Organizations use information to produce outputs but are not designed primarily for processing information. It highlights the formal and stable aspect of organizations. This definition highlights the people within the organization, their ways of working, their relationships. A business process is a logical sequence of activity to achieve a specific business goal or objective. Describe each of the major theories that help explain how information systems affect organizations.
Labor historically has a rising cost.
Through use of information systems technology, less capital and less labor are required, reducing the need for middle managers and clerical workers. Agency theory views the firm as a nexus of contracts among interested individuals. Agents need constant supervision and management which introduces management costs. As firms grow, management costs rise. According to this theory, information systems can permit organizations to reduce overall management costs by reducing the costs of acquiring and analyzing information.