization. How to manage information architecture
in a highly dynamic organization is a rich, but challenging, subject for further
research.
GLOBAL NETWORK ORGA>fIZATION OF THE FUTURE 45
information into knowledge that has business value. Next we will address the top layer:
the values, attitudes, and behaviors of information sharing.
Davenport et al. [21 ] have proposed alternative models for managing the politics
of information sharing. Their preferred model, "federalism," nurtures the volun-
tary and participatory spirit of the network organization, but appears to impede the
speed with which new nodes can join the network. "Federalism," according to
these authors, "treats politics [of information] as a necessary and legitimate
activity by which people with different interests work out and among themselves
a collective purpose and means for achieving it" [p. 59]. Further, "federalism
require[s] informed participation of all organizational citizens" [p. 64]. But gain-
ing consensus across dispersed knowledge nodes is likely to be a slow and
time-consuming activity. In the network organization, information sharing agree-
ments would have to be based on individualized negotiations between each joining
node and the rest of the network. And the requirements of the sharing arrangements
will probably change from one customer situation to another. Particularly, given
the dispersed nature of the network, some of the negotiations might have to occur
electronically. Unfortunately, it has been estimated that it takes four times as long
to reach consensus via electronic means in a nonsimultaneous encounter than via
a face-to-face meeting [90].
Would a constitutional monarchy be a better information sharing model for the
network organization? In a constitutional monarchy, a document exists that out-
lines "the monarch's limitations, the subjects' rights, and the law's authority"
about the information collection, use and sharing along with the enforcement of
the "laws" [21, p. 52]. To succeed in the long run, the constitutional monarchy
must be embedded in the values and norms of the organization. The social fabric"*
would embed the "laws" about information sharing and direct the members'
behaviors about information management. Similarly, conformance to technical
interoperability standards and naming guidelines would be used as a prerequisite
for continued participation in the network. Given that new standards and new
values are difficult to diffuse through an existing entrenched organization, the
constitutional monarchy model favors new organizations that are free from old
legacies of information management.
We propose another view for information sharing in the network organization.
This view mirrors the concept of auction block and involves an even greater
paradigm shift in information management. This view moves away from using
information to protect future income and toward one of conceptualizing informa-
tion as a means to generate future income. Information sharing would become
essential in continually maintaining the knowledge worker's credibility, reputa-
tion, and the trust of potential business partners. Similar to an auction, the buyer
is free to inspect the merchandise prior to the sale. Tara Rodgers, for instance,
examined previous work by her graphic artist as well as evaluations of the artist's
work by other Worldwide Group customers. But, unlike the auction, the buyer also
has the opportunity to register disappointment, and thus impact future prospective
purchasers' behavior, if the product doesn't live up to expectations. The network
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 47
High Low
\ Values, attitudes, and behaviors of information sharing
Crossfunctional business
I
applications triggering actions
> from information
en
Enterprise model of
organizational infonnation
resource
Software
3
compatibility
Low High
organization more tightly couples performance with compensation and future work
opportunities. Today, potential partners look at credentials, resumes, endorsements,
recommendation letters, and self-promotion. In the futtire they will instead traverse
databases containing information and evaluations on past works as well as the works
themselves. Tara Rodgers' or Jeremy Wainright's search for future lucrative business
opportunities necessitates that they publicize their performance data and skills inventories.
Again, the question remains whether this view of information sharing is only viable for
new organizations or whether an existing organization such as IBM or General Motors
can so dramatically change its values with respect to information management. Again,
much research is needed to explore which models and views of information sharing are
best suited for the dynamic network form.
efficiently as well as to use filters and willpower to avoid information overload as well
as the contagion of unlimited access to knowledge-based resources. These require-
ments, coupled with the sophisticated new pedagogical approaches that information
technology is making possible, call for a complete overhaul of our current approach
toward educating managers about information technology.
In the scenario, Tara Rodgers used several public information sotirces, including
Gopher IV, to examine the talent pool of the best business schools from around the
world. We see two parts to an organization's information asset: internal (proprietary)
and external (public). The internal part might include the knowledge bases (such as
relationship systems, expertise moderators, consulting methodologies) and perhaps
some of the software that manages those bases. The destruction or compromise of the
internal architecture would simultaneously destroy or compromise the core "intellig-
ency" of the network. The external pieces would include all the commodity pieces
such as the hardware, general-purpose software tools, and much of the network
management and other public services and databases. Some applications might be
industry-based cooperative information systems where network externalities exist.'
Policies for managing the marriage between the firm's proprietary information asset,
public services, and cooperative applications are needed.
The need to provide personalized products and services to a global customer presents
its own set of information management challenges. Speed and agility will be critical
for timely response to the customers' needs. Some dimensions wUl require global
uniformity while other dimensions will require local tailoring. Information systems
today do little to support an integrated global customer view [50]. In many cases they
present severe barriers. Sales and marketing systems tend to be product-based, not
customer-based. Moreover, multinationals have tended to let country units develop
their own customer, order, and sales support information systems. There is often little
resemblance among these systems in functionality, data structures, hardware plat-
forms, or even in the ways the customer is identified. This heritage offers a rocky
foundation upon which to develop an integrated worldwide interface to customers. A
likely increase in strategic alliances, temporary partnerships, corporate acquisitions,
and spinoffs adds further complexity to maintaining a single customer image. This
promises to be a very expensive undertaking. One British bank expects to spend $2
billion to reverse the historical functional and product constraints built into its systems
[80]. And they are operating primarily within a domestic context.
