IT and organizational change in digital economies: a socio-technical approach

Many people are enthusiastic about the prospects of a digital economy (sector) energizing the larger US economy. Much of the speculation and reporting emphasizes new business models a fun topic. However, it is easy to assume that business firms and public agencies can readily change to take advantage of new business models whcn they decide which ones are most appropriate. Regardless of the specific business models that are devised and selected, they have to be enacted by organizations in order to realize their expected economic and social value. We know that organizations are imperfect implementers of business strategies, even those that appeal to many experienced managers. For example, between 1993 and 1995, Business Process Re-engineering (BPR) was enthusiastically advanced by the popular business press and was tried by a substantial number of our major business firms, despite high costs and a high failure rate (75%) (Bashein, Markus, and Rile> 1994). Many professional managers have now become wary of BPR, and have turned to Knowledge Management as "the next big thing," despite considerable confusion about what it means in practice and how to change organizations to take advantage of its insights. More seriously, thirty years of systematic empirically grounded research about IT and organizational change suggests that many organizations have trouble in readily changing their practices and structures to take effective advantage of IT. Research has found how it requires complex organizational work takes to get information systems "up and running." In addition, researchers have found that there are sometimes major differences between the ways that systems have been envisioned and how they are used in practice. The body of research that examines topics like these is called Organizational htformatics (OI). Ol research has lead us to a deeper understanding of IT and organizational change and some highlights of this "deeper understanding" are the substance of this article. Before we discuss some key ideas from this body of research, it helps to characterize a Digital Econom> so that we may better understand how IT is to play an enabling role. The term "digital economy" was popularized by pundit and consultant Don Tapscott in his 1996 book, The Dgital Economy. Tapscott provides many engaging examples of the ways that iT plays a role in business operations, and he is especially enthusiastic about the role of the Internet in fostering electronic commerce. But he doesn't provide a significant analytical conception of a digital economy. In fact, he often uses the term "digital economy" interchangeably with "new economy" (which is a different construct one that emphasizes high growth, low inflation, and low unemployITlenr). A recent Commerce Department report, The Emerging Digital Economy, is much more analytical. It characterizes a "digital economy" based on industries and forms of IT-enabled business activity that are likely to be significant sources of economic growth in the next decade. These include the IT industry itself, electronic commerce among businesses, the digital delivery of goods and services, and the [T-supported Retail sale of tangible goods. Our approach builds on both of these, by focussing upon important forms of 1T-enabled business activity. The 'digital economy" is conceptualized differently than the better understood and more carefully studied "information economy" (Porat, 1977; Cooper, 1981; Katz, 1984; Robinson, 1986; Jussawalla and Lamberton, 1988; Kling, 1990; Schement, 1990; Engelbrecht, 1997). In brief, the digital economy f~)cuses on goods or services whose.development, production, sale, or provision is critically dependent upon digital technologies. In contrast, the information economy includes all informational goods and services, including publishing, en-