The Boundaryless Enterprise: Information, Organization & Leadership 3658400536, 9783658400538

Citation preview

Arnold Picot · Ralf Reichwald · Rolf T. Wigand · Kathrin M. Möslein · Rahild Neuburger · Anne-Katrin Neyer

The Boundaryless Enterprise Information, Organization & Leadership

The Boundaryless Enterprise

Arnold Picot • Ralf Reichwald Rolf T. Wigand • Kathrin M. Möslein Rahild Neuburger • Anne-Katrin Neyer

The Boundaryless Enterprise Information, Organization & Leadership

Arnold Picot Formerly Ludwig-Maximilians Universität München Munich, Germany

Ralf Reichwald TUM School of Management Technical University of Munich Munich, Germany

Rolf T. Wigand Formerly Emeritus College Arizona State University Tempe, AZ, USA

Kathrin M. Möslein Friedrich-Alexander-Universität ErlangenNürnberg (FAU) & Handelshochschule Leipzig (HHL) Nürnberg & Leipzig, Germany

Rahild Neuburger LMU Munich School of Management Ludwig-Maximilians-Universität Munich, Germany

Anne-Katrin Neyer Martin-Luther-University Halle-Wittenberg Halle (Saale), Germany

ISBN 978-3-658-40053-8    ISBN 978-3-658-40054-5 (eBook) https://doi.org/10.1007/978-3-658-40054-5 © Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 This book is a translation of the original German edition “Die grenzenlose Unternehmung” by Picot, Arnold, published by Springer Fachmedien Wiesbaden GmbH in 2020. The translation was done with the help of artificial intelligence (machine translation by the service DeepL.com). A subsequent human revision was done primarily in terms of content, so that the book will read stylistically differently from a conventional translation. Springer Nature works continuously to further the development of tools for the production of books and on the related technologies to support the authors. Translation from the German language edition: “Die grenzenlose Unternehmung, 6. Auflage” by Arnold Picot et al., © Springer Fachmedien Wiesbaden 2020. Published by Springer Fachmedien Wiesbaden. All Rights Reserved. This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH, part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

Preface

This book has a long history and is at the same time an exciting experiment. Over the last more than 25 years, it had six editions of the German version Die grenzenlose Unternehmung and has already seen three English and two Japanese editions. Today, it is still considered to be a trend-setter for the business administration of the future. Since the fifth German edition, major changes have taken place in technology, business, and society, making a new edition necessary. The recent sixth German edition, therefore, took a radical step: the book has been focused on the core contents, shortened, and updated. The translated “Preface to the Sixth Edition” summarizes and clarifies the idea, motivation, and direction taken. Now, on the occasion of the upcoming 80th birthday of Ralf Reichwald, core author and enthusiastic driver of all editions from the beginning, we decided for an experiment that simply follows the core understanding of the book. “The Boundaryless Enterprise” at its core addresses and discusses the crucial role of latest developments of information and communication technologies for the development of organizations and markets, for the work of individuals and teams, for leaders and members of organizations, and for the division of labor and new means of coordination that create or dissolve boundaries within and between organizations. With the Covid-19 pandemic as a burning glass, virtual forms of work have become the reality. What we have seen is a condensation of work as our private and professional life has been transferred in virtual settings. Now, after the Covid-19 peak, organizations are challenged to experiment with hybrid settings. As a consequence, condensed virtual work encounters hybridity. This implies up to a certain extent that individuals are reaching their personal limits, in particular time limits. New projects, such as the translation of this book, are always welcomed, but difficult to fill with life because of individual (time) limits. Thus, the pressing issue was: What to do? While all earlier editions in English and Japanese had been carefully (and in time consuming ways) translated and edited by the authors, we now deliberately decided for an experiment. We decided to go for an AI translation with two effects: First, this

v

vi

Preface

book is available in English, which would otherwise not have been the case. Second, this proves that a new division of labor is becoming more and more real and works – the co-working between humans and AI systems: AI takes over the tedious part of the translation and humans (the authors) control and look over it holistically. Consequently, AI is becoming an enabler for new forms of boundaryless organization. In the future, co-­existence of people and machines will increase. Machines will no longer be viewed only in the sense of supporting tools but also in the sense of “colleagues” at eye level, virtual “superiors,” or direct competitors. From the perspective of information, organization, and leadership, this is relevant, among others, because teams are extended by “virtual colleagues” with specific skills, for example, avatars, virtual reality, and metaverse. This new English edition is, thus, a pure machine translation of the sixth German edition with only very few minor edits from our side. We wanted to challenge you, the reader, to see and judge how far machine learning and artificial intelligence has made progress in the translation of professional and academic texts. And we must admit: we were impressed, touched only the absolute minimum, to give you a chance to assess what is already possible and where new forms of collaboration between man and machine could deliver better quality, allow for new processes in academic writing, or change the rules of the publication business in the years to come. We invite your feedback and comments and thank you in advance! Also, we would like to take this opportunity to thank Felix Wirges from Martin Luther University Halle-Wittenberg, who supported us in all steps and interactions and made sure we kept the timeline. Furthermore, we would like to thank Timon Sengewald from Friedrich-Alexander-Universität Erlangen-Nürnberg for his valuable contributions and for taking care of all figures and illustrations and Ronja Schwinghammer from the Ludwig-Maximilians-Universität München for her support. Thank you all. For the continuous great coaching and support from Springer-­ Verlag, we would like to thank Ms. Barbara Roscher, who accompanied the publishing work of Die grenzenlose Unternehmung from the first edition in 1996 to this new edition with the utmost commitment, and Ms. Barbara Bethke. All remaining weaknesses, for sure, are solely our responsibility. Please do not blame men or machine who supported us so brilliantly. Overall, this book is a celebration of great lifetime achievements of all original authors: in memory of the great organizational scientist and thought leader Arnold Picot and the inspiring academic and networking champion Rolf Wigand, but also as a “birthday present” from our young-at-heart jubilarian Ralf Reichwald to all his friends, followers, and alumni from the big extended “Reichwald family” – a boundaryless scholarly community that lives the spirit of the “Boundaryless Enterprise” in many different roles and positions in innovation, organization and leadership in academia, business, and society.

Preface

vii

Dear readers, please celebrate with us, be inspired, and feel free to further develop the theories and thoughts, as well as cases and outlooks that date back to the early days of developing the first edition. This book has never been designed as a solution; it has always been an inspiration for many. Please take your portion of inspiration and use it in creative ways in your own work-life contexts. Munich, Germany Ralf Reichwald Nürnberg & Leipzig, Germany Kathrin M. Möslein Halle (Saale), Germany Rahild Neuburger October 2022 Anne-Katrin Neyer

Preface to the First Edition

This book has a long history. The three authors work in related fields and have collaborated on numerous projects in organizational research, organizational design, and the application of new technologies, and have maintained a long-standing exchange of ideas. This has taken the form of publications, conferences in Europe and North America, reciprocal lecture visits and visiting professorships. At the end of the 1980s, this cooperation gave rise to the idea of summarizing the insights gained in a joint textbook, which was to be published simultaneously in German and English. Concepts and work plans were developed at various meetings, and the idea of trying out virtual teamwork in this project using the new communication media was fascinating. However, the practice of (transatlantic) telecooperation proved more difficult than anticipated: The complexity of a textbook project, the rapid developments in the field of new technologies and their applications, and the accompanying changes in the subject content for our book project demanded intensive dialogue between the authors: clarification of the content and discussion about the further development of the concept and content of the textbook. We experienced the limits of telecommunication and telecooperation, and the project went into crisis. At a “crisis retreat” lasting several days at a hotel on the shore of Casenovia Lake in New York State in April 1994, we asked the crucial question: Should we bury this ambitious project, or should we take it to completion with a new start, a new concept, and clear milestones within a manageable time frame? In this productive meeting the project was revitalized, the present new conception and a work plan were created, which was then strictly adhered to “cum grano salis”. In this project, we were able to experience something that is also the subject of the textbook: the authors experienced the limits, but also the support potential of information and communication technology, especially the Internet and its e-mail and file transfer services. They realized as a virtual team – on the basis of common values and trust, which of course could only be developed face-to-face – an altogether quite complex project. The general experience that complex projects often have to go through a serious crisis before they can find a goal-oriented conclusion was also confirmed in our case. ix

x

Preface to the First Edition

We also owe the realization of our project to the committed participation of our chair teams. The innovative spark of the “borderless enterprise”, the possibility of helping to shape the new “corporate management in the information age”, excited them and motivated everyone to contribute to this book in some way. These teams also networked virtually, contributing significantly to the efficient coordination of the final production across space and time. This allowed us to pool knowledge, and participation went to the limit of co-authorship. We would like to thank in particular Dr. Wolfgang Burr, Dipl.-Ing. Dipl.Wirtsch.-Ing. Juan-Ignacio Conrat, Dipl.-Inform. Burkhard Hermens, Dipl.-Kfm. Gerhard Hesch, Dr. Claudia Höfer, Dr. Wolf-Guido Lutz, Dipl.-Inform. Kathrin Möslein, Dr. Johann Niggl, Dipl.-Kfm. Hans Sachenbacher, Dipl.-Volksw. Nicola Sennewald and Dr. F.  Dianne Lux Wigand. We would like to thank Dipl.-Kffr. Christina Bastian, Dipl.-Ing. Dipl.-Wirtsch.-Ing. Rudolf Bauer, Dr. Hans Koller, Dipl.-Kfm. Barbara Kreis, Dr. Rahild Neuburger, Dr. Heiner Röhrl, Dipl.-Kfm. Sven Scheuble, Dipl.-Kfm. Bernd Schulte and Dr. Birgitta Wolff for their valuable editorial support. Mr. Carsten von Glahn (Dipl.-Ing. Dipl.-Wirtsch.-Ing.), Ms. Tanja Ripperger (MBA) and Ms. Angela Shelley have participated in the translation and linguistic smoothing work with great expertise and motivation. The overall technical coordination and the final editing were in the proven hands of Dipl.-Kfm. Hans Sachenbacher and Dr. Rahild Neuburger. In the preparation of the illustrations, the final proofreading and the compilation of the index, the very helpful assistance of Dipl.-Inform. Florian Bieberbach, Dipl.-Kfm. Markus Böhme, Dr. Christine Bortenlänger, Dipl.-Phys. Martin Braig, Dipl.-Phys. Jorun Cramer, Dipl.-Inform. Hermann Englberger, Mrs. Christine Graap-Lippert, Mr. Florian Haase, Mrs. Beth Mahoney, Mr. Dipl.-Kfm. Florian Pfingsten, Mrs. Dipl.-Kffr. Ulla Raithel, Mr. Dipl.-Ing. Dieter Riedel, Dr. Peter Rohrbach, Mr. Dipl.-Kfm. Bernd Schulte, Dr. Andrea Schwartz, Dipl.-Kfm. Eckhard Wagner, Dipl.-Ing. Dipl.-Wirtsch.-Ing. Axel Wiemers and Dipl.-Ing. Dipl.-Wirtsch.-Ing. Stefan Zeilner. We would like to express our sincere thanks to all of them for their work and cooperation with the authors, which has always been as high quality as it has been committed. Of course, the responsibility for the content and any remaining errors lies solely with us. The realization of our wish to make the book accessible to the German-speaking and English-speaking world at about the same time proved to be surprisingly laborious. The creation of the two language versions was not even the dominant difficulty. Since some parts of the book were written in German and others in English from the beginning, a “bilingual” manuscript was available, each of which was further edited and translated by the other authors and their helpers. The English and German versions are therefore not 1:1 versions in different languages. They also differ in nuances of content, which corresponds to the respective country-specific addressees and the respective “textbook cultures”. Both versions will not be published simultaneously, but at intervals of a few months. It was surprising for us that, despite all the globalization in the publishing and media sector, there were apparently no patterns of tandem solutions in the management literature for the German-speaking and English-speaking regions. It therefore took numerous discussions and negotiations before two equally renowned and

Preface to the First Edition

xi

knowledgeable specialist publishers, Gabler for the German-language edition and Wiley for the English-language edition, were won as cooperation partners for this project and all the necessary agreements were reached. We are very pleased with this solution and would like to thank in particular Ms Dianne Taylor (Wiley) and Dr Reinhold Roski (Gabler) for their consistently constructive cooperation. We are very grateful in advance to our readers for any kind of feedback on this textbook. You can reach us at the addresses given in the title and, of course, by e-mail! Munich, Germany and Syracuse, NY, USA January  1996 

Arnold Picot Ralf Reichwald Rolf T. Wigand

Preface to the Sixth Edition

The story continues. Die grenzenlose Unternehmung had five editions in the German version by 2003, as well as three English and two Japanese editions, and is still considered a trendsetter for business administration of the future. Since the last edition, major changes have taken place in technology, business, and society, making a new edition necessary. The impetus was provided by Anne-Katrin Neyer, who held a lecture on the topicality of the “boundless enterprise” at her Chair of Business Administration, in particular Human Resources Management and Business Governance, at Martin Luther University Halle-Wittenberg in the winter semester 2016/2017. The authors of the “boundless enterprise” were invited to the final event of the lecture. Arnold Picot also attended the students’ final presentation on January 31, 2017. For him, this event in January 2017 was a special occasion because 20 years earlier he had presented the basic ideas of the “boundless enterprise” for the first time at the annual conference of the Association of University Teachers of Business Administration (VHB) precisely at Martin Luther University Halle-Wittenberg. Now, in 2017, it was the students’ turn, and we were all extremely taken with the students’ creative ideas for reworking this textbook. The general recommendation was that “The Boundless Enterprise” should be developed as a platform concept with digital and physical components as a new type of textbook, a modular textbook that allows for interactive participation by students and other subject representatives and enables dynamic further development with supplementary digital products and services. Arnold Picot was so enthusiastic about this idea because he had dealt with the topic of “Digitalization and the Change in the World of Work” a year earlier, and he, too, based his lecture  – as it turned out  – on “The Borderless Enterprise” as an explanatory platform. The platform idea is the basis of this new edition. It is the result of an exciting and inspiring interaction with the students of the master’s program “Human Resources Management” at Martin Luther University Halle-Wittenberg over several semesters. Therefore, supplementary digital services and digital products are available to users of the textbook as knowledge resources:

xiii

xiv

Preface to the Sixth Edition

• Flashcards for individual review of learning success • Case studies for the application of theoretical knowledge to selected company examples (for download, visit the product page of the book: https://www. springer.com/de/book/9783658285647) We would like to take this opportunity to thank all students of the master’s program “Human Resources Management” at Martin Luther University Halle-­ Wittenberg, whose impulses have set this new edition of “grenzenlose Unternehmung” on its way. Special thanks go to Felix Wirges from Martin Luther University Halle-­ Wittenberg, who contributed to this book with valuable and enriching impulses and creative ideas. Furthermore, we would like to thank Christian Hoßbach, Sabrina Rockau, Kristin Anlauf, Anita Knappe, Lena Burkart, Ngoc Anh Vu, and Iris Kerres from Martin Luther University Halle-Wittenberg; Dr. Stefan Michael Genenning and Timon Sengewald from Friedrich Alexander University Erlangen-Nuremberg; Tim Mosig, Prof. Dr. Claudia Lehmann, and Claudia Roscher from the HHL Leipzig Graduate School of Management; and Katharina Schlegel from Ludwig Maximilians University of Munich for their valuable contributions in the revision of this textbook. For the cooperation with Springer-Verlag, we would like to thank Ms. Barbara Roscher, who accompanied the publishing work of Die grenzenlose Unternehmung from the first edition in 1996 to this new edition with the utmost commitment. Arnold Picot would have completed his 75th year on 28 December 2019. To mark this occasion, we want to present Die grenzenlose Unternehmung – as he had wished it – to the professional public in a new edition in the spring of 2020. This will be done in memory of the great organizational scientist and thought leader Arnold Picot. We authors associate with this the personal feeling of deep gratitude and attachment to our friend and colleague Arnold Picot for many years of great cooperation. This sixth edition of the book The Borderless Enterprise is based on the continuous development of the contents from edition to edition. Numerous former employees were involved in this process: Nizar Abdelkafi, Christina Bastian, Nina Bauer, Florian Bieberbach, Ingo Deking, Peter Dumont, Hermann Englberger, Berthold Hass, Michael Hermann, Christoph Ihl, Claudia Immetsberger, Karin Jenuwein, Jasmin Franz, nee. Korb, Barbara Kreis-Engelhardt, Ulrich Löwer, Christoph Lohse, Silvia Meyer, Nina Negele, Markus Pankow, Michael Peceny, Frank Piller, Stefan Riedel, Tanja Ripperger, Hans Sachenbacher, Sven Scheuble, Susanne Schuller, Jörg Siebert, Christof Stotko, Eckhard Wagner, Michael Wagner, Steffen Wiedemann, Stefan Wittenberg, and Stefan Zanner. Munich, Germany Ralf Reichwald Tempe, AZ, USA Rolf T. Wigand Nürnberg, Germany Kathrin M. Möslein Halle (Saale), Germany Rahild Neuburger January 2020 Anne-Katrin Neyer

Contents

1

 Information, Organization, and Leadership: On the Way to the Boundaryless Enterprise ������������������������������������������������������������������������    1 1.1 Changes in Competitive Conditions and Corporate Structures��������    1 1.1.1 Profound Change in Competitive Conditions ����������������������    2 1.1.2 Profound Changes in Society and the World of Work����������    3 1.1.3 Potentials of Digital Technologies����������������������������������������    3 1.2 New Organizational Concepts: Overcoming Boundaries ����������������    4 1.2.1 Stronger Market Orientation to Be Able to Cope with the Changed Competitive Conditions Outlined��������������������������    6 1.2.2 Technical and Nontechnical Forms of Networking��������������    7 1.2.3 New Forms of Employee Management to Develop and Exploit Employee Potentials������������������������������������������������    7 1.3 Structure and Characteristics of This Book��������������������������������������    7 References��������������������������������������������������������������������������������������������������   10

2

 Market Dynamics and Competition: The Crucial Role of Information����������������������������������������������������������������������������������������������   11 2.1 Why Enterprises and Markets? ��������������������������������������������������������   11 2.2 Theories of Organization������������������������������������������������������������������   14 2.2.1 Institutions and Treaties��������������������������������������������������������   15 2.2.2 Property Rights Theory��������������������������������������������������������   17 2.2.3 Transaction Cost Theory ������������������������������������������������������   20 2.2.4 Principal-Agent Theory��������������������������������������������������������   25 2.3 Information and Network Economy ������������������������������������������������   28 2.3.1 Production and Distribution of Information ������������������������   29 2.3.2 Use of Information����������������������������������������������������������������   31 2.4 Implications for Companies and Markets ����������������������������������������   32 References��������������������������������������������������������������������������������������������������   34

xv

xvi

Contents

3

 Basic Models of Human Information and Communication Behavior   37 3.1 The Importance of Information and Communication in Organizations������������������������������������������������������������������������������������   37 3.1.1 Information Needs and Information Supply ������������������������   40 3.1.2 First-Time Confirmation Model��������������������������������������������   40 3.1.3 Information Behavior According to O’Reilly ����������������������   41 3.2 Selected Models of Communication Behavior ��������������������������������   42 3.2.1 Three-Level Model of Semiotics������������������������������������������   43 3.2.2 Typical Communication Models������������������������������������������   45 3.3 Task, Medium, and Communication ������������������������������������������������   49 3.3.1 Perspectives on Media Choice: Results of Media Choice Research��������������������������������������������������������������������������������   50 3.3.2 Digital Leadership: The Impact of New Media on Corporate and Employee Management��������������������������������   54 3.4 Models of Knowledge����������������������������������������������������������������������   56 3.4.1 The Importance of Knowledge ��������������������������������������������   56 3.4.2 Knowledge Between Coordination and Motivation��������������   59 3.5 Information, Communication, and Trust������������������������������������������   60 3.5.1 The Importance of Trust in Intra- and Inter-Organizational Contexts��������������������������������������������������������������������������������   60 3.5.2 Information Behavior and Trust��������������������������������������������   61 3.5.3 Trust Building and Communication��������������������������������������   64 3.6 Conclusions for Management ����������������������������������������������������������   65 References��������������������������������������������������������������������������������������������������   66

4

Technology in the Boundaryless Enterprise: Digitalization as Driver for the Dissolution of Boundaries? ��������������������������������������������   71 4.1 Technologies as Enablers������������������������������������������������������������������   71 4.2 Overarching Trends in Digitization��������������������������������������������������   72 4.3 Big Data: Relevance of the Data������������������������������������������������������   73 4.4 Networked Production: Industry 4.0������������������������������������������������   76 4.5 Cloud Computing: Problem-Oriented Access to Services����������������   78 4.6 Blockchain Technology: Secure Transactions����������������������������������   80 4.7 Artificial Intelligence: New Interactions Between Man and Machine��������������������������������������������������������������������������������������������   81 4.8 Conclusions for Management and Leadership����������������������������������   83 References��������������������������������������������������������������������������������������������������   84

5

 Dissolution of Hierarchies: Modularization������������������������������������������   87 5.1 Basic Idea and Characteristics of Modular Forms of Organization��   87 5.2 Forms of Implementation of Modularization������������������������������������   91 5.2.1 The Spectrum of Modularization Concepts��������������������������   91 5.2.2 Modularization Concepts at the Organizational Level����������   92 5.2.3 Modularization Concepts at the Level of Process Chains����   94 5.2.4 Modularization Concepts at the Level of Work Organization��������������������������������������������������������������������������   95

Contents

xvii

5.3 Modularization and Interactive Value Creation��������������������������������   97 5.3.1 Involving the Customer in the Value Creation Process��������   97 5.3.2 Product Individualization (Mass Customization) and Open Innovation��������������������������������������������������������������������   98 5.4 Conclusions for Management and Leadership����������������������������������  100 References��������������������������������������������������������������������������������������������������  101 6

 Dissolution of the Company: Networks ������������������������������������������������  105 6.1 Basic Idea and Explanatory Approaches of Hybrid Organizational Structures������������������������������������������������������������������  105 6.2 Forms of Realization of Hybrid Organizations��������������������������������  106 6.3 Forms of Cooperation ����������������������������������������������������������������������  108 6.3.1 Systematization of Cooperations������������������������������������������  109 6.3.2 Organization of Cooperations ����������������������������������������������  109 6.4 Forms of Control������������������������������������������������������������������������������  110 6.5 Business Networks and Platforms����������������������������������������������������  111 6.6 Conclusions for Management ����������������������������������������������������������  114 References��������������������������������������������������������������������������������������������������  115

7

 Overcoming Location Boundaries: Virtual Enterprise������������������������  119 7.1 Basic Idea and Characteristics of Virtual Forms of Organization����  119 7.2 Forms of Implementation of Virtualization��������������������������������������  124 7.2.1 Overcoming Location Boundaries at the Market and Business Environment Level������������������������������������������  124 7.2.2 Overcoming Location Boundaries at the Level of Value Creation and Company Success��������������������������������������������  125 7.2.3 Overcoming Location Boundaries at the Level of People and Work ������������������������������������������������������������������������������  126 7.3 Virtualization and Organization��������������������������������������������������������  128 7.3.1 “Virtual Size” Despite “Real Smallness”������������������������������  129 7.3.2 Centralization Despite Decentralization ������������������������������  130 7.3.3 Generalization Despite Specialization����������������������������������  130 7.3.4 Virtual Teams������������������������������������������������������������������������  130 7.3.5 Limits of Virtual Organizations��������������������������������������������  131 7.4 Conclusions for Management and Leadership����������������������������������  132 References��������������������������������������������������������������������������������������������������  134

8

The Human Being in the Boundaryless Enterprise: New Demands on Employees and Managers������������������������������������������������������������������  137 8.1 The Human Being in the Boundaryless Organization: “Working World 4.0”������������������������������������������������������������������������  137 8.1.1 The Importance of People in Changing Competitive Conditions ����������������������������������������������������������������������������  138 8.1.2 New Models of Work Structuring in the Boundaryless Organization��������������������������������������������������������������������������  139

xviii

Contents

8.2 The New Role of Customers, Employees, and Managers in the Boundaryless Organization ��������������������������������������������������������������  142 8.2.1 The New Role of the Customer��������������������������������������������  142 8.2.2 The New Role of the Employee��������������������������������������������  143 8.2.3 The New Role of the Manager����������������������������������������������  145 8.3 Conclusions for Management and Leadership����������������������������������  147 References��������������������������������������������������������������������������������������������������  149

Chapter 1

Information, Organization, and Leadership: On the Way to the Boundaryless Enterprise

Abstract  We are used to thinking of companies as self-contained, integrated entities. They are physically located in office buildings and factories where their members operate and where the necessary materials, machines, and other resources are located. The physical location structures and the labor or corporate contractual relationships between the members of the enterprise generally define the boundaries of an enterprise. Of course, a venture crosses these boundaries all the time by operating in markets, e.g., procuring materials, selling products or services, or raising or investing capital. But these boundary crossings correspond to a clear notion of inside and outside, of belonging and not belonging, of interfaces between enterprise and markets. Large parts of the economy no longer correspond to this corporate model, which is also the basis of many textbooks. Modular, agile organizations, networks and cooperations, electronic markets, platforms, telecooperations, and virtual organizational structures have become reality. The classic boundaries of the enterprise are beginning to blur, to change both internally and externally, and in some cases to dissolve. Deeply tiered corporate hierarchies that function primarily according to command and control are increasingly being replaced by decentralized, modular structures characterized by autonomy, cooperation, and indirect leadership. This development is closely linked to changes in competition, technology, and values.

1.1 Changes in Competitive Conditions and Corporate Structures We are used to thinking of companies as self-contained, integrated entities. They are physically located in office buildings and factories where their members operate and where the necessary materials, machines, and other resources are located. The physical location structures and the labor or corporate contractual relationships between © Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_1

1

2

1  Information, Organization, and Leadership: On the Way to the Boundaryless…

the members of the enterprise generally define the boundaries of an enterprise. Of course, a venture crosses these boundaries all the time by operating in markets, e.g., procuring materials, selling products or services, or raising or investing capital. But these boundary crossings correspond to a clear notion of inside and outside, of belonging and not belonging, of interfaces between enterprise and markets. Large parts of the economy no longer correspond to this corporate model, which is also the basis of many textbooks. Modular, agile organizations, networks and cooperations, electronic markets, platforms, telecooperations, and virtual organizational structures have become reality. The classic boundaries of the enterprise are beginning to blur, to change both internally and externally, and in some cases to dissolve. Deeply tiered corporate hierarchies that function primarily according to command and control are increasingly being replaced by decentralized, modular structures characterized by autonomy, cooperation, and indirect leadership. This development is closely linked to changes in competition, technology, and values.

1.1.1 

Profound Change in Competitive Conditions

Goods, labor, and information markets have now become globalized. The Internet and digitization open up worldwide access to markets that were previously difficult to reach. New competitors, often from outside the industry, are entering existing markets – increasingly in the form of platforms. In addition, buyers have become more demanding and critical. The classic business objectives of “costs,” “quality,” “time” (development and delivery times), and “flexibility” are being fundamentally re-evaluated from a competitive strategy perspective. It is often the case that in particularly turbulent markets, time and flexibility are the decisive criteria in competition when it comes to having to respond quickly and cost-effectively to changing demand. In addition, the range of products and services is changing. The previously clear separation into physical product on the one hand and service on the other is becoming obsolete; physical products and matching services are growing together. As a result, service bundles are emerging that consist of physical products and accompanying services. In this context, there is often talk of “smart services” (cf., e.g., Kagermann & Riemensperger, 2015) or hybrid products (e.g., Noll et al., 2017).

1.1  Changes in Competitive Conditions and Corporate Structures

3

Example The following example illustrates the case: Whereas in the past a heating system was sold as a purely physical product, services can now be integrated into this heating system that provide timely reminders of maintenance, warn of a breakdown, automatically inform the installer of problems, or can be controlled externally via the mobile phone app in order to save energy. In order to develop and create such products, suppliers and upstream suppliers must now be involved who have played no or only a very rudimentary role in the classic value creation structure. They are also difficult to assign to the respective industry; usually, they come from other industries  – frequently the IT and software industries. For example, the heating system supplier mentioned above has to involve providers of sensor components or services as well as software providers or data processing providers in the creation process of his new heating system and, for example, also enter into cooperative ventures with installers to be able to offer the services mentioned. As a result, cross-­ industry value creation networks are emerging that need to be organized and coordinated accordingly.

1.1.2 Profound Changes in Society and the World of Work The development described above is overlaid by social changes. Classical hierarchical work models with subordination, obligation, and pure execution of work without own room for maneuver are becoming less and less accepted; values such as personal responsibility, independence, self-realization, individuality in the world of work, as well as the exercise of meaningful activities are becoming more important.

1.1.3  Potentials of Digital Technologies Digital technologies play a particularly important role in the processes of change. The dramatic increase in performance, miniaturization, and integration of these technologies lead in part to completely new application potentials at the product and process level in the economy and society. In conjunction with production, transport, materials, and energy technology, far-reaching changes are taking place, including increased capacity and performance, networking, globalization, convergence, virtualization, mobility, openness, decentralization, and dematerialization (see Chap. 4). Finally, numerous new service markets are developing in the environment of the new technologies. The actually well-known but still important fact that companies, markets, industries, politics, and society are essentially constituted by information and communication is being brought back to consciousness by the rapidly increasing range of

4

1  Information, Organization, and Leadership: On the Way to the Boundaryless…

services offered by corresponding technologies and the associated potential for structural change. New types of performance qualities and new forms of shaping economic processes are emerging, which are permanently changing the way business, science, and administration function. The new technologies also contribute significantly to the innovation dynamics in the area of product and process innovations. They are not only changing products and production processes. They are also causing many machines to age rapidly in economic terms, because new technologies with higher performance and a greater variety of possible applications are coming onto the market more quickly. Finally, new technologies provide an important basis for the development of new organizational concepts as well as technical services and applications to handle the challenges resulting from changing consumer behavior and value systems. Typical examples are team concepts, forms of mobile work, and the corresponding technologies to support these concepts.

1.2 New Organizational Concepts: Overcoming Boundaries Companies are limited in their options for action by various factors such as spatial distances, shortage of space and time, resource bottlenecks, knowledge bottlenecks, capacity bottlenecks, and lack of flexibility. The application potentials of digital technologies in the competitive process place the overcoming of such limits at the center of new solution approaches for organizational innovations. • Due to communication and transport facilitation, regional or national boundaries play an increasingly minor role in the definition and coordination of economic activities. • The facilitated communicative integration of third partners in the realization of entrepreneurial concepts makes corporate boundaries visibly disappear in the sense of a differentiation between inside and outside. • Capacity limits are extended in a problem-related manner, thanks to the flexible inclusion of the resources required in each case. • Knowledge boundaries can be pushed out and overcome more quickly through the considerably simplified, worldwide access to knowledge carriers and knowledge stocks. • Boundaries of specialization and qualification of people in organizations are evaporating due to new types of bundling and networking possibilities of processes and people – not least made possible by digital technologies. • Limitations in the collection and analysis of Big Data and the associated mastery of complexity can be handled by digital technologies such as Big Data analysis tools and artificial intelligence in particular. These exemplary trends show that traditional ideas about the formation and functioning of companies need to be revised. Companies will increasingly seldom be understood as relatively well-defined, permanent, integrated, and spatiotemporally well-defined entities in relation to their environment. Rather, new types of

1.2  New Organizational Concepts: Overcoming Boundaries

5

entrepreneurial conceptions and forms of economic division of labor within and between enterprises are emerging. They are the focus of this book. The realization of these organizational ideas is not easy. This is because the concepts of traditional industrial organization still often dominate actions in everyday business. The dominant design principles of the classical approach, strongly influenced by F.W. Taylor, were: • Widest possible work decomposition as a starting point. • Personnel separation of dispositive and executive work. • Time and place separation in working time/leisure time as well as place of work (factory or administrative building) and place of residence. In this thinking, the human being was regarded merely as a functional production factor, integrated into the manufacturing process as a recipient and implementer of orders. The communication relationships followed the hierarchical structures. A strictly formalized communication through the hierarchical levels, prescribed by fixed rules, developed the so-called official channel. The communication behavior between superiors and subordinates was characterized by the understanding of the role of the superior as the giver of orders and the subordinate as the recipient of orders. The stable conditions on the markets, the longevity of the products, and the high productivity gave this type of industrial organization its justification until the late 1970s. Today, the framework conditions have changed. On the one hand, new forms of organization are necessary; on the other hand, they can only be realized through technological developments. The changed competitive conditions require companies to be flexible and innovative instead of increasing productivity through a rigid division of labor. A flattening or even dissolution of hierarchical structures is necessary. Classic departments and hierarchical levels are losing their significance; strictly defined communication structures are being replaced by the direct path of group communication that is not channeled in the individual. The merging of dispositive and object-related work, as well as the merging of service and material performance into overarching value-­ added networks, has yet another consequence, however, it calls into question the boundaries of the enterprise in spatial terms as well: the more the principle of autonomous organizational units permeates the value chain and the better the autonomous corporate units can be coordinated through digital technologies, the more the question of location comes to the fore. If economic advantages can be achieved with a relocation, e.g., through greater market proximity, through the use of cost advantages, through an increase in the quality of life for employees, or through supply advantages, then the organizational decentralization is also followed by spatial decentralization, i.e., the relocation of organizational units. This refers to the locations of entire companies, modular organizational units, groups, or individual workplaces. It is therefore not surprising that new forms of work and division of labor are emerging. This is particularly true against the backdrop of discussions about Industry 4.0, a concept based precisely on digitally networked, partly decentrally organized production and value creation processes.

6

1  Information, Organization, and Leadership: On the Way to the Boundaryless…

Guiding principles of new innovation strategies

Forms of organization for fast and permanent market orientation

Forms of employee management for development and exploitation of the employee potential

Forms of networking: Ability to cooperate internally and externally Fig. 1.1  Guiding principles of new innovation strategies

Figure 1.1 provides an overview of the way in which new guiding principles are shaping the need for a redesign of corporate organization and leadership. The guiding principle is the strengthening of innovative capacity through the development of new organizational strategies that replace the classic productivity-oriented models. Prerequisites for this are:

1.2.1 Stronger Market Orientation to be able to Cope with the Changed Competitive Conditions Outlined It can be implemented, for example, by: • The reintegration of manufacturing and service functions into holistic processes based on customer benefits. • The formation of cooperations, also with competitors, to be able to actually realize the customer benefits. • The initiation or the participation in platforms to be able to increase the customer benefit as an overall system. • Direct, immediate communication between all participants in the value network. • The ability of employees to absorb market information, interpret it correctly, and act in a customer-oriented manner. • The ability of employees to recognize the performance contribution of the organizational unit to operational value creation and market success and to orient daily decisions on this. • A new understanding of the roles of managers and employees in low-hierarchy organizations.

1.3  Structure and Characteristics of This Book

7

1.2.2 Technical and Nontechnical Forms of Networking A prerequisite for working and acting in decentralized value creation processes organized on the basis of the division of labor is networking – both technically and socially. While technically networked work is made possible by new technologies, nontechnically networked work takes the form of a large number of social connections within and outside the company, the success and permanence of which depend on compliance with certain rules. These rules relate, for example, to dealing with team partners from other societies and cultures, to communicating with customers and market partners for whom other norms and rules apply, to dealing with different expectations of managers in global teams, but also to evaluating alternative courses of action whose benefits and costs may only emerge in the context of the network. Qualifications in the challenging field of communication must be developed for this purpose. Important questions here concern the building of trust and the cultivation of interpersonal relationships, on the one hand, and dealing with problems of understanding on the other.

1.2.3 New Forms of Employee Management to Develop and Exploit Employee Potentials The development and exploitation of employees’ skills and potential is crucial for the feasibility of innovative organizational structures. New forms of work such as team structures or mobile working offer organizational starting points for this on the one hand; however, against the background of the change in values outlined above, they also appear to be necessary to be able to bind employees and skilled workers to the company. The findings of the work structuring debate prove that people can be given increased opportunities for self-development and increased performance motivation through meaningful work content, a manageable work environment, rapid feedback of work results and appreciation by others, as well as through sufficient qualifications, autonomy of action, and responsibility. In this way, the goals of the people can be brought into line with the goals of the company to a large extent. The framework for these processes is provided by new concepts of strategy development and controlling.

