Center for Coordination Science
1994 TECHNICAL REPORTS AND WORKING
NOTE: If an electronic version of a paper is not available here, or
you are unable to successfully download the paper that you want in the
formats available, please contact MIT
Document Services at (617) 253-5668, DOCS@MIT>EDU.
Please, do not contact the authors for copies of papers.
1994 Working Papers
Over the past decade, American businesses have invested heavily in information
technology (IT) hardware. Unfortunately, it has been difficult to assess
the benefits that have resulted. One reason is that managers often buy
IT to enhance customer value in ways that are largely ignored in conventional
output statistics. Furthermore, because of competition, firms may be unable
to capture the full benefits of the value they create. This undermines
researchers' attempts to determine IT value by estimating its contribution
to industry productivity or to company profits and revenues.
An alternative approach is to estimate the consumer surplus from IT investments
by integrating the area under the demand curve for IT. This methodology
does not directly address the question of whether managers and consumers
are purchasing the optimal quantity of IT, but rather assumes their revealed
willingness-to-pay for IT is an accurate indicator of their preferences.
Using data from the US. Bureau of Economic Analysis, we estimate four
measures of consumer welfare, including Marshallian surplus, exact surplus
based on compensated (Hicksian) demand curves, a non-parametric estimate,
and a value based on the theory of index numbers. Interestingly, all four
estimates indicate that in our base year of 1987, IT spending generated
approximately $50 billion to $70 billion in net value in the US. Our estimates
imply that the value created for consumers from spending on IT is about
three times as large as the amount paid to producers of IT equipment,
providing a new perspective on the IT value debate.
Sloan No. 3571-93
Lost? Firm-level Evidence of High Returns to Information Systems Spending
Erik Brynjolfsson and Lorin Hitt
January 1994; Revised 1/97
The "productivity paradox" of information systems (IS) is that, despite
enormous improvements in the underlying technology, the benefits of IS
spending have not been found in aggregate output statistics. One explanation
is that IS spending may lead to increases in product quality or variety
which tend to be overlooked in aggregate output statistics, even if they
increase sales at the firm-level. Furthermore, the restructuring and cost-cutting
that are often necessary to realize the potential benefits of IS have
only recently been undertaken in many firms.
Our study uses new firm-level data on several components of IS spending
for 1987-1991. The dataset includes 367 large firms which generated approximately
$1.8 trillion dollars in output in 1991. We supplemented the IS data with
data on other inputs, output, and price deflators from other sources.
As a result, we could assess several econometric models of the contribution
of IS to firm-level productivity.
Our results indicate that IS have made a substantial and statistically
significant contribution to firm output. We find that between 1987 and
1991, gross return on investment (ROI) for computer capital averaged 81%
for the firms in our sample. We find that the ROI for computer capital
is greater than the return to other types of capital investment and that
IS labor spending generates several times as much output as spending on
non-IS labor and expenses. Because the models we applied were essentially
the same as those that have been previously used to assess the contribution
of IS and other factors of production, we attribute the different results
to the fact that our data set is more current and larger than others explored.
We conclude that the "productivity paradox" disappeared by 1991, at least
in our sample of firms.
Combining Local Negotiation and Global Planning in Cooperative Software
In cooperative software development, each programmer has their own plans
and conflicts or redundancies inevitably arise among them. We are concerned
with two main problems: first, to control changes without sacrificing
programmers' flexibility, and, second, to guide change activities to conform
project policies. Traditional methods of change request management focus
on the management process structure based on project policies while cooperative
development methodologies concern mainly with the conflict resolutions
among each changes. In this paper, we describe an architecture which deals
with proposal of changes. Based on plan integration it seamlessly supports
both change coordination through negotiations and the change management
process to have changes converge until they meet the project goals.
Answer Garden: A Tool for Growing Organizational Memory
Mark S. Ackerman
Answer Garden allows organizations to develop databases of commonly asked
questions that grow "naturally" as new questions arise and are
answered. It is designed to help in situations (such as customer "hot
lines" or help desks) where there is a continuing stream of questions,
many of which occur over and over, but some of which the organization
has never seen before. Answer Garden includes a branching network of diagnostic
questions, as well as additional information retrieval methods, that help
users find the answers they want. If the answer is not present, the system
automatically routes the question to the appropriate expert, and the answer
is returned to the user as well as inserted into the information database.
