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e-Business Strategies for Virtual Organizations
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expect to supply from within. (For a great deal of insight on this
see the work of Ronald Coase and his successors on transaction
theory.)
At this stage, two-thirds of the way through this text if you are
reading sequentially, we should pause to reflect that while the
first half of the last century showed us that the most effective
form of business enterprise was the hierarchical structure which
subsumed suppliers and competitors horizontally and vertically
as the (transaction cost-based) chance arose. During this time
economies of scale were venerated, and in many cases realized,
as firms organized into bureaucratic silos of divisions or
functions. Information naturally flowed, like water, along the
easiest paths – in this case determined by divisions and lines of
authority. The coordination of power and responsibility was a
central function of the apex of the pyramid, power being
distributed from the centre in the form of resources.
By the 1980s it had become clear that enormous economic and
social pressures had already effected great change to the
previous beliefs about organizational structure and efficiency.
Market convergence, the internationalization of competition and
the advent of innovative information and communication
technologies came together to produce restless marketplaces in
which short-term shifts could easily destroy long-term survival.
As well as strategy, firms were forced to rethink both structure
and strategy to respond dynamically to change. The past
hierarchies proved insufficiently responsive, and dynamic networks
of organizations, or within organizations proved their
worth. It is recognition of this that led to the positing of
networks as novel, and the tired notion of the necessity of stage
growth that has led to the PriceWaterhouse and Tapscott models
introduced above.
Similarly it is the retention of thinking in terms of central
authority and control that necessitates thinking in outsourcing
terms. We have introduced these here for you, but caution
reliance on these when they are failing to demonstrate their
relevance in the e-business environment we are facing.
It is our contention that this text as a whole will encourage you
to see emerging business forms as taking advantage of new
technologies and increasingly adopt network postures. At the
same time, middle management function will be less to worry
about making in-house or outsourcing, but to replace internal
administration task with the roles of information integrator and
entrepreneur.