1.3 Structure and Characteristics of This Book This book considers the causes, trends, and manifestations of the outlined change in an organization and between competing companies, the opportunities and prospects that this change offers, the difficulties of dealing with it, and the challenges it poses to management. At its heart is the concept of the boundaryless enterprise. It is

8

1  Information, Organization, and Leadership: On the Way to the Boundaryless…

Technological trends

Consequences for companies/ markets

Decentralization and networking

Integration

Mobility and virtuality

Artificial intelligence

Rise of cross-company and cross-sector value creation networks

Coordination of service provision?

New forms of value creation

Market

Intercompany cooperation

Consequences for leadership and work

Location of service provision?

Intracompany

Physical / locationbased

Virtual / locationindependent

Changed / new competencies

Fig. 1.2  Basic concept of the boundaryless enterprise

based on the guiding principles outlined above and opens up new scope for design in the (re)structuring of a holistic value creation process that extends beyond the company’s own boundaries. Figure 1.2 shows an overview of the basic structure of this concept. The starting point is overarching technological trends that can be observed independently of specific technologies. These include, in particular, decentralization and networking, integration, mobility and virtuality, and artificial intelligence. They dissolve – also in connection with the above-mentioned other trends – existing value creation processes that are often defined by industry and sector and give rise to cross-company and cross-sector value creation networks. At this point, reference should be made to the example of heating mentioned above, which illustrates a typical trend. The linking of a physical product with a service requires cooperation with software companies and sensor and database providers that cannot be counted as part of the original industry. The organization of the resulting cross-industry value networks places new demands on management. At the same time, digital technologies open up new degrees of freedom for the (re)design and organization of internal and external service provision. Traditional market relationships can be mapped as electronic markets or in electronic platforms. Hierarchical structures are increasingly being replaced by modular units or agile teams. Supported by networked technologies, they can be implemented more easily on the one hand; on the other hand – as already mentioned above – they correspond to the change in social values. On the basis of digital technologies, inter-­ company cooperation can now be supported as efficiently and without media

1.3  Structure and Characteristics of This Book

9

discontinuity as internal processes. Typical examples are supply chain management, platforms, or long-term development partnerships. Close cooperation does not stop at legally defined company boundaries; rather, it extends far beyond these and often involves competitors. This cooperation with competitors is also referred to in the literature as coopetition. New technological trends also open up new kinds of freedom for the question of the location of service provision. It can be either physical and location based or virtual and location independent. The various varieties of digital work or the discussion about virtual teams and virtual companies are valid examples. As a result, a management task can be identified that is becoming increasingly relevant: the (re)organization of service provision both in terms of coordination (market, inter-company cooperation, and intra-company) and the choice of location (physical or location independent/virtual). The resulting organizational constellations, such as networks or virtual companies, require new or further developed competencies from both employees and managers. Hierarchical management concepts often reach their limits here. They are increasingly being replaced by forms of results-oriented, agile leadership or coaching. Virtual teams, for example, are hardly compatible with classic activity-oriented leadership. In order to explain and understand this concept in its entirety, the book is divided roughly into three sections: Chaps. 2, 3, and 4 lay the theoretical and technological foundation to explain the typical structures of the newly developing forms of enterprise shown in Chaps. 5, 6, and 7. Chapter 8 outlines the resulting new demands on and competencies of people in the boundaryless enterprise. Chapter 2 deals with the theoretical foundations of the exchange of services on markets and in companies and, in particular, with the decisive role of information in market dynamics and competition. The aim is to understand why and in what way corporate structures change and the boundaries of companies shift. Chapter 3 discusses basic models of information and communication in order to be able to better classify information behavior and communication and also to understand how important communication is becoming, especially in times of global, digitally networked corporate structures. Chapter 4 shows the potential of digitalization for change and development of companies. On the one hand, this is about overarching trends; on the other hand, it is about specific technologies that influence all of the structural changes shown below. The aim is to understand the influence that overarching technological trends, in particular, have on the organizational changes outlined. Chap. 5 deals with the dissolution of internal hierarchies. Through increasing modularization of the enterprise, traditional, deeply tiered hierarchical structures are being overcome in favor of relatively independent and unconnected, process-­ oriented units that are only loosely coordinated with one another. Chapter 6 focuses the discussion on the dissolution of corporate boundaries in external relations, which leads to networks. Problem-dependent cooperation with third parties blurs classic corporate organizational boundaries in favor of strategic networking and cooperation in both horizontal and vertical directions.

10

1  Information, Organization, and Leadership: On the Way to the Boundaryless…

Chapter 7 discusses ways of overcoming the boundaries of location at workplace and company level, particularly in the form of virtual enterprises. Chapter 8 deals with new demands on the people involved as a result of all the developments described above, which ultimately lead to an extension of human performance limits, to a changed role of people in the organization and thus require new or changed competences. The ideas and concepts presented in this book can offer recommendations for a variety of challenges. Nevertheless, it would be fatal to ascribe to them the character of a recipe catalogue. This is because, according to the situational approach to organization on which this book is based, organizational solutions are only ever efficient for certain framework conditions. If these framework conditions change, then changed organizational recommendations are necessary. But what does that mean exactly? And how can the theoretical approaches presented be used to better understand the organizational solutions selected in this book? The aim of the book is to enable the reader to overcome key challenges, i.e., to: 1. Recognize, justify, and understand which organizational form selected companies represent. 2. Explain a specific form of organization on the basis of theoretical explanatory approaches to the formation of organizational forms presented here (in particular transaction cost theory, principal-agent theory, and selected theories of information and communication behavior). 3. Explain what problems of communication and understanding can occur in networked, virtual corporate structures and what possible solutions are available for handling them. 4. Understand the implications of each for management and staff and what competencies are required in each case. The reader is provided with selected examples in the form of case studies developed by students of the Master’s program in Human Resources Management at Martin Luther University Halle-Wittenberg.

References Kagermann, H., & Riemensperger, F. (Hrsg.). (2015). Smart Service Welt. Umsetzungsempfehlungen für das Zukunftsprojekt Internetbasierte Dienste für die Wirtschaft. Acatech Abschlussbericht. https://www.acatech.de/wp-­content/uploads/2014/03/Bericht_SmartService_final_barrierefrei_DE.pdf. Accessed on 24.01.2020. Noll, E., Zisler, K., Neuburger, R., Eberspächer, J., & Dowling, M. (2017). Neue Produkte in der digitalen Welt. Books on Demand.

Chapter 2

Market Dynamics and Competition: The Crucial Role of Information

Abstract  The satisfaction of human needs is the fundamental intention of economic activity. In general, individual needs exceed the limited goods that are available and suitable for fulfilling respective needs. A possible starting point for dealing with this scarcity is the division of labor and specialization. This division leads to the organization problem, which can be differentiated into the coordination problem and the motivation problem. The theories of New Institutional Economics (i.e., property rights theory, transaction cost theory, and principal-agent theory) can be used as an explanatory and design approach. In the following chapter, this will be explained in more detail alongside information and network economics as theoretical building blocks of the concept of the borderless enterprise before the implications for markets and companies are highlighted.

2.1 Why Enterprises and Markets? The satisfaction of human needs is the fundamental intention of economic activity. In general, individual needs exceed the limited goods that are available and suitable for fulfilling respective needs. As a result of this scarcity, mechanisms have evolved that, while not eliminating this scarcity, do alleviate it. Scarcity is thus a fundamental cause of various phenomena of economic life that are usually taken for granted, such as the phenomena of exchange, division of labor, markets, firms, or competition. The search for effective scarcity reduction means nothing other than allocating production factors and consumption goods to individual economic agents in such a way that as many needs as possible can be satisfied. Hence, economic activity means making rational decisions about the use of scarce resources to fulfil given purposes.

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_2

11

12

2  Market Dynamics and Competition: The Crucial Role of Information

Fundamental approaches for alleviating the scarcity problem are (cf. Picot, 1998): • Production diversion: Using a good as a means of a production instead of a consumption good (e.g., grain as seed instead of food). This corresponds to an investment as the short-term consumption renunciation in the present leads to an increase in the potential of need satisfaction in the future. • Innovation: A further reduction in scarcity is possible if consumption or production becomes more efficient or effective through innovation. The available resources are then used more sparingly or in a more productive way, so that, for example, a larger harvest can be achieved with the same amount of seeds in the future. • Division of labor and specialization: The starting point is limited time and cognitive abilities of people to manage extensive tasks on their own. Therefore, it is necessary to break tasks down into smaller subtasks until individuals are ultimately able to successfully process task components within the scope of their capacities. In addition, the focus on certain task areas allows to develop special knowledge, skills, and procedures with which these tasks can be solved in a more efficient manner. This principle of forming and using special skills through specialization, which was already recognized by Aristotle as well as in modern times by Adam Smith (cf. Smith, 1999 [1776]), brings about considerable increases in productivity in the accomplishment of subtasks. The more differentiated the division of labor is, the more important and complex the coordination between the actors becomes. This applies both to the domestic sector and to the increasing interdependence of services on markets. For all the forms of scarcity reduction mentioned above, namely, production diversion, innovation, division of labor/specialization, and the resulting coordination actions, information is of essential importance (cf. Picot, 1998). • Production diversion is often complex and time-consuming, requiring both expertise in its use and forecasting information on future demand. • Innovations are based on prior knowledge and initially consist of nothing but an idea, i.e., information or a network of information, which is then put into practice. • Finally, division of labor/specialization and coordination require information in the decomposition of the overall task, in the assignment of subtasks to individual task owners, in the control of task fulfillment, as well as in the combination of the individual parts of a task or in the exchange of services. The latter point requires particular attention because of the importance of division of labor and specialization and is called the organization problem (see, among others, Picot, 1982; Milgrom & Roberts, 1992). The organization problem arises because information itself is a scarce good. If necessary information is lacking, deficiencies can arise in the process of completing tasks due to incorrect organization (cf. Picot et al., 2020). An example is unproductive duplication of task due to an insufficiently clarified division of labor. These deficiencies can be divided into two sub-aspects (cf. Milgrom & Roberts, 1992; Wolff, 1995):

2.1  Why Enterprises and Markets?

13

• Coordination problems arise when actors lack information about their task in the economic process, e.g., about which steps they have to perform. Coordination problems are therefore problems of ignorance. • Motivation problems result from conflicts of interest between actors, for example, a contractor may know what tasks he is supposed to execute but does not carry them out as he pursues different goals than his client. Thus, motivation problems are problems of unwillingness. Through coordination and motivation problems in the division of labor/specialization as well as in exchange and coordination, possible productivity gains are lost. The avoidance of these deficiencies in the process of economic activity through coordination and motivation is subject to the organization problem. However, resources are consumed in the process. Consequently, the organization problem is an optimization task. It needs to be searched for the form of organization that succeeds in increasing or optimizing the attainable increase in productivity through the division of labor and specialization along with the consumption of resources required as a result of exchange and coordination (cf. Fig. 2.1). The decisive question here is which instruments will allow coordination and motivation to work. The costs that result from consumption of resources for coordination and motivation are called transaction costs (cf. Picot, 1982). They are the costs of the “production” of an organizational performance. It concerns costs of information and communication, which are necessary for the preparation, execution, and monitoring of division of labor and specialization on the one hand and exchange and tuning on the other hand. The height of the transaction costs is affected above all by the characteristics of the respective transaction (see Sect. 2.2.3).

Scarcity

Exchange/ coordination

Division of labor/specialization

Ignorance

Coordination problems

Unwillingness

Motivation problems

Fig. 2.1  The organization problem. (Picot et al., 2020, p. 39)

14

2  Market Dynamics and Competition: The Crucial Role of Information

Organizational or technological innovations that contribute to a reduction of these costs for coordination and motivation are important to economic development (cf. Picot, 1998). Ultimately, organizational forms are to be assessed in terms of the extent to which they allow economic activity to be coordinated as seamlessly as possible and thus represent a viable solution to the organization problem addressed above. Companies and markets can be illustrated as the two end points of a continuum of possible organizational mechanisms. Enterprises are characterized by long-term and asymmetric relations between the enterprise and employees, whereby the task to be completed by the employee is only vaguely determined. Market relationships, however, tend to be short-term (in extreme cases one-time) and symmetrical; the services to be rendered by the actors are usually precisely specified ex ante by contract. Between these two forms, there are many options for designing organizational forms that minimize transaction costs. Enterprises and markets are thus organizational mechanisms which are intended to solve the coordination and motivation problems arising as a result of the division of labor as efficiently as possible. Moreover, information needed to solve the coordination and motivation problem is also provided by means of digital technologies. Technological developments are changing the efficiency and design options of organizational forms. Based on the theories of organization, this change is explained in the following section.

2.2 Theories of Organization The scarcity of economic goods and the resulting economic problems as well as the possibilities of their reduction through task fulfilment based on the division of labor form the core of the organization problem. Thus, determining tasks to be accomplished by division of labor and selecting suitable forms of organization for coordination and motivation are central questions of organization in and between enterprises as well as in the national economy. Numerous theoretical instruments and models for solving this organization problem are offered in social science. In this context, particularly, the New Institutional Economics has gained attention. It emphasizes the importance of information and communication for the organization of economic activity. However, the focus of its field of investigation is on institutions that serve to rationalize information and communication processes. In the following, the parts of institutional economics that are particularly relevant for the theory of organization, namely, property rights theory (Sect. 2.2.2), transaction cost theory (Sect. 2.2.3), and principal-agent theory (Sect. 2.2.4), are presented. By way of introduction, Sect. 2.2.1 begins with a brief outline of the elements and assumptions common to all institutional economic sub-theories.

2.2  Theories of Organization

15

2.2.1 Institutions and Treaties Institutions are “[…] socially sanctionable expectations that relate to the courses of action and behaviour of one or more individuals” (cf. Dietl, 1993, p.  37). They inform each individual both about his or her own scope of action and about the likely behavior of others. Institutions thus function as behavior-stabilizing mechanisms. They facilitate human coexistence in general as well as the production of services based on the division of labor in particular. Such institutions are, for example, laws, norms, and contracts but also money or language. New Institutional Economics attempts, on the one hand, to explain the development of institutions and their impact on human behavior in economic terms (positive analysis) and, on the other hand, to provide recommendations for action to shape institutions efficiently (normative analysis). The emergence of institutions is closely related to the task of coordination and motivation. Institutions arise wherever individuals achieve a higher level of benefit for all through the creation of institutions and their observance than in the case of behavior not organized by institutions. Following Ullmann-Margalit (1977) and Kunz (1985), a distinction can be made between norms that are self-perpetuating and those that require monitoring. Compliance with self-perpetuating norms does not need to be monitored, since deviation from them causes disadvantages to the actors themselves (cf. Ullmann-­ Margalit, 1977). Examples of such self-perpetuating norms are language rules of interpersonal communication (sentence structure, grammar), money, or traffic rules, such as the right-hand driving rule on roads in continental European countries. The latter highlights the importance of institutions as a mechanism for stabilizing expectations: road traffic becomes more efficient and safer since each actor knows on which side of the road the other road users will drive, even if he has not asked them before (cf. Kunz, 1985, p. 18). Such institutions are thus able to overcome the coordination problem of not knowing. If such a norm exists, it maintains itself, since the actors have no interest in deviating from it. In contrast, in the case of norms requiring monitoring, divergent interests of the parties involved may occur, at least in part. Norms in need of monitoring are thus characterized by the fact that it is rational for individual actors to deviate from the norm that has been created. Examples of institutions in need of monitoring include the payment of taxes for the provision of public goods or investments in climate protection. An important institution for solving coordination and motivation problems are contracts, in which, on the one hand, it can be specified how the contracting parties are to behave (coordination aspect) and, on the other hand, what sanctions are to be expected if they do not act in conformity with the contract (motivation aspect). In this context, a contract in the economic sense is understood as “any binding explicit or implicit agreement on the exchange of goods or services between people who agree to this agreement because they expect to be better off as a result” (cf. Wolff, 1995, p.  38). Building on MacNeil (1978), a distinction is often made between

16

2  Market Dynamics and Competition: The Crucial Role of Information

classical, neoclassical, and relational contract types (cf. Williamson, 1990; Picot et al., 2020, p. 46 f.). • Classic contracts are characterized by their time orientation. Performance and consideration coincide in time or are brought to mind by formulating ex ante contractual provisions for all possible future environmental states. Depending on the objectively ascertainable state of the environment, the corresponding parts of the contract then come into force. Classical contracts are thus complete. The performance of the contract is objectively ascertainable and, if necessary, enforceable by the courts. The identity of the contracting parties is irrelevant; neither prior nor subsequent relationships are assumed between them. Classic contracts usually relate to standard goods and are concluded for the short-term exchange of services between anonymous contracting parties, as is the case, for example, with the purchase of petrol at a motorway filling station. • Neoclassical contracts, on the other hand, are time period related. Although the contractual relationship is limited in time, it extends over a longer period of time. It is often no longer possible to foresee all contingencies at the time the contract is concluded. Moreover, clearly regulating all environmental states can be expensive or ineffective. Neoclassical contracts therefore remain incomplete to some extent. Concrete provisions are replaced by rules that increase the flexibility of the contract. If disagreements arise between the contracting parties during their execution, a third party can be involved in this bilateral performance relationship as a mediator (i.e., as an expert or arbitrator). Examples of neoclassical contracts are a multi-year procurement contract or a leasing contract. Long-term cooperation between companies can also be established on the basis of neoclassical contracts (cf. Chap. 6). • Relational contracts differ fundamentally from classical and neoclassical contracts: while classical and neoclassical contracts are based on explicit, mostly fixed agreements, relational contracts are built on implicit agreements based on shared values to a large, though not entirely, extent. The identity of the contracting parties and the evolved quality of their mutual relations play a dominant role. The performance relationship that develops over time, the common values, the mutual trust, and solidarity between the contracting parties thus gain significant importance for the formation and the performance of the relational contract in accordance with the agreement. Relational contracts are the basis of most employment relationships or also of particularly intensive inter-company cooperation agreements. An efficient settlement of disagreements that does not burden future relations can only be achieved by the parties themselves. The intervention of third parties, be they judges or arbitrators, is rarely helpful and usually impossible because the subject matter of relational contracts is usually so specific that it can hardly be described to third parties, let alone verified by them. Different types of contracts ultimately form the basis of all forms of organization. All economic processes of production and exchange are organized through contracts; they are the instruments and means for organizing relations of performance based on the division of labor. In this sense, the enterprise can be interpreted

2.2  Theories of Organization

17

as a network of permanent contracts (cf. Alchian & Demsetz, 1972; Cheung, 1983; Fama, 1980) between economically dependent individuals. Markets can be viewed analogously as networks of short-term contracts between economically and legally independent economic units, while cooperations and strategic alliances represent networks of medium- to long-term contracts between legally independent but economically partially dependent partners. The design of organizational structures by means of contracts is analyzed within the framework of New Institutional Economics. Today, New Institutional Economics does not represent a unified body of theory. Rather, it consists of several, methodologically largely related approaches that overlap, complement, and in part refer to each other. Common to all institutional economic approaches are the following starting points (cf. Picot et al., 2020): • Methodological individualism: Decisive for the analysis of companies are the goals and decisions of the respective acting individuals. • Individual utility maximization: Each actor pursues his own interest and chooses the alternative from which he expects the highest benefit. • Opportunism: If negative consequences for other people are also accepted, this is referred to as opportunistic behavior. • Bounded rationality: According to Simon (1959, p. xxiv), human behavior is “intentionally rational, but only limitedly so.” The limits of rationality are a consequence of incomplete knowledge and limited information processing capacity. In this sense, people can only be rational in relation to their subjectively incomplete level of information, which is why Simon (1959) also speaks of subjective rationality. The theoretical approaches of New Institutional Economics include property rights theory (cf. Sect. 2.2.2), transaction cost theory (cf. Sect. 2.2.3), and principal-­agent theory (cf. Sect. 2.2.4), which are described below in terms of their significance for explaining the dissolution of corporate boundaries.

2.2.2 Property Rights Theory Property rights theory (cf. Alchian & Demsetz, 1972; Coase, 1960; Picot et al., 2020) focuses on rights of action and disposal (property rights) and their effect on the behavior of economic actors. The starting point is the observation that the value of goods on the one hand and the actions of people on the other depend on the rights assigned to them. For example, a large part of an entrepreneur’s motivation results from the right to appropriate the profits of his enterprise. His motivation and the value of the enterprise will decrease, ceteris paribus, if this right to appropriate profits is restricted, for example, by taxes and duties. In addition to the general assumptions of New Institutional Economics mentioned above, the property rights theory is essentially based on the elements of property rights, external effects, and transaction costs.

18

2  Market Dynamics and Competition: The Crucial Role of Information

The focus is on the so-called property rights to goods. Property rights are the rights of action and disposal associated with a good and to which economic entities are entitled on the basis of legal systems and contracts. These rights of action and disposal have both object-related and person-related aspects. They define the rights of individuals in dealing with a good and thus delimit the rights of individuals among themselves in a good. The allocation of property rights creates rights and obligations to act for the favored individuals and restrictions on action for those individuals who have no property rights to the good in question. The distribution of property rights thus has certain incentive effects on the behavior of individuals. The property rights of a good can be divided into four individual rights (cf. Alchian & Demsetz, 1972; Furubotn & Pejovich, 1974): • (1) The right to use a good (usus) • (2) The right to change the form and substance of the good (abusus) • (3) The right to appropriate resulting profits and the duty to bear resulting losses (usus fructus) • (4) The right to sell the property to third parties (capitalization or liquidation right) With regard to an actor, it needs to be differentiated as to whether he owns all of these partial rights jointly (complete allocation) or these rights are only partially allocated to him (incomplete allocation). However, in general, one and the same partial right can be assigned to a single individual or distributed among several individuals. One speaks of diluted property rights when rights of action and disposition are incompletely assigned and/or distributed among several individuals. An example of this is the difference between ownership and rent. While the owner usually possesses all rights, the tenant usually only has the right to use a good. In the case of diluted property rights, there is a risk of external effects. External effects are understood to be all (positive or negative) side effects of an individual’s actions that are not remunerated via the market or charged to the individual in some other way as an individual economic cost. In the case of diluted property rights, since the rights to act and dispose are not fully specified or are distributed among several actors, the actions of an individual have an impact on the benefits of the remaining actors. If dilution is low, it may be possible to balance the parties involved. However, if property rights are highly diluted, prohibitive bargaining costs prevent a contractual agreement. In this case, externalities remain that lead to a welfare loss. A typical example of this are communication goods such as smartphones or networked information and communication systems. They are characterized by the fact that the benefit of a single participant depends particularly on the number of individuals who can be reached via a common network by means of these goods (cf. Blankart & Knieps, 1995). Thus, each new participant causes positive externalities for the existing actors of a network, as their communication possibilities increase. Obviously, in this case the right to use (usus) is diluted, since communication goods are by definition always used by at least two people: a sender and a receiver. The same applies to the profit arising from use (usus fructus). If a buyer of components invests in digital infrastructures and connects to the electronic inventory

2.2  Theories of Organization

19

management system of his supplier, costs can be saved not only on the side of the buyer but also on the side of the supplier. The buyer thus does not have the full right to appropriate the profit (usus fructus) resulting from the investment. If the supplier is willing to contribute to the costs of implementing the system, the positive external effect on the supplier’s profit is internalized. Network effects also arise with platforms (cf. Chap. 6) or social networks (cf. Chap. 3). For example, each new user of a social platform such as Facebook or XING increases the benefit for existing users, as the number of theoretically possible communication relationships increases. Unlike in the above example, however, internalization of the external effects through payments to compensate for benefits is de facto not possible, as the necessary negotiations would devour immense costs due to the large number of participants involved. This example illustrates the importance of the third central element of property rights theory: transaction costs. In a world without transaction costs, every distribution of property rights would be equally efficient. If information and communication were free of charge and as much time as desired were available for negotiations, then even with diluted property rights the individuals concerned would continue to negotiate with each other until all external effects had been internalized. This is the rationale of the Coase theorem (cf. Coase, 1960). In the real world, however, considerable substantial transaction costs arise, not only in negotiations but more generally in the formation, allocation, transfer, and enforcement of property rights (cf. Tietzel, 1981). It concerns costs of the information and communication including the opportunity costs of the time, which must be spent for the initiation and completion of an exchange of services. A typical example is the cost of searching for and buying an apartment, to which the costs of advertisements, estate agents, notaries, etc. are counted in the same way as the opportunity costs of the time spent. From the perspective of property rights theory, the efficient distribution of property rights is that which minimizes the sum of transaction costs and the welfare losses caused by (positive and negative) external effects. Property rights should tend to be distributed in such a way that as complete a bundle of rights as possible is associated with the use of economic resources and assigned to the actor, so that he has incentives for a self-responsible and efficient use of resources. However, this increasing completeness of allocation is only economically as long as the reduction in welfare losses due to externalities is greater than the transaction costs incurred in the allocation, transfer, and enforcement of property rights. Figure  2.2 illustrates this trade-off. The property rights theory contributes to a differentiated picture of the enterprise. It is seen as a multi-person structure and a dynamic network of contractual relationships (cf. Kaulmann, 1987). Thus, the property rights theory is suitable for the analysis decisions that lead to a change in the rights of action and disposal within the enterprise. Therefore, it can also provide valuable design recommendations for more far-reaching questions of internal organizational design (cf. Picot, 1981).

20

2  Market Dynamics and Competition: The Crucial Role of Information

Total effect Transaction costs Welfare losses

Total effect

Transaction costs

Welfare losses Degree of internalization Fig. 2.2  Trade-off between welfare losses due to externalities and transaction costs. (Picot et al., 2020, p. 84)

This may require a more detailed view on property rights. For example, organizational changes that result in the reassignment of responsibilities and competencies lead to a redistribution of property rights. The aim of the organizational design should be to allocate property rights within the company as efficiently as possible by means of organizational regulations in the sense of the abovementioned criterion. Securing and enforcing property rights also plays an important role. The willingness to act increases to the extent that an actor can privately appropriate the benefits of his actions. This phenomenon is particularly important for research and development activities. To this end, there are various institutional regulations designed to ensure the protection of knowledge, such as copyrights, registered designs, or patents. Without such institutions, which describe rights of disposal to information and are intended to facilitate their enforcement, innovative knowledge production would be severely inhibited.

2.2.3 Transaction Cost Theory The basic unit of analysis in transaction cost theory (cf. Coase, 1937; Picot et al., 2020; Williamson, 1990) is the  individual transaction, which is defined as the transfer of property rights. The costs incurred in this process are referred to as transaction costs (Picot, 1991) and include costs related to: • • • • •

Initiation (e.g., research, travel, consulting). Agreement (e.g., negotiations, legal department). Processing (e.g., process control). Control (e.g., quality and deadline monitoring). Adjustment (e.g., additional costs due to subsequent qualitative pricing or scheduling changes).

2.2  Theories of Organization

21

The height of these transaction costs depends on the one hand on the characteristics of the performance to be supplied and on the other hand on the selected organizational form. A goal of the transaction cost analysis is to find appropriate characteristics of the organizational form, which minimizes the transaction costs with given production costs and performance. Transaction costs are thus the efficient benchmark for the evaluation and selection of different institutional arrangements. Suitable forms of organization are market, enterprise, and intermediate forms, e.g., longer-term cooperation (cf. Chap. 6). Accordingly, enterprises only have a right to exist if they can solve the coordination and motivation problems related to the division of labor within their company more efficiently (i.e., with lower transaction costs) than with external partners via the market. The influencing variables of transaction costs can be systematized with the help of the organizational failure framework of Williamson (1975) (cf. Fig. 2.3). Within the organizational failure framework, the environmental characteristics of specificity, strategic importance, and uncertainty, on the one hand, and the behavioral assumptions of opportunism and bounded rationality, on the other, are the key influencing variables. When the degree of specificity of a transaction is higher, the greater is the loss of value that occurs when the resources required for the fulfilment of tasks are not utilized in their intended purpose but are dedicated to another use (cf. Klein et al., 1978). For example, when a business relationship is terminated, nonspecific resources such as standard software can still be used without restriction. Specific investments such as special machines, on the other hand, require refitting or become completely worthless. In general, the following types of specificity can be distinguished (cf. Williamson, 1990):

Behavior assumption

Transaction atmosphere/ Transaction frequency

Bounded rationality

Uncertainty/ Complexity Information wedge

Opportunism

Environmental factor

Specificity/ Strategic importance

Fig. 2.3  Variables influencing transaction costs. (Picot et al., 2020, p. 92 adapted from Williamson, 1975, p. 40)

22

2  Market Dynamics and Competition: The Crucial Role of Information

• • • •

Site specificity: investment in site-specific assets. Physical asset specificity: investment in specific machinery and technology. Human asset specificity: investment in specific employee skills. Dedicated asset specificity: investments in assets which are not specific in themselves but which would represent excess capacity if the transaction were to be discontinued.

Often the specificity of a service relationship changes in the course of a contractual relationship. For example, a buyer has an ex ante choice between different suppliers who all offer just-in-time processing. However, once he has decided on a particular supplier, barriers to switching arise because the connection to the logistics concept requires specific investments, for example, in information technology. The service relationship is ex post specific: the service relationship has become ex post specific. Such a transformation is called a fundamental transformation (cf. Williamson, 1990). This dependence through specificity can be exploited opportunistically, e.g., by increasing supply prices. Specificity thus becomes problematic when actors maximize their own benefit, if necessary also at the expense of the contractual partner (cf. Sect. 2.2.1). Therefore, transaction cost theory generally recommends that specific transactions should not be conducted via short-term market relationships but should be integrated more hierarchically, e.g., within the framework of a long-term contract. However, for such a decision, the strategic importance of the service created must also be taken into account, i.e., its contribution to the competitive position of the end product. If services are specific and strategically important, then the underlying capabilities can be interpreted as core competencies in the understanding of Prahalad and Hamel (1990), which should in any case be organized internally within the company. Action is required for services that are specific but of little strategic importance. The specificity of such transactions should be reduced in order to enable outsourcing in the long term. Uncertainty as an environmental factor is reflected in the number and extent of unpredictable task changes. In an uncertain environment, contract performance is made more difficult by frequent changes in dates, prices, conditions, and quantities, which requires contract modifications and thus the acceptance of increased transaction costs. However, the uncertainty of environmental conditions becomes only problematic in connection with the behavior assumption of the bounded rationality, since in this case the cognitive abilities can be overemphasized. Williamson describes situations of asymmetrically distributed information, with which the danger comes that a transaction partner opportunistically uses information to his advantage, as information wedging (see Williamson, 1975). These constellations of asymmetrical information are also of subject to the principal agent approach (see Sect. 2.2.4). In addition to these four influencing variables and the possibility of information wedging, two further factors must be taken into account: transaction frequency and transaction atmosphere. These two elements of the organizational failure framework have a subordinate, but nevertheless significant meaning with the choice

2.2  Theories of Organization

23

of efficient integration forms. The transaction frequency determines the amortization period and thus the economic advantageousness of hierarchical corporate structures or long-term cooperative relationships. Frequently recurring transactions increase the profitability of the creation of in-house production capacities or the conclusion of long-term cooperation agreements more than the profitability of exchange relationships that occur only sporadically, which should be handled via the market if possible. Finally, the transaction atmosphere has a considerable influence on the transaction costs of different forms of commitment. It includes social, legal, and technological basic conditions that are relevant for the organization of a service relationship. This includes value attitudes of the transaction partners as well as the technical infrastructures underlying the transaction, which can facilitate the interaction of the transaction partners and thus reduce transaction costs. Information and communication systems can extend the possibilities of rational behavior, change the degree of specificity of a transaction, and reduce transaction costs. Thus, information and communication systems can influence the shape of the optimal form of organization. As already mentioned, there is a diverse spectrum of intermediate forms between the two extreme forms of market and hierarchy. They combine elements of both market and hierarchical organization. These include, for example, long-term corporate cooperation, strategic alliances, joint ventures, franchising systems, licensing to third parties, dynamic networks, virtual companies, and long-term purchase and supply agreements. By taking them into account, a continuum of organizational forms is created between the extreme forms of the purely market-based organization with short-term contracts and the purely hierarchical organization based on employment contracts of unlimited duration (cf. Fig. 2.4). The advantage of each of these organizational forms depends on the interaction of the abovementioned factors influencing the transaction costs. Figure  2.5 illustrates exemplarily how the transaction costs of the three organizational forms vary dependent on the specificity of the achievement to be provided in each case (whereby all other factors of the organizational failure frameworks as well as production costs and achievements are assumed as constant). Hierarchies (companies) have the highest fixed transaction costs, regardless of the degree of specificity. Among them are above all the costs of the bureaucratic apparatus (see Williamson, 1990). However, the hierarchical organization form provides a multiplicity of incentive and control mechanisms, which facilitate the execution of specific transactions. As a result, transaction costs rise relatively flatly as the degree of specificity increases. Conversely, market transactions incur the lowest fixed costs because any longer-term contractual ties are absent. As a consequence, the variable transaction costs of additional specificity are very high as the threat of opportunistic exploitation necessitates precautionary measures with regard to the selection of contracting parties, agreement on the content of contracts, and control of performance. This threat tends to be lower for hybrid organizational forms (but greater than within hierarchies), since longer-term relationships mean that the interests of the contractual partners are at least partially aligned and the potential for

24

2  Market Dynamics and Competition: The Crucial Role of Information

In-house development and in-house production Equity participation in Suppliers/buyers Supplier settlement Development cooperation - with subsequent self-production - with subsequent external production Long-term agreements - for specific, self-developed parts - for specific, externally developed parts Annual contracts - with open delivery dates and quantities - with fixed delivery dates and quantities Spontaneous purchase at the market

Decreasing vertical degree of integration

Fig. 2.4  Examples of forms of coordination. (Based on Picot, 1991, p. 340)

Transaction costs

Markets

Hybrid forms

Hierarchies

Specificity Fig. 2.5  Forms of integration and specificity (Picot et al., 2020, p. 104 adapted from Williamson, 1991, p. 284)

sanctioning opportunistic behavior increases. But hybrid organizational forms cause higher fixed transaction costs, which, however, increase less with increasing specificity than in the case of settlement via the market (but more than in the case of hierarchies). If the specificity of services is low, the expensive incentive and control mechanisms of hierarchical forms of integration are not efficient. Consequently, such transactions should be settled via the market.

2.2  Theories of Organization

25

For high levels of specificity, vertical integration makes sense, since hierarchies are better suited to managing the resulting information wedging. Finally, for the broad class of tasks of medium specificity, hybrid forms of organization are advantageous. With the help of the transaction cost theoretical frame of reference, the emergence of companies (cf. Coase, 1937) can be justified, as can the phenomenon that can be observed, namely, that company boundaries are becoming increasingly blurred and companies are beginning to dissolve, as it were (cf. Chap. 6). But valuable design recommendations can also be derived from transaction cost theory for questions of internal organizational design (cf. Chap. 5) or the spatially decentralized, cross-company processing of tasks, which cannot be realized at all without digital technologies that reduce transaction costs (cf. Chap. 4).

2.2.4 Principal-Agent Theory Principal-agent theory (cf. Jensen & Meckling, 1976; Picot et  al., 2020; Ross, 1973) is subject to principal-contractor relationships that are based on the division of labor and are characterized by asymmetrically distributed information. In a principal-­agent relationship, the agent (contractor) makes decisions that affect not only his own welfare but also the utility level of the principal. However, the principal is only imperfectly informed about both the occurrence of certain environmental states and the agent’s behavior. This creates discretionary scope for opportunistic behavior on the part of the agent. The central unit of study in principal-agent theory is the contract underlying this relationship. Principal-agent relationships exist, for example, between a customer and a supplier, an owner and a manager, a supervisory board and a board of directors, but also between a doctor and a patient, a student and a university lecturer. Who is a principal and who is an agent, i.e., who is the “poorly” and who is the “well” informed transaction partner, can only be judged depending on the respective situation. For example, a hospital doctor has an agent relationship with several individuals and institutions (e.g., patients, hospital management, health insurance company). In addition, however, he can also assume the position of a principal, e.g., vis-à-vis assistant physicians who report to him, his tax advisor, or his asset manager. Institutions such as companies, but also networked structures or market relations, can be interpreted as a network of principal-agent relationships. Principal-agent theory serves both to explain (positive analysis) and shape (normative analysis) principal-agent relationships from the perspective of the principal. The efficiency criteria are agency costs. According to Jensen and Meckling (1976), they consist of three components: • Monitoring and controlling costs of the principal. • Signaling and guaranteeing costs of the agent. • Remaining welfare loss (residual loss).