Experts can also modify this network in response to users' problems. Through
their normal interactions, users and experts build an organizational memory.
The thesis examines organizational memory and Answer Garden from three
perspectives: in terms of organizational memory at an organizational level,
information seeking at an individual level, and software systems at a
technical level. It is asserted that information technology can support
organizational memory in two ways, either by making recorded knowledge
retrievable or by making individuals with knowledge accessible. The thesis
also describes two additional organizational memory applications, the
ASSIST and LiveDoc, and details the Answer Garden Substrate system underlying
all three applications. Finally, the thesis reports a field study of software
engineers' using Answer Garden.
Paul Resnick, Neophytos Iacovou, Mitesh Suchak, Peter Bergstrom, John
Collaborative filers help people make choices based on the opinions of
other people. GroupLens is a system for collaborative filtering of netnews,
to help people find articles they will like in the huge stream of available
articles. News reader clients display predicted scores and make it easy
for users to rate articles after they read them. Rating servers, called
Better Bit Bureaus, gather and disseminate the ratings. The rating servers
predict scores based on the heuristic that people who agreed in the past
will probably agree again. Users can protect their privacy by entering
ratings under a pseudonym, without reducing the effectiveness of the score
prediction. The entire architecture is open: alternative software for
news clients and Better Bit Bureaus can be developed independently and
can interoperate with the components we have developed.
Wanda J. Orlikowski, JoAnne Yates
Using the genre perspective, we studied the electronic communication
of knowledge workers collaborating on a multi-year project and found that
their work and interactions were mediated by the use of four genres (or
shared types) of communication. Drawing on these findings, we develop
the concept of genre repertoire to designate the set of genres enacted
by groups, organizations, or communities to accomplish their work. We
show that the establishment of a community's genre repertoire, which typically
occurs at its formation, is a process that is largely implicit and rooted
in members' prior experiences of working and interacting. Once established,
a genre repertoire serves as a powerful social template for shaping ho,
why, and with what effect members of a community interact to get their
work done. While serving to institutionalize norms and forms of work and
interaction, genre repertoires can and do change over time through members'
response to project events, task demands, media capabilities, time pressures,
and converging community norms. The concept of genre repertoire offers
organizational research a powerful way of understanding mediated work
practices and interaction norms, and hence how communication technologies
may be associated with changes in the work and interaction of groups,
organizations, or communities.
Wanda J. Orlikowski and JoAnne Yates, Kazuo Okamura, Masayo Fujimoto
In this paper we suggest that the use of computer-mediated communication
technologies in new and fluid organizations can be facilitated by the
explicit and ongoing adapting of those technologies to changing contexts
of use. In an exploratory study on the use of a computer conferencing
system in an R&D setting, we found that the new medium's effectiveness
was significantly influenced by the intervention of a few individuals
who took on a role we label technology-use mediation. These mediators
shaped everyday use of the conferencing technology, modifying the technology
as well as the context of use to promote effective electronic communication.
Drawing on the insights of this empirical study, we develop a theoretical
framework that views technology-use mediation as influencing how users
structure their communication technologies, and hence as one form of metastructuring.
We believe that the role of technology-use mediation constitutes a valuable
mechanism for providing the ongoing attention and resources needed to
contextualize what are often generic computer-mediated communication technologies
to the shifting conditions of dynamic organizational forms.
Coalition, Cryptography, and Stability: Mechanisms for Coalition Formation
in Task Oriented Domains
Gilad Zlotkin and Jeffrey S. Rosenschein.
(To appear in the proceedings of the The National Conference on Artificial
Intelligence, Seattle, Washington, July 1994.)
Negotiation among multiple agents remains an important topic of research
in Distributed Artificial Intelligence (DAI). Most previous work on this
subject, however, has focused on bilateral negotiation, deals that are
reached between two agents. There has also been research on $n$-agent
agreement which has considered ``consensus mechanisms'' (such as voting),
that allow the full group to coordinate itself. These group decision-making
techniques, however, assume that the entire group will (or has to) coordinate
its actions. Sub-groups cannot make sub-agreements that exclude other
members of the group.
