The Digital Business Ecosystem

The Digital Business Ecosystem

Edited by Angelo Corallo, Giuseppina Passiante and Andrea Prencipe

By bringing together elements of a radical new approach to the firm based on a biological metaphor of the ecosystem, this unique book extends the limits of existing theories traditionally used to investigate business networks.

Chapter 11: Enabling the Flexible Enterprise – RFID and Smart Devices

Robert Laubacher

Subjects: business and management, organisational innovation, organisation studies, strategic management, innovation and technology, organisational innovation


11. Enabling the flexible enterprise – RFID and smart devices Robert Laubacher INTRODUCTION During the 1980s, in the aftermath of the personal computer revolution, businesses substantially increased their investments in information technology (IT). Economists and management researchers expected that these higher levels of investment would lead to increases in economy-wide productivity and firm-level performance. But early studies found that IT investment was not associated with significant productivity gains. In the late 1980s, Nobel laureate Robert Solow characterized this puzzling development with a quip: ‘You can see the computer age everywhere but in the productivity statistics’ (Solow 1987). With the rise of the World Wide Web in the 1990s, business investment in IT continued to boom. Yet researchers continued to struggle in their efforts to show a link between IT spending and performance. Starting in the mid-1990s, MIT researchers Eric Brynjolfsson and Lorin Hitt produced a series of papers that examined data on both IT spending and organizational practices from a very large number of firms. Because their sample was substantially larger than the ones examined by prior researchers, Brynjolfsson and Hitt were able to demonstrate that IT had a significant impact on performance. But their work also showed that information technology alone, in the absence of changes in organizational practice, did not have much impact. It was only when firms combined these two factors in tandem that they enjoyed major increases in both profitability and stock market valuation (Brynjolfsson and Hitt 2000). Labour productivity in the US,...

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