26

2  Market Dynamics and Competition: The Crucial Role of Information

The first two types of costs arise due to measures of uncertainty reduction. The residual loss is a sign that, due to the imperfect state of information, transactions that would be welfare-enhancing are not or only partially carried out. For example, parents may forego the services of a babysitter because of uncertainty, but they would employ him if they knew him in person. There are some trade-off relationships between the types of costs mentioned: the residual loss to be accepted can, for example, be limited by increased monitoring and control expenses, while these in turn can be reduced by credible signaling and guarantee services provided by the agent. For the settlement of a service relationship, the institutional arrangement that minimizes agency costs is to be preferred. An important role is played by the classification of the principal-agent relationship under investigation according to the underlying information asymmetry between the principal and the agent. With regard to their causes, three problem types can be distinguished (cf. Picot et al., 2020; Spremann, 1990): • “Hidden characteristics” • “Hidden action” • “Hidden intention”. Hidden Characteristics  The problem of hidden characteristics arises before the conclusion of the contract if the principal does not know the characteristics of the agent or the services offered by the agent. The threats arising from hidden characteristics lead to the selection of unsuitable contractual partners (adverse selection). Typical examples are previously unknown sellers in online trading, the hiring of new employees, or the purchase of used cars. The principal-agent theory recommends two ways to solve this problem: signaling and screening as well as self-­ selection contracts are mechanisms to reduce the information asymmetry between principal and agent. Instruments for aligning interests prevent the exploitation of existing information asymmetries. Signaling means that the agent signals his character traits or the characteristics of his performance to the principal in order to achieve the agreement of a principal-­ agent relationship. Such a signaling function can be, for example, job and training references, seals of approval, or even evaluations or recommendations. In contrast, in screening, the initiative comes from the principal who wants to obtain additional information about the characteristics of the agent or his performance. Examples of such screening activities are the organization of recruitment tests or enquiries by a lender with credit agencies. In the case of self-selection, the principal offers the agent a choice of different contracts. These are designed in such a way that the agent reveals his hidden characteristics by choosing the contract. A typical example is the offer of deductibles of different amounts under insurance contracts. A high deductible only makes sense for the agent if the insured event is unlikely to occur. By choosing a high deductible, the agent thus reveals his low risk of loss. A high deductible can also be interpreted as an instrument for aligning interests if the agent can influence his risk of loss: since the agent has to share the loss, it is in his, as well as in the insurance company’s, interest that no losses occur.

2.2  Theories of Organization

27

Hidden Action  In contrast to the problem of hidden characteristics, hidden action only becomes relevant after the contract has been concluded, i.e., after a contractual partner has been selected. Hidden action means that only the results of the agent’s actions are known to the principal, while the actions themselves remain hidden from him. This may be the case if he cannot observe the agent’s behavior or if he lacks the knowledge to judge the behavior. For example, a supervisory board (principal) cannot judge whether the executive board’s (agent’s) chosen strategy was in the owners’ best interests if it does not know the alternatives that were available to the board. As a consequence, the principal cannot distinguish whether the agent or an unfavorable environmental influence is responsible for a poor result. The threat of moral hazard resulting from hidden action is that the agent exploits his room for maneuver opportunistically and acts contrary to the interests of the principal, e.g., by performing his tasks with little care or slackening in his work efforts. To restrict moral hazard, the principal-agent theory recommends monitoring to reduce information asymmetry (e.g., reporting systems and control instances). This enables the principal to assess the agent’s behavior more accurately and to sanction it directly. An alternative is the implementation of incentive systems, especially through profit-sharing, in order to achieve an alignment of interests between principal and agent. In this case, the agent receives, for example, a contract in which his salary varies in part with the outcome of the action. In this way, the goals of the company can be linked to the (financial) goals of the agent, so that the agent has a greater incentive to achieve the desired result of action. Hidden Intention  In the case of hidden intention, the principal has made irreversible advance payments (so-called sunk costs). Due to these specific investments in the transaction relationship, the principal becomes dependent on the agent after the conclusion of the contract, as he is dependent on the agent’s performance. If the agent exploits the dependency opportunistically, a hold-up situation arises. Here the logical connection of the principal-agent theory to the transaction cost approach becomes apparent: in both cases the specificity of investments is the risk-triggering moment. To control the hold-up problem, the alignment of interests by establishing ownership of unique and withdrawable resources is recommended. This can be done, for example, through vertical integration, the conclusion of long-term supply and service contracts, or the creation of mutual dependencies, for example, through the provision of collateral (pledge or “hostage”) (cf. Spremann, 1990). Figure 2.6 shows an overview of the three cases of information asymmetry. However, a clear, fixed assignment of institutional forms of integration to specific information asymmetries is hardly possible (cf. Spremann, 1990). Therefore, the added value of principal-agent theory lies in the design of incentive and information systems. In particular, information asymmetries, especially the hidden action problem, between principal and agent increase due to decentralized task performance (virtual organization) (cf. Chap. 7). Principal-agent theory increases the efficiency of new forms of organization.

28

2  Market Dynamics and Competition: The Crucial Role of Information Information asymmetry

Hidden characteristics

Hidden action

Hidden intenon

Information problem of the principal

Quality characteristics of the contractor's performance unknown

Effort of the contractual partner not observable or not assessable

Intentions of the contracting party unknown

Problem cause or essential influencing variable

Hideability of properties

Monitoring possibilities and costs

Resource dependency

Behavioral scope of the agent

Before contract conclusion

After contract conclusion

After contract conclusion

Adverse selection

Moral hazard

ad hoc

Differentiation criteria

Problem

Way of problem solving

Elimination of information asymmetry through Signalling/ Screening

Selfselection

Aligning interests

Aligning interests

Reduction of information asymmetry (monitoring)

Aligning interests

Fig. 2.6  Principal-agent theory at a glance. (Adapted from Picot et al., 2020)

Starting from the organizational problem explained in Sect. 2.1, property rights theory and, in particular, transaction cost theory make an important contribution to the handling of the coordination problem, whereas principal-agent theory can provide valuable hints for the handling of the motivation problem.

2.3 Information and Network Economy Based on the organizational problem, it became clear in the last section that the choice of a suitable form of organization depends significantly on the costs of coordination and thus information and communication. Systematic planning of the corporate resource information is thus at least as important as the planning of human, financial, or material resources. However, information has typical characteristic properties that distinguish it from other goods (cf. Bode, 1993; Pethig, 1997; Picot & Franck, 1988; Reichwald, 1999; Shapiro & Varian, 1998): • Information is an intangible good that is not consumed even when used multiple times. • Information is consumed and transported by means of media. • Information is transmitted in coded form and requires common standards in order to be understood.

2.3  Information and Network Economy

29

• Information reduces uncertainty but is itself fraught with uncertainty in its production and use. • Information is condensable and expands simultaneously during use. As a consequence, specific characteristics also apply to the value creation process underlying the information.

2.3.1 Production and Distribution of Information The production of information can be divided into two processes: the new production of information and the reproduction of already existing information (cf. Hass, 2002). New production is involved, for example, in the creation of a book manuscript or a program code. Reproduction occurs when the manuscript or program code is reproduced and then distributed as a “copy.” The recipient of information thus does not receive an original, but always only a copy, that is identical in content. In other words, information – unlike material goods – can be passed on as a copy and the original kept at the same time. Original information forms the basis for the new production of information. Original information is raw data such as for example purpose-related messages about sales markets or already existing software objects. From this original information, derivative information is obtained through processing procedures. Information processing procedures can be distinguished according to the extent to which sign content (e.g., market volume in euros), sign system (number or graphic), or sign carrier medium (screen or paper) is changed (cf. Bode, 1993; Kosiol, 1968). The transmission of information content (i.e., communication) always takes place in coded form: the content is encoded by characters from a sign system and stored or transmitted by means of a sign carrier (i.e., medium). For communication to take place, the receiver must be able to decode the message sent. This requires a common understanding of the underlying sign system. Depending on the medium used, a compatible technology for media use may also be required. In media theory, a distinction is made between primary, secondary, and tertiary media (cf. Faulstich, 1998). Primary media do not require the use of any other technology (e.g., lecture or meeting). Secondary media (print media) are characterized by the use of technology on the sender side (e.g., printing a textbook). Tertiary media (electronic media) also require the use of technology on the receiver side and, in particular, standards for decoding. The set of rules that form the basis for interaction between actors is called a communication standard (cf. Buxmann et al., 1999). Such standards, e.g., the grammar of the German language or the rules of the hypertext markup language (HTML), are the basis of all communication between people and machines. All players using the same standard together form a network. It is the characteristic of such networks that their value – apart from possible capacity bottlenecks – increases with the number of connected users. The reason for this are, as mentioned

30

2  Market Dynamics and Competition: The Crucial Role of Information

above, positive external effects, so-called network effects between the actors: each new subscriber increases the benefit of the other actors in the network. Network effects can be divided into direct and indirect network effects (cf. Katz & Shapiro, 1985). Direct network effects are based on the underlying physical network connections between network participants. Each new subscriber provides all existing users with another means of communication, thereby increasing the value of the network. In the case of indirect network effects, the utility of the participants increases with the size of the network; however, this increase in utility does not arise from direct communication relationships between the actors. Indirect network effects are characteristic of operating systems, for example, a high distribution of an operating system increases the supply of complementary application software and thus makes it more attractive. Standards are a prerequisite for this. Communication via the network is only possible if all participants use the same data and transmission formats. The underlying standardization process can take different forms (cf. Besen & Saloner, 1989). If there is a great interest in a generally valid standard without there being any particular preferences with regard to a specific standard, standards are developed in coordination processes. If different preferences for a standard exist at the same time, a conflict situation arises. Each actor wants to enforce its own standard in order to avoid standardization costs due to necessary retooling. Two different approaches can be distinguished to solve this problem: de jure standards arise when public bodies such as standardization committees establish a standard in consultation with manufacturers and users (cf. Kleinaltenkamp, 1993; Thum, 1995). De facto standards arise when individual market participants succeed in setting a standard. The prerequisite for this is rapid market penetration. If there are underlying network effects, it is feasible if a large number of users are bound to the underlying application as quickly as possible. The more players already use a standard, the more attractive this network becomes and the more new participants will choose this standard or service. If a critical mass of users can be built up in this way, a de facto standard is created. There are examples of this in the Internet world right now. Companies such as Amazon, eBay, and Apple or even communication services such as WhatsApp have succeeded in setting de facto standards. The binding of users to a once chosen standard or service is also called lock-in (cf. e.g., Shapiro & Varian, 1998). Lock-in effects are of strategic interest for the providers of network products. They bind customers to their offering and thus avoid switching to competing products. One means of retaining customers and achieving rapid market penetration is to give away products or offer a service free of charge. This strategy is particularly promising in the case of information goods, since on the one hand the costs of non-physical reproduction and distribution are negligible, but on the other hand the lock-in effect offers the possibility of skimming off profits once one’s own standard is established (cf. Zerdick et al., 2001) by charging higher prices for successor or complementary products. This pricing strategy, which is also referred to as “follow the free” (cf. Zerdick et al., 2001), is considered a key success factor.

2.3  Information and Network Economy

31

For such a skimming, it is advantageous if the supplier owns the property rights to his standard and can control the use of this standard. In this case one speaks of a closed or proprietary standard (cf. Grindley, 1995). Since no one is allowed to offer goods of such a standard without permission, high profits can be made through exclusive own products or by means of licenses. In the case of open standards, the specifications are generally accessible and can be used by everyone (e.g., HTML). Accordingly, once an open standard has been successfully established, it is likely that many suppliers will be found, making the lock-in effect of users independent of manufacturers and increasing competitive pressure for producers. Open standards are thus more difficult to exploit. It is generally easier to establish open standards than closed ones: on the one hand, the larger number of suppliers increases the diffusion in the market and increases the availability of complementary products, which increases the value of the network; on the other hand, the life cycle costs of the system decrease for the users because competition within the standard increases. Thus, for the parties to such a conflict, there is a trade-off between absolute market penetration and relative market power: open standards allow rapid and widespread enforcement of the standard but are associated with losses of control. Closed standards are more difficult to establish but allow a more precise control of further development as well as a better skimming of profits (cf. Grindley, 1995; Shapiro & Varian, 1998).

2.3.2 Use of Information In economic contexts, the information exchanged by means of communication ultimately serves to prepare actions; in the words of Martin J. Beckmann, it is the “raw material […] from which decisions are made” (cf. Albach, 1969, p. 720). The economic value of information is determined by comparing the benefits of information for problem-solving and decision-making processes with the costs of the necessary information procurement and production activities. Determining this information value is not easy. On the one hand, information is an intangible good, so Arrow’s information paradox (cf. Arrow, 1962) arises as a consequence: the value of a piece of information is known to a buyer with certainty only when he knows the information. Then, however, he has already absorbed it and no longer needs to acquire it. On the other hand, high search and analysis costs may arise for the necessary information procurement and production activities. This is particularly true against the background of the information overload that is becoming apparent in the course of digitization. Access to an increasing amount and variety of information appears to be possible at low cost. The problem and context-oriented evaluation and analysis of information, on the other hand, require time, technical methods (e.g., big data tools), and the development of competencies to assess and classify the information. This involves (opportunity) costs. This does not mean, however, that an evaluation of information – and thus a rational procurement of information – is impossible. It

32

2  Market Dynamics and Competition: The Crucial Role of Information

is, however, fraught with uncertainty, which is why the value of information tends to be a stochastic quantity. The source of information often serves as a valuation surrogate. For this reason, brands play a special role in information goods, as they vouch for the quality of the information with their reputation. Against the background of the principal-agent theory, this is a typical example of signaling or screening. Irrespective of this, the rational procurement of information finds its limits in the limited rationality of people (cf. Sect. 2.2.1).

2.4 Implications for Companies and Markets On the basis of the foregoing, some important conclusions can be drawn: • Information and communication are fundamentally important for economic activity. • Even if the basic characteristics of information in production, distribution, and use have not changed in principle, the technology of production, distribution, and use of information has been revolutionized in the past and is developing very rapidly. • The economic significance of the improvement of information and communication technology lies less in the absolute increase in the amount of information available; the decisive factor is rather that the available information is accessible almost everywhere simultaneously at low cost and can be processed electronically (cf. Shapiro & Varian, 1998). • Since organizational forms arise not least because of the scarcity of the resource information and the resulting transaction costs, scarcities changed by information and communication technology affect companies as well as markets (cf. Bieberbach, 2001; Picot & Hass, 2002). • Transaction costs decrease to different degrees for different organizational forms. As a result, the efficiency of the organizational forms in question shifts for the underlying tasks and problems. This changes the boundaries of existing organizational forms. In this context, the “move-to-the-market hypothesis” has been discussed since the 1980s (cf. Malone et al., 1987), according to which the efficiency of given organizational structures shifts in the direction of market forms of settlement. This is supported above all by (cf. Picot, 1998): • Through information and communication technology, market transparency is increasing. Information about offers can be processed electronically and is available simultaneously worldwide. In addition, individual tasks of the transaction process can be automated (e.g., price comparisons) or can be handled electronically (e.g., online trading).

2.4  Implications for Companies and Markets

33

• At the same time, barriers to market entry are falling as information and communication technology enables direct access to customers worldwide – e.g., via the Internet or electronic market platforms. • Many process steps can be standardized and automated through the use of information and communication technology. As a result, these work processes become less specific and can be outsourced to external providers who specialize in these processes and can realize (often global) economies of scale (outsourcing). At the same time, this creates new markets for services that were previously produced exclusively in-house. Therefore, the effects known from Fig. 2.5 shift and allow novel organizational solutions for given tasks. Figure 2.7 illustrates this effect. It continues to be shown that for services with a high degree of specificity (from S2), an organization within the company (e.g., hierarchy) is generally more efficient; for services with a low degree of specificity (0 to S1), market forms; and for services with a medium degree of specificity (S1 to S2), hybrid forms between market and hierarchy (cf. Sect. 2.2.3). However, the introduction of new information and communication technologies leads to a reduction in fixed and variable transaction costs, i.e., those that increase with specificity. As a consequence, the transitions to the more hierarchical form of organization in each case move to the right (S1 to S1 ′, S2 to S2 ′). In other words, only at a higher degree of specificity is it worthwhile to switch from the market to hybrid organizational forms and to hierarchical ventures. The “move-to-the-market hypothesis” has meanwhile been extended by the “move-to-the-middle hypothesis” (cf. Clemons et  al., 1993). According to this hypothesis, companies are increasingly relying on significantly fewer suppliers with whom, however, they maintain more long-term and intensive relationships. This makes sense, since transaction costs can be saved thereby such as in particular Transaction cost

Market

S1 S 1 ‘

Hybrid Coordinationform

S2 S2‘

Hierarchy

Specificity

with digital technologies without digital technologies Fig. 2.7  Move-to-the-market by decreasing transaction costs. (Based on Picot et al., 1996, p. 71)

34

2  Market Dynamics and Competition: The Crucial Role of Information

agreement and monitoring costs, which would occur with constantly changing short-term market partners. The result is a tendency to organize the underlying value creation process through the intelligent combination of internal, inter-firm, and market coordination mechanisms, with an increasing focus on so-called hybrid forms. How this intelligent combination presents itself in detail and under which conditions which form of coordination is efficient ultimately depends on the characteristics of the underlying transaction in each case. In general, the more specific and strategic an underlying service is, the more efficient an internal or hierarchical solution appears to be. The more standardized the underlying transaction is, the more efficient a market solution appears to be. The potential of digital technologies for the choice of location, which has already been mentioned, has not yet been considered. For example, new technologies allow for changed decentralized and mobile solutions, which have been less of a focus to date. As a consequence, the discussion expands: Starting from the holistic value chain oriented toward market-oriented service production, it is necessary to clarify for each individual underlying sub-process: • Whether it is to be handled internally or externally (this is the classic make-or-­ buy problem). • How the coordination is to be designed in each case (internally, e.g., the question of hierarchy or modules, agile structures; externally, e.g., the selection of a hybrid form of coordination). • Where it is to be handled (possibilities of location distribution and location independence). The efficient exploitation of the new design potentials leads to an increasing dissolution of boundaries and to the virtualization of market and corporate structures. The individual coordination models are the subject of detailed analysis in the second part of the book (Chaps. 5, 6, and 7) before the implications for people and management are worked out (Chap. 8).

References Albach, H. (1969). Informationswert. In E.  Grochla (Ed.), Handwörterbuch der Organisation (pp. 720–727). Schäffer-Poeschel. Alchian, A. A., & Demsetz, H. (1972). Production, information costs and economic organization. American Economic Review, 62(5), 777–795. Arrow, K. J. (1962). Economic welfare and the allocation of resources for invention. In R. Richard Nelson (Ed.), The rate and direction of inventive activity: Economic and social factors (pp. 609–625). Princeton University Press. Besen, S.  M., & Saloner, G. (1989). The economics of telecommunications standards. In R. W. Crandall & K. Flamm (Eds.), Changing the rules: Technological change, international competition, and regulation in communications (pp. 177–220). Brookings Institution. Bieberbach, F. (2001). Die optimale Größe und Struktur von Unternehmen: der Einfluss von Informations- und Kommunikationstechnik. Gabler.

References

35

Blankart, C.  B., & Knieps, G. (1995). Kommunikationsgüter ökonomisch betrachtet. Homo Oeconomicus, 3, 449–464. Bode, J. (1993). Betriebliche Produktion von information. DUV. Buxmann, P., Weitzel, T., & König, W. (1999). Auswirkung alternativer Koordinationsmechanismen auf die Auswahl von Kommunikationsstandards. Zeitschrift für Betriebswirtschaft, Ergänzungsheft, 2, 133–151. Cheung, S.  N. S. (1983). The contractual nature of the firm. Journal of Law and Economics, 26(1), 1–21. Clemons, E.  C., Reddi, S.  P., & Row, M.  C. (1993). The impact of information technology on the organization of economic activity: The “move to the middle” hypothesis. Journal of Management Information Systems, 10(2), 9–35. Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386–405. Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3(1), 1–44. Dietl, H. (1993). Institutionen und Zeit. Mohr. Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288–307. Faulstich, W. (1998). Medienkultur: Vom Begriff zur Geschichte. In U.  Saxer (Ed.), Medien-­ Kulturkommunikation. Publizistik: Vierteljahreshefte für Kommunikationsforschung (Vol. 2, pp. 44–54). Verlag für Sozialwissenschaften. Furubotn, E.  G., & Pejovich, S. (1974). Introduction: The new property rights literature. In E. G. Furubotn & S. Pejovich (Eds.), The economics of property rights (pp. 1–9). Ballinger. Grindley, P. (1995). Standards, strategy, and policy: Cases and stories. Oxford University. Hass, B.  H. (2002). Geschäftsmodelle von Medienunternehmen: Ökonomische Grundlagen und Veränderungen durch neue Informations- und Kommunikationstechnik. Gabler. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. Katz, M. L., & Shapiro, C. (1985). Network externalities, competition and compatibility. American Economic Review, 75(3), 424–440. Kaulmann, T. (1987). Property rights und Unternehmungstheorie: Stand und Weiterentwicklung der empirischen Forschung. Florentz. Klein, B., Crawford, R. G., & Alchian, A. A. (1978). Vertical integration, appropriable rents, and the competitive contracting process. Journal of Law and Economics, 21(2), 297–326. Kleinaltenkamp, M. (1993). Standardisierung und Marktprozeß: Entwicklungen und Auswirkungen im CIM-Bereich. Gabler. Kosiol, E. (1968). Einführung in die Betriebswirtschaftslehre: Die Unternehmung als wirtschaftliches Aktionszentrum. Gabler. Kunz, H. (1985). Marktsystem und Information: “Konstitutionelle Unwissenheit” als Quelle von “Ordnung”. Mohr. MacNeil, I.  R. (1978). Contracts: Adjustment of long-term economic relations under classical, neoclassical, and relational contract law. Northwestern University Law Review, 72(6), 854–905. Malone, T. W., Yates, J. A., & Benjamin, R. I. (1987). Electronic markets and electronic hierarchies. Communications of the ACM, 30(6), 484–497. Milgrom, P., & Roberts, J. (1992). Economics, organization and management. Prentice Hall. Pethig, R. (1997). Information als Wirtschaftsgut aus wirtschaftswissenschaftlicher Sicht. In H.  Fiedler & H.  Ullrich (Eds.), Information als Wirtschaftsgut: Management und Rechtsgestaltung (pp. 1–28). Schmidt. Picot, A. (1981). Der Beitrag der Theorie der Verfügungsrechte zur ökonomischen Analyse von Unternehmensverfassungen. In K.  Bohr (Ed.), Unternehmensverfassung als Problem der Betriebswirtschaftslehre (pp. 153–197). Schmidt. Picot, A. (1982). Transaktionskostenansatz in der Organisationstheorie: Stand der Diskussion und Aussagewert. Die Betriebswirtschaft, 2, 267–284. Picot, A. (1991). Ein neuer Ansatz zur Gestaltung der Leistungstiefe. Zeitschrift für Betriebswirtschaftliche Forschung, 4, 336–357.

36

2  Market Dynamics and Competition: The Crucial Role of Information

Picot, A. (1998). Die Transformation wirtschaftlicher Aktivität unter dem Einfluß der Informationsund Kommunikationstechnik. Freiberger Arbeitspapier, 98(2). Technische Universität Freiberg. Picot, A., & Franck, E. (1988). Die Planung der Unternehmensressource Information (I). Das Wirtschaftsstudium, 10, 544–549. Picot, A., & Hass, B.  H. (2002). Digitale Organisation. In S.  Spoun & W.  Wunderlich (Eds.), Medienkultur im digitalen Wandel (pp. 143–166). Haupt. Picot, A., Ripperger, T., & Wolff, B. (1996). The fading boundaries of the firm: The role of information and communication technology. Journal of Institutional and Theoretical Economics (JITE), 152(1), 65–79. Picot, A., Dietl, H., Franck, E., Fiedler, M., & Royer, S. (2020). Organisation: Theorie und Praxis aus ökonomischer Sicht (8th ed.). Schäffer-Poeschel. Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation (pp. 79–91). Harvard Business Review. Reichwald, R. (1999). Informationsmanagement. In M.  Bitz, K.  Dellmann, M.  Domsch, & H.  Egner (Eds.), Vahlens Kompendium der Betriebswirtschaftslehre (Vol. 2, 4th ed., pp. 221–288). Vahlen. Ross, S. A. (1973). The economic theory of agency: The principal’s problem. American Economic Review, 63(2), 134–139. Shapiro, C., & Varian, H. R. (1998). Information rules: A strategic guide to the network economy. Harvard Business School Press. Simon, H. A. (1959). Administrative behavior: A study of decision-making processes in administrative organization (2nd ed.). Macmillan. Smith, A. (1999 [1776]). Untersuchung über Wesen und Ursachen des Reichtums der Völker [an inquiry into the nature and causes of the wealth of nations]. : Verlag Wirtschaft und Finanzen. Spremann, K. (1990). Asymmetrische information. Zeitschrift für Betriebswirtschaft, 5(6), 561–586. Thum, M. (1995). Netzwerkeffekte, Standardisierung und staatlicher Regulierungsbedarf. Mohr. Tietzel, M. (1981). Die Ökonomie der Property-Rights: Ein Überblick. Zeitschrift für Wirtschaftspolitik, 3, 207–243. Ullmann-Margalit, E. (1977). The emergence of norms. Oxford University. Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. A study in the economics of internal organization. The Free Press. Williamson, O.  E. (1990). Die ökonomischen Institutionen des Kapitalismus: Unternehmen, Märkte, Kooperation [the economic institutions of capitalism, 1985]. Mohr. Williamson, O. E. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2), 269–296. Wolff, B. (1995). Organisation durch Verträge: Koordination und Motivation in Unternehmen. Gabler. Zerdick, A., Picot, A., Schrape, K., Artopé, A., Goldhammer, K., Lange, U. T., Vierkant, E., López-­ Escobar, E., & Silverstone, R. (2001). Die Internet-Ökonomie  – Strategien für die digitale Wirtschaft (2nd ed.). Springer.

Chapter 3

Basic Models of Human Information and Communication Behavior

Abstract  Information and communication are essential components of human life. Both in the corporate world and in private life, a rapidly growing variety of different forms and media of information and communication and their ever-increasing importance are becoming apparent. In order to understand these new developments, it is useful to look at the numerous different aspects of information and communication using theoretical models, also in order to understand why communication and understanding problems arise in companies and how they can be managed. Especially against the background of increasingly decentralized, modular, and virtual organizational structures, this presents an increasingly relevant requirement. The same applies to the handling and management of knowledge and the shaping of trust. In the course of technological dynamics, but also of the dissolution of existing boundaries, completely new challenges arise here, which are also addressed in this chapter.

3.1 The Importance of Information and Communication in Organizations Information and communication are essential components of human life. Both in the corporate world and in private life, a rapidly growing variety of different forms and media of information and communication as well as their ever-increasing importance are becoming apparent. To understand these new developments, it is useful to consider the various aspects of information and communication using theoretical models. The examination of the constitutive role of information and communication for the structure of markets and the organization of the division of labor in the previous chapter has already contributed to this. It is noteworthy that the modeling of information and communication behavior began long after the modeling of other economic phenomena. Models of information and communication have © Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_3

37

38

3  Basic Models of Human Information and Communication Behavior

considerable value in explaining and shaping entrepreneurial structures and behaviors (cf., e.g., Wahren, 1987; Picot & Wolff, 1997; Kieser et al., 1998; Reichwald, 1999). This is particularly evident with the communication age now fully upon us as a replacement of the industrial age (cf. Rosenberger, 2017). Thus, the humanmachine relationship has changed: human is the teacher of the machine just as human can learn from the machine; in short, the relationship between human and machine is changing radically. As a result, established structures and working methods must be rethought. In the future, humans will work more closely with machines than ever before, and the importance of personal initiative and rethinking in the sense of lifelong learning will increase. The design of the relationship between human and machine in the sense of a cyber-physical structure represents one of the central tasks and requirements for companies today (cf. Gorecky et al., 2014; see Chap. 4). Information and communication can be viewed in different contexts: human information behavior (cf. Sect. 3.2) and communication behavior (cf. Sect. 3.3) are associated with a wide range of behavioral options, restrictions, and problems. The type of task to be performed also affects the choice of communication medium and thus the form of communication (cf. Sect. 3.4). The development and transfer of knowledge can only be ensured through suitable information and communication processes and systems (cf. Sect. 3.5). In addition, information and communication are crucial for building trust between actors; here, too, there are close interactions. As a result of developments in the field of corporate communication, the implementation of “corporate social responsibility,” for example, is gaining in importance as a management tool for building trust within the company. The concept of corporate social responsibility is thereby linked to the social responsibility of a company and arising requirements from a social, ecological, and economic point of view (cf. Scherer & Picot, 2008). Different theories and models exist for these diverse aspects. They point out various key variables that influence the quality of information and communication-oriented actions and institutions in practice and that are crucial for overcoming information and communication boundaries. The models briefly presented below can help to understand communication and understanding problems in networked, virtual organizational structures as well as in teams. How complex these problems are in the contexts mentioned and how necessary it is to consider not only one but several perspectives in order to meet a practical information and communication problem will be explored in the following remarks. In doing so, it will become apparent that the various approaches to modeling comprehension processes come from quite different traditions and thus have dissimilar points of view. This leads to the fact that there are considerable differences between the views of information and communication processes, both in theory and in practice. There is no question of a uniform model of understanding. This is not surprising, because in reality there is also an enormous complexity of communication and understanding processes. However, the diversity of perspectives includes the possibility of filtering out a suitable combination of model aspects depending on the explanation and design problem. In this way, barriers to understanding can be described, better understood,

3.1  The Importance of Information and Communication in Organizations

39

and therefore also more easily managed. Digital technologies considerably expand the degrees of freedom in the design of information and communication relationships. A variety of new options arise, also and especially for the design of information and communication relationships of people in and between companies. At the same time, however, various typical communication problems may become more acute or new ones may arise. Models for explaining information and communication behavior or communication processes can help to identify and reduce informational and communicative barriers in overcoming communication problems. It should be noted that corporate communication has been subject to major changes since the 1950s and is now heavily influenced by communication technology (cf. Bruhn, 2015). While new forms of communication cannot completely replace face-­ to-­face communication between people, they enable interactivity in social and mobile media and on platforms on the Internet with external market partners, with customers, suppliers, or other market partners. In this way, they can be involved in the value creation process through interaction via communication media. Due to these changes, corporate communication has become a strategic success factor (cf. Piller & Reichwald, 2009). In corporate communication, however, it can also be seen that the volume of communication activities has increased very significantly as a result of the new technologies (cf. Klammer et al., 2017). Frequently, existing communication channels are used in parallel (e-mail, telephone, social media). As a result of the increase of these activities, multitasking requirements and a general increase of stress in the daily work routine arise. Characteristics of this development are, for example (cf. Bruhn, 2016): • Successive replacement of analogue and closed to digital and open communication processes. • Collaborating with influencers. • Multi-channel strategies. • The use of digital communication tools that allow real-time communication, i.e., parallel communication in the analog and virtual worlds. It should be noted that with the constantly increasing number of digital communication tools, an increasing convergence can be observed at the same time (cf. Silic & Back, 2013). Whereas individual communication methods such as mail, telephone, and chat used to be available only as individual functions, there are now multicompatible solutions that integrate as many functions as possible. Selected Models of Information Behavior and Understanding  As already mentioned above, information is indispensable for any task fulfilment within a company. In order for this information to reach the task managers, mutual understanding or communication is necessary. This is especially true for organizations and teams with a strong division of labor. The more networked and work-sharing organizational structures develop and the more teams become established, the more important it is to understand how communication between the actors succeeds or for what reasons it does not work. Against this background, various aspects of understanding

40

3  Basic Models of Human Information and Communication Behavior

are presented below on the basis of a few selected models. This also includes the questions of information behavior, which are to be addressed first.

3.1.1 Information Needs and Information Supply Information needs are defined as the type, quantity, and quality of information that a person requires to perform his or her tasks in a given time. An information-­oriented analysis of the task to be performed determines the so-called objective information need. It indicates the type and amount of information a decision-maker should use to accomplish a task. The subjective information requirement, on the other hand, is based on the personal view of the decision-maker and indicates which information appears relevant to him in order to accomplish a task. As a rule, the subjectively expressed information need differs from the objective one. The goal of information management must be to align the subjective information needs closer with the objective ones. However, this will be all the more difficult the more unstructured, complex, and changeable the underlying task is. The amount of information that is ultimately demanded is, in turn, only a subset of the actual information need. Only the area in which information demand and information supply coincide ultimately leads to an actual supply of information (cf. Picot & Reichwald, 1991; Picot & Wolff, 1995; Reichwald, 1999). In this context, recent developments are significantly influencing the traditional supply of information. Big Data alone opens up new, automated, and structured possibilities for information acquisition and supply in companies (cf. Binckebanck & Elste, 2016; Picot et al., 2018). Through the use of data analytics, new methods of information evaluation are emerging. Data analytics offers companies the opportunity to obtain and condense a large amount of data through diverse methods. The information obtained from this can also be referred to as a data product, which ultimately creates value-added benefits for a company (Loukides, 2010). The part of the information supply that is objectively available for task performance represents the information state. On the one hand, the digitization of information and communication processes improves the supply of information; however, it can also lead to a shift in the demand for information. At the same time, direct access to information, e-learning offers, virtual reality, etc. allow new forms of supplying task managers with relevant information.

3.1.2 First-Time Confirmation Model Ernst and Christine von Weizsäcker analyzed a simple but important starting point for describing the action-creating effect of information on the basis of their first-­ time confirmation model (cf. Weizsäcker, 1974). The prerequisite for an action-­ creating effect of information is that it conveys neither too much first-time experience nor too much confirmation of already made experiences. Pure firstness and pure

3.1  The Importance of Information and Communication in Organizations Fig. 3.1 First-time confirmation model. (Based on Schneider, 1988, p. 220, there based on Weizsäcker, 1974, p. 99)

41

Pragmatic information

0% 100 %

Confirmation First time

100 % 0%

confirmation form the end points on a continuum within which the action-creating or pragmatic effect of information is expressed. Complete firstness of information has no action effect and thus does not constitute pragmatic information: the receiver does not succeed in inserting such information into a contextual frame of reference on the basis of his own experience. The information can thus not be used in a purpose-­oriented way and remains an ineffective message. While, for example, the information “the yen is falling” could certainly induce an experienced investment fund manager to buy and sell shares, this information would hardly have any effect on an absolute stock market layman. Information can therefore only develop its pragmatic effect if it also contains confirming elements that can be linked to previous experiences (cf. Fig. 3.1). These considerations show that an understanding between two communication partners is only fruitful if information is exchanged with a favorable mixture of what is new and what is known. If this is not the case, there is a risk of communication problems. This is the case, for example, when, due to different backgrounds of experience, at least one partner is confronted with information for the first time. This can be observed, for example, in international cooperative relationships between companies or in communication processes between professional groups from different disciplines. For lectures and meetings, it can be learned from this approach how important it is to address the audience at the respective level of their knowledge in order to be able to pick them up in terms of content.

3.1.3 Information Behavior According to O’Reilly O’Reilly considers the institutional conditions of human information processing by relating information and communication behavior to organizational contextual variables (cf. O’Reilly, 1983). In an integrated approach, O’Reilly (1983) establishes a relationship between organizational context variables, information and communication behavior, information status, and the resulting decision behavior of actors. Decisions here are ultimately a function of how information is used. The contextual variables relevant to this are:

42

• • • •

3  Basic Models of Human Information and Communication Behavior

The organizational structure. The incentive and control systems in place. The structure of norms and values. The characteristics of the tasks to be performed.

In addition, information and communication behavior is influenced by the formal and informal power relations resulting from the prevailing context. O’Reilly (1983) formulates several statements related to the relationship between context variables and information behavior. Information is then all the more likely to be taken into account: • The more central their importance is to the decision-maker’s task performance (although there may be a difference between subjective and objective task definition). • The more clearly they are linked to the planning, control, and evaluation system relevant to the decision-maker, because this is where the reward and punishment options are derived for him. • The greater their contribution to actions that are positively sanctioned by the control system (conformity). • The more they favor the respective personal objectives of the decision-maker. • The less they generate conflicts with cooperation partners who are required to share the workload. • The easier they are to access (organizationally, spatially, intellectually). • The more compact and easily understandable they are presented (e.g., graphic with concise verbal summary). • The more personal the contact with the informant (advantage of oral communication). • The greater the trust in the source of information. • The greater the power of the informant compared to the power of the decision-maker. All these influencing factors can ultimately be traced back to a cost-benefit calculation by the decision-maker: information is more likely to be used the lower the costs – in the broadest sense – of its acquisition and the higher the expected benefit from its observance or the higher the possible sanction for non-observance.