In some domains, however, it may be possible for beneficial agreements
to be reached among sub-groups of agents, who might be individually motivated
to work together to the exclusion of others outside the group. This paper
considers this more general case of $n$-agent coalition formation. We
present a simple coalition formation mechanism that uses cryptographic
techniques for subadditive Task Oriented Domains. The mechanism is efficient,
symmetric, and individual rational. When the domain is also concave, the
mechanism also satisfies coalition rationality.
Consenting Agents: Designing Conventions for Automated Negotiation
Jeffrey S. Rosenschein and Gilad Zlotkin
(To appear in the AI Magazine, Vol 15, Fall 1994, No. 3.)
As distributed systems of computers play an increasingly important role
in society, it will be necessary to consider ways in which these machines
can be made to interact effectively. We are concerned with heterogeneous,
distributed systems made up of machines that have been programmed by different
entities to pursue different goals.
Adjusting the rules of public behavior (the rules of the game) by which
the programs must interact can influence the private strategies that designers
set up in their machines. These rules can shape the design choices of
the machines' programmers, and thus the run-time behavior of their creations.
Certain kinds of desirable social behavior can thus be caused to emerge
through the careful design of interaction rules. Formal tools and analysis
can help in the appropriate design of these rules.
We here consider how concepts from fields such as decision theory and
game theory can provide standards to be used in the design of appropriate
negotiation and interaction environments. This design is highly sensitive
to the domain in which the interaction is taking place.
Meet Your Destiny: A Non-manipulable Scheduler
Eithan Ephrati, Gilad Zlotkin and Jeffrey S. Rosenschein
(To appear in the proceedings of the Conference on Computer Supported
Cooperative Work, North Carolina, October, 1994).
In this paper we present three scheduling mechanisms that are manipulation-proof
for closed systems. The amount of information that each user must encode
in the mechanism increases with the complexity of the mechanism. On the
other hand, the more complex the mechanism is, the more it maintains the
privacy of the users.
The first mechanism is a centralized, calendar-oriented one. It is the
least computationally complex of the three, but does not maintain user
privacy. The second is a distributed meeting-oriented mechanism that maintains
user privacy, but at the cost of greater computational complexity. The
third mechanism, while being the most complex, maintains user privacy
(for the most part) and allows users to have the greatest influence on
the resulting schedule.
Kazuo Okamura, Masayo Fujimoto, Wanda J. Orlikowski, JoAnne Yates
(To appear in the proceedings of the Conference on Computer Supported
Cooperative Work, North Carolina, October, 1994).
This study found that the use of a computer conferencing system in an
R&D lab was significantly shaped by a set of intervening actors--mediators--who
actively guided and manipulated the technology and its use over time.
These mediators adapted the technology to its initial context and shaped
user interaction with it; over time, they continued to modify the technology
and influence use patterns to respond to changing circumstances. We argue
that well-managed mediation may be a useful mechanism for shaping technologies
to evolving contexts of use, and that it extends our understanding of
the powerful role that intervenors can play in helping CSCW applications
Computers and Economic Growth: Firm-Level Evidence.
Erik Brynjolfsson, Lorin Hitt
In advanced economies, computers are a promising source of output growth.
This paper assesses the value added by computer equipment and information
systems labor by estimating several production functions that also include
ordinary capital, ordinary labor and R&D capital. Our study employs
recent firm-level data for 367 large firms which generated approximately
$1.8 trillion dollars in output per year for the period 1988 to 1992.
We find evidence that computers are correlated with significantly higher
output at the firm level, although simulataneity makes it difficult to
prove a casual relationship. Considering the rapid growth in the sample
period than all other types of capital combined, despite the fact that
they accounted for less than 2% of the total capital stock.
Information Technology as a Factor of Production: The Role of Differences
Erik Brynjolfsson, Lorin Hitt
Despite evidence that information technology (IT) has recently become
a productive investment for a large cross-section of firms, a number of
questions remain. Some of these issues can be addressed by extending the
basic production function approach that was applied in earlier work. Specifically,
in this short paper we 1) control for individual firm differences in productivity
by employing a "firm effects" specification, 2) consider the
more flexible translog specification instead of only the Cobb-Douglas
specification, and 3) allow all parameters to vary between various subsectors
of the economy.
