Many analysts have documented the failure of mergers and acquisitions. It rarely is the panacea hoped for by beleaguered management. Where the costs of coordination and transaction between value-adding entities were high, large hierarchies in the form of autonomous firms would predominate as they could achieve economies of scale in production and distribution. However, where coordination and transaction costs approach zero, markets would become the dominant form of economic organization, efficiently arbitrating how value is created and exchanged among a constantly changing universe of producers and consumers. With the arrival of the Internet, we are on the threshold of an era where transaction and coordination costs are rapidly approaching zero, where markets matter more than hierarchies, and information matters more than asset ownership.
Open information drives ecosystems.
The need to own and control is inversely proportionate to the amount of cooperation and trust evident in any given marketplace or environment. True and natural economic ecosystems of scale are built on the common foundation of voluntarily shared information. All rights reserved.