3.2 Selected Models of Communication Behavior First of all, it needs to be clarified what the object of communication processes really  is and how communication can be described in general (cf. Sect. 3.2.1). Against this background, important models are then presented in more detail (cf. Sect. 3.2.2).

3.2  Selected Models of Communication Behavior

43

Example An example will illustrate the demarcation problem: if one person is persuaded by another to jump into the water, and the person in question actually does so, then a communication process has clearly taken place between the two actors. If, however, that person is pushed into the water by the other, then the end result may be a similar one, but in this case, it can hardly be said that an act of communication has taken place between the two participants. But what is the difference between the linguistically formulated message and the push? The difference between direct causation (e.g., the push) and communication is that direct causation conditions a simple, unavoidable relation between cause and effect, whereas in the case of communication, this relation refers to the fact that the message receiver can estimate the probabilities of different reactions to a possible refusal. In this case, the message receiver is in principle free to choose between different alternative actions or responses. The mere push is thus not a communication process, since the fall into the water does not represent a reaction, but only the physical consequence of the push.

3.2.1 Three-Level Model of Semiotics The scientific study of the functioning of communication processes is called semiotics (cf., e.g., Eco, 1977). Semiotics distinguishes between three different levels of communication: syntactics as the analysis of signs and the relationships between signs, semantics as the analysis of the relationships between signs and their meaning, and pragmatics as the analysis of the effects of signs on their users or recipients. A simple communication process will serve as an illustrative example.

Example A professor says to one of her students: “If your presentation in the seminar does not turn out significantly better than your seminar paper, I am pessimistic about your ECTS points.” On the syntactic level, the question is simply the correct transfer of words, i.e., is the student able to take in the sentence purely acoustically, or is this impaired, for example, by the professor’s unclear pronunciation, the student’s poor hearing, or background noise? The question on the semantic level is whether the student attaches the correct meaning to the words of his professor, e.g., whether he associates the term “ECTS points” with an important “step in his study progress” or recognizes its endangerment through the words “I am pessimistic.” Finally, on the pragmatic level, it is a (continued)

44

3  Basic Models of Human Information and Communication Behavior

(continued) question of the intention that the professor pursues with her statement, as well as the reaction that it triggers in the student, e.g., whether the student is spurred on to higher performance, as intended, or gives up in resignation. The three levels of investigation should not be viewed completely separately from each other. They overlap or build on each other. All three levels deal with signs, their relations, and rules. The pragmatic level represents the most comprehensive level of analysis. It takes into account all the personal-­ psychological and constitutional factors that distinguish one communication event from another and analyzes intentions and practical action consequences associated with communication events. This stage is therefore the main anchor point for describing different models of understanding.

Communication processes are often associated with different terms such as signal, sign, message, or information. On the basis of the semiotic levels outlined, these terms can be distinguished from one another and their significance in communication processes clarified. Signals or signs are the object of observation of the syntactic level. This illuminates the relationship of signs or signals to each other as well as the formal rules according to which they are composed. However, no statement about meanings is connected with these terms. They are rather used to describe problems of correct and complete transmission or to analyze the composition of combinations of signs (grammar). At the semantic level, the relationship between signs and what they designate (designata) is described. Signs always refer to some objects, events, or states. Thus, a meaning is ascribed to the signs by their users. If sender and receiver assign an identical meaning to the transmitted signs, i.e., if there is a semantic agreement, one can speak of a message. However, the modes of action of messages are not referred to at this level. This only happens when considering the pragmatic level. This illuminates the consequences of action and the effects that a transmitted message is intended to trigger or triggers in the recipient. By linking the meaning of the signs and the consequences of action, a message becomes information. Against this background, information is to be interpreted as purpose-oriented knowledge. With this use of language, it becomes clear that information is to be regarded as action-provoking (see Fig. 3.2).

3.2  Selected Models of Communication Behavior

45

Communication processes

S E N D E R

Transmission of sign + Meaning + Intention of the sender Semantic level Transfer of characters + Meaning of the characters Syntactic level

R E C E I V E R

Human/Machine

Human/Machine

Pragmatic level

Transmission of (physical) characters Fig. 3.2  Levels of analysis of information transmission. (Based on Reichwald, 1999, p. 231)

3.2.2 Typical Communication Models 3.2.2.1 Axioms of Communication According to Watzlawick et al. (1990) Watzlawick et al. (1990) develop a comprehensive, social-psychologically oriented model of human communication and are primarily interested in its behavioral effects. The authors describe various general/basic characteristics of human modes of communication and derive the following five axioms (cf. Watzlawick et  al., 1990). On the basis of these axioms, they identify disturbances in human communication processes and ways of remedying them. Thus, there are interactions between two communication partners in that one partner influences the other partner through communication and vice versa. The Five Axioms of Communication • Axiom 1: You cannot not communicate. • Axiom 2: Every communication has a content aspect and a relationship aspect. • Axiom 3: The relationship between communication partners is characterized by the punctuation of communication processes. • Axiom 4: Human communication uses digital and analog modalities. • Axiom 5: Communication can be based on symmetrical and complementary relationships.

46

3  Basic Models of Human Information and Communication Behavior

In the first axiom, any form of behavior is called communication and, accordingly, also has a message character. Thus, there is no possibility for a person not to communicate. For example, even the wordless passing of an employee by his superior has a certain meaning, so even in this situation, communication takes place. This insight is important because it makes interpersonal interaction problems accessible to an analysis based on communication theory, without explicit communication necessarily having to take place in the traditional sense. The second axiom states that every communication includes a content aspect and a relationship aspect. The content aspect concerns the transmission of facts, for example, a superior communicates certain controlling figures of his own department to his employees. The relationship aspect, however, concerns the interpersonal relationship between the communication partners and thus possibly provides a starting point for the interpretation of the pure content, for example: praise or blame of the supervisor for the realized key figures. The third axiom refers to the fact that relationships between communication partners are shaped by the type of punctuation of communication processes. By punctuation, Watzlawick et  al. (1990) mean certain ways of interpretation and causal perceptions of statements and behaviors of the communication partners. For example, a punctuation problem occurs when a supervisor criticizes his employee for lack of commitment, but the employee attributes his low performance to the constant criticism. Context-dependent communication problems can therefore occur as a result of different modes of punctuation, which can often only be resolved by communicating about the meaning of the original communication (metacommunication). Especially in intercultural communication relations, such punctuation divergences can occur frequently and lead to considerable misunderstandings or even to the failure of the communication process (cf. Keller, 1992). The fourth axiom distinguishes between digital and analogue communication. Digital communication takes place primarily through spoken or written language and, due to its unambiguous syntax, is particularly suitable for the precise transmission of the content aspect of a communication. Analog communication mainly takes place outside of the actual language, e.g., via facial expressions, gestures, or tone of voice. It has a less clear syntax, but a variety of semantic possibilities, and usually serves to convey the relational aspect. To take up the example of the second axiom again, the presentation of the key figures (digital communication) can take place in a critical-worried or pleased tone (analog communication). In this way, analog communication can be used to convey the desired message even without explicit praise or reprimand. The fifth axiom involves the distinction between symmetrical and complementary communication relationships. Symmetrical relationships exist when the communication partners are on the same level, such as equal colleagues in a company. Complementary relationships, on the other hand, exist when communication partners have complementary differences. This can be the case, for example, between a superior and an employee. With the five axioms of communication, Watzlawick et al. (1990) do not offer a complete, self-contained model of communication. However, their considerations

3.2  Selected Models of Communication Behavior

47

draw attention to a number of important aspects of communication that have a great influence on interpersonal communication relationships. They thus provide important indications for the design of intra- and inter-company communication relationships as well as the use of communication media. It is particularly important to note that different media are suitable to varying degrees for conveying the content and relationship aspects of communication. For example, an e-mail or a message in a social network is perfectly suited for the quick and clear transmission of printed numerical material (content aspect, digital communication). In addition, it can be assumed that virtual communication channels are constantly being optimized and adapted to user needs. However, for a critical employee discussion, which is primarily about the relationship aspect, personal face-to-face contact will generally be unavoidable, as the analog communication that is increasingly required here is difficult to transmit via technical media. 3.2.2.2 Neuberger’s TALK Model Neuberger’s (1985) TALK model is a further development of the communication theory of Watzlawick and his circle of students. It was developed as a theoretical basis for communication training in organizations and is particularly suitable for analyzing interpersonal communication processes. In this model, four aspects are distinguished in the communication process: fact representation, expression, guidance, and contact. The aspect of fact representation (“It is”) largely corresponds to the content aspect of communication in the second axiom of Watzlawick et  al. (1990). The focus here is on communication to solve factual problems. In this problem-solving process, Neuberger distinguishes five phases: problem formulation, clarification of conditions and goals, development of alternative solutions, evaluation of alternative solutions and decision, and finally, implementation and control. The expression (“I am”) includes information which one reveals about oneself – voluntarily or involuntarily – when communicating. This includes in particular nonverbal communication, which, however, can easily be misunderstood. Neuberger (1985) distinguishes between expression (reflection of the inner situation) and impression (effect on the partner), which need not be identical. The guidance aspect (“You shall”) emphasizes that the sender of a message generally wants to achieve a certain effect with the recipient. This can be quite openly (“Try harder!”) or through the use of manipulation techniques (“Tomorrow the board will come and then you can show how innovative the team is working.”). Contact (“We are”) comprises the parts of communication that relate to the relationship between the communication partners. Here, the relationship aspect from the second axiom of Watzlawick et al. (1990) can be found again. Many communication processes primarily serve to establish or maintain the relationship; the actual factual content of the communication is secondary. This is sometimes difficult to recognize: if one is addressed in a friendly manner by a colleague (e.g., “How are you?”), it may be quite wrong to respond factually to the content, since the

48

3  Basic Models of Human Information and Communication Behavior

colleague only wants to express emotions. In this case, you should try to respond to the message on the relationship level and also say something friendly. Metacommunication plays a crucial role in resolving communication disorders. When communicating about communication, an orientation toward the four aspects mentioned above can be very helpful in identifying the causes. 3.2.2.3 Four Sides of a Message (Schulz von Thun) A similar, also sociopsychological, view of interpersonal communication can be found in a study by Schulz von Thun (cf. Schulz von Thun, 1993). According to Schulz von Thun, every message contains four different messages: • The content and relationship aspect – analogous to the Watzlawick et  al. (1990) model. • The appeal aspect, through which a certain effect is to be achieved with the communication partner. • The self-revelation aspect, according to which communication can involve both intentional self-revelation and involuntary self-revelation. These four aspects are analyzed in terms of their intentions or effects between sender and receiver (cf. Fig. 3.3). In this respect, Schulz von Thun (1993) does not establish his own model of communication but develops the model of Watzlawick et  al. (1990) further and Fig. 3.3  Four sides of the message. (Based on Schulz von Thun, 1993)

Content

Relationship

Statements about "pure facts": what the sender informs about

Statements about the relationship between sender and receiver: how the sender relates to the receiver

MESSAGE Self-revelation

Appeal

The sender: what the sender thinks about itself

The sender to the receiver: what the sender wants the receiver to do

3.3  Task, Medium, and Communication

49

differentiates it for better applicability to concrete communication disorders and problems. Against this background, communication breakdowns are inevitable when the message sent and received are interpreted in different ways by the sender and receiver. Example For example, the project manager’s information “We are 3 days behind schedule” can be related to all four messages and thus interpreted differently: • Case level: “Project execution is delayed by 3 days.” • Relationship level: “I was relying on you guys – what have you been doing all this time?” • Self-revelation: “I’m seriously worried about whether we can keep our schedule.” • Appeal: “Get involved so that the project can be completed on time.” In reality, the supervisor may focus on the factual content; however, the project staff may also take the message as an accusation and conclude that the project manager is very dissatisfied with the work performance on the project. This can lead to the project team members responding to the statement in a way that seems inappropriate to the project manager. As a result, misunderstandings and conflicts arise that could have been avoided. They can possibly only be solved by both communication partners entering into a meta-communication. They have to communicate how a message is meant in order to reach an understanding about the underlying message. However, this requires that both partners recognize the problem and are willing to actually reach such an understanding at the meta-level. Another important role in avoiding misunderstandings, especially at the relational and self-revelation level, is also played by the question of standardization or individuality of communication processes (cf. Koller, 1994). Thus, typical misunderstandings and conflicts can be avoided through standardized communication processes.

3.3 Task, Medium, and Communication There are numerous interactions between task, medium, and communication. The type and scope of the information and communication activities required depend on the nature of the task to be performed. Conversely, the quality of the decisions and actions required in the context of a particular task is decisively shaped by the communication between the various task bearers. The choice of medium or means of communication is influenced by both the nature of the task and the form of communication required and in turn itself has an impact on task performance and the

50

3  Basic Models of Human Information and Communication Behavior

quality of communication processes. In the following, selected perspectives on the explanation of media choice (Sect. 3.4.1) and media effects (Sect. 3.4.2) will therefore be explained.

3.3.1 Perspectives on Media Choice: Results of Media Choice Research Different tasks place different demands on communication. But which media are better or worse at meeting the respective requirements posed by different tasks? This question about the suitability of certain technical communication channels for supporting communication tasks, especially tasks of (digital) management communication, is analyzed in numerous empirical studies within the framework of so-­ called media choice research. Whenever communication cannot take place directly – i.e., face-to-face, at the same time and at the same place – support through media is required. This can be, for example, the classic letter, an e-mail, or multi-­ channel communication platforms, but it can also be via telephone or video conferencing; the spectrum of media for supporting human communication across the boundaries of space and time is large, and the range of alternative communication services is constantly growing. Mobile – and in some cases real time – virtual communication is becoming increasingly important due to the diversity of end devices. The both steady increase in the performance of mobile devices and the expansion of mobile networks with 4G and 5G provide space for the development of applicationoriented and integrated applications, which have become a significant communication channel (Stieglitz, 2015). However, the form of media support chosen is not irrelevant to the success of a communication process. Communication research attempts to trace such connections. It asks about factors influencing the choice of media, that is, what causes people to choose certain media in certain communication situations. And it asks about the effect of media use, that is, about the effects that the decision for a particular communication medium has on the success or failure of communication processes. From the point of view of different media theories, different influencing factors are nowadays also held responsible for the selection and use of certain media (Möslein, 1999; Reichwald & Möslein, 1999): • From the perspective of the theory of subjective media acceptance, the personal work style and communication preferences of the individual determine the choice of media (Does the medium support one’s preference for speed or convenience?). • From the point of view of the social influence approach, the acceptance of the medium in the environment of the communication partners determines the selection (What does my counterpart prefer?). • From the point of view of the task-oriented approach to media selection, the business communication task in each case has certain basic requirements that

3.3  Task, Medium, and Communication

51

must be met by the medium used (How well does a medium meet the requirements of the task?). None of these theories is fully explanatory on its own, and there are still many unanswered questions in this area. But the findings to date make the following clear: new technologies cannot be assessed as suitable for overcoming spatial and temporal boundaries solely on the basis of their potential. Only by taking into account other influencing factors and cause-effect relationships it can be understood and explained why, for example, in the business world, despite the availability of virtual conferences and multimedia, costs and time expenditure are still accepted to a considerable extent in order to communicate in person (cf. Goecke, 1997; Pribilla et al., 1996; Reichwald et al., 2000; Reichwald & Möslein, 2001). In addition, the implementation of digital forms of information and communication requires certain prerequisites, such as the media affinity of the users as well as the willingness to use these technologies. In addition, there are additional costs for the acquisition of hardware and software for use. In the age of digitalization, these aspects become more important than ever, as they place different demands on managers. An important aspect of the concept of digital leadership, therefore, is the ability of managers to create an organizational framework in which the new media and techniques can be used sustainably. Media Choice from the Perspective of the Theory of Subjective Media Acceptance  From the perspective of the theory of subjective media acceptance, the deployment and use of certain media is highly dependent on the personal style of task performance. Accordingly, the choice of a communication medium is not solely determined by its objective performance characteristics. Rather, the subjectively perceived usefulness of the medium determines acceptance or rejection. “Perceived usefulness” and “perceived ease of use” are central determinants of media acceptance from this perspective (cf., e.g., Davis, 1989). However, this perceived usefulness or perceived ease of media use is not without influence. In part, the subjective assessments may be an expression of personal character traits, but practice and positive personal experience in using a medium certainly promote a positive assessment of its usefulness. Frequently, qualification measures such as instruction, training, and education are necessary for a really effective use (and thus for a perception of benefit). These are then at the same time paving the way for acceptance and beneficial use of the media. Media Choice from the Perspective of the Social Influence Approach  The social influence approach, which is also referred to as the theory of collective media acceptance, points out that in addition to individual preferences, the social environment also influences the acceptance or rejection of certain media. This means that the individual choice of media is determined by which media are used by work colleagues, cooperation partners, or superiors, which symbolic meaning is attributed to the use of a medium, and which distribution a medium has in the work environment (cf. Goecke, 1997).

52

3  Basic Models of Human Information and Communication Behavior

The extent to which attitudes, experiences, and usage patterns in the work environment influence personal media choice was already made clear in an early empirical study by Schmitz (1987): 20% of the variances that occurred in the use of e-mail in different departments could be explained by the usage behavior of the respective superior. The role played by the symbolic meaning of media use becomes obvious when, for example, in some organizations personal media use by managers is seen as a sign of innovative ability, while in other organizations refusal to use media in management is seen as a special status symbol. Even though this study dates back more than 30 years, the human behavior behind it can certainly also be found in the context of the use of new social media in companies today. Another influence on the use of various media is exerted by the so-called digital natives, who have already grown up with the use of new media (cf. Rademacher & Weber, 2017). They use social media, blogs, and messenger services as a matter of course and repeatedly encounter the rather reserved communication behavior of older employees in the company. This can lead to islands of communication if there are no clear rules in the company about the permissible communication processes. The importance of the adoption behavior and the spread of a communication medium in the working environment is shown by the network effects already mentioned in Chap. 2 as well as the related goal of reaching a “critical mass.” It is a typical characteristic of communication media that the attractiveness of the medium increases with the number of its users. Once a certain critical number of users have been reached, a de facto standard emerges, so the decision to use a particular medium becomes a foregone conclusion. A more recent (further) development of this approach could be seen in the so-called influencer marketing. Influencers represent a new type of independent third party that can influence consumers through blogs, tweets, and the use of other social media channels with a high reach (cf. Freberg et  al., 2010). Cooperations with influencers in the business-to-consumer (B2C) area are already standard in the marketing mix of companies, whereas this aspect has so far been largely ignored in the business-to-business (B2B) area (cf. Jahnke, 2018). Media Selection from the Perspective of the Task-Oriented Approach  Different tasks place different demands on communication; alternative media can meet these demands to varying degrees. The task-oriented suitability of a medium thus decisively determines its acceptance and use. The model shows that every business communication process places four basic requirements on the communication channel. These requirements vary in importance for task fulfilment depending on the task content and the assessment of the task owner (cf. Fig. 3.4). Recent developments toward agile organizations in particular underpin the importance of the task-­ oriented approach to media selection: agile work requires the flexible selection of the respective media depending on the tasks to be processed. Accuracy of communication is of decisive importance as a basic characteristic, for example, in bureaucratic management processes, but also in coordination processes for technical specialist tasks. In such communication processes, it is important that the information exchanged is administratively accurate, can be documented,

3.3  Task, Medium, and Communication

53

Task-related basic requirements for communication channels Speed / Convenience

Accuracy

Transcription of Short the exact transmission time wording Short Documentability creation time of the information Quick reply Easy further processing Verifiability of the Information

Simplicity of the communication process Transmission of short messages

Degree of task structuredness

Confidentiality

Complexity

Transmission of confidential content

Need for clear understanding of the content

Protection against falsification

Transmission of difficult factual contexts

Identifiability of the sender Interpersonal trust building

Carrying out controversies Solution of complex problems Need for social presence

Fig. 3.4  The task-oriented communication model. (Based on Reichwald, 1999)

and can be further processed. The formal approval of investment projects is an example of cooperation processes in the management area in which particular “accuracy,” i.e., content-related aspects of communication, is important. Speed and convenience of communication are in the foreground when information needs to be exchanged in the shortest possible time and without major effort. If communication processes require, for example, quick dispositions or immediate reaction to unexpected events, then fast and convenient communication is particularly important. Confidentiality as a requirement for a communication process plays a role above all when it is a matter of achieving a value-oriented agreement between cooperation partners and when interpersonal trust-building as a social aspect of communication is in the foreground. However, the characteristic “confidentiality” also includes requirements of the communication partners for protection against unauthorized access, falsification, and the identifiability of the sender of messages. Complexity characterizes communication tasks that involve the clarification of difficult content or where complicated factual and personal issues must be mutually understood. Complexity places special demands on the directness of the dialogue, requires immediate feedback and the interplay between verbal and nonverbal communication.

54

3  Basic Models of Human Information and Communication Behavior

Fig. 3.5  Frequency of use of communication channels in the company. (Bitkom, 2017)

Corporate blogs or microblogging services Internal apps (e.g. for the order processing) Social networks Customer or employee portals Mobil- & smartphone Online meetings, video conferencing Fax E-mail Landline phone 0% 2017

20%

40%

60%

80% 100%

2018

These four basic requirements represent the conditions for every business communication relationship. The focus is on effective task fulfilment and undisturbed communication between the communication partners. The choice of communication media depends on the type of task and the subjective assessment on the part of the task owner (cf. Reichwald, 1999). For optimal task support, therefore, choice, i.e., equipping the workplace with alternative access to new communication media, is of paramount importance. This applies equally to the handling of business processes and to the work of the manager in the company management. The relevance of the necessary broad positioning of companies in terms of communication channels is also shown in Fig. 3.5, as the tendency to use a variety of communication media is continuously increasing (Bitkom, 2017).

3.3.2 Digital Leadership: The Impact of New Media on Corporate and Employee Management The connections between the use of digital technologies and their impact on corporate management become clear through the digital leadership approach. To successfully transform a digital business model, the digital transformation must start from the top management and additionally be lived at all levels by the executives (cf. Wagner, 2018). With the help of new tools and media, the so-called digital leaders should provide an optimized organizational structure that promotes a more efficient and productive way of working for employees (cf. Creusen et al., 2017). In order to meet the increased flexibility requirements of the corporate environment in an agile manner, the focus of change is on internal and external networking

3.3  Task, Medium, and Communication

55

through appropriate media. Location-independent tools such as cloud solutions support decentralized forms of work (cf. Wagner, 2018). Due to the transparency of digital media, comprehensive monitoring is possible, while social media, for example, facilitate employee participation (cf. Wagner, 2018). How the use of new media affects the requirements of leadership behavior will be examined in more detail in the following section. Demands of New Media on Leadership Behavior  Buhse’s (2014) VOPA model summarizes the new requirements for digital leaders: networking, openness, participation, and agility. Reduction of hierarchy through networking of employees, an open attitude toward new ideas and the new self-responsibility of employees, their participation in decision-making processes, and agile adaptation to the rapidly changing environment are central elements. According to Wagner (2018), the basic requirements for the position as a digital leader are an overarching technological understanding and IT competencies to be able to convey the necessary skills to employees (cf. Eggers & Hollmann, 2018; Wagner, 2018). With regard to the leadership of employees, the role of a coach is therefore spoken of (cf. Wagner, 2018). It becomes clear at this point that designations and positions are also adapted according to the digital environment. Another example is the introduction of the term “follower” as a synonym for the employees who are supposed to follow the role model of the managers with regard to the use of digital media (cf. Schirmer, 2016; Wagner, 2018). According to Wagner (2018), the function as a role model is thus the most important leadership behavior with regard to self-leadership. To fulfil this task, the concept of lifelong learning is essential in order to be able to correspond to the rapid technological developments (cf. Wagner, 2018). Effects of the Use of Media on Work and Cooperation in Management  Contrary to all predictions about the substitution of face-to-face communication, especially if they involve overcoming spatial distances, face-to-face communication is a constant in communication behavior. It plays a dominant role in the company – today as in the past. This is reflected, among other things, in the fact that the use of face-to-face communication by management is positively associated with employee satisfaction (cf. Men, 2014). With this result, all the findings on the importance of face-to-face communication already established in earlier studies (cf., e.g., Beckurts & Reichwald, 1984; Kieser et al., 1998) also remain equally current: the problem of high absenteeism and the inaccessibility of people involved in management processes associated with face-to-face communication have, however, been considerably alleviated by the current availability of mobile communication. Media communication is therefore a considerable relief for senior management work. However, ubiquitous accessibility and the pressure exerted by the media to respond quickly and often make decisions bring new forms of stress. The new communication media offer the opportunity to better design work and management processes, i.e., to be reachable independent of time and place despite a complex and distributed task environment, to maintain contacts, and ultimately to shorten response and coordination times.

56

3  Basic Models of Human Information and Communication Behavior

However, this finally reduces face-to-face/human-to-human interaction (Loebbecke & Picot, 2015), as it often seems easier and more convenient for individuals to communicate via a digital communication platform or messenger service (Wet et  al., 2016). This can lead to a decrease in face-to-face contact reducing the depth of relationships and reflected in negative employee collaboration (cf. Colbert et  al., 2016). Furthermore, according to Colbert et al. (2016), the associated decrease in empathy leads to communication partners no longer including the personality of the other person in the conversation, which can lead to communication problems. As a conclusion, the following remains to be stated with regard to the media effect: executives see the advantages of media use – especially the advantages of asynchronous forms of communication – in the quick, convenient establishment of contact with spatially close and distant partners. Not to be overlooked, however, is that media contributes to a general increase in activity levels and reinforce expectations for immediate feedback, rapid response, and quick decisions. This can lead to a greater fragmentation of the working day, not least because the possibilities of digital communication are also increasingly dissolving the boundaries between work and non-work phases (cf. Colbert et al., 2016). Thus, private tasks are more and more performed during working hours, while work-related activities are carried out during leisure time. This opens up considerable potential for more flexible work and life arrangements; however, the associated constant accessibility outside of work can also have a negative impact (cf. Butts et al., 2015). For the time and activity dilemma of management, the new technologies thus prove to be both problem-­solvers and problem-amplifiers and require corresponding competencies to deal with them (cf. MÜNCHNER KREIS, 2020). Communication and management research still encounters numerous unanswered questions.

3.4 Models of Knowledge 3.4.1 The Importance of Knowledge In contrast to information, which is defined as meaning-bearing signs (data), knowledge is understood as an action-oriented linking of information taking into account experiences in the individual context. Knowledge is therefore person-related, whereas information can also be interpreted and processed in isolation from persons. Knowledge, in turn, is the basis of expertise, which is created through repeated networking and application of knowledge. Knowledge thus comprises the sum of all conceptual content that an individual has accumulated about his environment on the basis of past observations and experiences as well as conclusions derived from them. Furthermore, knowledge comprises the sum of all learned cognitive and motor skills of an individual that have proven useful in dealing with his environment, as well as the skills of a collective that result as knowledge elements of their own quality from the joint exercise of these

3.4  Models of Knowledge Fig. 3.6  Implicit and explicit knowledge

57 IMPLICIT KNOWLEDGE

Human: Understanding, interpretation, synthesis and Application of unstructured knowledge elements

“Machine”: Preservation, transformation and distribution of structured knowledge elements

EXPLICIT

KNOWLEDGE

individual skills (cf. Scheuble, 1998). The content of this concept of knowledge can be systematized on the basis of three criteria: the subject matter, the context, and the transferability (cf. Fig. 3.6). The question of the object leads to the distinction between theoretical and practical knowledge. Depending on the context within which the knowledge element in question develops its respective effect, a distinction can be made between individual and collective knowledge. The individual knowledge categories can additionally be differentiated according to the extent of the barriers that stand in the way of a transfer of the knowledge element in question from one actor to another. This leads to the distinction between transferable and non-transferable knowledge. Knowledge also has implicit and explicit components, which differ in how knowledge is expressed (Baumard, 1999; Polanyi, 1985). Implicit knowledge, which is embedded in skills, routines, thought patterns, etc. – in short, experiential knowledge – is very difficult to transfer. For this to happen, close cooperation and trust between the knowledge carriers is necessary (e.g., chief physician with assistant physician or manager with young employee or mentor and mentee). Explicit knowledge, on the other hand, which can be easily codified (e.g., process descriptions of simple activities) can be passed on more easily, for example, in the form of manuals or documents (Polanyi, 1985). The respective expressions are to be understood as ends of a continuum spanned along the dimension in question. Types of being found in the literature can be interpreted either as alternative designations for the recognizable cubes or as partial aspects of these elements. What has been described so far is theoretical or abstract knowledge about something. Theoretical knowledge is what Ryle (1949) calls “knowledge that” and James (1962) calls “knowledge about.” However, to reduce the concept of

58

3  Basic Models of Human Information and Communication Behavior

knowledge to this abstract theoretical knowledge would be inappropriate because it abstracts from those practical skills and abilities that are so significant for economic activity. Practical knowledge includes all those more practical skills and abilities without which theoretical knowledge would remain a purely mental phenomenon. Knowledge, while always individual, is shaped in its form and content by the social environment of the individual (cf. Nelson & Winter, 1982; Simon, 1991). Against this background, collective knowledge resembles a mosaic. It is composed of individual elements whose form is given by their unified purpose. Individual knowledge is the substance of collective knowledge and yet the latter is more than the sum of its parts. Without tracing in detail how these mutual adaptations take place between the individual and his social environment (cf. Berger & Luckmann, 1967), it can be stated that collective knowledge exists because individual knowledge results from a process of interaction with his material and social environment, which is influenced by individual action and at the same time has an effect on individual knowledge. Collective knowledge is knowledge which is mastered only by a collective as a whole. This does not mean that this knowledge lies, for example, in a routine or in a culture, as is often read. The bearers of knowledge are always individuals, and just as a mosaic consists of specially formed stones, the knowledge of a collective is composed of the individual building blocks of knowledge. The knowledge of a collective can also be differentiated in terms of its practical and theoretical content. Theoretical knowledge of a collective is shared knowledge. The attribute “shared” indicates that it is knowledge possessed by each of the individuals belonging to a collective. Typical examples are the myths and stories spread in an organization or the expert language shared by the members of a project team. When the literature speaks of the knowledge of a collective, however, its practical aspects are often meant. These routines (cf. March & Simon, 1958; Nelson & Winter, 1982) result from the well-rehearsed sequence of actions and decisions of a group of people and represent knowledge elements of their own quality. This independent character of collective knowledge makes it possible to analyze collective economic actors, such as a company or an organizational unit, with the same knowledge-­economic instruments as can be applied to single individuals. Of particular interest is the question of the extent to which knowledge can be transferred from one actor to another. This applies both to the promotion of an intended transfer of knowledge and to the prevention of an undesired transfer of knowledge. Transfer at this point means an effective transfer of knowledge from one actor to another. The purchase of a physics book, the reading of a patent in a patent issuing office, or the presence in the lecture hall of a university, for example, is not sufficient to qualify this process as knowledge transfer. A transfer of knowledge has only taken place when the recipient is able to construct the element of knowledge in question approximately in the same way as the original knowledge holder has mastered it. Of importance in this context is the already mentioned implicit character of knowledge, which often prevents its transfer. However, the articulability of knowledge is not the only determinant of the transferability of knowledge. For example, when an apprentice learns his craft, he

3.4  Models of Knowledge

59

does so in large part by observing, imitating, and practicing what the master demonstrates to him (cf. Nonaka & Takeuchi, 1985). Often, it is not even necessary to observe the knowledge holder practicing his skills. In most cases, simply observing a product is enough to obtain the underlying knowledge  – an option known, for example, as reverse engineering. Conversely, there are examples of largely articulated knowledge that can only be transferred with great difficulty.

3.4.2 Knowledge Between Coordination and Motivation Knowledge as a central production factor can be managed. The task of knowledge management is to specifically optimize processes for the creation, further development, and exchange of knowledge between people in and between companies. Because it is anchored in an organizational context, knowledge management presents a typical coordination and motivation problem (cf. Milgrom & Roberts, 1992; cf. Chap. 2). Coordination measures concern the “can,” while motivation measures concern the “will” of employees as carriers of knowledge in an organization. In this sense, it is an important task of management to create a suitable coordination and motivation framework. Only in this way knowledge management can succeed. In the context of the coordination aspect, the focus is on the question of which knowledge-related activities must be carried out by employees in order to contribute to the achievement of corporate goals. In particular, it is about the transmission of knowledge about what needs to be done. In terms of knowledge management, this involves two aspects: coordination among humans and coordination between humans and machines. The first aspect is crucial wherever there is coordination of knowledge flows through, for example, hierarchies, group constellations, or formalized information channels. The coordination of the human-machine relationship is particularly important when individual access to databases, the targeted transmission of information (internal circulars, newsletters), or even the design of the user interface of a company’s intranet influences and controls knowledge flows. In the context of the motivation aspect, the question is how the conditions are to be designed so that all employees want to make their contribution to knowledge management. The motivation of actors to generate, transfer, pass on, and use knowledge depends to a large extent on the design of material and immaterial incentives. In order for knowledge management to succeed, organizational regulations as well as motivation and incentive systems must therefore be designed in such a way that the members of the organization are not only able to make their contribution (coordination aspect) but also want to do so (motivation aspect). Against the backdrop of digitalization, the challenge for organizations is to achieve efficient use of knowledge despite the ever-growing flood of information (cf. Mahringer & Gabler, 2018). With an increase in the complexity of the environment, the need for strategic knowledge management grows at the same time in order to remain able to act in the future (cf. North & Maier, 2018). In a study on the topic of “productive

60

3  Basic Models of Human Information and Communication Behavior

exchange of knowledge in the company,” 86% of respondents stated that the exchange of knowledge was already actively taking place but that the appropriate tools and communication channels for this were lacking (cf. Haufe-Lexware GmbH & Co. KG, 2014). In addition, humans must also be willing to share their individual knowledge with other organizational members, which requires an undisturbed relationship of trust. It can be inferred that a sophisticated knowledge management system can definitely be efficient with digital communication. It depends on the constellation of tasks to what extent analogue communication has to complement digital communication processes: overcomplication versus oversimplification. One approach to solving this problem are needs-oriented knowledge management systems that are geared to task patterns, e.g., routine tasks in the company. However, due to the decrease in routine tasks and the increasing importance of more individual project work, these systems are reaching their limits (cf. Schacht et al., 2016). Knowledge management systems that combine elements of gamification and knowledge are more suitable for project tasks. The gamified project management system goes back to the action design research approach of Sein et al. (2011) and represents a further development. The intention of this approach is to use individual experiential knowledge of people with their own interest in solving issues in a business context in a gamified manner. In doing so, the documentation and evaluation of experience in the field of project work is to be provided in order to efficiently reuse knowledge generated in individual projects  – a modern knowledge management approach for non-routine tasks (cf. Sein et al., 2011).

3.5 Information, Communication, and Trust Trust is an elementary organizational principle of interpersonal exchange relationships. On the one hand, the formation of trust is based on information and communication processes. On the other hand, the nature and manner of human information and communication behavior are in turn decisively shaped by the existing level of trust. These interactions between trust, information, and communication are the subject of the following remarks.

3.5.1 The Importance of Trust in Intraand Inter-Organizational Contexts As an elementary organizational principle of interpersonal exchange relationships, trust also plays a central role in the organization of economic performance relationships (cf. Albach, 1980; Fukuyama, 1995; Ripperger, 1998). Trust is the prerequisite for the undisturbed transfer of knowledge between people. Trust thus forms the basis of transactions, interactions, contracts, and business processes in and

3.5  Information, Communication, and Trust

61

between organizations. Trust is thus also essential in microeconomic transformation and reorganization processes toward more flexible corporate structures, such as the network organizations and virtual corporate structures discussed in the following sections (cf., e.g., Neuburger, 2019; Rump & Eilers, 2020). In many areas, these forms of organization are characterized by an increasing degree of spatial and organizational decentralization: based on digital technologies, such decentralization processes are more or less extreme. Starting with intra-organizational structures such as modularization and internal networks (cf. Chap. 5), they can continue, for example, as inter-company networks (cf. Chap. 6) beyond the boundaries of the company, also taking on the extreme form of the virtual company (cf. Chap. 7). Both spatial and organizational decentralization measures initially increase the scope for action of employees and partners. At the same time, expanded scope for action also requires suitable coordination, control, and monitoring systems. The resulting additional costs of control and monitoring can more than compensate for the efficiency gains that can in principle be achieved through decentralization. Building trust can be a thoroughly efficient mechanism for filling this “control vacuum.” The genesis of trust in and between organizations can be specifically promoted by appropriate social norms and institutional frameworks (cf. Ripperger, 2003; Rump & Eilers, 2020). Organizations in which there is a high degree of trust tend to have more social capital than those with more opportunistic cultures and can thus regularly realize higher cooperation gains. Trust can therefore be a valuable source of human capital and an important competitive advantage, especially in the new forms of enterprise.