We find that while "firm effects" may account for as much as
half of the productivity benefits imputed to IT in earlier studies, the
elasticity of IT remains positive and statistically significant. We also
find that the estimates of IT elasticity and marginal product are little-changed
when the less restrictive translog production function is employed. Finally,
we find only limited evidence of differences in IT's marginal product
between manufacturing and services and between the "measurable"
and "unmeasurable" sectors of the economy. Surprisingly, we
find that the marginal product of IT is at least as high in firms that
did not grow during 1988-1992 sample period as it is in firms that grew.
Interdependency and coordination have been perennial topics in organization
studies. The two are related because coordination is seen as a response
to problems caused by dependencies. Past studies, however, describe dependencies
and coordination mechanisms only in general terms, without characterizing
in detail difference between dependencies, the problems dependencies create
or how the proposed coordination mechanisms address those problems. This
vagueness makes it difficult or impossible to determine what alternative
coordination mechanisms might be useful in a given circumstance or to
directly translate these alternative designs into specifications of individual
In this paper I develop a taxonomy of dependency types by considering
possible combinations of activities using resources. The taxonomy includes
task-resource dependencies and three types of task-task dependencies:
shared resources, producer-consumer and common output. For each type of
dependency, alternative coordination mechanisms are described. I conclude
by discussing how the taxonomy helps to analyze organizational processes
and suggest alternative processes.
Describing and categorizing organizational forms remains a central problem
in organization theory. Unfortunately defining organizational form poses
numerous difficulties. Rather than attempting to categorize entire organizations,
researchers have instead suggested focusing on how particular tasks are
performed, i.e., adopting the process as the unit of analysis. An important
practical problem then is to identify processes that would be suitable
for performing a desired task, especially processes that are enabled by
the use of new electronic media and other forms of information technology.
Coordination theory provides an approach to the study of processes. In
this view, the form a process takes depends on the coordination mechanisms
chosen to manage dependences among tasks and resources involved in the
process. These mechanisms are primarily information-processing and so
the use of new media will particularly affect their cost, perhaps changing
which are preferred.
In this paper, I use coordination theory to analyze the software change
process of a large mini-computer manufacturer and suggest alternative
ways the dependences involved could be managed and thus alternative forms
the process could take. Mechanisms analyzed include those for task assignment,
resource sharing and managing dependences between modules of code. The
organization studied assigned problem reports to engineers based on the
module which appeared to be in error; engineers specialized in particular
modules. The framework suggests alternative mechanisms including assignment
to generalists based on workload or based on market-like bids. Modules
of code were not shared, but rather "owned" by one engineer,
thus reducing the need for coordination; a more elaborate code management
system would be required if multiple engineers needed to work on the same
modules. Finally, engineers managed dependences between modules informally,
based on their personal knowledge of which other engineers used their
code; alternatives include formally defining the interfaces between modules
and tracking their users.
Software bug fixing provides a microcosm of coordination problems and
solutions. Similar coordination problems arise in most processes and are
managed by a similar range of mechanisms. For example, diagnosing but
reports and assigning them to engineers may have interesting parallels
to diagnosing patients and assigning them to specialists.
While the case presented does not formally test coordination theory,
it does illustrate the potential of the coordination theory for exploring
the space of organizational forms. Future work includes developing more
rigorous techniques for such analyses, applying the techniques to a broader
range of processes, identifying additional coordination problems and mechanisms
and developing tools for collecting and comparing processes and perhaps
automatically suggesting potential alternatives.
Brian T. Pentland
Grammar has been used metaphorically to describe organizational processes,
but the metaphor has never been systematically developed so that it can
be applied in empirical research. This paper develops the grammatical
metaphor into a rigorous model for describing and theorizing about organizational
work processes, defined here as sequences of actions that occur in the
context of enabling and constraining structures. A grammatical model starts
with a lexicon of elementary actions (called moves) and specifies the
ways in which they can be combined to create a process. Unlike other sequential
data analysis techniques, grammatical models provide a natural way of
describing the layering and nesting of actions that typifies organizational
processes. The example of a simple retail sales transaction is used to
illustrate the underlying concepts. The paper also examines some methodological
considerations involved in using process grammars and proposes an agenda
for research , including: (1) creating descriptive taxonomies of organizational
processes; (2) creating disconfirmable theories about the relationship
between processes and the structures that enable and constrain them; (3)
explaining the distribution of observed processes and predicting new processes
that have not yet been observed; and (4) designing new organizational
KEYWORDS: Grammars; Process models; Business processes; Sequential analysis.
