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

November 16, 2013

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

Abstract:     
Innovation has traditionally taken place within an organization’s boundaries and/or with selected partners. This Chandlerian approach to innovation has been rooted in transaction costs, organizational boundaries, and information processing challenges associated with distant search. Information processing, storage, and communication costs have long been an important constraint on innovation and a reason for innovative activities to take place inside the boundaries of an organization. However, exponential technological progress has led to a dramatic decrease in information constraints. In a range of contexts, information costs approach zero. In this chapter, we discuss how sharply reduced information costs enable organizations to engage with communities of developers, professionals, and users for core innovative activities, frequently through platform-based businesses and ecosystems and by incorporating user innovation. We then examine how this ease of external engagement impacts the organization and its strategic activities. Specifically, we consider how this shift in information processing costs affects organization boundaries, business models, interdependence, leadership, identity, search, and intellectual property. We suggest that much of the received wisdom in these areas of organization theory requires revisiting. We then discuss the implications for an organization’s management of innovation and conclude with research opportunities.

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  

Suggested Citation

Altman, Elizabeth J. and Nagle, Frank and Tushman, Michael, Innovating Without Information Constraints: Organizations, Communities, and Innovation When Information Costs Approach Zero (November 16, 2013). 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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