3.5.2 Information Behavior and Trust The problem of trust can be described as the problem of risky advance performance (Luhmann, 2000); the trust giver transfers control over events or resources to the trust taker, thereby entrusting him with something over which the latter can dispose to the detriment (breach of trust) or else to the benefit (rewarding of trust) of the former. In doing so, the repositor exposes himself unprotected to the risk of a breach of trust and the associated damage. Thus, capturing the problem of trust presupposes two assumptions about human (information) behavior (cf. Chap. 2): bounded rationality and opportunism. This is because trust is first established by uncertainty about the motivational disposition or intention to act of another person and the risk of harm that person can inflict. On the one hand, this means that the trust giver is only incompletely informed about the true motives and intentions of the trust taker or can be subject to error in this respect (bounded rationality). On the other hand, it means that the relying party does not always convey information truthfully but may also deliberately conceal or distort it in order to achieve his own advantage at the expense of the relying party (opportunistic behavior). This means that there is a principal-agent relationship between the

62

3  Basic Models of Human Information and Communication Behavior

Trust is ...

Trust action

Trust expectation

... the voluntary provision of a risky advance payment without explicit explicit contractual safeguards and controls against and control measures against opportunistic behavior ...

... in the expectation that the trusted party is motivated to voluntarily refrain from opportunistic behavior.

Fig. 3.7  Trust-trust expectation and trust action. (Based on Ripperger, 2003)

party providing the trust and the party receiving the trust (cf. Sect. 2.2.4). The trust giver, in the role of the principal, is in general less well informed about the true characteristics and intentions of the trusted party (agent) than the latter himself. Against the background of these considerations, trust can thus be defined as in Fig. 3.7. The trust giver’s expectation of trust is based on his subjective assessment of the trustworthiness of the trusted party (cf. Deutsch, 1960a, 1960b, 1976). The trust giver is basically not fully informed to be able to act with certainty of success. He willfully overrides this lack of information through his trust by transferring his existing information from the past to the future. In doing so, the trust giver can rely on his own experience or on the experience of third parties. Depending on the underlying information, different categories of trust can be differentiated (cf. Fig. 3.8). Generalized trust describes a person’s fundamental willingness to trust, irrespective of the specifics of a particular situation (cf. Petermann, 1996; Rotter, 1971, 1980). It characterizes a typical personality trait: depending on underlying experiences, people have more or less trust toward third parties. In contrast, specific trust is based on the subjective assessment of the trustworthiness of a certain person in a specific situation (Petermann, 1996). It refers, for example, to a doctor who makes a very qualified and reliable impression in the context of a serious treatment. However, the relying party does draw not only on his own experience but also on the experience of third parties. If these are experiences of third parties with the person of the trusted party, this is referred to as reputation. To a certain extent,

Source of information

3.5  Information, Communication, and Trust

Personal interaction as a trust giver … Interaction of third parties as trust giver

63

Generalized trust

Specific trust

Atmosphere of trust

Reputation

… with third parties as trust taker

… with the person of the trust taker

Information reference object Fig. 3.8  Typical trust categories. (Based on Ripperger, 2003)

reputation is the public information about the previous trustworthiness of an actor. It plays a major role, for example, in cooperative ventures when no verifiable information is available about the performance of potential partners, or in Internet commerce when the information on the Web does not allow any conclusions to be drawn about the quality of the service (Koch et al., 2000). If the experiences of third parties do not relate directly to the person of the trusted party, but to the interaction with third parties within a common social context, they constitute the atmosphere of trust of a social system (Ripperger, 2003). The respective underlying cultural or institutional conditions have a decisive influence on the probability of opportunistic behavior within a given system, so the proportion of opportunistically acting actors will be different in different cultures. The higher the proportion of positive experiences in trust relationships in a social environment, the better the quality of the atmosphere of trust. Interdependencies naturally exist between the individual categories. It is obvious that the degree of generalized trust has a decisive influence on the expectation of trust in a specific situation. It can also be assumed that in a social system with a good atmosphere of trust, the generalized trust of an actor  – at least toward the members of this system – is regularly higher than in a system with a poor atmosphere of trust. The nature of reputations within a social system influences its members’ subjective perceptions of the quality of the trust atmosphere. In addition, the reputation of a potential trustee will have an impact on the specific trust of the trust giver, even though it is of course not a substitute for personal experience.

64

3  Basic Models of Human Information and Communication Behavior

3.5.3 Trust Building and Communication Trust formation and communication are closely linked (Bittl, 1997; Müller et al., 2017): the formation of trust presupposes communication just as certain forms of communication require trust. Thus, communication is not without influence on trust between communication partners. Trust is only established as a problem by the fact that the trust giver is unclear about the moral qualities and the true intentions of the trust taker. The problem of trust thus results from the existence of information asymmetries on the part of the trust giver and the danger of their opportunistic exploitation by the trust taker. Communication can overcome or reinforce information asymmetries. Trustworthy is “who realizes the intention he has communicated to the other in words or by implied behavior, i.e. who aligns his own actions with what he has consciously or unconsciously communicated about himself and also only communicates what, according to his knowledge, is already true in reality or becomes reality through his own future behavior” (Ripperger, 2003). Untrustworthy, however, are those who, through their communication behavior, give the appearance of benevolent intentions and thereby inspire trust to then deliberately bring about an event that is damaging to the person giving the trust, for their own benefit. It is therefore in particular the intention to deceive associated with the transmitted message that separates honest communication behavior from dishonest ones (Baier, 1986). The trust of the trust giver is therefore based on the assumption that the trust taker does not have any intention to deceive with what he communicates. The establishment of a trust relationship also requires that the relying party has communicated his willingness to acknowledge the interests of the relying party and to bind his own behavior accordingly. This can be done by literal communication, for example, in the form of a promise but can also be done by implied conduct alone. The formation of trust often relies on easily interpretable situations and presupposes the ability to interpret communicative utterances and signals from third parties as correctly as possible. This requires a minimum level of agreement and understanding at the syntactic, semantic, and pragmatic levels of communication (cf. Sect. 3.3.1) as well as with regard to certain behavioral norms and customs. People perceive facial expressions, gestures, utterances, and behaviors of other people subjectively different through a cognitive and affective filter. Thus, they are not always able to correctly interpret the meaning of the message communicated by the sender. In many cases, the correct interpretation of communicative utterances must first be learned in the course of repeated interaction. This requires a history of repeated experiences and thus a minimum level of familiarity (Luhmann, 1988, 2000). “Familiarity increases the certainty of expectation by simplifying the correct assessment of potential trust situations and thus reduces the subjective uncertainty inherent in trust, i.e. the possibility of misinterpretation of information and communication and thus the risk of error” (Ripperger, 1998, p. 107).

3.6  Conclusions for Management

65

3.6 Conclusions for Management The success of communication between actors within and between companies strongly depends on the extent to which certain typical behaviors in dealing with information and communication channels and media are taken into account in the design of information and communication systems. Whatever the causes of communication problems may be, they must be perceived by the management of information and communication and solved by appropriate measures in the design of analogue and digital information and communication systems. This applies in particular to cross-company information and communication relationships: • On the one hand, certain communication problems in the inter-company area are becoming more explosive, for example, due to spatial and/or temporal distances or technical coordination problems. • On the other hand, problem-solving becomes more difficult because the management of information and communication transcends corporate boundaries. System design is now no longer the responsibility of a single company-related management but requires the coordination of a plurality of company interests. • This means a dilution of responsibilities across companies with regard to system design, more complex coordination mechanisms, and possibly increased scope for self-serving, opportunistic behavior. It is not possible to say to what extent organizational forms such as modular organizations, networks, or virtual companies exacerbate the aforementioned problems of information behavior. The use of digital technologies cannot eliminate the limits imposed on humans by limited rationality and information processing capacity, but it can at least extend them. The use of digital technologies can alleviate problems of information behavior of employees: • For example, distributed databases or new ways of searching for information can alleviate problems of inadequate information gathering due to too great a distance to information sources. • In the future, the increasing improvement of data generation and data analysis will occupy a special place in the context of automated and structured information procurement and ultimately determine competitive advantages for companies of all sizes. The targeted use of data science/analytics and artificial intelligence (cf. Chap. 4) will therefore take on an even more significant role in competition, and companies should increasingly regulate the areas of the company in which this targeted use takes place if it is profitable. The abovementioned problems of communication behavior or understanding can be exacerbated in networked forms of organization or virtual companies (cf. Chaps. 6 and 7) in comparison with traditional highly integrated companies.

66

3  Basic Models of Human Information and Communication Behavior

• On the one hand, greater distances can be bridged through the use of new digital technologies and the digitalization of value creation processes. • On the other hand, with increasing distance and distribution of the locations of the value creation processes, problems of communication can arise despite all the advances in the digitalization of communication. Disruptions at the syntactic, semantic, and especially the pragmatic level of communication become more likely due to a lack of or limited feedback in communication. • With greater distance, the dependencies on the reliable function of the technical transmission of information also increase. The transfer of knowledge and the building of trust are made even more difficult here. This leads to the conclusion that these impending communicative disadvantages must be compensated for by other efficiency advantages of these forms of organization or, if possible, controlled through the targeted use of digital technologies and corresponding incentive systems. In contrast, the problems of communication tend to be reduced in the modularization of the enterprise (cf. Chap. 5) if task bearers that were previously organizationally and spatially separate in the enterprise are combined in independently acting entrepreneurial subunits. The basic ideas developed above will be further developed in the following parts of the book. In each case, it will become clear in which forms corporate boundaries are dissolving, what role digital technologies play in this process, how the new forms of work and organization that are emerging can be managed, and what competencies are required for this. What is important here is that organization, digital technologies, and competencies must interlock and be able to withstand the challenges of increased digital information and communication processes so that companies can enter into new forms of coordination and the internal cohesion of the new structures thus created is not endangered.

References Albach, H. (1980). Vertrauen in der ökonomischen Theorie. Zeitschrift für die gesamte Staatswissenschaft, 1, 2–11. Baier, A. (1986). Trust and antitrust. Ethics, 96, 231–260. Baumard, P. (1999). Tacit knowledge in organizations. Sage Publications. Beckurts, K.  H., & Reichwald, R. (1984). Kooperation im Management mit integrierter Bürotechnik. CW-Publikationen. Berger, P. L., & Luckmann, T. (1967). The social construction of reality. Doubleday. Binckebanck, L., & Elste, R. (Eds.). (2016). Digitalisierung im Vertrieb: Strategien zum Einsatz neuer Technologien in Vertriebsorganisationen. Springer Gabler. Bitkom. (2017). Wie häufig nutzen Sie die folgenden Kommunikationskanäle in Ihrem Unternehmen? [Graph]. Statista. https://de.statista.com/statistik/daten/studie/691566/umfrage/ umfrage-­zur-­nutzung-­verschiedener-­kommunikationskanaele-­in-­unternehmen/. Accessed on 08.01.2020. Bittl, A. (1997). Vertrauen durch kommunikationsintendiertes Handeln: eine grundlagentheoretische Diskussion in der Betriebswirtschaftslehre mit Gestaltungsempfehlungen für die Versicherungswirtschaft. Gabler.

References

67

Bruhn, M. (2015). Kommunikationspolitik: Systematischer Einsatz der Kommunikation für Unternehmen (8th ed.). Vahlen. Bruhn, M. (2016). Marketing: Grundlagen für Studium und Praxis (13th ed.). Springer Gabler. Buhse, W. (2014). Management by internet. Börsenmedien. Butts, M. M., Becker, W. J., & Boswell, W. R. (2015). Hot buttons and time sinks: The effects of electronic communication during nonwork time on emotions and work-nonwork conflict. Academy of Management Journal, 58(3), 763–788. Colbert, A., Yee, N., & George, G. (2016). The digital workforce and the workplace of the future. Academy of Management Journal, 59(3), 731–739. Creusen, U., Gall, B., & Hackl, O. (2017). Digital leadership. Springer Gabler. Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13, 319–339. Deutsch, M. (1960a). The effect of motivational orientation upon trust and suspicion. Human Relations, 13, 123–139. Deutsch, M. (1960b). Trust, trustworthiness and the scale. Journal of Abnormal and Social Psychology, 61, 138–140. Deutsch, M. (1976). Konfliktregelung: konstruktive und destruktive Prozesse. Reinhardt. Eco, U. (1977). Einführung in die Semiotik. Fink. Eggers, B., & Hollmann, S. (2018). Digital Leadership  – Anforderungen, Aufgaben und Skills von Führungskräften in der “Arbeitswelt 4.0”. In F.  Keuper, M.  Schomann, L.  I. Sikora, & R. Wassef (Eds.), Disruption und transformation management (pp. 43–70). Springer Gabler. Freberg, K., Graham, K., McGaughey, K., & Freberg, L.  A. (2010). Who are the social media influencers? A study of public perceptions of personality. Public Relations Review, 37, 90–92. Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. The Free Press. Goecke, R. (1997). Kommunikation von Führungskräften: Fallstudien zur Medienanwendung im oberen Management. Gabler. Gorecky, D., Schmitt, M., & Loskyll, M. (2014). Mensch-Maschine-Interaktion im Industrie 4.0-Zeitalter. In T.  Bauernhansl, M.  T. Hompel, & B.  Vogel-Heuser (Eds.), Industrie 4.0  in Produktion, Automatisierung und Logistik (pp. 525–554). Wiesbaden. Haufe-Lexware GmbH & Co. KG. (2014). Produktiver Umgang mit Wissen in Unternehmen. https://www.faktor4-­beratung.de/sites/default/files/haufe-­studie-­wissen-­in-­unternehmen.pdf. Accessed on 08.01.2020. Jahnke, M. (Ed.). (2018). Influencer Marketing: Für Unternehmen und Influencer: Strategien, Plattformen, Instrumente, rechtlicher Rahmen. Mit vielen Beispielen. Springer Gabler. James, W. (1962). The principles of psychology. Dover. Keller, E. (1992). Management in fremden Kulturen. Haupt. Kieser, A., Hegele, C., & Klimmer, M. (1998). Kommunikation im organisatorischen Wandel. Schäffer-Poeschel. Klammer, U., Steffens, S., Maier, M. F., Arnold, D., Stettes, O., Bellmann, L., & Hirsch-Kreinsen, H. (2017). Arbeiten 4.0 – Folgen der Digitalisierung für die Arbeitswelt. Wirtschaftsdienst, 9, 459–476. Koch, M., Möslein, K., & Wagner, M. (2000). Vertrauen und Reputation in Online-Anwendungen und virtuellen Gemeinschaften. Tagungsbeitrag zur GeNeMe 2000 (Gemeinschaften in Neuen Medien), Dresden 5./6. Oktober 2000. Koller, H. (1994). Die Integration von Textverarbeitung und Datenverarbeitung: Analyse des Bedarfs und seiner Determinanten aus betriebswirtschaftlicher Sicht. Gabler. Loebbecke, C., & Picot, A. (2015). Reflections on societal and business model transformation arising from digitization and big data analytics: A research agenda. The Journal of Strategic Information Systems, 24(3), 149–157. Loukides, M. (2010). What is data science?, O’Reilly Radar. https://www.oreilly.com/radar/what-­ is-­data-­science/. Accessed on 13.01.2020. Luhmann, N. (1988). Familiarity, confidence, trust: Problems and alternatives. In D.  Gambetta (Ed.), Trust: Making and breaking cooperative relations (pp. 94–107). Blackwell.

68

3  Basic Models of Human Information and Communication Behavior

Luhmann, N. (2000). Vertrauen: Ein Mechanismus der Reduktion sozialer Komplexität (4th ed.). Enke. Mahringer, C. A., & Gabler, M. (2018). Wie können Wissensmanagementsysteme nutzerorientiert gestaltet werden? HMD Praxis der Wirtschaftsinformatik, 55(4), 791–800. March, J. G., & Simon, H. A. (1958). Organizations. Wiley. Men, L.  R. (2014). Strategic internal communication: Transformational leadership, communication channels, and employee satisfaction. Management Communication Quarterly, 28(2), 264–284. Milgrom, P., & Roberts, J. (1992). Economics, organization and management. Prentice Hall. Möslein, K. (1999). Medientheorien  – Perspektiven der Medienwahl und Medienwirkung im Überblick. In Arbeitsberichte des Lehrstuhls für Allgemeine und Industrielle Betriebswirtschaftslehre (Vol. 10). Technische Universität München. Müller, F., Mander, R., & Hellert, U. (2017). Virtuelle Arbeitsstrukturen durch Vertrauen, Zeitkompetenz und Prozessfeedback fördern. Gruppe. Interaktion. Organisation. Zeitschrift für Angewandte Organisationspsychologie (GIO), 48(4), 279–287. MÜNCHNER KREIS. (2020). Kompetenzentwicklung für und in der digitalen Arbeitswelt. Positionspapier 2020 des MÜNCHNER KREISArbeitskreises “Arbeit in der digitalen Welt”. www.muenchner-­kreis.de. Nelson, R.  R., & Winter, S. (1982). An evolutionary theory of economic change. Cambridge University. Neuberger, O. (1985). Miteinander arbeiten  – miteinander reden! (6th ed.). Bayerisches Staatsministerium für Arbeit und Sozialordnung. Neuburger, R. (2019). Der Wandel der Arbeitswelt in einer Industrie 4.0. In R. Obermaier (Ed.), Handbuch Industrie 4.0 und Digitale transformation (pp. 589–608). Gabler. Nonaka, I., & Takeuchi, H. (Eds.). (1985). The knowledge-creating company – How japans companies create the dynamics of innovation. Oxford University. North, K., & Maier, R. (2018). Wissen 4.0  – Wissensmanagement im digitalen Wandel. HMD Praxis der Wirtschaftsinformatik, 55(4), 665–681. O’Reilly, C. A. (1983). The use of information in organizational decision making: A model and some propositions. Research in Organizational Behavior, 5, 103–139. Petermann, F. (1996). Psychologie des Vertrauens (3rd ed.). Hogrefe. Picot, A., & Reichwald, R. (1991). Informationswirtschaft. In E. Heinen (Ed.), Industriebetriebslehre: Entscheidungen im Industriebetrieb (9th ed., pp. 241–393). Gabler. Picot, A., & Wolff, B. (1995). Franchising als effiziente Vertriebsform. In P.  K. Kaas (Ed.), Marketing und Neue Institutionenlehre, ZfbF-Sonderheft (Vol. 35, pp. 223–243). Picot, A., & Wolff, B. (1997). Informationsökonomik. In Gabler’s Wirtschaftslexikon (pp. 1870–1878). Gabler. Picot, A., Berchtold, Y., & Neuburger, R. (2018). Big Data aus ökonomischer Sicht: Potenziale und Handlungsbedarf. In B. Kolany-Raiser, R. Heil, C. Orwat, & T. Hoeren (Eds.), Big Data und Gesellschaft – Eine multidisziplinäre Annäherung (pp. 309–416). Springer VS. Piller, F., & Reichwald, R. (2009). Interaktive Wertschöpfung: Open Innovation, Individualisierung und neue Formen der Arbeitsteilung. Gabler. Polanyi, M. (1985). Implizites Wissen. Suhrkamp. Pribilla, P., Reichwald, R., & Goecke, R. (1996). Telekommunikation im Management. Schäffer-Poeschel. Rademacher, U., & Weber, U. (2017). Mentoring im Talent Management: Win-win-Programme für Mitarbeiter und Unternehmen. Springer Gabler. Reichwald, R. (1999). Informationsmanagement. In M.  Bitz, K.  Dellmann, M.  Domsch, & H.  Egner (Eds.), Vahlens Kompendium der Betriebswirtschaftslehre (Vol. 2, 4th ed., pp. 221–288). Vahlen. Reichwald, R., & Möslein, K. (1999). Management und Technologie. In L.  V. Rosenstiel, E. Regnet, & M. E. Domsch (Eds.), Führung von Mitarbeitern. Handbuch für erfolgreiches Personalmanagement (4th ed., pp. 709–727). Schäffer-Poeschel.

References

69

Reichwald, R., & Möslein, K. (2001). Pluri-local social spaces by telecooperation in international cooperations? In L. Pries (Ed.), New transnational social spaces: International migration and transnational companies in the early twenty-first century (transnationalism) (pp.  115–133). Routledge publ. Reichwald, R., Möslein, K., Sachenbacher, H., & Englberger, H. (2000). Telekooperation: Verteilte Arbeits- und Organisationsformen (2nd ed.). Springer. Ripperger, T. (1998). Ökonomik des Vertrauens. Analyse eines Organisationsprinzips. Mohr. Ripperger, T. (2003). Ökonomik des Vertrauens. Analyse eines Organisationsprinzips (2nd ed.). Mohr. Rosenberger, B. (2017). Modernes Personalmanagement: Strategisch  – operativ  – systematisch (2nd ed.). Gabler. Rotter, J. B. (1971). Generalized expectancies for interpersonal trust. American Psychologist, 26, 443–452. Rotter, J.  B. (1980). Interpersonal trust, trustworthiness and gullibility. American Psychologist, 35, 1–7. Rump, J., & Eilers, S. (2020). Kontrolle ist gut, Vertrauen ist besser? Die Bedeutung der Vertrauenskultur in der Personalführung 4.0. In J. Rump & S. Eilers (Eds.), Die vierte Dimension der Digitalisierung: Spannungsfelder in der Arbeitswelt von morgen (pp. 65–77). Gabler. Ryle, G. (1949). The concept of mind. Hutchinson. Schacht, S., Reindl, A., Morana, S., & Mädche, A. (2016). Projektwissen spielend einfach managen mit der ProjectWorld. In HMD Best Paper Award 2015. Springer Vieweg. Scherer, A.  G., & Picot, A. (2008). Unternehmensethik und Corporate Social Responsibility  – Herausforderungen an die Betriebswirtschaftslehre. Schmalenbachs Zeitschrift für betriebswirtschaftliche Forschung, 60(58), 1–25. Scheuble, S. (1998). Wissen und Wissenssurrogate. Gabler. Schirmer, H. (2016). Entwicklung von Digitalkompetenzen und Führungskultur im Zeitalter der Digitalen (R)Evolution – Darstellung am Beispiel Continental. In T. Petry (Ed.), Digital Leadership – Erfolgreiches Führen in Zeiten der Digital Economy (pp. 355–371). Haufe. Schmitz, J. (1987). Electronic messaging: System use in local governments. Paper presented at the International Communication Association. Schneider, D. (1988). Zur Entstehung innovativer Unternehmen – Eine ökonomisch-theoretische Perspektive. VVF. Schulz von Thun, F. (1993). Miteinander Reden, Teil 1, Störungen und Klärungen. Rowohlt. Sein, M., Henfridsson, O., Sandeep, P., & Matti, R. (2011). Action design research. Management Information Systems Quarterly, 35(1), 37–56. Silic, M., & Back, A. (2013). Organizational culture impact on acceptance and use of unified communications & collaboration technology in organizations. BLED 2013 Proceedings, 28, 275–286. Simon, H. A. (1991). Bounded rationality and organizational learning. Organization Science, 2, 176–201. Stieglitz, S. (2015). Gamification  – Vorgehen und Anwendung. HMD Praxis der Wirtschaftsinformatik, 52(6), 816–825. Wagner, D.  J. (2018). Digital Leadership. Kompetenzen  – Führungsverhalten  – Umsetzungsempfehlungen. Springer Gabler. Wahren, H. K. (1987). Zwischenmenschliche Kommunikation und Interaktion in Unternehmen. de Gruyter. Watzlawick, P., Beavin, J. H., & Jackson, D. D. (1990). Menschliche Kommunikation: Formen, Störungen, Paradoxien (8th ed.). Huber. Weizsäcker, E. U. V. (1974). Erstmaligkeit und Bestätigung als Komponenten der Pragmatischen Information. In E. U. V. Weizsäcker (Ed.), Offene Systeme I Beiträge zur Zeitstruktur, Entropie und Evolution (pp. 82–113). Klett-Cotta. Wet, W. D., Koekemoer, E., & Nel, J. A. (2016). Exploring the impact of information and communication technology on employees’ work and personal lives. SA Journal of Industrial Psychology, 42(1), 1–11.

Chapter 4

Technology in the Boundaryless Enterprise: Digitalization as Driver for the Dissolution of Boundaries?

Abstract  As shown in Chap. 1, overarching technological trends can be identified as a major enabler for the dissolution of existing corporate structures and the emergence of changed forms of organization within and between companies. This is hardly surprising, since we know from history that technological developments have always played a major role when the focus of human activity has changed and new structures have emerged. Against this background, the following chapter lays the technological foundations for understanding the boundaryless enterprise. First, we look at overarching technological trends before explaining individual relevant technologies in general and in terms of their relevance for the emergence of boundaryless enterprises.

4.1 Technologies as Enablers As shown in Chap. 1, overarching technological trends can be identified as a major enabler for the dissolution of existing corporate structures and the emergence of changed forms of organization within and between companies. This is hardly surprising, since we know from history that technological developments have always played a major role when the focus of human activity has changed and new structures have emerged. This is obvious, because ultimately the human potential for action is determined by the prevailing technical tools. In this respect, overarching technological trends, which ultimately manifest themselves in various concrete technologies, on the one hand dissolve existing value creation processes that are often defined in terms of industry and sector. On the other hand, they open up new degrees of freedom for the (re)design and organization of internal and external service provision. For example, they enable modular structures within companies (cf. Chap. 5); externally, they lead to inter-company networks and cooperation (cf. Chap. 6). At the same time, new technologies open

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_4

71

72

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

up new kinds of freedom for virtual, location-independent forms of division of labor (cf. Chap. 7). Existing structures, ultimately manifested by industrialization, are thus dissolving and placing new demands on people (cf. Chap. 8). A basic understanding of these interdependencies between overarching technological trends and specific technologies thus appears important to be able to better understand and classify the following remarks.

4.2 Overarching Trends in Digitization New technologies affect companies and industries in several ways: they allow new forms of technical and organizational networking, they provide new technologies both for service provision and for the coordination of service provision, and they change established business models, leading to hybrid products that change the entire industries. All of this has implications that are comparable to the consequences of the first industrial revolution in terms of their impact, which is often described as disruptive: the way in which work is performed and the division of labor has changed, in some cases seriously (cf. Neuburger, 2019). In contrast to previous industrial revolutions, however, it is less a matter of individual technical tools such as the famous “spinning jenny” as the first spinning machine, the plough, the loom, the steam engine, or the assembly line that can ultimately be regarded as the trigger for the changes. Rather, various overarching technological principles can be identified that have become increasingly prevalent. In addition, the exponential increase in the performance of new, digital technologies coupled with a simultaneous decline in costs is leading to the continuous development of new types of technologies at a speed that has not been seen before. Therefore, it is currently hardly foreseeable which technologies will influence the organizational and working world in the future and in what way. Against this background, it first seems useful to consider a few technologically driven principles that characterize the currently emerging technologies and, ultimately, the changing organizational and coordination structures. • Networking Digital technologies enable the networking of actors (e.g., companies/institutions, customers/individuals) vertically, horizontally, and laterally. As a result, more and more cross-industry, decentralized value creation networks are emerging, in which competitors also cooperate with each other in some cases. At the same time, digital technologies allow the networking of machines, production facilities, and transport systems and products. The Internet of Things (IoT) and cyber-physical systems (see Skilton & Hovsepian, 2017) are particularly worthy of mention here, as they enable the digital mapping and holistic control of industrial process chains (see also Sect. 4.4). The increasing technical-infrastructural networking of actors and physical elements ultimately requires organizational networking, as discussed in Chap. 6, as well as personnel networking, as discussed in Chap. 8.

4.3  Big Data: Relevance of the Data

73

• Digital Platforms Increasing technical networking ultimately also leads to the emergence of digital platforms on which providers of products, services, or skills come together with potential customers (cf., e.g., McAfee & Brynjolfsson., 2017). Such platforms pursue different goals and emerge both within companies and between companies or between companies and their customers. Against the background of the increasing relevance of these platforms, the term “platform economy” is therefore often used. • Virtualization Communication and work environments are increasingly shifting to the information sphere. As a result, a virtual world is emerging alongside the physical world in which actors, teams, and companies operate. Concrete examples are social networks, virtual forms of organization (cf. Chap. 7), cloud computing (cf. Sect. 4.5), or virtual products or digital twins. These are first created in the information space before they are physically produced. • Mobility Thanks to digital technologies and ever-smaller applications, control and execution of service processes are increasingly taking place independent of location and/ or distributed across locations. Particularly in conjunction with increasingly powerful networking technologies, forms of organization and coordination can be realized that were hardly conceivable in the past. Worthy of mention here are, above all, the various varieties of mobile work and virtual forms of organization, to which we will return in Chap. 7. What all these trends have in common is that they can be interpreted both technically and organizationally. Thus, infrastructural-technical networking and organizational networking can be distinguished; digital platforms represent a technical concept, at the same time an organizational model or even a business model. Virtuality is a technical concept (e.g., virtualization of IT systems or cloud computing); at the same time, it is also the basis for organizational structures (e.g., virtual companies). Mobility is a technical principle (e.g., mobile telephony) but also manifests new types of work (e.g., mobile work). In addition to these overarching principles, and also on the basis of these principles, a number of typical technologically driven developments are emerging that are shaping the company’s development now and in the future. These are briefly discussed in the following sections.

4.3 Big Data: Relevance of the Data Digitization and networking of people, machines, and end devices, in conjunction with the corresponding software and computing power, enable, on the one hand, the creation but, on the other hand, also the integration, analysis, and processing of an

74

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

increasing amount of data from diverse, heterogeneous sources. As a result, a wealth of data is emerging that is impacting the global economy on an unprecedented scale (BARC, 2013; Manyika et al., 2011). Companies such as Google and Amazon have now successfully demonstrated that their ability to work effectively and efficiently with data has made them market leaders (Barton & Court, 2012, p. 79). At the same time, such examples show that Big Data can not only lead to greater internal efficiency but also redefine business models and relationships with customers and even have the potential to transform entire industries and the entire business world (BARC, 2013; Picot & Hopf, 2014). In the future, this development – commonly referred to as Big Data – will require even greater attention to fundamental principles (see also Picot et al., 2018 for the following). Since no uniform definition of Big Data can be identified so far, the delimitation of Big Data is often done on the basis of so-called V-dimensions, which have been successively expanded. • Volume This refers to the enormous amount of data that is produced on a daily basis and is a key characteristic of Big Data (see, e.g., Manyika et  al., 2011; Schroeck et al., 2012). • Velocity This includes, on the one hand, the speed at which data is generated and, on the other hand, the speed at which this data can be processed and analyzed (cf. Schroeck et al., 2012). For example, data streams can often already be analyzed in near real time (cf. Morabito, 2014). • Variety This stands for the diversity of data, which can come from different data sources (e.g., financial, personnel, industrial, product, customer, machine data, etc.) as well as in different formats (e.g., text, image, sensor data, etc.) and degrees of structure (e.g., standardized, free, semi-structured, etc.) (cf., e.g., Klein et al., 2013; Barton & Court, 2012). • Veracity This addresses the question of the extent to which trust is placed in the quality and correctness of the sources, collection, and processing of data (cf. Schroeck et al., 2012). • Value This points out that the application of Big Data is ultimately not an end in itself but should add value. This refers both to the various forms of data processing and to additional insights or options for action from the in-depth analysis of data (cf. Boyd & Crawford, 2012). The value-enhancing effect of Big Data manifests itself in two ways in particular:

4.3  Big Data: Relevance of the Data

75

• Reshaping and redesigning the business model, e.g., by adding data-related functions and services to existing products or developing entirely new types of data-related functions and services with value for customers (see Picot et  al., 2018, 2020; Satzger et al., 2018). • Improving and optimizing the value creation processes of companies, e.g., by adding data-related value creation activities. The prerequisite is to understand the individual elements of Big Data value creation and to implement them accordingly. Figure  4.1 shows an overview of the essential elements based on Porter’s value chain. In principle, a distinction can be made between primary (direct) value creation activities and supporting (indirect) components. Thus, technology (hardware and software), infrastructure, and security represent components that enable and support each of the primary Big Data activities. As primary activities, a total of six elements can be distinguished that contribute to value creation (cf. Picot et al., 2018). • Collection Generation and collection of new data as well as digitization of analog data sets (BITKOM, 2013; Klein et al., 2013) • Integration Integration, cleaning, and removal of redundancies (cf. Chen et al., 2014) • Aggregation Collection and presentation of data in summary form for further analyses or reports (cf. Experton Group, 2014)

Infrastructure

Val ue

Security Collection

Integration

Analysis

e

Valu

Primary activities

Supporting components

Technology

Visualization

Aggregation

Usage

Fig. 4.1 Elementary components of Big Data value creation (Berchtold, 2016 based on Porter, 1985)

76

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

• Visualization Preparation of the data with the help of different visualization tools • Analysis Technologies as well as techniques to analyze and explore large amounts of data for hidden patterns, unknown relationships, and information (cf. Kapdoskar et al., 2015; Miller & Mork, 2013; Russom, 2011) • Usage Application of the data and analysis results in domain-specific cases Understood in this way, Big Data value creation activities represent cross-­ disciplinary and cross-industry activities. As a result, new forms of cooperation and ultimately value creation networks are emerging, which also integrate (formerly or still) external partners into the value creation chains. In this respect, Big Data, and in particular the elements of Big Data value creation, reinforce the formation of networked, boundaryless corporate structures.

4.4 Networked Production: Industry 4.0 Digitization and networking affect all processes and functions in companies, including production. “Industry 4.0” has now become the accepted term for increasingly networked production (BMBF, 2014), ultimately characterizing the fourth stage of the industrial revolution. After the previous industrial revolutions through the loom (first industrial revolution; beginning with mechanical loom in 1784), through the introduction of assembly line work (second industrial revolution; beginning with assembly line in the slaughterhouses of Cincinnati in 1870) and the use of electronics and IT (third industrial revolution; beginning with the first programmable logic controllers in 1969), the fourth industrial revolution represents another fundamental process-related change in production. Figure 4.2 shows an overview of the various stages of the industrial revolution. Industry 4.0 is characterized by the networking of machines, production facilities, transport systems, and products. In particular, this enables the digital mapping and holistic control of industrial process chains, as a result of which conventional production structures and processes can be reorganized and organized differently (e.g., Neuburger, 2019; Obermeier, 2019). The primary potentials of Industry 4.0 include more flexible production through better coordination of individual production processes and steps, flexible factories through a modular structure of production lines, customer-centric solutions through better involvement of customers, optimized logistics through ideal delivery routes, or a resource-saving circular economy through a data-supported view of products over their entire life cycle (cf. Plattform Industrie 4.0). In the context of the concept of the boundaryless

77

4.4  Networked Production: Industry 4.0

End of 18th century

Beginning of 20th century

Start 70s

Today

2. Industrial Revolution

3. Industrial Revolution

4. Industrial Revolution

Introduction of mechanical production equipment using water and steam power

Introduction of mass production based on the division of labor with the aid of electrical energy

Use of electronics and IT for further automation of production

Realization of cyber-physical systems and the Internet of Things for networking production

First power loom 1784 Emergence of factory work

First assembly line in Cincinatti slaughterhouses in 1870

First programmable logic controller (PLC) Modicon 1969

Mass production with division of labor

Production control

Viewing focus

1. Industrial Revolution

Networking and flexibility

Change of the human activity focus in production

Fig. 4.2  Stages of the industrial revolution (adapted from Forschungsunion Wirtschaft und Wissenschaft, 2013, p. 10)

enterprise, Industry 4.0 solutions will certainly lead to an even stronger networking of companies and enable completely new types of cooperation (cf. Chap. 6). The essential prerequisites include the collection and use of the resulting data, especially industrial data, in the sense of Big Data solutions (see Sect. 4.3) and so-­ called cyber-physical systems (CPS) (Monostori et al., 2016). CPS are defined as transformative technologies that can control interconnected systems of physical components as well as computer-based capabilities (Baheti & Gill, 2011). The origin of CPS is widely believed by academics to be embedded systems (Park et al., 2012). They are defined as computer systems with some mechanical as well as electrical system components that perform and fulfil fixed specific functions. While embedded systems are characterized by a tight integration of physical and computer-­ based processes, CPS represent the interconnection of a multitude of such components and processes. The aim of this networking is to detect, monitor, as well as trigger physical elements in the real world (Monostori et al., 2016). This requires two main functional components that make up the CPS: • Advanced connectivity to ensure real-time data collection from objects in the physical world as well as feedback from cyberspace. • Intelligent data management, analytics, and the provision of the necessary computing power.