GLOBAL NETWORK ORGANIZATION OF THE FUTURE 49
network participants. These practices open a wealth of privacy, security, and solitude
threats. But to prohibit or enact laws against these activities, as some European
countries have done^ [6], considerably lessens the promise of the network organiza-
tion. The network organization assumes free flow of infonnation about employees
within the network and among alliance partners and hence decreasing ability of an
individual to control what information is shared about him- or herself. It has been
suggested that there may be no private life in cyberspace [3].
The unique attributes of the information resource make it particularly vulnerable to
privacy and security violations. For instance, information may be stolen from across
the world but still appear to its owner to be uncomproniised. Also, once the information
is read, it becomes a part of what that person knows, making the violation irreversible
[95]. As the U.S. government has demonstrated with a mammoth security bureaucracy,
attempting to classify infomiation on a document-by-document basis is expensive,
time-consuming, and an inhibitor of innovation. Although advances in encryption
techniques should ease some of the problem, purely technical solutions are unlikely
to resolve the social dilemma [3]. Research to date emphasizes the need to inform
individuals and get their consent for information that they might consider private or
proprietary [18, 59,92]
A related area pertains to computer monitoring [e.g., 44]. Although computer
monitoring tends to be negatively viewed in the popular literature, it has been used
successfully, for instance, in the microchip production and inspection process at
Hughes Aircraft Company [45]. The Hughes system is used not as a managerial
surveillance tool, but as a way to provide feedback to team members as to how the
team can improve its processes and subsequently the quality of products. The captured
data are also used to develop a neural network system that will assist team members
in quality inspection. Griffith [45] argues that the intention of electronic monitoring,
not the monitoring itself, determines whether the employees view it positively or
negatively and how monitoring affects the quality and quantity of work.
An area that has received little research attention is the loss of a person's control
over others' intrusion into his or her space or consumption of his or her time (i.e.,
solitude). In a global world where it is always business hours somewhere, "personal
freedom" takes on a new meaning. Tara Rodgers, for instance, set a 5:30 A,M, wakeup
call for Jeremy Wainright, while Tara's own boss took the liberty of booking her on
a flight to London. Twenty-four-hour operations, "anytime, anyplace, anywhere"
phone numbers, cellular telephones, voice mail accessible from home, home comput-
ers, pagers, beepers, ubiquitous security cameras, phones that display the number
called from, cal! waiting, geographical locating services, and performance monitoring
databases seem destined to produce a considerable reduction in personal freedom. Big
Brother may indeed soon be watching, but probably not in the person of the techno-
logically plodding government. Instead, Big Brother takes shape in the collective
impatience of the efficient secretary, a needy customer, a desperate subordinate, a
spouse, the obnoxious person with the portable phone sitting at the next table in the
restaurant, or a colleague prescribing the time of your wakeup call. Fish et al. [28], for
example, found that while superiors did use the desktop videosystem to check on their
52 SIRKKA L. JARVENPAA AND BLAKE IVES
subcffdinates, the subordinates woe twice as likely to check on their superiors and to hold
spontaneous convocations than thereverse.As expected, the recipients of the COT versadonal
attanpts woe much more cOTConed with intrusion than the initiators of convosations. In
summary, while the customer surely will get betto- service in the future, it comes at a price
in personalfreedfxnOVCT solitude that the customs may never have intaided to pay and for
which the knowledge wwker may receive little extra compensation.
In his 1990 Harvard Business Review article. Max Hopper, CIO of American Airlines,
foretells:
As technology reshapes the nature of work and redefines organizational structures, technol-
ogy itself will recede into the strategic background. Eventually—and we are far from this
time—^infomiation systems will be thought of more like electricity or the telephone net-
work than as a decisive source of organizational advantage. In this world, a company trum-
peting the appointment of a new chief infonnation officCT will seem as anachronistic as a
company today naming a new vice president for water and gas. [48, p. 125]
6. Conclusion
We have attempted to look into the future. But we fear that all of our experiences in
the present and past limit our ability to conceive the future. We are still trapped in the
54 SIRKKA L. JARVENPAA AND BLAKE IVES
NOTES
1. Information and conimunication technologies have at least partly lowered the cost and
effort of in terfirm communication and transactions to be largely indistinguishable from intrafirm
transactions [45, 58].
2. Asea Brown Boveri has worldwide operations and a major presence in such segments as
power generation, transmission, and distribution.
3. For another, albeit traditional, illustration of computer support for management by
objectives, see [84].
4. Contrary to the common fear that network organizations have an unstable social fabric,
the electronic network forms so far have been found to enjoy strong social relationships [90].
5. A network externality exists where the per unit information value increases or the per
unit information cost decreases as the user base increases in size and geographical scope.
6. For example, the Privacy Directive of the European Commission seeks to eliminate the
transfer of personal information from one company to another.
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