Brian T. Pentland
This paper explores the sequential structure of work processes in a task
unit whose work involves high numbers of exceptions, low analyzability
of search, frequent interruptions and extensive deliberation, and cannot
be characterized as routine under any traditional definition. Yet a detailed
analysis of the sequential pattern of action in a sample of 168 service
interactions reveals that most calls follow a repetitive, functionally
similar pattern. This apparent contradiction presents a challenge to our
theoretical understanding of routines: how can apparently non-routine
work display such a high degree of regularity? To answer this questions,
we propose a new definition of organizational routines as a set of functionally
similar patterns and illustrate a new methodology for studying the sequential
structure of work processes using rule-based grammatical models. This
approach to organizational routines juxtaposes the structural features
of the organization against the reflective agency of organizational members.
Members enact specific performances form among a constrained (but potentially
large) set of possibilities that can be described by a grammar, giving
rise to the regular patterns of action we label routines.
Brian T. Pentland
Organizations are under increasing pressure to redesign core organizational
processes. This paper describes the ways in which the Process Handbook
(Malone, Crowston, Lee, and Pentland, 1993) can be used to describe and
redesign business processes. The Process Handbook is an electronic database
of process descriptions and analysis tools. When completed, it will embody
a large lexicon of process steps and constraints on the ways in which
they can be combined. The Process Handbook can therefore be viewed as
a kind of grammar for generating alternative process configurations. The
example of a supply chain is used to illustrate the concepts.
Paul Resnick, Richard Zeckhauser and Chris Avery
The information superhighway directly connects millions of people, each
both a consumer of information and a potential provider. If their exchanges
are to be efficient, yet protected on matters of privacy, sophisticated
mediators will be required. Electronic brokers can play this important
role by organizing markets that promote the efficient production and consumption
of information. One possible role for brokers would be to collect and
redistribute product evaluations. We discuss issues of privacy, censorship,
and incentives for participation that would arise in such a shared evaluation
service. We then argue for the separation of the services of information
provision and brokerage.
Jintae Lee, Gregg Yost and the PIF Working Group
This document describes the first version of the Process Interchange
Format (PIF, version 1.0). The goal of this work is to develop an interchange
format to help automatically exchange process descriptions among a wide
variety of business process modeling and support systems such as: workflow
software, flow charting tools, process simulation systems, and process
Instead of having to write ad hoc translators for each pair of such systems,
each system will only need to have a single translator for converting
process descriptions in that system into and out of the common PIF format.
Then any system will be able to automatically exchange basic process descriptions
with any other system.
The current PIF format includes a core set of object types (such as activities,
actors, and prerequisite relations) that can be used to describe the basic
elements of any process. The PIF format also includes a framework for
extending the core set of object types to include additional information
needed in specific applications. These extended descriptions are exchanged
in such a way that the common elements are interpretable by any PIF translator
and the additional elements are interpretable by any translator that knows
about the extensions.
The PIF format was developed by a working group including representatives
from several universities and companies and has been used for experimental
automatic translations among systems developed independently at three
of these sites.
This document is being distributed in the hopes that other groups will
comment upon the interchange format proposed here and that this format
(or future versions of it) may be useful to other groups as well.
Thomas W. Malone, Kum-Yew Lai, and Christopher Fry
This paper describes a series of tests of the generality of a "radically
tailorable" tool for cooperative work. Users of this system can create
applications by combining and modifying four kinds of building blocks:
objects, views, agents, and links. We found that user-level tailoring
of these primitives can provide most of the functionality found in well-known
cooperative work systems such as gIBIS, Coordinator, Lotus Notes, and
Information Lens. These primitives, therefore, appear to provide an elementary
"tailoring language" out of which a wide variety of integrated
information management and collaboration applications can be constructed
by end users.