78

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

The possible applications are already diverse today and will influence, permeate, and change all areas of life even more profoundly in the future. Examples that we are already familiar with today, but whose development potential still seems immense, are autonomous cars, intelligent power grids, robotic surgery, implanted medical devices, and intelligent buildings (National Institute of Standards and Technology, 2013). Additive manufacturing, such as 3D printing in particular, is also changing established processes in production and plays an important role in the context of Industry 4.0. This is particularly true when, on the one hand, technology and potentials leave the field of prototype development and, on the other hand, new raw materials are available on the basis of which materials that have not yet been printable can be produced in the same or similar quality. The more materials that can be produced in comparable quality by 3D printing in the future, the more potential will open up for companies to redesign their production processes and produce individual components themselves again. For example, automotive companies are increasingly using 3D-printing technologies to additively produce individual components. As a result, the organization of the value creation process can change: processes previously carried out externally by cooperation partners are once again created in-­ house (cf. Neuburger, 2019).

4.5 Cloud Computing: Problem-Oriented Access to Services As mentioned elsewhere, cloud computing represents both a technical concept and a new business model to provide IT infrastructure, components, and applications (Benlian et al., 2018; Boes & Langes, 2019). From a technical point of view, cloud computing describes the concept of making IT infrastructures and applications available via a computing network (e.g., the Internet) without having to install them on local, physically available computers. Both the offer and the use of the respective programs, applications, and services take place exclusively via corresponding interfaces and protocols. In this respect, cloud computing can be understood as a digital platform that allows problem-oriented access to technical applications and services (cf. Fig. 4.3). In detail, a distinction can be made between: • Infrastructure as a service (IaaS). • Platform as a service (PaaS). • Software as a service (SaaS). The respective services (infrastructure, platform, or software) are offered globally, distributed, and service-oriented (cf. Benlian et al., 2018). A characteristic feature of this is the so-called on-demand character, which allows access to the services offered from virtually any application and enables demand-based billing (pay per use). This opens up completely new perspectives for both providers and users for the use of software solutions and applications in

4.5 Cloud Computing: Problem-Oriented Access to Services

79

Cloud-Computing

Smartphones

Server

Tablets

Software (SaaS)

Desktop PCs

Laptops Monitoring Communication Web content

Collaboration

Office tools

Platform (PaaS) Object storage Runtime Developer tools

Databases

Infrastructure (IaaS) Virtual storage

Virtual server

Networks

Fig. 4.3  Cloud computing (adapted from Gebel, 2019)

their value creation processes. A distinction can be made with regard to the offer of services and access to corresponding services (cf. Peters & Leimeister, 2019): • Private cloud: access only within one organization. • Shared cloud: access is available to a consortium of allied organizations. • Community cloud: access is limited to a specific community and its respective members. • Public cloud: access is open in principle. It stands to reason that cloud solutions support the opening of borders within companies as well as between companies. Internally, they permit new types of collaboration even across traditional functional boundaries and thus allow modular structures (see Chap. 5). Internally, they allow the integration of new or other partners into the company’s own value creation processes and thus facilitate new forms of cooperation (cf. Chap. 6). They also support the implementation of concepts such as Industry 4.0 or Big Data.

80

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

4.6 Blockchain Technology: Secure Transactions Blockchain technology is also based on networking. It has the potential to significantly change the corporate world, if it succeeds in handling industrial transactions and processes between intelligent machines and operating resources securely and without human intervention via a blockchain. In production, for example, it is possible on the basis of blockchain technologies for production equipment, transport systems, and products networked by IoT to exchange their respective states, negotiate specific interactions in the sense of optimal value creation, and store the resulting value-adding activities sustainably and transparently for all actors involved. Another typical use case is so-called smart contracts with or between production systems, whose compliance is ensured in both directions. Machines can bill their services directly to their user and store the revenue accordingly in a decentralized manner (cf. Fraunhofer-Gesellschaft, 2017; Neuburger, 2019). From a technical point of view, blockchain is a protocol that allows data to be exchanged directly between different contracting parties (human actors or nonhuman elements such as machines, services, etc.) within a network without intermediaries. In this process, network participants interact with encrypted identities, and each transaction is thereby stored in a nonmodifiable transaction chain and distributed to all network nodes (Deloitte, 2017). The blockchain thus represents a database that allows transactions between actors to be digitally mapped and immortalized. Once stored in a blockchain, data or transactions can no longer be changed. The principle of almost all activities on the blockchain is identical and consists of six elements (cf. Deloitte, 2017): • The starting point is a transaction with the aim of exchanging a describable good (e.g., data, contracts, or money). • Verification of this transaction and an immediate execution or inclusion in the log. • The structure assigns each verified block a code, called a hash, which contains a reference to the previous block. • Through validation, these blocks are first confirmed according to the “proof of work” concept before being attached to the blockchain. • In the process of blockchain mining, the variables are changed until the validation is successful and the network accepts the solution. • After successful validation, the block is finally added to the chain. • Integrated protection ensures that blocks already validated in the network cannot be modified. Bitcoins are a well-known example of blockchain technology. This is a virtual cryptocurrency based on blockchain technology that was first traded in 2008. With digital coins, both the origin and the other party to the transaction are unknown. The trust is purely based on the security of the currency given by the blockchain technology and its features. However, Bitcoins are not the only cryptocurrency based on blockchain technology.

4.7  Artificial Intelligence: New Interactions Between Man and Machine

81

Contracts are another application of blockchain technology. Here, the technology can ensure compliance with the terms and act as a “trust platform.” In this way, the rights and obligations of the contractual partners can be automatically checked. In addition, “smart contracts” can be accompanied when, for example, machine data is automated and written in real time in the blockchain. These contracts are gaining importance in the context of Industry 4.0 (see Sect. 4.4). As a technological concept that allows secure transactions, blockchain technology thus supports any form of cooperation between actors or interaction between actors and machines or even machines among themselves. In the context of the boundaryless enterprise, this means two things: on the one hand, blockchain technology facilitates and allows discussed and novel forms of cooperation and network organization (cf. Chap. 6). On the other hand, blockchain technology can lead to the function of intermediaries in digital platforms and (electronic) markets becoming obsolete and suppliers and consumers communicating directly with each other on the basis of “smart contracts.”

4.7 Artificial Intelligence: New Interactions Between Man and Machine The use of artificial intelligence (AI) has now become firmly established in many everyday applications. These changes can also be seen increasingly in the world of work and will determine the way employees work in a company in the future. In this context, artificial intelligence is described as “the predominant technology of the future era that will usher in a paradigm shift” (Meyer & Reese, 2018, p. 3). In the context of the future way of working, it is therefore important to clarify the extent to which humans and machines interact and coexist with each other (Haenlein & Kaplan, 2019) and the extent to which AI solutions affect the interaction of humans within companies and between companies. Ultimately, the question behind AI is how systems can solve tasks that were previously attributed to human intelligence. Typical examples are decision support in the diagnosis of diseases, the use of chatbots in customer service, the algorithm-­ supported selection of new employees, automated case processing in insurance companies, the use of robots in production processes, or even voice-controlled assistants in the living room or the navigation system in cars. In principle, a distinction is made between weak and strong AI.  Systems that focus on solving concrete application problems are referred to as weak AI. The problem is solved on the basis of algorithms that have been developed and optimized for the respective requirement. The systems developed in this way are able to optimize themselves. Typical examples are character or text recognition, speech recognition, automated translation, and expert systems in the sense of deriving recommendations for action on the basis of a knowledge database.

82

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

In contrast, the goal of so-called strong AI or superintelligence is to obtain the same intellectual abilities as humans or even to surpass them. Understood in this way, strong AI does not only act reactively but also on its own initiative, intelligently and flexibly, which possesses logical thinking, decision-making ability even in the face of uncertainty, as well as planning and learning abilities. While strong AI can still be classified as a dream of the future, weak AI technologies and systems are playing an increasingly relevant role in companies. Two other concepts are often discussed in close connection with AI: machine learning and robotics. The term “machine learning” summarizes the techniques that allow machines to learn relationships with the help of training data by systematically searching for patterns. In the process, more data inputs improve performance over time. One specific method of machine learning is deep learning, which is primarily based on the use of neural networks. In principle, three types of machine learning can be distinguished (cf. Jordan & Mitchell, 2015). • Supervised Learning The “programmer” trains the system by connecting a list of inputs (e.g., pictures of animals) with the corresponding outputs (e.g., names of animals). Feedback is continuously given during the training phase as to whether the output has been achieved. The prerequisite for this and the other forms of machine learning is that a very large amount of data about a particular behavior is available. • Unsupervised Learning Noncontrolled systems learn here in a self-determined way by “playing” with a given set of unlabeled data. The result is not fixed, but the goal is to discover possible patterns and classifications that go beyond what has previously been considered “standard.” The focus is thus on discovering new patterns and classifications. • Reinforcement Learning Here, the system learns independently through reward or punishment. To a certain extent, the program starts without prior knowledge. The only specification that the developers program is a reinforcement of the behavior that leads to a desired result. The goal is set by the programmer, but not the way the system can achieve the goal. This is done by learning in the context of the actions allowed. Probably one of the most famous examples is “AlphaGo Zero,” i.e., trying to find out if a machine can beat the reigning world champion of the game “Go.” The developers simply entered the rules and left it to the machine to learn for itself. Playing against itself, the machines use feedback (reward/punishment) to recognize patterns and find solutions on their own based on them. The core area of robotics is the development and control of robots that interact with the physical world on the basis of sensors, actuators, information systems, and elements of AI. In principle, a distinction can be made between hardware robots with hardware and software and pure software robots (bots). In addition to the classic industrial and service robots, the focus is increasingly on humanoid robots,

4.8  Conclusions for Management and Leadership

83

which also involve the production of limbs and skin, facial expressions and gestures, as well as natural language capabilities (cf., e.g., Bendel, 2018). Based on AI, machine learning and robotics, there are increasingly self-­ controlling systems and robots that can support individual value creation processes automatically or perform them autonomously. This applies to all functional areas of the company and affects supporting value creation processes such as financing, controlling, and personnel in the same way as primary value creation processes such as production and logistics. The decisive factor is that these systems are capable of learning and thus constantly evolving. As a result, they can take over more and more activities in terms of quality and quantity, which raises new questions for the organization of the division of labor between humans and automated systems/robots in and between companies. Which work steps are taken over by the system/robot, which work steps are taken over by the human being, and how are interaction and control of this interaction carried out? The question underlying the concept of the boundaryless enterprise concerning the coordination of service provision (cf. Fig. 1.2) thus gains an additional dimension: how will cooperation between humans and machines take place in the future and what implications will the use of self-controlling systems and robots have for the future division of labor in and between companies.

4.8 Conclusions for Management and Leadership The aim of this chapter is to show which overarching technological principles and technical developments influence the design of internal and inter-company corporate structures. At the same time, it should become clear how closely technical and organizational structural developments are linked and how strongly technical developments influence the design of coordination and organizational structures. In summary, it can be seen that overarching technological principles such as networking, (digital) platforms, virtuality, and mobility can simultaneously be understood as organizational concepts that need to be implemented on the basis of corresponding technologies. All of the technical concepts outlined have the potential to change existing structures and to implement modified or new forms of internal and inter-company collaboration. For example, the increasing relevance of data (Big Data) requires new types of cooperation across existing industry boundaries. Industry 4.0 and cloud computing allow greater networking within existing value creation processes but also beyond them. Blockchain has the potential to reorganize transactions within and between companies, and AI, especially in conjunction with machine learning and robotics, is changing cooperation between humans and machines with implications for the organization of internal and inter-company service provision. However, the introduction of new technologies should not be an end in itself. Rather, it should be examined in each case how the respective technologies can actually support the underlying business model as well as the questions of

84

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

appropriate coordination of service provision discussed here. Critical reflection on both the existing technologies and their respective application potentials can help (cf. Genennig, 2020). Irrespective of this, the explanations in this chapter form the basis for the following chapters, since the technological trends explained and the technologies outlined can be characterized as a significant influencing factor for the concepts of modularization, virtualization, and networks to be considered in each case.

References Baheti, R., & Gill, H. (2011). Cyber-physical systems. The Impact of Control Technology, 12, 161–166. BARC. (2013). Big data use cases. Getting real on data monetization. http://www.sas.com/de_de/ whitepapers/ba-­st-­barc-­bigdata-­use-­cases-­de-­2359583.html. Accessed on 05.04.2016. Barton, D., & Court, D. (2012). Making advanced analytics work for you. Harvard Business Review, 90(10), 78–83. Bendel, O. (2018). Robotik. In Gablers Wirtschaftslexikon. https://wirtschaftslexikon.gabler.de/ definition/robotik-­54198/version-­277250. Accessed on 12.01.2020. Benlian, A., Kettinger, W. J., Sunyaev, A., & Winkler, T. J. (2018). Special section: The transformative value of cloud computing: A decoupling, platformization, and recombination theoretical framework. Journal of Management Information Systems, 35(3), 719–739. Berchtold, Y. (2016). Business models and big data. Master thesis at the Munich School of Management. Institute of Electronic Commerce and Digital Markets, Ludwig Maximilian University of Munich. BITKOM. (2013). Management von Big-Data-Projekten. https://www.bitkom.org/ Publikationen/2013/Leitfaden/Management-­von-­Big-­Data-­Projekten/130618-­Management-­ von-­Big-­Data-­Projekten.pdf. Accessed on 12.12.2015. BMBF. (2014). The new high-tech strategy innovations for Germany. https://www.bmbf.de/ upload_filestore/pub_hts/HTS_Broschure_Web.pdf. Accessed on 12.01.2020. Boes, A., & Langes, B. (2019). Die Cloud und der digitale Umbruch in Wirtschaft und Arbeit. Strategien, Best Practices und Gestaltungsimpulse. Haufe Group. Boyd, D., & Crawford, K. (2012). Critical questions for big data: Provocations for a cultural, technological, and scholarly phenomenon. Information, Communication & Society, 15(5), 662–679. Chen, M., Mao, S., & Liu, Y. (2014). Big data: A survey. Mobile Networks and Applications, 19(2), 171–209. Deloitte. (2017). Die Blockchain (R)evolution – Die Schweizer Perspektive. White Paper. https:// www2.deloitte.com/content/dam/Deloitte/ch/Documents/innovation/ch-­d e-­i nnovation-­ blockchain-­revolution.pdf. Accessed on 28.012020. Experton Group. (2014). Big data vendor benchmark 2014. Hardware-Anbieter, Software-Anbieter und Dienstleister im Vergleich. http://www.experton-­group.de/index.php?eID=dumpFile&t=f &f=743&token=1e54e8e08afe8a2f86f73b5122f49af6d3e46e33. Accessed on 28.12.2015. Forschungsunion Wirtschaft und Wissenschaft. (2013). Deutschlands Zukunft als Produktionsstandort sichern – Umsetzungsempfehlungen für das Zukunftsprojekt Industrie 4.0. Abschlussbericht des Arbeitskreises Industrie 4.0. Forschungsunion. Fraunhofer-Gesellschaft. (2017). Blockchain und Smart Contracts  – Technologien, Forschungsfragen und Anwendungen. https://www.sit.fraunhofer.de/fileadmin/dokumente/ studien_und_technical_reports/Fraunhofer-­Positionspapier_Blockchain-­und-­Smart-­Contracts. pdf?_=1516641660. Accessed on 28.01.2020.

References

85

Gebel, J. (2019). In der Cloud alle Daten sichern. https://www.netzsieger.de/k/cloud-­speicher. Accessed on 13.01.2020. Genennig, S. M. (2020). Realizing digitization-enabled innovation. Dissertation. Springer Gabler. Haenlein, M., & Kaplan, A. (2019). A brief history of artificial intelligence: On the past, present, and future of artificial intelligence. California Management Review, 61(4), 5–14. Jordan, M. I., & Mitchell, T. M. (2015). Machine learning: Trends, perspectives, and prospects. Science, 349(6245), 255–260. Kapdoskar, R., Gaonkar, S., Shelar, N., Surve, A., & Gavhane, S. (2015). Big data analytics. International Journal of Advanced Research in Computer and Communication Engineering, 4(10), 518–520. Klein, D., Tran-Gia, P., & Hartmann, M. (2013). Big data. Informatik Spektrum, 36(3), 319–323. Manyika, J., Chui, M., Brown, B., Bughin, J., Dobbs, R., Roxburgh, C., & Hung Byerys, A. (2011). Big data: The next frontier for innovation, competition, and productivity. https://www.mckinsey.com/business-­functions/mckinsey-­digital/our-­insights/big-­data-­the-­next-­frontier-­for-­ innovation. Accessed on 28.01.2020. McAfee, A., & Brynjolfsson. (2017). Machine, platform, crowd: Harnessing our digital future. Norton & Company. Meyer, W.  M., & Reese, H. (2018). Künstliche Intelligenz als Innovationsbeschleuniger im Unternehmen. Zuversicht und Vertrauen in Künstliche Intelligenz PwC.  Whitepaper. https:// www.pwc.de/de/digitale-­transformation/ki-­als-­innovationsbeschleuniger-­in-­unternehmen-­ whitepaper.pdf. Accessed on 28.01.2020. Miller, H. G., & Mork, P. (2013). From data to decisions: A value chain for big data. IT Professional, 15(1), 57–59. Monostori, L., Kádár, B., Bauernhansl, T., Kondoh, S., Kumara, S., Reinhart, G., Sauer, O., Schuh, G., Sihn, W., & Ueda, K. (2016). Cyber-physical systems in manufacturing. CIRP Annals, 65(2), 621–641. Morabito, V. (2014). Trends and challenges in digital business innovation. Springer. National Institute of Standards and Technology. (2013). Foundations for innovation: Strategic R&D opportunities for 21st century cyber-physical systems: Connecting computer and information systems with the physical world. Report of the Steering Committee for Foundations in Innovation for cyber-physical systems, NIST, US, 28. Neuburger, R. (2019). Der Wandel der Arbeitswelt in einer Industrie 4.0. In R. Obermaier (Hrsg.), Handbuch Industrie 4.0 und Digitale Transformation (S. 589–608). Gabler. Obermeier, R. (2019). Industrie 4.0 als unternehmerische Gestaltungsaufgabe: Strategische und operative Handlungsfelder für Industriebetriebe-In R.  Obermaier (Hrsg.), Handbuch Industrie 4.0 und Digitale Transformation – Betriebswirtschaftliche, technische und rechtliche Herausforderungen (S. 3–46). Springer Gabler. Park, K.-J., Zheng, R., & Liu, X. (2012). Cyber-physical systems: Milestones and research challenges. Computer Communications, 36(1), 1–7. Peters, C., & Leimeister, J.  M. (2019). Cloud, Hybrid Intelligence und digitale Arbeit für das Engineering von soziotechnischen Systemen. In A. Boes, B. Langes, E. Vogl & J. Witte (Hrsg.), Die Cloud und der digitale Umbruch in Wirtschaft und Arbeit (S. 91–99). Haufe. Picot, A., & Hopf, S. (2014). Geschäftsmodelle mit Big Data im Dienstleistungsbereich. In A. Boes (Hrsg.), Dienstleistung in der Digitalen Gesellschaft – Beiträge zur Dienstleistungstagung des BMBF im Wissenschafsjahr 2014 (S. 259–272). Campus. Picot, A., Berchtold, Y., & Neuburger, R. (2018). Big Data aus ökonomischer Sicht: Potenziale und Handlungsbedarf. In B. Kolany-Raiser, R. Heil, C. Orwat & T. Hoeren (Hrsg.), Big Data und Gesellschaft – Eine multidisziplinäre Annäherung (S. 309–416). Springer VS. Picot, A., Neuburger, R., Berchtold, Y., & Defort, A. (2020). Big Data und Mittelstand – ABIDA-­ Ergebnisse im Überblick. Springer Gabler. Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. The Free Press A Division of Simon & Schuster Inc.

86

4  Technology in the Boundaryless Enterprise: Digitalization as Driver…

Russom, P. (2011). Big data analytics. TDWI best practices report, fourth quarter. https://tdwi.org/ research/2011/09/~/media/TDWI/TDWI/Research/BPR/2011/TDWI_BPReport_Q411_Big_ Data_Analytics_Web/TDWI_BPReport_Q411_Big%20Data_ExecSummary.ashx. Accessed on 09.02.2016. Satzger, G., Schüritz, R., Hunke, F., Seebacher, S., Möslein, K. M., Jonas, J. M., et al. (2018). Geschäftsmodelle 4.0 – Baukasten zur Entwicklung datenbasierter Geschäftsmodelle. Service Research Institute. Schroeck, M., Shockley, R., Smart, J., Romero-Morales, D., & Tufano, P. (2012). Analytics: The real-world use of big data. IBM Global Business Services, 12, 1–20. Skilton, M., & Hovsepian, F. (2017). The 4th industrial revolution: Responding to the impact of artificial intelligence on business. Springer.

Chapter 5

Dissolution of Hierarchies: Modularization

Abstract  As mentioned in Chap. 1, modular units or agile teams are increasingly replacing hierarchical structures. Supported by digital, networked technologies, they are on the one hand easier to implement and, on the other hand, correspond to the desire and the tendency toward more delegation and decentralization.

5.1 Basic Idea and Characteristics of Modular Forms of Organization As mentioned in Chap. 1, modular units or agile teams are increasingly replacing hierarchical structures. Supported by digital, networked technologies, they are on the one hand easier to implement, and, on the other hand, correspond to the desire and also the tendency toward more delegation and decentralization. This is because competitive conditions have changed, particularly in the course of technological developments. Companies need to be close to their customers and must be able to react quickly and flexibly to increased competition. In particular, large companies with strongly hierarchical and functional organizational structures are often not (or no longer) able to do this. Therefore, the last decades have been characterized by restructuring corporate organizations. In most industries, especially those with high innovation dynamics, hierarchies have mainly been dissolved or flattened (cf., e.g., Bennis, 1993; Davidow & Malone, 1993; Picot & Reichwald, 1994). As outlined in Chap. 1, hierarchical structures are increasingly developing in the direction of modular organizations, corporate networks, or virtual organizations. This is accompanied by changes in working methods, responsibilities, and, in many cases, a new range of tasks for management and employees in the company. In the following, the characteristics of modular organizations will be clarified. Modularization is an organizational principle for reducing complexity and

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_5

87

88

5  Dissolution of Hierarchies: Modularization

expanding scope for action in organizational design. Depending on the aspect under consideration, products and services, value creation processes, or companies can be the subject of modularization. The basic principle is always similar: products (e.g., a large complex machine) or services (e.g., the services of an airport) can be broken down into parts that can be manufactured and provided relatively autonomously. This facilitates planning, management, and control in the value creation process. Furthermore, the value creation process itself can be broken down into relatively autonomous subprocesses, which reduces the susceptibility to faults and increases the controllability of the value creation process by the employees. Finally, the organization as a whole forms an object of modularization in both structure and process. If we look at a company’s organizational structure, the change from centralized hierarchical to modular structures is usually associated with the reduction of hierarchical levels and decentralization of decision-making rights. The decisive factor is that autonomy and room for maneuver are transferred to the employees in modular organizational units. With the transfer of rights of disposal (cf. Chap. 2) to the modular organizational units, customer proximity can be established in this way, and fast and flexible action can be transferred to the decision-makers. In order to meet this increased flexibility of economic activities and the strategic and operational requirements that can change daily, companies must consider what opportunities and risks lie in a possible adaptation or realignment of their company in the sense of modularization. These considerations on modularization already show the diversity of modularization approaches for organizational design. Modularization can take place in various ways, depending on which level of consideration is chosen. Modularization is an intra-organizational form of reorganization (cf. Schwarzer & Krcmar, 1994). This distinguishes the modular form of organization from network organizations (Chap. 6) and virtual organizations (Chap. 7), which require relatively permanent or case-related coordination mechanisms between different (legally independent) organizations (inter-organizational perspective). It is assumed that the value creation processes in modules are of a high degree of specificity and are therefore not handled on a case-by-case basis in the market (cf. the fundamental considerations in Chap. 2). If, based on the fundamental considerations in Chap. 2, the decision has been made in favor of internal processing, modularization concepts represent a more efficient solution within the company than classic hierarchical models. This division of the organization into modules aims to reduce the service production’s complexity and increase the proximity to the market. The modularized company should thus be able to react faster and more flexible to market changes, customer wishes, and competitors’ actions. The key features of the modular organization include the following. Formation of Small Units The formation of small organizational units is an essential core idea of modularization (Weber, 1995). The objective is to adapt the organizational structure to the

5.1  Basic Idea and Characteristics of Modular Forms of Organization

89

problem-solving capacity of  the individual or manageable groups of people. In particular, this is intended to avoid complexity-related errors, costs, and time losses. Since the limits of controllability by humans vary greatly depending on the task, there is a clear variation in determining the meaningful size of “modular units.” A central basic requirement for module formation is derived from this: the scope and complexity of the tasks assigned to a module must correspond to the capabilities of the task bearer (employee or group) in terms of dispositive and executive skills. A conflict that is difficult to resolve can arise here if a different degree of task integration results from a process perspective than from the aspect of controllability and the capacity limits of  the employees. The new digital technologies can play a decisive role as “enablers” in this context by extending the capacity limits of employees through suitable tools and methods. In addition, efforts are increasingly being made to keep technical and process-­ related interdependencies to a minimum as early as the design stage of products and services. By breaking down services into largely independent functional subsystems with defined interfaces, individual task areas can be specifically isolated from one another, which facilitates the formation of modules in organizational design. Process Orientation Process orientation describes the alignment of organizational units with processes (see Fig.  5.1). Processes, such as innovation processes or order processing processes, go beyond departmental boundaries (e.g., beyond the departmental boundaries of the development, production, or sales department). However, processes also cross company boundaries (see Sect. 5.3). Core processes are those processes that serve to add value to the company and thus to meet customer requirements. Therefore, these are the company’s core competencies (see Sect. 2.2.3). The primary goal of process-oriented approaches is to reduce organizational interfaces in the performance process (Bretzke, 2015; Schmelzer & Sesselmann, Fig. 5.1 Process-oriented view of value creation

BU

D

Development

M

Manufacturing

S

Sales

e.g. Innovation processes e.g. Order processing processes

Processes go beyond departmental boundaries Processes go beyond company boundaries Core processes as critical processes from customer perspective

90

5  Dissolution of Hierarchies: Modularization

2008). Interface problems, such as communication barriers, conflicting goals, or idle times at the boundaries between departments, have been identified in recent years as one of the most important organizational causes of poor competitiveness in companies (cf., e.g., Gaiser, 1993). They cause, among other things, long lead times in development projects and the processing of customer orders (cf. Reichwald & Sachenbacher, 1996), high change costs due to late detection of quality defects, or low flexibility in responding to new market demands (Sanchez & Mahoney, 1996; Baldwin & Clark, 1998). Customer Orientation The consistent orientation of the modules to the target objects of the operational activities – internal and external products or services – is inextricably linked to an emphasis on customer orientation. This results from the central role of the customer in defining the requirements for the service and thus for the process. The described extension of the object-oriented perspective to internal products and processes results in an expansion of the concept of the customer to include internal purchasers of intermediate services. The emphasis on customer orientation in market-­oriented as well as internal exchange processes has an interesting side effect: the reorganization of company areas that are far from the market, such as research and development, finance or personnel, can be carried out in modularization according to the analogous customer-oriented basic principles for restructuring the areas of the value chain that are close to the market. The prerequisite, however, is a precise definition of the relevant internal customer and his specific requirements. A special form of customer orientation through customer integration can be found in the concept of interactive value creation (see Sect. 5.3). Quality Orientation The autonomy associated with the modular design of organizational units requires a strong quality orientation at all levels of the performance process, i.e., from the supplier to the customer. For a successful implementation of modularization, comprehensive quality assurance and control are therefore prerequisites and require a rethinking in the direction of a holistic understanding of quality as well as the introduction of a strategic-oriented quality management system. Integrated Nature of the Tasks Directly connected with process and customer orientation is the demand for extensive integration or completeness of the tasks combined in a module. This requirement results directly from the approach of process orientation to integrate as far as possible all related activities for the creation of a (intermediate) product in one organizational unit. The minimum size of a module thus results from the process steps required for a clearly definable intermediate product. Decentralized Decision-Making Authority and Responsibility for Results Another common feature of modularization concepts is the shifting of decision-­ making authority and responsibility for results to the modules. In this context, the holistic processing of a module also includes the ability of employees to make decisions as well as their own responsibility for the results of their actions (Picot &

5.2  Forms of Implementation of Modularization

91

Neuburger, 2004). The concrete extent of this reintegration of dispositive and administrative tasks depends on the level of consideration and the task. In principle, however, the principle of subsidiarity (cf. Picot, 1991) is followed as a guideline for the decentralization of management functions: decision-making authority and responsibility for results should be located as low as possible in the hierarchy (i.e., as close as possible to the actual value creation process). For example, decision-­ making competence close to the process means a significantly higher flexibility of the company through many decentralized and customer-oriented control loops (cf. Beuermann, 1992) and through eliminating long and error-prone decision-making paths. At the same time, the motivation of the employees is to be increased through holistic task fulfilment and the incentive to act in line with the market is to be strengthened. This also changes the manager’s role from the classic supervisor to the “coach” (cf. Chap. 8). As a result of flexibilization, strategic competence management becomes indispensable and is one of the central tasks of corporate management. In this context, skills and abilities such as learning, self-organization, and the use and communication of existing in-house competences across modules are increasingly coming into focus. A central challenge for management is to make relevant competencies for work in a modular organization transparent, to communicate them, and to ensure the transfer, use, and development of competencies in harmony with employee and company interests (cf. Chap. 8). In summary, it can be stated that especially in boundaryless organizations, the internal handling of sub-processes with underlying high specificity and strategic importance is still quite relevant. At the same time, classic hierarchical structuring approaches are reaching their limits: changing market requirements, characterized by rising cost and quality pressures as well as increasing customer demands for individualized products, require flexible and adaptable production systems (ElMaraghy, 2006), making modularization more important. A specific form of modularization in which the concept is realized technically and organizationally are the so-called cyber-physical systems, which have already been discussed in Chap. 4.

5.2 Forms of Implementation of Modularization 5.2.1 The Spectrum of Modularization Concepts Reorganization concepts that correspond to the basic principles of modularization described above exist for all levels of corporate organization: the macrolevel (overall company), the microlevel (workplace design and work organization), and the intermediate mesolevels (departments or processes). Although similar in their basic principles, the modularization approaches at the different levels are characterized by different orientations. At the company level, the formation of modules is oriented toward competition-relevant goals such as market proximity or technology leadership, at the process level toward coherent task chains, and at the work organization

92

5  Dissolution of Hierarchies: Modularization

level primarily toward employees and the digital technologies available to support them. The modularization concepts within a level often have different focal points, some of which compete with each other. On the other hand, there is also potential for conflict between modularization efforts at different levels. Furthermore, it must be taken into account that modularization forms, once selected, can lose their advantage through a change in the framework conditions and, for example, a return to a stronger functional orientation becomes necessary. In the following, an attempt is made to provide an overview of the modularization approaches currently under discussion and the limits of modularization that are becoming apparent.

5.2.2 Modularization Concepts at the Organizational Level 5.2.2.1 Profit Center Structures with Centralized and Decentralized Modules Cross-company modularization treats the company, its suppliers, stakeholders, etc. as modules of the overall system, which operates in a customer-oriented manner (Picot & Neuburger, 2004). In contrast, at the level of the company, the respective divisions of a divisional organization are understood as modules. The prerequisite is that they are largely independent, i.e., structured as profit or investment centers. If individual modules have certain attributes, they are also referred to as fractals. The division into numerous, legally independent profit centers is a characteristic of many companies with modularized structures (cf. Frese, 1995). These are then grouped together at a higher modularization or segmentation level according to different criteria, such as business areas and products, core competences, or regions and markets (Wittlage, 1996). When considering the profit center organization, the focus is again on the classic tension between centralization and decentralization of task fulfilment, which must be resolved appropriately. Complete centralization may fail because the central instance is overburdened. Similarly, a decentralized solution cannot work if central framework conditions or a sufficient infrastructure is lacking. Thus, even decentralized corporate organizations require to a certain degree a uniform design of cross-­ sectional tasks such as strategy development, accounting, controlling, finance, human resources, technology development, etc. (cf. Koller, 1997; Scholz, 1997). The strategic management holding company, also referred to as a management holding company, primarily strives for synergy strategies such as core competencies, functional synergies, etc., whereas an operational management holding company also influences the market and product strategies of the associated subsidiaries (Borchers, 2000). The management holding company evolves from a financial holding company, which is considered to be the most flexible and least integrated form of holding company with a focus on financially oriented strategies. The management holding company  is a decentralized form of business unit organization. It stands for a group of companies in which the actual business

5.2  Forms of Implementation of Modularization

93

activity is the responsibility of several entrepreneurially capable and legally independent sub-companies as profit centers. The parent company, which manages the group and often comprises only a small proportion of the total number of employees, has as its overarching task the long-term coordination of its subsidiaries, especially with regard to global strategy, the allocation of financial resources in the sense of an internal capital market, human resources management, accounting, and the coordination of other cross-sectional tasks. The holding company must thus ensure financial, technological, and management synergies. Operational synergies (e.g., the joint use of distribution systems) are to be realized by the business units. The higher operational autonomy of the business units increases employee motivation and makes the business units more agile. A further advantage lies in the structural and strategic flexibility, for example, in the connection or separation of business units or in the participation of external partners in certain business units. 5.2.2.2 Modularization by Region and Local Individual Markets The increasing necessity to act as a local market participant in international markets leads to another form of module formation in many companies: the formation of region-specific organizational units (cf., e.g., Koerber, 1993). The background to this is, on the one hand, companies’ efforts to place specific organizational units as close as possible to the individual markets. On the other hand, this regional differentiation of companies is a response to the sometimes clear preference for domestic suppliers and employers in certain local markets. As with modularization by business unit and product, care must be taken to coordinate these market activities in order to exploit synergy effects. Here, too, the establishment of higher-level modules for regional areas at the top level of the corporate hierarchy can be a useful measure. 5.2.2.3 Potential for Conflict at the Level of the Company The formation of separate modular organizational units for the various business areas, core competencies, and regional markets of a company cannot naturally take place without overlaps. Modularly organized companies are therefore often structured at their top level in (sometimes multiple) matrix form. Conflicts of interest are practically unavoidable in such an organizational structure, even if the disciplinary assignment of employees usually only takes place with respect to one axis of the matrix. However, these conflicts are accepted by the companies. The task is to deal with and resolve them. Thus, the managers of the individual profit centers play a decisive role. As “servants of several masters,” so to speak, they have to strike a balance between the different interests within the matrix structure (cf. Koerber, 1993). The demands on managers at these interface positions in modularly structured companies are correspondingly high.

94

5  Dissolution of Hierarchies: Modularization

Another important area of conflict at the level of the overall company concerns the division of labor between centralized and decentralized modules. Here it is important, among other things, to identify and exploit the right specialization advantages. These specialization advantages can lie on the one hand in the area of process and customer specificity and, on the other hand, in the specificity of the overarching corporate infrastructures and the cross-sectional functions. Tasks with high process and customer specificity, i.e., where knowledge of specific customer-oriented processes is crucial for problem-solving (cf. Picot, 1999; Picot et al., 2015), should be solved in a decentralized manner in the process-oriented modules or specialist departments that are close to the market. In contrast, tasks with a high degree of functional and infrastructure specificity, in the sense of a high importance of overarching methodological and technical aspects for problem solving, should be handled in an overarching manner (centralized). It is not uncommon for activities to be highly classified in both directions, so that hybrid forms of coordination must be found that both correspond to the infrastructure and functional specialization advantages and meet the process requirements. If the cause of conflicts is not a lack of coordination between areas of competence, but rather a lack of communication, digital technologies can also act as an “enabler” for flexible organizational solutions here. For example, customer-­ oriented processes can increasingly be fed from function-specific information pools. Traditional organizational solutions such as matrix structure, working groups, project management, or even the informal exchange of information can be efficiently implemented with the help of digital technologies. Other supporting elements, such as the competence center, take the place of classic functional areas and stand by the decentralized organizational units with regard to specialist topics such as advisors and coordinators of all corporate activities in this specialized area (Koller, 1997). The result is a flexible combination of infrastructure and function-oriented modules (“centralization”) with process and customer-oriented modules (“decentralization”).

