Center for Coordination Science
1997 TECHNICAL REPORTS AND WORKING
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1997 Working Papers
Sharon Eisner Gillett and Mitchell Kapor
Contrary to its popular portrayal as anarchy, the Internet is actually
managed, though not by a manager in the traditional sense of the word.
This paper explains how the decentralized Internet is coordinated into
a unified system. It draws an analogy to an organizational style in which
a manager sets up a system that allows 99% of day-to-day functions to
be handled by empowered employees, leaving the manager free to deal with
the 1% of exceptional issues. Within that framework, it discusses:
- how the Internet's technical design and cultural understandings serve
as the system that automates 99% of Internet coordination;
- what the 1% of exceptional issues are in today's Internet, how they
are handled by multiple authorities, and where the stresses lie in the
- and the differences in mindset that distinguish the Internet's self-governance
from the management of more traditional communication systems.
Thomas W. Malone, Kevin Crowston, Jintae Lee, Brian Pentland, Chrysanthos
Dellarocas, George Wyner, John Quimby, Charley Osborne, and Abraham Bernstein
This paper describes a novel theoretical and empirical approach to tasks
such as business process redesign, enterprise modeling, and software development.
The project involves collecting examples of how different organizations
perform similar processes, and organizing these examples in an on-line
"process handbook". The handbook is intended to help people:
(1)╩redesign existing organizational processes, (2)╩invent new organizational
processes (especially ones that take advantage of information technology),
(3)╩learn about organizations, and (4)╩automatically generate software
to support organizational processes. A key element of the work is an approach
to analyzing processes at various levels of abstraction, thus capturing
both the details of specific processes as well as the "deep structure"
of their similarities. This approach uses ideas from computer science
about inheritance and from coordination theory about managing dependencies.
A primary advantage of the approach is that it allows people to explicitly
represent the similarities (and differences) among related processes and
to easily find or generate sensible alternatives for how a given process
could be performed. In addition to describing this new approach, the work
reported here demonstrates the basic technical feasibility of these ideas.
Yannis Bakos and Erik Brynjolfsson
We analyze pricing strategies for digital information goods, such as
those increasingly available via the Internet. Because perfect copies
of such goods can be created and distributed almost costlessly, any single
positive price for copies is likely to be socially inefficient. However,
we show that, under certain conditions, a monopolist selling information
goods in large bundles instead of individually may nearly eliminate this
inefficiency. In addition, the bundling strategy can extract as profits
an arbitrarily large fraction of the area under the demand curve for the
individual goods while commensurately reducing consumers' surplus. The
bundling strategy is particularly attractive when the marginal costs of
the goods are very low, when the correlation in the demand for different
goods is low, and when consumer valuations for the individual goods are
of comparable magnitude. We also describe the optimal pricing strategies
when these conditions do not hold; show how private incentives for bundling
can diverge from social incentives; and describe a mechanism to recover
information about the underlying demand for each individual good. The
predictions of our analysis appear to be consistent with empirical observations
of the markets for Internet and on-line content, cable television programming,
and copyrighted music.
Erik Brynjolfsson and Haim Mendelson
In this short paper we briefly discuss the newly emerging organizational
paradigms and their relationship to the prevailing trends in information
technology (IT). We argue that IT is an important driver of this transformation.
Finally, we place the studies selected for the special issue of the Journal
of Organizational Computing within this context.
Erik Brynjolfsson and 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.
Erik Brynjolfsson and Shinkyu Yang
In recent years, the relationship between information technology (IT)
and productivity has become a source of debate. In the 1980s and early
1990s, empirical research generally did not significant productivity improvements
associated with IT investments. More recently, as new data are identified
and new methodologies are applied, several researchers have found evidence
that IT is associated not only with improvements in productivity, but
also in intermediate measures, consumer surplus, and economic growth.
Nonetheless, new questions emerge even as old puzzles fade. This survey
reviews the literature, identifies remaining questions, and concludes
with recommendations for applications of traditional methodologies to
new data sources, as well as alternative, broader metrics of welfare to
assess and enhance the benefits of IT.