Organizational Impacts of IS

Describe the characteristics, advantages and disadvantages of organizational structures

Describe the impact of IS on organizational structure

Describe the impact of IS on control activitiesDistinguish between virtual organizations and

corporationsDescribe the stages in the development of

interorganizational relationshipsDefine virtual teams

Hierarchical Structure (Centralized)

Traditional, top-downGood for stable environmentsGood for communication and

coordination within the functionDecisions made at topGeared toward efficiency

Flat Structure (Decentralized)

Based on product, location, etc.Better than hierarchical structure in

more dynamic environmentsGood for training general managersFaster decision making than with

hierarchical structureDecisions are made at the level where

problems occur

Matrix StructureTwo or more supervisors (one for each

dimension: for example, functional and project)

Hybrid model that emerged about 40 years ago

Geared for one-time projectsIS reduces technical complexityStill - coordination is challenging,

especially in dynamic environments

Network Structure

Very fluid - evolve based on needExtremely flexible and adaptiveGood for creativityIS improve process efficiency,

effectiveness and flexibility IT facilitates communications

T-Form

Technology-based organizationFeels flat: technology allows individuals from

all parts of the organization to reach all other parts of the organization

Technologies (i.e., email, voice mail, Notes) make it easy to communicate

Work vs. jobElectronic links with partners, customersAccess to information is increased

What is the impact of IT on organization structure?

Leavitt & Whisler’s Predictions

1958 1980’sBell- shaped curveNo middle managersRecentralized organizationsDP is king: Programmers hold high-

level staff jobs Top management will become more

abstract and focus on the horizon

Impact of IT on Control Activities

MonitoringEvaluatingProviding FeedbackCompensatingRewarding

Virtualness

CorporationsOrganizations Teams

Virtual Corporations

Temporary network of companies that come together quickly to exploit fast-changing opportunities

Involves interorganizational linkagesRequires low-cost information storage

and processingOften built on core competenciesAppears as one entity

Virtual Corporations

ManufacturerSuppliers

Distributors

Retailers

Customers

Information-Enabled Alliances

Joint Marketing PartnershipsIntra-Industry PartnershipsCustomer-Supplier PartnershipsIT Vendor-Driven Partnerships

Joint marketing partnerships

IBM + Sears = ProdigyCombined marketing programs with

airlines, hotels, car rental companies, and bank credit cards

Participant companies gain access to new customers and territories economies of scale through cost

sharing

Intra-industry partnerships

Often small or mid-sized competitors18 mid-sized paper companies with

global electronic information systemInsurance Value-Added Network

Services (IVANS)Some are led by government

(TradeNet)

Customer-Supplier PartnershipsEngineering

compress product development time automate design process

Inventory management just-in-time access to production scheduling databases

Built on trustBuilt on accessing and sharing ISs

Examples

Chrysler’s Viper Chrysler worked with suppliers 90% of parts came from suppliers (vs.

typical 70%) Xerox

from 5000 suppliers to 400 multiple player joint ventures defects down common future and mutual support

IT Vendor- Driven Partnerships

EDS and software applicationsAllows IT vendor to bring

technology to a new marketResearch alliance with major

customer (beta site)

Information Processing Serves as Dynamo

Provides information about marketPromotes quick responseAllows coordination and controlCan be used to add value to

products and servicesEliminates some manual workEnriches relationships (relational)

Developing Cooperative IOAs

Ring & Van de Ven, 1994, Academy of Management Review

Cooperative IOAs are socially contrived mechanisms for collective action which are continually shaped and restructured by actions and symbolic interpretations of the parties involved

Repetitive sequence of negotiations, commitments and executions

Negotiating Stage of IOA Development

Parties develop joint expectations about motivations and investments

Formal bargaining and selectionUnderneath - psychological sensemakingIndividual choices, values, expectations

must be congruentMay emerge from preexisting friendship

ties, need for resources, institutional mandate, brokered deals, etc.

Commitment Stage of IOA Development

Terms and governance structures are established

Formal contracts or informally understood psychological contracts

Trust + Legal agreement

Executions Stage of IOA Development

Commitments are carried into effectInitially formally designated role behavior

reduces uncertaintyIncreasing reliance on interpersonal

relationshipsPsychological contracts increasingly

substitute for formal legal contractsAssessments are made about efficiency

and effectiveness of IOA

Turnover in IOAs

Replacements may not have prior relationship

Some flexibility is lost as new “agents” rely on formal agreement and role designations

Clock restarted on psychological contracts

Trust must be developed interpersonally

Virtual Organizations

Organizations in which IT enables employees to work for an organization and live anywhere

Often uses network structureManagement, support and business

processes are designed to support virtual work relationships

Virtual Teams- DefinedGeographically and/or organizationally

dispersed coworkers that are assembled using a combination of telecommunications and information technologies to accomplish an organizational task (Townsend, DeMarie& Hendrikson, 1998)

fluid membershipface-to-face vs. electronic mediumgeographically dispersedshort-term vs. long-term

Virtual Teams - Some Issues

Technology supportCultural DifferencesSwift TrustRotating LeadershipReward SystemOrganizational memory