5.2.3 Modularization Concepts at the Level of Process Chains 5.2.3.1 Institutionalization of Business Processes In connection with task expansion and object orientation, cross-functional and cross-departmental process orientation is becoming increasingly important. With a continuous process and process chain orientation, a considerable reduction in information transfer and waiting times and, thus, in the overall processing times of machining operations can be achieved. Concepts for process-oriented restructuring of companies have been discussed for some time (cf. Gaitanides, 1983). The ideal goal is the complete replacement of the hitherto usual functional organizational structure by process-oriented organizational units and their responsible persons (the so-called process owner). Typical examples of such business processes are order

5.2  Forms of Implementation of Modularization

95

processing, purchasing processing, or product development (cf. Fromm, 1992). In particular, approaches have been developed for the area of manufacturing that aim at the process-oriented formation of small organizational units (Wildemann, 1994). The concept of the so-called manufacturing segments is opposed to the concept of the product island in terms of its basic structure and characteristics (Wagner & Schumann, 1991). 5.2.3.2 Potential for Conflict at the Level of Processes When setting up modular organizational units at the level of processes, conflicts can arise in several respects. For example, the scale of the tasks involved in a process chain may make it impossible for small organizational units to manage them, even if the possibilities offered by digital technologies are exploited. Hierarchical intermediate structures are then usually unavoidable for such process chains (Picot et al. 2015). Conflicts can also occur at the interfaces between modular units, such as between the sales and the manufacturing segment. Here, care must be taken to ensure that divergences in goals between the cooperating modules are avoided as far as possible (Weißner et al., 1997). Similarly, conflicts of interest can arise between similar modules, e.g., between manufacturing segments for related product lines, when indivisible resources, e.g., expensive specialized machinery, have to be shared. This shows that the tension between centralized and decentralized distribution of resources also represents a significant problem area at the process level, for which suitable solutions can only be found on a case-by-case basis. General conflict potentials at the process level can arise in particular from the fact that the reorganization of corporate processes is planned and enforced “top-­ down” by the company management and its consultants. While such an approach can ensure the speedy implementation of reorganization projects, it can also cause considerable resistance among the employees  affected. Such acceptance problems can be mitigated or overcome by incorporating participatory elements into the planning and implementation of reorganization measures (cf. Picot & Franck, 1995).

5.2.4 Modularization Concepts at the Level of Work Organization 5.2.4.1 Semi-autonomous Groups The typical organizational form for the implementation of the cooperation model at the level of work organization is the semi-autonomous group. Through the most extensive reintegration of dispositive tasks, groups of eight to ten broadly qualified persons can carry out the entire value creation process for manageable task areas. Ideally, this goes from material procurement to the final assembly of a specific

96

5  Dissolution of Hierarchies: Modularization

customer order (cf. Martin, 1990; Frieling, 1992). People are at the center of the trend toward the increased use of semi-autonomous groups (cf. Olfert, 2015). The organizational model of the autonomous group was already propagated in the 1970s as the working model most in line with human needs. It possesses the essential prerequisites to develop the creativity and performance potential of people to a high degree, to promote their motivation and generate economic benefits if it is sensibly integrated into the value creation process. The findings of the work structuring debate prove that people are given a better opportunity for self-development through meaningful work content, a manageable work environment, rapid feedback on work results and sufficient qualifications for a task, autonomy of action, and responsibility. At the same time, the willingness to perform and the appreciation by others increase. These aspects must be taken into account and implemented, particularly with regard to the increasing digitalization of work processes in the context of modularization in Industry 4.0. 5.2.4.2 Teams A team is a group of individuals who pursue one or more common goals and are interdependent (Hackman, 2002). The team goals are aligned with an overarching task, e.g., the successful completion of a project. Depending on the task, the roles, hierarchy structure, and composition of team members are determined (Becker, 2016). Team members share both responsibility and rewards for completing tasks and view each other as members of that team. The social interaction as well as the elaboration of shared norms, i.e., the description and regulation of the expected behavior, must be such that it can be used to complete the task. After completion of the task, the team is often disbanded, i.e., the temporal stability of the team is aligned with the task (Becker, 2016). Teams play an increasingly important role and can be observed in different constellations (see Chap. 8). If the entire organization is organized according to project teams, a project organization emerges. Each project team can be understood as a module. 5.2.4.3 Multiteaming In the context of modularization, the approach of “multiteaming” is becoming increasingly important. This means that a person is deployed in more than one project team at the same time (Rapp & Mathieu, 2018). Mortensen et al. (2007) assume that a single employee is nowadays deployed in an average of three to four teams at the same time. In addition to globalization and the corresponding pressure on companies to keep costs as low as possible, another key reason for the increase in the importance of multiteaming is the resource of the specialist knowledge of individual employees. In order to work innovatively in the context of modularization and develop creative approaches to solutions, including together with the customer, it is necessary to combine the resource of knowledge, i.e., the in-depth knowledge of

5.3  Modularization and Interactive Value Creation

97

experts from different fields, which can make it necessary for one employee to work on several projects at the same time (e.g., Mortensen & Gardner, 2017). 5.2.4.4 Potential for Conflict at the Level of Work Organization As noted at the beginning of this chapter, the modularization approaches at the immediate level of work organization are oriented to the resources available for accomplishing tasks, in particular to employee potentials as well as to the new possibilities for supporting them through digital technologies. Accordingly, the most important potential for conflict at this level is to be expected in relation to the acceptance of the new forms of organization and the new digital technologies. Examples of possible causes of conflict at this level include: • Insufficient breadth of specialist qualifications to cope with the extended range of tasks (especially for the use of the necessary digital technologies). • Poor social skills for self-organization and conflict resolution in the group. • Intra-group tensions due to differences in performance or willingness to perform (especially in the case of group-oriented performance evaluation). At the level of work organization, modularization can ultimately also fail due to personnel barriers to change, such as employees holding on to old habits and thought structures. Problems resulting from this can be overcome if management discloses the reasons, goals, and consequences of the organizational changes at an early stage before the reorganization begins and integrates qualification concepts into the reorganization project which prepares employees for the more complex and demanding tasks (cf. Nippa, 1995).

5.3 Modularization and Interactive Value Creation 5.3.1 Involving the Customer in the Value Creation Process Modularization and market orientation create customer proximity. For the interface to the customer, the Internet today offers convenient possibilities for including customers and other market participants in the value creation process of products and services. Modular structures with a high degree of decision-making autonomy therefore offer a wide range of opportunities for customer integration. This is referred to as “interactive value creation” (Reichwald & Piller, 2009).1 Interactive value creation describes the allocation of a service, which was previously provided by internal employees of a company, to one or more customers or

1  The contents of Sects. 5.3.1 and 5.3.2 were taken from the book Interactive Value Creation (Reichwald & Piller, 2009).

98

5  Dissolution of Hierarchies: Modularization

other market participants through a call for participation. The service is created collaboratively between several actors on both sides of the market. The service itself can refer to an innovation (creation of new knowledge) but also to operational services (e.g., participation in the design or configuration of a product). Between the extremes of a completely manufacturer-dominated and a completely external (customer-dominated) value creation, there are numerous variants of interactive cooperation between manufacturer and customer in the different phases of the value creation process. The point of reference for this cooperation can be both operational activities and innovative activities in the area of product and process development. On the Internet, numerous manufacturers offer their customers convenient platforms with easy-to-use tools (e.g., configurators) and methods to facilitate customer involvement in the integration and interaction process. In this way, customers can help design their own individual items of clothing, bicycle, or sneaker and contribute their own individual tastes. Today, this has also gained great importance in the B2B sector, where the buyer of a machine tool, for example, can introduce his special requirements into the manufacturing process via configurators. On the other hand, manufacturers use interactive value creation as a competitive strategy when it comes to involving the customer very early in the planning and development of a system. The early insight into the customer’s value creation process creates knowledge for bundling products and services into so-called solution bundles for the customer’s value creation process (hybrid value creation).

5.3.2 Product Individualization (Mass Customization) and Open Innovation According to the value creation phases in which external actors are integrated (location and degree of integration), two basic forms of interactive value creation can be distinguished: product individualization (mass customization) and open innovation (cf. Fig. 5.2). Open innovation refers to those activities between manufacturing companies and external partners (customers, suppliers, other external partners) that relate to an innovation process and are aimed at developing new products or services for the market. Open innovation provides new methods and approaches to gain better access to need and solution information and often increases the efficiency of innovation processes. The central idea behind the open innovation approach is that, on the one hand, customer knowledge or the knowledge of other market participants is incorporated into the innovation process at an early stage through the active integration of customers and users in all phases of the innovation process. On the other hand, the early involvement of potential buyers is intended to reduce the market risk for the failure of innovations, e.g., the introduction of new products.

5.3  Modularization and Interactive Value Creation

99

Product individualization (mass customization), on the other hand, is the cooperation between companies and customers that relates to value creation activities in the operational production process (e.g., co-designing my T-shirt or piece of clothing on an Internet platform). The involvement of the customer in the product creation and the incorporation of individual tastes (product individualization) creates a high degree of willingness to buy and customer loyalty. The manufacturer’s goal is to gain access to needs information through customer integration, which is difficult to obtain through classic market research or trend scouting measures. Mass customization is therefore particularly widespread in e-commerce. Figure 5.2 illustrates the solution space for the two variants of interactive value creation. The basis of interactive value creation is a voluntary interaction process between actors of the supplier company and external actors as value creation partners. The interaction process is both a joint problem-solving process and a social exchange process. In this process, the actions of the interaction partners are linked to the mutual exchange of knowledge. This presupposes that the interaction process must generate benefits for all value creation partners involved and must not cause high costs. The phases of the value creation process shown in Fig. 5.2 also describe the boundaries of the solution space. Phases and degree of integration of the external partner show the difference. In product individualization, external partners face a limited solution space that they can individualize with respect to a specific product. Open innovation, on the other hand, refers to an open solution space that can be filled or even expanded together with external partners.

Supplier company as shaper of value creation

External actors as value creation partners

Open Innovation

Idea generation Concept development Prototyp

Degree of integration

Fig. 5.2  The interactive value creation model. (Piller & Reichwald, 2009)

Product Individualization

Market launch

Interaction field

Manufacturing Assembly Sales After Sales Value creation phase

Limitation of the solution space

Product/market test

Design space

100

5  Dissolution of Hierarchies: Modularization

5.4 Conclusions for Management and Leadership The modularization of organizations is closely linked to the process thinking that is receiving increasing attention in organizational theory and practice. At the center of all modularization concepts is the holistic, market-oriented service provision process. This must first be subdivided into interrelated sub-processes, for which a decision must be made on the basis of suitable efficiency criteria (e.g., the level of transaction costs) as to whether they should basically be carried out internally within the company, should be handled in cooperation with selected external partners, or should be purchased externally from the market. For highly specific business processes that are to be carried out in-house, suitable modularization concepts must then be found. The guiding principle here is to create small, manageable, and largely self-­ controlling organizational units (modules) in order to enable holistic, customer-­ oriented processes. This makes it easier to meet the new competitive requirements described at the beginning (cf. Chap. 1): • Due to the emphatic orientation of the company organization toward customer-­ oriented processes in the course of modularization and the increased delegation of decision-making powers to these customer-oriented modules, market orientation moves to the center of organizational design. • The operational flexibility of the company, e.g., with regard to new customer requirements, is significantly increased by avoiding interfaces, by short communication paths in the modules and by flat hierarchies. • At the same time, the modular corporate structure also offers a high structural adaptability to dynamic market conditions due to the possibility of a relatively simple assembly or disassembly of individual modules. • Finally, the high level of innovation required today throughout the company is promoted by the market proximity of the modules, the motivation-enhancing holistic task structure, and direct and informal communication opportunities. Modularization as an organizational approach can be applied at all company levels. • At the level of the overall organization (macrolevel), modules can be set up with responsibility for entire business areas or regional markets, core competencies, or strategic planning and coordination of the overall company. • At the level of business processes (mesolevel), meaningful process delimitations and thus modules can range from simple manufacturing segments to complete company segments (e.g., with overall responsibility for a product). • At the level of work organization (microlevel), the same basic principles of modularization lead to the formation of semi-autonomous groups and teams and in some cases to work in multiteams. Digital technologies play a central role in modularization. In many places, they are rightly referred to as the actual “enablers” of process-oriented reorganization,

References

101

since they break down the previous limits of the controllability of interrelated processes by humans and, thus, open the way to today’s modularization concepts. As a rule, it is only through the use of digital technologies that the combination of the advantages of small organizational units or teams (flat hierarchy, self-organization, stronger motivation, social control, etc.) with the advantages of integrating interrelated processes becomes possible. The decision to modularize brings numerous positive effects, the success of which can be measured based on four success factors: operational success, market success, strategic flexibility, and financial success (Eitelwein et  al., 2012). Companies that exhibit a high degree of modularization can better adapt to changing conditions in the competitive environment and more quickly push through new product launches. In addition, greater customer value is created, and at the same time the company is more profitable. Modularization is a holistic approach that must also include the people working in the company. Both employees and managers must develop a new understanding of their roles in modularized organizational units (cf. Chap. 8). The role of employees as a key factor in successful radical organizational change has recently been reassessed. In this context, the generally higher level of qualification and increased demands on the quality of work are seen as an opportunity to eliminate – with the appropriate digital support – conventional divisions between executive and dispositive work that are no longer in line with requirements today. New demands on the social and technical competence of employees arise in particular from the team-­ oriented forms of work associated with modularization.

References Baldwin, C. Y., & Clark, K. B. (1998). Modularisierung: Ein Konzept wird universell. Harvard Business Manager, 2, 39–48. Becker, F. (2016). Teamarbeit, Teampsychologie, Teamentwicklung. So führen Sie Teams! Springer. Bennis, W. (1993). Beyond bureaucracy: Essays on the development and evolution of human organization. Jossey-Bass. Beuermann, G. (1992). Zentralisation und Dezentralisation. In E. Frese (Hrsg.), Handwörterbuch der Organisation (3. Aufl., S. 2611–2625). Schäffer-Poeschel. Borchers, S. (2000). Beteiligungscontrolling in der Management-Holding: Ein integratives Konzept. Gabler. Bretzke, W.-R. (2015). Logistische Netzwerke (3. Aufl.). Springer. Davidow, W. H., & Malone, M. S. (1993). Das virtuelle Unternehmen. Campus. Eitelwein, O., Malz, S., & Weber, J. (2012). Erfolg durch Modularisierung. Controlling & Management, 56, 79–84. ElMaraghy, H. (2006). Flexible and reconfigurable manufacturing systems paradigms. International Journal of Flexible Manufacturing Systems, 17, 261–271. Frese, E. (1995). Profit Center: Motivation durch internen Marktdruck. In R.  Reichwald & H.  Wildemann (Hrsg.), Kreative Unternehmen  – Spitzenleistungen durch Produkt- und Prozeßinnovation (S. 77–93). Schäffer-Poeschel. Frieling, E. (1992). Veränderte Produktionskonzepte durch “Lean Production”. In R. Reichwald (Hrsg.), Marktnahe Produktion (S. 165–177). Gabler.

102

5  Dissolution of Hierarchies: Modularization

Fromm, H. (1992). Das Management von Zeit und Variabilität in Geschäftsprozessen. CIM Management, 5, 7–14. Gaiser, B. (1993). Schnittstellencontrolling bei der Produktentwicklung. Vahlen. Gaitanides, M. (1983). Prozeßorganisation: Entwicklung, Ansätze und Programme prozeßorientierter Organisationsgestaltung. Vahlen. Hackman, J. R. (2002). Leading teams: Setting the stage for great performances. Harvard Business School Press. Koerber, E.  V. (1993). Geschäftssegmentierung und Matrixstruktur im internationalen Großunternehmen – Das Beispiel ABB. Zeitschrift für Betriebswirtschaftliche Forschung, 12, 1060–1077. Koller, H. (1997). Probleme und Ausgestaltung der Unternehmensdezentralisierung. In B.  Lutz (Hrsg.), Ergebnisse des Expertenkreises “Zukunftsstrategien” (Bd. IV). Campus. Martin, T. (1990). Das Verhältnis von Mensch und Automatisierung in der Produktion  – am Beispiel CIM.  In K.  Henning, S.  Süthoff & M.  Mai (Hrsg.), Mensch und Automatisierung. Sozialverträgliche Technikgestaltung Materialien und Berichte (S. 91–106). VS Verlag für Sozialwissenschaften. Mortensen, M., & Gardner, H.  K. (2017). The overcommitted organization. Harvard Business Review, 9, 58–65. Mortensen, M., Woolley, A. W., & O’Leary, M. B. (2007). Conditions enabling effective multiple team membership. In K. Crowston, S. Sieber, & E. Wynn (Hrsg.), Virtuality and virtualization (S. 215–228). Springer. Nippa, M. (1995). Anforderungen an das Management prozeßorientierter Unternehmen. In M.  Nippa & A.  Picot (Hrsg.), Prozeßmanagement und Reengineering. Die Praxis im deutschsprachigen Raum (S. 39–77). Campus. Olfert, K. (2015). Personalwirtschaft (16. Aufl.). Kiehl. Picot, A. (1991). Subsidiaritätsprinzip und ökonomische Theorie der Organisation. In P.  Faller & D.  Witt (Hrsg.), Erwerbsprinzip und Dienstprinzip in öffentlicher Wirtschaft und Verkehrswirtschaft. Festschrift für K. Oettle (S. 102–116). Nomos. Picot, A. (1999). Organisation. In M. Bitz, K. Dellmann, M. Domsch & F. Wagner (Hrsg.), Vahlens Kompendium der Betriebswirtschaftslehre (4. Aufl., Bd. 2, S. 107–180). Vahlen. Picot, A., & Franck, E. (1995). Prozeßorganisation. Eine Bewertung der neuen Ansätze aus Sicht der Organisationslehre. In A. Picot & M. Nippa (Hrsg.), Prozeßmanagement und Reengineering. Die Praxis im deutschsprachigen Raum (S. 13–38). Campus. Picot, A., & Neuburger, R. (2004). Modulare Organisationsformen. In G. Schreyögg & A. v. Werner (Hrsg.), Handwörterbuch Unternehmensführung und Organisation (4. Aufl., S. 898–905). Schäffer-Poeschel. Picot, A., & Reichwald, R. (1994). Auflösung der Unternehmung? Vom Einfluß der IuK-Technik auf Organisationsstrukturen und Kooperationsformen. Zeitschrift für Betriebswirtschaft, 5, 547–570. Picot, A., Dietl, H., Franck, E., Fiedler, M., & Royer, S. (2015). Organisation: Theorie und Praxis aus ökonomischer Sicht (7. Aufl.). Schäffer-Poeschel. Piller, F.  T., & Reichwald, R. (2009). Wertschöpfungsprinzipien von Open Innvoation. In A. Zerfaß & K. Möslein (Hrsg.), Kommunikation als Erfolgsfaktor im Innovationsmanagement (S. 105–120). Gabler. Rapp, T.  L., & Mathieu, J.  E. (2018). Team and individual influences on members’ identification and performance per membership in multiple team membership arrangements. Journal of Applied Psychology, 1, 1–18. Reichwald, R., & Piller, F. (2009). Interaktive Wertschöpfung: Open Innovation, Individualisierung und neue Formen der Arbeitsteilung (2. Aufl.). Gabler. Reichwald, R., & Sachenbacher, H. (1996). Durchlaufzeiten. In W. Kern, H. Schröder, & J. Weber (Hrsg.), Handwörterbuch der Produktion (2. Aufl., S. 362–374). Schäffer-Poeschel. Sanchez, R., & Mahoney, J. T. (1996). Modularity, flexibility and knowledge management in product and organizational design. Strategic Management Journal, 17, 63–76. Special Issue Winter.

References

103

Schmelzer, H. J., & Sesselmann, W. (2008). Geschäftsprozessmanagement in der Praxis: Kunden zufrieden stellen, Produktivität steigern, Wert erhöhen (6. Aufl.). Hanser. Scholz, C. (1997). Strategische Organisation: Prinzipien zur Vitalisierung und Virtualisierung. Moderne Industrie. Schwarzer, B., & Krcmar, H. (1994). Neue Organisationsformen: Ein Führer durch das Begriffspotpourri. Information Management, 4, 20–27. Wagner, D., & Schumann, R. (1991). Die Produktinsel: Leitfaden zur Einführung einer effizienten Produktion in Zulieferbetrieben. TÜV Rheinland. Weber, J. (1995). Modulare Organisationsstrukturen internationaler Unternehmensnetzwerke. Deutscher Universitätsverlag. Weißner, R., Klauke, A., Guse, M., & May, M. (1997). Modulare Fabrikstrukturen in der Automobilindustrie. Zeitschrift für wirtschaftliche Fertigung und Automatisierung, 92(4), 152–155. Wildemann, H. (1994). Fertigungssegmentierung: Leitfaden zur Einführung einer modularen Organisation (2. Aufl.). TCW. Wittlage, H. (1996). Fraktale Organisation: Eine neue Organisationskonzeption? Das Wirtschaftsstudium, 25(3), 223–228.

Chapter 6

Dissolution of the Company: Networks

Abstract  As already discussed in Chap. 1, traditional corporate structures and corporate boundaries are dissolving not only internally but also in the direction of hybrid connections with external partners. The basic idea behind such arrangements is based on a global idea of cooperation and can be outlined as follows: a company enters into an intensive connection with other, legally and economically, independent companies by involving them in the performance of its tasks. This creates links that can have both negative (dependencies) and positive (synergy effects) effects (cf. Gemünden and Ritter, From alliance practices to alliance capitalism. Gabler, Wiesbaden, 1998).

6.1 Basic Idea and Explanatory Approaches of Hybrid Organizational Structures As already discussed in Chap. 1, traditional corporate structures and corporate boundaries are dissolving not only internally but also in the direction of hybrid connections with external partners. The basic idea behind such arrangements is based on a global idea of cooperation and can be outlined as follows: a company enters into an intensive connection with other, legally and economically, independent companies by involving them in the performance of its tasks. This creates links that can have both negative (dependencies) and positive (synergy effects) effects (cf. Gemünden & Ritter, 1998). In order to avoid or limit the opportunistic exploitation of dependencies by one partner, such hybrid arrangements are generally designed for the long term. They aim for close networking between the partners and are based on mutual trust. Various forms of such arrangements, as well as networks, joint ventures, or platforms, change the legal and economic boundaries of the company: company boundaries become blurred because the interface between the company and the market can no longer be accurately described. Sometimes it is also advisable to enter into © Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_6

105

106

6  Dissolution of the Company: Networks

Fig. 6.1  Companies as networks or platforms. (Picot, 2015)

cooperations with competitors in order to be able to meet customer requirements or to be able to concentrate on one’s core competencies. Especially then, it is a good idea to integrate missing competencies by cooperating with external partners. All this is increasingly blurring the traditional company boundaries drawn to the market (specific versus standardized services; cf. Chap. 2) and is leading, as it were, to a dissolution of the company and the traditional industry boundaries. Legal boundaries are also increasingly being shifted by hybrid organizations. In the case of a joint venture, an independent legal entity is created that cannot be clearly assigned to any of the partners. Internationally oriented dynamic networks cross national legal boundaries and can lead to the collision of different national legal systems. Figure 6.1 illustrates this concept. The more companies cooperate with other companies in individual or several areas, the more networked structures with different characteristics are created. As a result, companies are less and less individual entities and more and more networks or platforms.

6.2 Forms of Realization of Hybrid Organizations On the continuum between market and hierarchy, hybrid organizational forms can be classified as being closer to the market or closer to the hierarchy. The underlying degree of vertical integration is defined differently in the literature (cf. Imai & Itami, 1984; Baur, 1990; Kappich, 1989; Malone et al., 1987; Schneider, 1988). The dependency relationship between exchange partners is closely related to the degree of specificity of a service relationship. Most descriptive approaches aim to

6.2  Forms of Realization of Hybrid Organizations

107

characterize the degree of integration by the extent of dependence on business partners. Organizational forms that are closer to the hierarchy are characterized by a greater degree of interdependence between business partners than forms that are closer to the market. One-sided dependencies enable the exploitation of power potentials. In such cases, vertical control exists (cf. Baur, 1990). Forms of control define medium- to long-term relationships between legally independent but unilaterally economically dependent partners. These forms of control are characterized by a comparatively high degree of vertical integration and thus require an organizational form that is closer to the hierarchy. Tasks with a comparatively high degree of specificity but a rather low strategic importance or frequency are examples of this. In contrast, the term “cooperation” characterizes the equal cooperation between legally and economically independent companies. As a rule, cooperations are entered into for tasks of medium specificity and medium strategic importance and are characterized by a certain, albeit not very high, degree of vertical or horizontal integration. Cooperations in this sense have a symbiotic character with a mutual dependency relationship. In the following, various forms of control and cooperation are presented. In addition, their characteristic features and manifestations are clarified in each case. In the literature and in business practice, there is a whole range of terms used to describe certain forms of organizational mechanisms between market and hierarchy. Thus, terms such as strategic alliances, strategic (value-added) partnerships, strategic cooperations, operational cooperations, joint ventures, and similar can be found. They can all be subsumed under the term cooperation. At the same time, however, they also indicate different manifestations of cooperation. Similarly, we speak of vertical, horizontal, or diagonal forms of cooperation (cf. Sydow, 1992). The various forms are the subject of Sect. 6.3. Forms of domination also reveal a wide range of terminology. The spectrum ranges from quasi-vertical integration or vertical quasi-integration to licensing or equity participation. These forms of control are discussed in more detail in Sect. 6.4. In addition, various manifestations and characteristics of multilateral forms of organization are described. They include inter-firm networks, business webs, and platforms. Inter-firm networks consist of a number of legally independent companies whose links are more or less loose. Networks are not inherently linked to a particular market or hierarchical proximity. They can be described as hybrid forms of organization which, depending on the type of relationship, can be structured either close to the market or close to the hierarchy. There is also an inconsistent field of terms for networks. There are terms such as strategic networks, dynamic networks, or value-added networks, some of which are used synonymously, while others indicate different types of networks. Business webs and platform-based ecosystems can be classified as special forms of networks. All this is the subject of Sect. 6.5.

108

6  Dissolution of the Company: Networks

6.3 Forms of Cooperation Forms of cooperation refer to a medium- to long-term, contractually regulated collaboration between legally independent companies for the joint fulfilment of tasks (cf. Rotering, 1990; Schrader, 1993; Balling, 1997). Inter-company cooperation is primarily for mutual benefit. It is suitable when it offers advantages that cannot be achieved by other forms of management. Frequently cited examples of this are time advantages, cost advantages, know-how advantages, economies of scale, competence gains, risk reduction, and market access (cf. Porter & Fuller, 1989; Vizjak, 1990; Rupprecht-Däullary, 1994; Bronder, 1993). However, this does not say anything about what this joint fulfilment of tasks can look like and what concrete forms of relationship underlie it. Tröndle describes the nature of cooperation, for example, on the basis of the criteria of degree of autonomy and degree of interdependence (cf. Tröndle, 1987; Rotering, 1993). Companies participating in a cooperation are autonomous to the extent that they can make decisions themselves about entering into or terminating the cooperation without having to take into account instructions from a higher authority. They have an equal relationship with their cooperation partners. This view can be supplemented. An enterprise is also autonomous if it is not exposed to any direct pressure or power potential from a partner in a relationship with another enterprise with regard to the initiation or termination of a longer-term cooperation. In this respect, cooperation agreements differ from control agreements. At the same time, however, interdependencies arise between the cooperation partners after the start of a cooperation. These interdependencies refer to the existence of collective decision-making facts. In a cooperation, a whole series of decisions are made jointly, which must be negotiated within the framework of decision-making bodies and to which a binding character is attributed for both cooperation partners (cf. Brockhoff, 1989). Cooperations thus constitute a form of resource pooling (cf. Vanberg, 1982), in which coordination or negotiation processes take place regarding both the type and quantity of resources to be brought into a cooperation and the distribution of the output that can be achieved with them, in which the respective bargaining potential is essentially balanced. If the negotiating potential is not balanced, the weaker partner would not enter into cooperation. Other characteristic features that are frequently mentioned are the voluntary nature of the cooperation and the fact that it is always explicitly agreed upon in a contract. On the basis of the first-mentioned characteristic, cooperation can be easily distinguished from the forms of control to be discussed in the following chapter. Voluntary cooperation means that cooperation is only entered into if both partners expect cooperative benefits. This does not necessarily apply to forms of domination. Furthermore, cooperations are always formed by explicit contractual agreement. As will be shown, forms of control, however, can arise on the basis of implicit contracts. The explicit agreement of a cooperation is often regarded as a defining characteristic of cooperations. Often, cooperations are associated with a strategic component. In this context, one speaks of strategic alliances, strategic

6.3  Forms of Cooperation

109

partnerships, or, in the context of networks, strategic networks. This addition is intended to clarify the goal of cooperations to create competitive advantages for the cooperation partners.

6.3.1 Systematization of Cooperations Cooperations can be systematized according to various aspects. With regard to the direction of cooperation, a distinction can be made between vertical, horizontal, and diagonal cooperation (cf. Büchs, 1991; Bronder, 1993). Vertical cooperations refer to companies at successive levels of the value chain, such as customer and supplier. Such forms of cooperation are often referred to as value-added partnerships and originate from the same industry (e.g., close cooperation between manufacturer and supplier in the automotive industry). In horizontal cooperations, companies in the same industry and at the same level of the value chain work together (e.g., research and development cooperations between microelectronics companies). Diagonal cooperations are concluded between companies from different industries at different stages of the value chain (e.g., between banks and IT companies). Cooperations can relate to the entire company or to individual functional areas. If the cooperation relates to individual functional areas, functional cooperations can be further differentiated. Logistical cooperations, for example, describe a form of cooperation in which companies agree on a close and long-term contractual coordination of inbound and outbound logistics. Marketing cooperations refer to the cooperation of companies with regard to sales, marketing, or customer service. Technology cooperations exist when companies work together, particularly in the area of research and development, in order to jointly develop new technologies or to jointly pursue further technological developments. Further systematization possibilities are, for example, the scope of cooperation (national/international), duration of cooperation (temporary/permanent), degree of underlying mutual economic dependence, and degree of technological support.

6.3.2 Organization of Cooperations Depending on the concrete characteristics and objectives of the underlying cooperation, there are various possibilities for organizing the cooperation (cf. Fontanari, 1996; Olesch, 1998). There can be formal organizational structures or the cooperation can be represented in a loose, informal structure. If, for example, a cooperation only relates to a single contract, it does not seem absolutely necessary to manifest the cooperation through a formal organization. If, however, the parties involved decide in favor of a formal organizational structure, there are in principle two possibilities for longer-term cooperation efforts: joint venture and consortium.

110

6  Dissolution of the Company: Networks

In a joint venture, companies carry out the cooperation via a legally independent company founded specifically for this purpose as a joint venture to which the cooperation partners contribute various resources. The cooperating companies usually have equal shares (cf. Liessmann, 1990). Joint ventures are mainly found where technologically highly complex tasks can no longer be handled by one company alone, such as in the aerospace industry and in microelectronics. In order to spread the large research and development risks as well as the financial burdens and to increase the sales opportunities in the often protectionist closed markets, corresponding large-scale projects are carried out in the form of international joint ventures. They encompass the development, production, and in some cases also the distribution of such goods. The second option for organizing cooperation between companies is to set up a project consortium. In this form of organization, known as a consortium, the participating companies undertake to carry out one or more precisely defined projects jointly. Consortia are usually formed for a limited period of time. They lack the intention of a permanent association. In addition to the realization of resource-­ related synergy advantages, a consortium also reduces the risk associated with large-scale projects for the individual cooperation partners. The economic and legal independence of the consortium partners is maintained. Typical examples are consortiums for large construction projects. Banks also frequently join together to form consortia, for example, to grant larger loans or to handle security issues. A concrete example is the cooperation and strategic partnership between Fuze, a leading provider of a cloud-based communications platform for modern, global companies, and Samsung Electronics America, Inc. The combination of Samsung mobile devices with Fuze software and services enables a range of end-to-end solutions to meet the changing needs of today’s increasingly mobile and distributed workforce.

6.4 Forms of Control  In contrast to forms of cooperation between companies, forms of control involve one-sided economic and financial dependencies (cf., e.g., Baur, 1990). Due to the limited economic independence of the participating companies, forms of control have a character closer to the hierarchy than the forms of cooperation described above. Such vertical integrations are efficient when tasks are to be organized which have a relatively high degree of specificity, but which do not necessarily require in-house handling because of merely low to medium strategic importance or low frequency. The contractual arrangement allows the dominant company to exert more or less influence on the business activities of the partners (cf. Gerpott, 1993). This can manifest itself in the fact that decisions that change the benefit level of all parties are not taken in a decision-making body with balanced power relations. The dominant company has means of power with which decisions can be enforced even if they have economic disadvantages for the controlled business partner. There are various contractual arrangements between the parties which result in corresponding shifts

6.5  Business Networks and Platforms

111

Vercal forms of control

Cause of the power posion

Quasi-vertical integration

Ownership of specific production factors

Vertical quasi-integration

Significance of the customer for total sales

Implicit contracts

Threat of termination of tacit contract extension

De facto vertical integration

Geographical location of the supplier

Partial integration

(Credible) threat of complete integration of a production stage

Licenses

Possibility of withdrawal of knowhow

Equity investment

Ownership

Fig. 6.2  Important vertical forms of control. (Based on Baur, 1990, p. 101)

of power in favor of one partner. The various forms of control can thus be distinguished according to the underlying dependencies in each case (cf. Baur, 1990). Typical examples are shown in Fig. 6.2.

