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social benefits of the paradigm shift towards a new
nature of those firms. And while their existence
is certainly a result of creative destruction, their
actions would prove contradicting the Schumpe-
terian spirit of increased competitiveness for the
benefit of productive capacity and efficacy.
they manifested themselves, when they were prac-
ticed; and the more they were practiced the more
credible their existence, i.e. economics of scale
were important. A notable property of informa-
tion is, however, is that it is in fact independent
of its practice. Information doesn't have to be
practical to exist.
Yet, the prominent forms of our newly pro-
posed category are all but indifferent to size and
scale. While traditionally firms were either part
of the problem, or part of the solution, or part of
the landscape, they can now be either
MethodoLogY
In the present exploratory paper we propose ele-
ments of a framework that captures three important
components responsible for the resulting am-
bivalent nature of these firms. Methodologically
our approach is a composite of (a) an empirical
(grounded-theory) approach based on several
dozens of semi-structured interviews with high-
profile professional and practitioners in the larger
New York metropolitan business community in
the context of a larger inquiry into “the new nature
of the firm” that we have been conducting since
early 2007; (b) an exploratory inquiry based on
observable behaviors of these firms as publicly
traded entities followed by Wall Street analysts;
and (c) a critical conceptual study exposing the
unobservable context and suggesting new theoreti-
cal developments with regards to the unanticipated
consequences of such ambivalent nature of the
said Complex Information Technology-Intensive
firms.
•
the entire landscape or
•
move the landscape altogether. So,
Amazon, Google, and eBay did not con-
tent themselves to being yet another player
in their respective industries; they became
the entire market respectively, inviting ev-
eryone else to join and participate. Apple
single-handedly changed the way music
will be enjoyed in the future.
The organic logic of the network has thus been
undone. Similar to the notion of market makers,
several firms realized the advantage of actually
themselves becoming and being networks. The
network effect has thus become captive of indi-
vidual firms quickly stepping up and internalizing
network effects. And they didn't do it by chance
or accidental evolution, they did it by intelligent
design to do just that. Amazon had over-engineered
their capacity from the early beginning in order
to not have to struggle and incur risks with incre-
mental adaptation later.
Ronald Coase informed institutional econom-
ics in 1937 of the true substance of the firm: it's
ability to arbiter transaction
costs
which markets
couldn't. (See also the subsequent work by
Williamson, 1981, and Williamson & Winter,
1991, ultimately resulting in what is called New
Institutionalism). The CITI firms have not only
substituted this concepts with transaction
profits
(e.g. eBay), but moreover expanded it to a level
the contradiction in
scale and scope
Originally, at the advent of the digital age, we may
have expected the notion of size to lose its impor-
tance. Size as a protection against environmental
turbulence and contested market share became
overrated. The nature of IT was utterly different
form the previous technologies of transforma-
tion, transportation, energy-generation, energy-
distribution, coordination, and communication.
Unlike information that simply exists (in its own
right), previous technologies only existed when
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