Abstract

http://ssrn.com/abstract=2362855
 


 



Innovating Without Information Constraints: Organizations, Communities, and Innovation When Information Costs Approach Zero


Elizabeth J. Altman


Harvard Business School

Frank Nagle


Harvard Business School

Michael Tushman


Harvard University - Organizational Behavior Unit

September 10, 2014

Harvard Business School Organizational Behavior Unit Working Paper No. 14-043

Abstract:     
Innovation traditionally takes place within an organization's boundaries and with selected partners. This Chandlerian approach is rooted in transaction costs, organizational boundaries, and information challenges. Information processing, storage, and communication costs have been an important constraint on innovation and a reason why innovation takes place inside the organization. However, exponential technological progress is dramatically decreasing information constraints, and in many contexts, information costs are approaching zero. We discuss how reduced information costs enable organizations to engage communities of developers, professionals, and users for core innovative activities, frequently through platforms, ecosystems, and incorporating user innovation. We suggest that when information constraints drop dramatically, and the locus of innovation shifts to the larger community, there are profound challenges to the received theory of the firm and to theories of organization and innovation. Specifically, we consider how shifts in information costs affect organizational boundaries, business models, interdependence, leadership, identity, search, and intellectual property.

Number of Pages in PDF File: 66

Keywords: Managing Innovation, Information Costs, Information Constraints, Communities, Organization Boundaries, Technological Progress, Platforms and Ecosystems, User Innovation

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Date posted: December 4, 2013 ; Last revised: September 11, 2014

Suggested Citation

Altman, Elizabeth J. and Nagle, Frank and Tushman, Michael, Innovating Without Information Constraints: Organizations, Communities, and Innovation When Information Costs Approach Zero (September 10, 2014). Harvard Business School Organizational Behavior Unit Working Paper No. 14-043. Available at SSRN: http://ssrn.com/abstract=2362855 or http://dx.doi.org/10.2139/ssrn.2362855

Contact Information

Elizabeth J. Altman
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
Frank Nagle
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
Michael Tushman (Contact Author)
Harvard University - Organizational Behavior Unit ( email )
Soldiers Field
Boston, MA 02163
United States
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