6.5 Business Networks and Platforms The explanations given so far have concentrated on bilateral forms of cooperation or control. However, forms of cross-company cooperation need by no means be limited to bilateral relationships. It is also possible to carry out cross-company task creation through contractual relationships between a number of legally independent companies. This leads to a network of cross-company cooperation in which a large number of companies are involved (cf. Gomez & Zimmermann, 1999). So far, no uniform terminology has emerged for this form of cooperation. In the literature, terms such as dynamic networks (cf. Jarillo, 1988, 1993), strategic networks (cf. Sydow, 1992), value creation networks (cf. Pfeiffer & Weiß, 1994; Blecker & Gemünden, 2006), cooperative networks (cf. Thorelli, 1986), or business webs (cf. Hagel, 1996) can be found. In general, these networks can be either more hierarchical or more market-based in character. Accordingly, they are either more cooperative or more dominant forms of inter-firm cooperation. If cooperative relationships form the basis of cooperation, one can speak of cooperative networks (cf. Thorelli, 1986). Examples are research

112

6  Dissolution of the Company: Networks

and development alliances, merchandise management systems in which a majority of companies are involved, or rationalization communities between suppliers, buyers, and hauliers for efficient transport handling (cf. Wolff & Neuburger, 1995). Other networks, on the other hand, are characterized by the fact that one or more companies have a leading role. Such so-called focal companies coordinate the process of cross-company task creation (cf. Sydow, 1992). Long-term contractual relationships with hierarchy-like conditions exist between these and the other participating companies. Typical examples are supplier hierarchies or supply chain management systems. One form of temporary cooperation is the virtual enterprise (cf. Chap. 7). This type of cooperation arises against the background of the concentration of companies on individual areas of the value chain in order to bundle competences. However, the trend toward company- and competence-related segmentation does not necessarily lead to an optimization of the entire value chain due to possible processing problems and breaks. The concept of the virtual enterprise is a possible solution (cf. Picot & Neuburger, 1997; Mertens & Faisst, 1997; Ettighofer, 1992; Reichwald & Möslein, 1996, 1997a, b). Virtual enterprises are artificially created companies that integrate the individual core competencies of different companies along the value chain to solve customer problems (cf. Picot & Neuburger, 1997; Rayport & Sviokla, 1996). After the underlying task has been completed, they usually dissolve again. In the configuration of virtual enterprises, the focus is not on the available resources but rather on the necessary competencies. Their integration into virtual enterprises is – independent of their location – possible. In this way, virtual enterprises support market orientation on both the procurement and the sales side. Figure 6.3 shows an overview of some typical network forms. Business webs represent a special form of network (cf. Hagel, 1996; Zerdick et al., 2001; Franz, 2003). They designate a group of companies that independently create value-adding partial services and complement each other. The customer only receives the desired, holistic solution to a problem through the system product created in the entire value creation network. A distinction must be made between technology webs that are based on one technology and customer webs that aim to create a holistic solution to a problem for a specific customer segment. In each case, the so-called shaper controls the central element of the business web around which so-called adapters create their complementary services. A typical example is iTunes. The technical basis is provided by Apple as a shaper; the apps offered are provided by the adapters as a complementary service. In particular, technology webs can hardly be distinguished from platforms or platform-based ecosystems, whose emergence on the basis of digital technologies can currently be observed and which pose entirely new challenges to managers (cf. McAfee & Brynjolfsson, 2017; Jaekel, 2017; Baums et al., 2015). Platform-based ecosystems can be defined “as definable value networks based on an existing [technical] network architecture” (Schauf, 2012, p. 7). Such platforms are known primarily from the B2C sector, such as Amazon, or crowdworking platforms that bundle supply and demand. Motivation, realization, and operation are all the responsibility of one and the same actor. The ultimate goal is to offer bundled products and

6.5  Business Networks and Platforms

113

Form of organization

Binding duration

Capitalinterweavi ng

Partner selecon

Network openness

Market models

Product types

Institutionalized performance of a company

Joint Venture

long-term

not usual

selective

conditionally closed

independent

single/ system

no

Strategic alliance

long-term

yes, separate company

selective

closed

independent

single/ system

yes

Strategic network

long-term

not usual

planned evolutionary

conditionally open

independent

single/ system

quasi (focal company)

Virtual enterprise

rather short term, project related

not usual

ad hoc

open

independent

single/ system

problem-related

Business webs

long-term

not usual

planned evolutionary

conditionally open to open

independent

only system

partly by shaper

Fig. 6.3  Overview of typical network forms. (Franz, 2003)

services from different players. At the centre is a digital platform that integrates the various systems and services. In the B2B sector in particular, other models can also be identified in which the motivation for creating a platform lies in the desire for secure communication or the secure exchange of data and goods. Such platforms are initiated, for example, by industry consortia via associations or cooperatives. In these cases, a distinction is often made between technical and commercial platform operators. Similar to business webs or B2C platforms, the platform operator is surrounded by a large number of other companies that provide the necessary services. All these platforms or platform-­based ecosystems operate technologically on digital platforms that realize the secure and trustworthy conclusion of transactions for the provision, acquisition, or use of goods, services, content, information, or data between people and/or technical systems. According to a study by McKinsey Research, approximately 30% of global GDP will be realized through such platform-based ecosystems by 2025. Considerable opportunities arise here in particular for medium-sized companies, which can overcome existing know-how, capital, and capacity limits on the basis of cooperation and platforms. The players within the business webs outlined above, as well as within the platform-­eco-based platforms, are often in vertical or horizontal competition with each other. At the same time, they cooperate with each other on the business web or on a platform in order to offer holistic customer service, exchange data, and exploit the potential of the platform economy. In literature and practice, this is referred to as “coopetition” – a combination of the terms cooperation and competition (e.g., Brandenburger & Nalebuff, 2011).

114

6  Dissolution of the Company: Networks

As a result, the increasing relevance of business webs as well as platforms or platform-based ecosystems show two things: On the one hand, the importance of cooperation between companies as well as the emergence of networks is growing rapidly. Sometimes cooperations are even required to be able to establish a platform or to participate in a platform. On the other hand, it is becoming less and less possible to draw a clear line between cooperatively oriented networks and (electronic) market relationships. For example, platforms in the B2C sector or crowdworking platforms can, on the one hand, be assigned to the basic idea of networks; on the other hand, strictly speaking, they can also be assigned to electronic markets, since they bring providers and demanders together on their platform.

6.6 Conclusions for Management The opportunities offered by inter-company arrangements lie primarily in the expansion of the resources (especially capital and know-how) available to a company by the partners contributing their respective resources to the cooperation or because innovative organizational solutions such as platforms can only be realized on the basis of inter-company arrangements. Since such arrangements between companies are not limited to the national sphere, but are increasingly being realized internationally as well, they open up the opportunity for regional and global potentials to be flexibly exploited and advantages of the international division of labor to be utilized. Inter-company arrangements or the development or participation in a platform must be planned and organized like any economic activity. Managing symbiotic arrangements requires creating the conditions for close cooperation with other companies, managing the risks of such blurring of corporate boundaries and exploiting the entrepreneurial opportunities associated with symbiotic arrangements. Particularly, the prerequisites for this are as follows: • Robust infrastructures in technical (in particular functioning broadband networks that enable communication and process control in real time) and institutional terms (above all company and competition law, as cooperation and platforms between competitors will increasingly emerge). • Building trust as well as common values and norms, which is promoted but not necessarily guaranteed by mostly long-term cooperation. It is helpful here that both partners adhere to written or unwritten rules of cooperation, which can form the corporate constitution, as it were, in the sense of a kind of network or cooperation constitution. • Managing risks such as loss of identity or loss of market advantage. This risk is particularly great when companies with different cultures and traditions work together. Here there is a risk that the intertwined parts of the company either do not develop their own corporate culture and identity or that the culture of a dominant partner displaces that of the other partners with the risk that the cooperation is not feasible in the long term.

References

115

In summary, the management of inter-firm arrangements should place particular emphasis on the management of information and communication infrastructures, the management of inter-firm contractual networks, and cross-firm cultural management, compared to the principles of successful management in the traditional, highly integrated enterprise.

References Balling, R. (1997). Kooperationen, Strategische Netzwerke, Joint Ventures und andere Organisationsformen zwischenbetrieblicher Zusammenarbeit in Theorie und Praxis. Peter Lang. Baums, A., Schössler, M., & Scott, B. (2015). Industrie 4.0: Wie digitale Plattformen unsere Wirtschaft verändern- und wie die Politik gestalten kann. Kompendium Digitale Standortpolitik, Bd. 2. http://plattform-­maerkte.de/wp-­content/uploads/2015/11/Kompendium-­High.pdf. Accessed 29 Jan 2020. Baur, C. (1990). Make-or-Buy-Entscheidungen in einem Unternehmen der Automobilindustrie – Empirische Analyse und Gestaltung der Fertigungstiefe aus transaktionskostentheoretischer Sicht. VVF. Blecker, T., & Gemünden, H. G. (2006). Wertschöpfungsnetzwerke: Festschrift für Bernd Kaluza. Erich Schmidt. Brandenburger, A. M., & Nalebuff, J. (2011). Co-opetition. Random House. Brockhoff, K. (1989). Schnittstellenmanagement. Schäffer-Poeschel. Bronder, C. (1993). Kooperationsmanagement: Unternehmensdynamik durch Strategische Allianzen. Campus. Büchs, M.  J. (1991). Zwischen Markt und Hierarchie: Kooperationen als alternative Koordinationsform. Zeitschrift für Betriebswirtschaft, Ergänzungsheft, 1, 1–38. Ettighofer, D. (1992). L’Entreprise Virtuelle ou Les Nouveaux Modes de Travail. Editions Odile Jacob. Fontanari, M. (1996). Kooperationsgestaltungsprozesse in Theorie und Praxis. Duncker & Humblot. Franz, A. (2003). Management von Business Webs: Das Beispiel von Technologieplattformen für mobile Dienste. Gabler. Gemünden, H. G., & Ritter, T. (1998). The impact of radical environmental change on a company’s network activities: An empirical study in east and West Germany. In S. Urban (Ed.), From alliance practices to alliance capitalism (pp. 95–130). Gabler. Gerpott, T.  J. (1993). Integrationsgestaltung und Erfolg von Unternehmensakquisitionen. Schäffer-Poeschel. Gomez, P., & Zimmermann, T. (1999). Unternehmensorganisation: Profile, Dynamik, Methodik (4. Aufl.). Campus. Hagel, J. (1996). Spider versus spider. The McKinsey Quarterly, 1, 4–19. Imai, K., & Itami, H. (1984). Interpenetration of organization and market. International Journal of Industrial Organization, 4, 285–310. Jaekel, M. (2017). Die Macht der digitalen Plattformen. Wegweiser im Zeitalter einer expandierenden Digitalsphäre und künstlicher Intelligenz. Springer. Jarillo, J. C. (1988). On strategic networks. Strategic Management Journal, 9, 31–41. Jarillo, J.  C. (1993). Strategic networks: Creating the borderless organization. Butterworth-Heinemann.

116

6  Dissolution of the Company: Networks

Kappich, L. (1989). Theorie der internationalen Unternehmungstätigkeit. VVF. Liessmann, K. (1990). Joint Venture erfolgreich organisieren und managen: Neue Märkte durch strategische Kooperation. WRS. Malone, T. W., Yates, J. A., & Benjamin, R. I. (1987). Electronic markets and electronic hierarchies. Communications of the ACM, 30(6), 484–497. McAfee, A., & Brynjolfsson. (2017). Machine, platform, crowd: Harnessing our digital future. Norton. Mertens, P., & Faisst, W. (1997). Virtuelle Unternehmen. Idee, Informationsverarbeitung, Illusion. 18. Saarbrücker Arbeitstag für Industrie, Dienstleistung und Verwaltung. Springer. Olesch, G. (1998). Kooperation im Wandel: Zur Bedeutung und Entwicklung der Verbundgruppen. Deutscher Fachverlag. Pfeiffer, W., & Weiß, E. (1994). Lean Management: Grundlagen der Führung und Organisation industrieller Unternehmen. Erich Schmidt. Picot, A. (2015). Der Wandel der Arbeitswelt und der Aus- und Weiterbildung. Vortrag im Rahmen von open.acatech – Industrie 4.0. Potsdam. Picot, A., & Neuburger, R. (1997). Der Beitrag virtueller Unternehmen zur Marktorientierung. In M. Bruhn & H. Steffenhagen (Hrsg.), Marktorientierte Unternehmensführung – Reflexionen, Denkanstöße, Perspektiven (S. 119–140). Gabler. Porter, M. E., & Fuller, M. B. (1989). Koalitionen und globale Strategien. In M. E. Porter (Hrsg.), Globaler Wettbewerb: Strategien der neuen Internationalisierung (S. 363–399). Gabler. Rayport, J.  F., & Sviokla, J.  J. (1996). Die virtuelle Wertschöpfungskette-kein fauler Zauber. Harvard Business Manager, 18, 104–114. Reichwald, R., & Möslein, K. (1996). Telearbeit und Telekooperation. In H.-J.  Bullinger & H.-J. Warnecke (Hrsg.), Neue Organisationsformen im Unternehmen – Ein Handbuch für das moderne Management (S. 691–708). Springer. Reichwald, R., & Möslein, K. (1997a). Chancen und Herausforderungen für neue unternehmerische Strukturen und Handlungsspielräume in der Informationsgesellschaft. In A.  Picot (Hrsg.), Telekooperation und virtuelle Unternehmen – Auf dem Weg zu neuen Arbeitsformen (S. 1–37). Decker. Reichwald, R., & Möslein, K. (1997b). Innovationsstrategien und neue Geschäftsfelder von Dienstleistern  – Den Wandel gestalten. In H.-J.  Bullinger & H.-J. (Hrsg.), Dienstleistungen für das 21. Jahrhundert. Gestaltung des Wandels und Aufbruch in die Zukunft (S. 75–105). Schäffer-Poeschel. Rotering, J. (1990). Forschungs- und Entwicklungskooperationen zwischen Unternehmen. Schäffer-Poeschel. Rotering, J. (1993). Zwischenbetriebliche Kooperation als alternative Organisationsform. Schäffer-Poeschel. Rupprecht-Däullary, M. (1994). Zwischenbetriebliche Kooperation. Gabler. Schauf, T. (2012). Das Internet als Netzwerk von Ökosystemen: Weniger Offenheit, mehr Konzentration? Policy Essay. Stiftung Neue Verantwortung. Schneider, D. (1988). Zur Entstehung innovativer Unternehmen – Eine ökonomisch-theoretische Perspektive. VVF. Schrader, S. (1993). Kooperation. In J.  Hauschildt & O.  Grün (Hrsg.), Ergebnisse empirischer betriebswirtschaftlicher Forschung – Zu einer Realtheorie der Unternehmung, Festschrift für Witte, E (S. 221–254). Schäffer-Poeschel. Sydow, J. (1992). Strategische Netzwerke und Transaktionskosten. In W. H. V. Staehle & P. Conrad (Hrsg.), Managementforschung 2 (S. 239–311). De Gruyter. Thorelli, H.  B. (1986). Networks: Between markets and hierarchies. Strategic Management Journal, 7, 37–51.

References

117

Tröndle, D. (1987). Kooperationsmanagement. Steuerung interaktioneller Prozesse bei Unternehmenskooperationen. Eul. Vanberg, V. (1982). Markt und Organisation. Mohr. Vizjak, A. (1990). Wachstumspotentiale durch Strategische Partnerschaften. B. Kirsch. Wolff, B., & Neuburger, R. (1995). Zur theoretischen Begründung von Netzwerken aus der Sicht der Neuen Institutionenökonomik. In D. Jansen & K. Schubert (Hrsg.), Netzwerke und Politikproduktion (S. 74–94). Schüren. Zerdick, A., Picot, A., Schrape, K., Artopé, A., Goldhammer, K., Lange, U. T., López-Escobar, E., & Silverstone, R. (2001). Die Internet-Ökonomie: Strategien für die digitale Wirtschaft (3. Aufl.). Springer.

Chapter 7

Overcoming Location Boundaries: Virtual Enterprise

Abstract  Based on the considerations in Chap. 1 and in particular Fig. 1.2, Chaps. 5 and 6 were primarily concerned with the potential of technologies for the coordination of service provision, which is leading to an increasing dissolution of existing corporate boundaries both internally (cf. Chap. 5) and externally (cf. Chap. 6). Strict hierarchies are dissolving in favor of flat, modular structures; traditional corporate boundaries are blurring into network-like corporate connections. This trend is reinforced by the question of the location of service provision. This can be physical, location-based, as mostly observed on traditional companies, or – on the basis of new technologies  – location-independent. As a result, so-called virtual organizational arrangements emerge, which have already been briefly discussed in Chap. 6. They further reinforce the effect of dissolving corporate boundaries. This aspect of the dissolution of place as well as its conditions and implications for current and future organizational forms of service provision based on the division of labor are the focus of this chapter.

7.1 Basic Idea and Characteristics of Virtual Forms of Organization Based on the considerations in Chap. 1 and in particular Fig. 1.2, Chaps. 5 and 6 were primarily concerned with the potential of technologies for the coordination of service provision, which is leading to an increasing dissolution of existing corporate boundaries both internally (cf. Chap. 5) and externally (cf. Chap. 6). Strict hierarchies are dissolving in favor of flat, modular structures; traditional corporate boundaries are blurring into network-like corporate connections. This trend is reinforced by the question of the location of service provision. This can be physical, location-­ based, as mostly observed on traditional companies, or – on the basis of new technologies  – location-independent. As a result, so-called virtual organizational

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_7

119

120

7  Overcoming Location Boundaries: Virtual Enterprise

arrangements emerge, which have already been briefly discussed in Chap. 6. They further reinforce the effect of dissolving corporate boundaries. This aspect of the dissolution of place as well as its conditions and implications for current and future organizational forms of service provision based on the division of labor are the focus of this chapter. The new boundaryless or virtual forms of organizations break down classic corporate boundaries not only in terms of place and time but also in legal terms. Here, task management does not take place in static, predefined structures. Rather, there is a problem-related, dynamic linking of real resources for the accomplishment of specific tasks. It is therefore a form of organization that can be volatile in parts but also as a whole (i.e., it dissolves completely after a problem has been solved) or, through dynamic reconfiguration, is able to adapt flexibly to highly variable tasks. The virtual organization is thus more of a “cobweb” than a network. It forms the antithesis to corporate forms with relatively clearly defined boundaries in terms of ownership and contracts, a stable location, a relatively permanent allocation of resources, and regulated process structures. In the sense of the concept of virtuality in the philosophy of Aristotle, it can be understood as a purely possible form or ideal-typical target conception of an enterprise that is boundaryless in every respect (cf. Legrand, 1972). However, it can also be interpreted as an organizational form that uses virtualization in the sense of information technology as a concept of performance enhancement and realizes a systematic and dynamic assignment of abstract performance requirements to concrete places of performance (cf. Mowshowitz, 1991; Reichwald & Möslein, 2003). Regardless of the chosen viewpoint, however, spatial distribution and location independence of task accomplishment based on the division of labor are necessary (although not sufficient) prerequisites on the path to virtual organization. Therefore, in the following, basic characteristics as well as forms of realization of the virtual organization are presented first. “Anytime/Anyplace”. In the age of digitalization, it is more important than ever to come to terms with the fact that even though tasks can be handled to an ever greater extent in a distributed and location-independent manner, it does not at all mean that this form of task handling is always an organizational form that is appropriate for people, qualitatively suitable and economically efficient. Which form of organization is actually suitable for efficient task management depends on the characteristics and context of the task. Therefore, a systematization of the spatial and temporal options is necessary as a basis for considerations on their organizational use. A particularly simple and at the same time vividly memorable form of systematization is offered by the “anytime/anyplace matrix” (cf. Fig. 7.1). The two-dimensional distinction according to space and time  – depending on whether interaction takes place at the same place or at different places or even mobile, at the same time (synchronous) or at different times (asynchronous) – leads to the formation of four basic situation types. The representation was introduced early on with the aim of being able to convey a basic understanding of the new

7.1  Basic Idea and Characteristics of Virtual Forms of Organization Fig. 7.1 Anytime/ anyplace matrix. (O’Hara-­ Devereaux & Johansen, 1994)

121

Same time

Different time

Different place

Different place

Same time

Different time Same place

Same place

technical possibilities in a short time and in a simple way (cf. Bullen & Johansen, 1988; Bullen & Bennett, 1990; Johansen, 1991). Organization in the sense of personnel division of labor is always necessary when a task has to be accomplished that cannot be completed by one person in one step. Organization then means two things: first, dividing the task appropriately and, second, bringing together the resulting individual activities, i.e., coordinating the performance of the individual activities and ensuring motivation in the performance of the task. This results in organization as an interplay of task division, coordination, and motivation (cf. Chap. 2). A distinction can be made between possibilities of cooperation and coordination despite spatial and temporal distribution of the participants, on the one hand, and possibilities of spatial and temporal independence despite joint task accomplishment on the other. This distinction makes it possible to isolate two fundamental questions analytically: • If, in the first case, the given task requires a certain distribution of locations (e.g., production of high-quality translations by native speakers in the home country) or spatial mobility of the task bearers (e.g., mobile knowledge workers, forwarding agencies, construction sites, etc.), the question arises as to how the coordination system can be adequately designed under the given conditions of location distribution or mobility. • If, on the other hand, the task to be accomplished and the available coordination system allow the actors involved to be distributed or independent of location (e.g., through a common value system, similar training, or a favorable transport or communication infrastructure), the question arises as to which design alternatives arise from the possibilities of the coordination system for improved task accomplishment.

122

7  Overcoming Location Boundaries: Virtual Enterprise

Characteristics

Realization principles

●

Modularity

●

Open-closed principle

●

Heterogeneity

●

Complementarity principle

●

Spatial/Temporal flexibility ●

Transparency principle

Fig. 7.2  Characteristics and implementation principles of virtual organizations. (Reichwald et al., 2000)

None of these questions can be answered completely today. However, distributed forms of work and organization open up new challenges and opportunities for work design and performance management. The virtual enterprise thus presents itself as a dynamic network. Network nodes can be formed equally by individual actors, organizational units, or organizations. The links between the network nodes configure themselves dynamically and problem-­related. The individual task thus determines the structure of a virtual enterprise at any point in time. Despite its volatility, however, this organizational structure is not contourless, because performance enhancement through virtualization can only be achieved in a system if the constituent components meet certain basic requirements. Thus, characteristics can be isolated for the virtual enterprise which are indispensable for the achievement of objectives (cf. Fig. 7.2). In a second step, certain implementation principles are assigned to them. Modularity The basic building blocks of the virtual enterprise are modular units, i.e., relatively small, manageable systems with decentralized decision-making authority and responsibility for results (cf. Chap. 5). While modularity was introduced in Chap. 5 as an internal corporate structuring concept, the virtual enterprise also requires virtual modules for its implementation, i.e., decentralized units that consist of actors who may belong to one company or to different legal institutions. Without the modularity of the components, their internal coherence, and their external openness via clear interfaces, the efficient dynamic reconfiguration of a system cannot be realized. Heterogeneity The basic building blocks of the virtual enterprise have different performance profiles in terms of their strengths and competencies. By selectively limiting them to core competencies, they create the conditions for building a symbiotic network of relationships. Without the qualitative complementarity of the components, the dynamic reconfiguration of the system is limited to scalability. The possibilities of realizing more far-reaching performance goals, for example, in terms of quality and flexibility, are lost. However, this would also make the advantageousness compared to other forms of organization questionable.

7.1  Basic Idea and Characteristics of Virtual Forms of Organization

123

Spatial/Temporal Flexibility The basic building blocks of the virtual enterprise are spatially distributed. Their affiliation or non-affiliation is subject to dynamic reconfiguration. The possibilities of virtual task management are thus constitutive for the emergence of virtual enterprises. Information and communication infrastructures can set limits even in the age of digitalization (e.g., lack of broadband coverage, incompatible digital communication systems and tools, unresolved access and usage rights, etc.). The three outlined characteristics of virtual enterprises are directly linked to basic implementation principles that ultimately constitute the essence of a virtual enterprise. Open-Closed Principle This principle is based on the modularity of the virtual enterprise. Due to this structure, the virtual enterprise can realize a closed appearance on the market with open, dynamic structures at the same time. The customer places his order with a company he trusts, which seems to be optimally tailored to his specific requirements and remains his direct contact. This company then takes care of the configuration and control of the virtual network. To the outside world, a kind of visible “shell” is created for the client, which presents itself as a cohesive whole. The actual “tailored” organization for handling the order often only structures itself in the process of handling the order, since the inner structure (the content of the shell) forms an open system. Complementarity Principle This principle is based on the heterogeneity of the network nodes constituting the virtual enterprise. The modular units with their different performance profiles complement each other through complementary competencies in the sense of symbiotic organizational configurations. Transparency Principle This principle concerns the spatial and temporal distribution of the virtual enterprise. In the terminology of computer science, transparency of a system means that a system can be regarded as a “black box.” The user only specifies his requirements for the system; he does not have to worry about system internals. From the customer’s point of view, the virtual enterprise appears as a “black box.” From the outside, the customer sees only the shell. The knowledge of the concrete location of the service provision is irrelevant for the customer. In spite of, or precisely because of, the permanent reconfiguration, from the customer’s point of view, the enterprise appears at all times to be specially tailored to the customer’s needs. The outlined characteristics and implementation principles initially remain abstract. The remainder of the chapter therefore addresses different forms of implementation of virtualization and shows how virtualization can be designed. Figure 7.3 illustrates the basic principle of virtual organization once again. A virtual network of suitable or necessary competencies is formed from a network of many heterogeneous competencies to deal with a customer-specific problem or task. After the task has been completed or mastered, the virtual organization dissolves again.

124

7  Overcoming Location Boundaries: Virtual Enterprise

Fig. 7.3  Principle of virtual organization

7.2 Forms of Implementation of Virtualization For the discussion of possible forms of implementation of location-distributed organizations, it is helpful to first deal with the driving forces of location dissolution. The role of digital technologies as a driver of the developments outlined has already been addressed several times. However, the creation of new technologies alone is far from a guarantee of their actual use. Time and again, technical innovations have failed due to a lack of market or social acceptance or have not been taken up due to the inadequate quantifiability of their potential benefits. Structural developments thus always result from an interplay of diverse influencing factors. Even if we are not in a position to fully explain this interplay, even in the age of digitalization, it is nevertheless useful to at least bear in mind the significance of three key levels of influence: • The market and corporate environment level. • The level of value creation and corporate success. • The level of people and work.

7.2.1 Overcoming Location Boundaries at the Market and Business Environment Level New digital, technical possibilities are generally considered to have triggered the emergence of distributed forms of work and organization (cf., e.g., Grenier & Metes, 1992; Allen & Scott Morton, 1994; Reichwald et al., 2000). Chapter 4 has already shown which new digital technologies have developed in recent years and how they

7.2  Forms of Implementation of Virtualization

125

affect communication and work organization. Influencing factors such as decentralization, networking, mobile technologies, and the miniaturization of information and communication technologies as well as, above all, increasing capacities with a simultaneous immense drop-in costs play a central role. New digital technologies allow for a dissolution of location boundaries. Current framework conditions in environment, society, and politics facilitate further. Only a few examples may serve as illustration. Example Regional and structural policy: The declared objective of today’s regional and structural policy is to counteract the progressive polarization between urban agglomerations and structurally weak areas in rural regions. Through a targeted orientation of mobile technologies, positive effects seem to be achievable here in several respects: • Creation of additional employment opportunities, especially for the young population. • Increasing the income and economic power of the affected areas. • Reduction of out-migration tendencies. • Preservation of the rural area as an equal and independent living space. Flexibilization of individual work: Mobile technologies in particular enable distributed work, which many employees like to use by switching between workplaces in the company, at home, at the customer’s, or even on the road in a plane or train. For companies, this sometimes results in high savings potentials if they no longer have to provide a location-based workstation for each employee.

7.2.2 Overcoming Location Boundaries at the Level of Value Creation and Company Success The trend toward relocation is driven by a number of economic factors. An increased dependence of companies on resources, especially in terms of know-how and capital, is increasingly favoring the tendency to relocate. As already mentioned several times, a far-reaching customer orientation is demanded from companies today. The increased creation of customer-specific solutions requires a close integration of the customer into the service creation process. The customer is changing from a pure buyer to a user with a post-purchase orientation to a “prosumer” integrated into the service production process (cf. Piller & Reichwald, 2009). This results in the requirement to link isolated, juxtaposed value creation processes with each other. Digital technologies offer a range of options. Customer integration can be supported by distributed value creation structures if this results in greater proximity to the customer.

126

7  Overcoming Location Boundaries: Virtual Enterprise

The competitiveness of a company depends to a decisive degree on the extent to which it succeeds in designing the processes of service production economically. From an economic point of view, it is possible to influence economic efficiency through organizational and technical design measures, particularly in the four target dimensions: costs, time, quality, and flexibility (cf. Reichwald et al., 1996). These dimensions are supplemented by other goals, such as innovation and transparency (cf. Osterloh & Frost, 2006). New organizational designs and technology concepts that promise significant positive effects in these dimensions have realistic chances of being introduced and implemented. If in addition a positive influence on the job satisfaction of the employees as well as a consideration of company-external effects is given, they have chances of success. The assessment of a potential achievement of objectives can of course only be made subjectively and therefore sensibly requires the consideration of different interest groups. An assessment from an individual perspective inevitably remains incomplete. Numerous reasons speak for an economically positive evaluation of organizational-­technical concepts of overcoming the boundaries of location. Those reasons are driving the introduction and implementation of virtual forms of organization. Only a few of these reasons are highlighted below: • Cost factors: Regional and national differences in wages and salaries (or personnel costs) are often reasons for relocating business activities. Furthermore, high real estate costs in metropolitan areas also speak in favor of a spatial decentralization of corporate units. • Time factors: The use of different time zones or internationally different working rhythms and public holiday regulations by means of location distribution allows a time streamlining of operational processes. • Quality factors: A targeted use of national strengths and competences allows an improved achievement of quality goals. • Flexibility factors: The growing need to be able to react flexibly to changing requirements makes it necessary to permanently adapt one’s own capacity and performance limits to problem-dependent demands.

7.2.3 Overcoming Location Boundaries at the Level of People and Work It will therefore become increasingly important for companies in the future to reflect these sustainable changes and new needs structures and to take them into account in new organizational designs. Entrepreneurial goals will become less and less feasible without the inclusion of employee goals. In the end, the survival of each individual company will depend on the consistent development and use of human abilities and creativity potentials as well as the provision of sensible organizational and technical framework conditions. Virtual forms of work and organization meet the new values in many respects. They make it possible to integrate goals of the individual, such as

7.2  Forms of Implementation of Virtualization

127

self-determination, mobility, and independence, and thus make them a basic building block of organizational design concepts.1 Based on the changes and opportunities presented by digital technologies outlined above, collaboration in the future will take place even more than before in an environment where the boundaries between online and offline are disappearing. Therefore, it is necessary to implement a technological infrastructure that enables employees to access information and work together from any location (i.e., office, home office, shared office, mobile). However, providing such an infrastructure is not enough. In order to achieve business goals, the organizational infrastructure must be designed in such a way that cross-departmental collaboration is not only encouraged but can be integrated into everyday work as a matter of course, i.e., without much trouble. Waber et al. (2014, p. 71) even go one step further and talk about offices becoming a “semi-permeable public space woven into the urban fabric” in the future. Working in different workplaces goes hand in hand with the understanding of digital work. However, it is evident in company practice that many companies are still far from penetrating all facets of the heterogeneity of their employees’ qualifications, needs, and perceptions in relation to everyday digital work. Vogl and Nies (2013) show that, in addition to the aforementioned technological infrastructure, this also requires legal and collectively agreed norms, company agreements, codes of conduct, etc. However, due to the heterogeneity of employees, the implementation, evaluation, and also regulation of digital working at different workplaces can only be achieved through a differentiated understanding of the individual benefits of digital working. This requires taking into account the different types of digital workers and their respective expectations and capabilities. Neyer (2015) has developed a typology that shows four types of digital workers depending on the share of digital work and the relative benefits of digital work (cf. Fig. 7.4). The share of digital work is defined as the objective degree of use of information and communication technology-based digital work tools. The relative benefit of digital work is the individual benefit that results from working with digital work tools. Following Schröder (2014), individual benefit is understood as the degree of: • Conscious use of creative leeway resulting from the temporal and spatial disponibility of digital work. • Autonomy in work design (e.g., flexibility). • Work-life balance. • Work-life blending. • Stress and strains resulting from the often boundary-dissolving effect of digital work (e.g., permanent accessibility). • Joy of using digital work tools. • Availability of the skills and qualifications required for digital working. • Protection of data and guarantee of the privacy rights of digital workers.  The contents of Sect. 7.2.3 were taken from the book Business Governance (Müller & Neyer, 2015). 1

7  Overcoming Location Boundaries: Virtual Enterprise

high

128

Digital high-flyer

Share of digital work

Sufferer „I have to keep up“

"I benefit personally, my work result is very good and I learn new things all the time"

Digital optimizer

"What am I doing here actually?"

"My work is facilitated"

low

Ignorant

low

high Relative benefits of digital work

Fig. 7.4  Types of digital workers. (Neyer, 2015)

Depending on how high the relative benefit of digital work is assessed and how high the actual use of digital work tools is in the context of the respective activity, the range of those who work digitally to a high extent extends from the sufferer who feels pressured, for example, due to the behavior of their environment (e.g., colleagues who also answer e-mails at the weekend) to the digital high-flyer who appreciates a corporate environment in which the technological and organizational infrastructure is designed in such a way that digital work is seen as a matter of course at a wide variety of work locations and times. If the actual share of digital work in day-to-day business is low, a distinction can be made between the ignorant, i.e., the person who is not explicitly aware that the use of digital work tools can be beneficial within the scope of his or her tasks, and the digital optimizer. The latter understands how to make the most of the limited opportunities for digital work that his or her job entails, e.g., by allowing teleworking on individual days. These different types and their expectations and needs can influence virtual collaboration. If, for example, primarily digital high-flyers work in a team, it can be assumed that the basic attitude toward virtual collaboration is more positive than if the team is composed of the types “sufferers” and “ignorant.”

7.3 Virtualization and Organization The goal pursued with the virtualization of organizations is flexibility. It refers to the ability of an organization to adapt dynamically to changes in environmental conditions. While organizational stabilization strategies aim at counteracting

7.3  Virtualization and Organization

129

external forces with internal constancy, flexibility strategies strive for dynamic change processing and adaptability (cf. Camarinha-Matos et al., 2003). If the environment changes only slightly or if the variability of requirements is low, stabilization strategies are generally superior from an efficiency point of view. However, the more turbulent the environment or the higher the variability of the requirements to be met, the more successful a flexibility strategy is. Conboy (2009) and Sambamurthy et al. (2003) underline the high flexibility potential of a targeted use of digital technologies. Lucas and Olsen (1994) see flexibility improvements in three main areas: • Change in the spatial and temporal dimension of task accomplishment. • Increasing the speed of task completion. • Improving the company’s reaction time to market changes. In the following, the essential aspects relevant to the question of the organization of the virtualization of organizations will now be discussed, before possible limits of the virtual organization  – also in the age of digitalization  – are pointed out afterward.

7.3.1 “Virtual Size” Despite “Real Smallness” Today, size often matters for organizations. The globalization of economic activity forces size; investments in technology and innovation require size. Growth and size are therefore absolutely relevant for the success of a company in its competitive environment. On the other hand, size today is almost synonymous with sluggishness. The inflexibility and inefficiency associated with size must be avoided. In the past, many economic endeavors, such as achieving economies of scale or scope, could only be met through real growth. Today, however, it is becoming apparent that under the influence of digital technologies, not only smaller companies are favored (cf. Gehrckens, 2016; Radut, 2009); they are additionally given the chance of building virtual scale (cf. Chang, 2003; Scholz, 2000). The open-closed principle of the virtual organization and its location distribution allow for size in the appearance on the market. Network structures allow for size with regard to the use of common resources or the provision of common financial resources (cf. Chap. 6). While strategies of vertical integration are increasingly associated with competitive disadvantages and a clear trend toward outsourcing and downsizing (i.e., overall vertical disintegration) can be observed, virtual organizations use the concept of virtual integration by networking independent units (cf. Gora & Scheid, 2001; Radut, 2009) and, by removing formal boundaries, make use of cooperation that acts like a single company vis-à-vis third parties (cf. Gora & Scheid, 2001).

130

7  Overcoming Location Boundaries: Virtual Enterprise

7.3.2 Centralization Despite Decentralization When deciding between centralization and decentralization, organizations are faced with the design question of which instruments from the continuum between market and hierarchy are to be used under which conditions for the coordination of economic activities (cf. Picot & Neuburger, 1997; Picot, 1999). Complete centralization stands for the decision to do everything oneself; complete decentralization means a transfer of all tasks to independent entrepreneurs. To what extent should a company use centralized (hierarchical) or decentralized (market-based) forms of organization to accomplish its tasks? Answers to this question cannot be found with the help of a standard remedy. There is no “either-or.” The decisive factor is to find the appropriate mix between decentralization and centralization, i.e., one that is tailored to the characteristics of the problems to be solved. Extreme positions are often dangerous. Complete centralization breaks down because the central authority is overwhelmed. Similarly, a decentralized solution cannot work if there is no adequate central framework and infrastructure, etc.

7.3.3 Generalization Despite Specialization Generalization requires redundant resources for a business organization as well as for organizational units and individuals (cf. Staehle, 1991; Romero & Molina, 2010). If one considers the accomplishment of a single task, generalists inevitably incur higher costs and achieve lower efficiency than an actor specialized in this task. However, this advantage of specialists immediately disappears when considering the accomplishment of bundles of tasks in a dynamic, uncertain environment. Due to their modularity and heterogeneity, virtual organizations can simultaneously achieve generalization in their external appearance (service offering) and exploit cost advantages by specializing the individual components internally (cf. Reiß, 1992; Köszegi, 2001).

7.3.4 Virtual Teams To achieve the goal of flexibility, organizations are increasingly working with virtual teams. These are characterized by the following features (Konradt & Hertel, 2002): • Flexible groups of distributed and location-independent employees. • Common work assignments or objectives. • IT networking.

7.3  Virtualization and Organization

131

• Communication and exchange of information primarily through electronic communication media such as e-mail, online meeting, web conferencing, Internet services etc. • Employees are ideally members of the team because of their specific competence. • Leadership by distance leaders. In addition to clear organizational framework conditions and a functioning IT infrastructure, the successful work of virtual teams also requires very good communication skills on the part of the virtual team members (see also Chap. 3). Furthermore, the emotional intelligence of the team members plays an important role. Emotional intelligence describes the ability to understand the feelings and emotions of others and to respond to and control them in communication and social interaction (Goleman & Griese, 2007). Virtual teams pose major challenges for leadership in particular (e.g., Gilson et al., 2015): • Leaders are challenged to moderate the distance between members, i.e., the physical (measurable) distance and the perceived distance (e.g., via power relations) in a virtual context. • Virtual teams often have members from different cultures, for whom it is necessary to develop a common understanding, especially in communication and working methods. • Trust plays a very important role in virtual cooperation. At the same time, however, this is more difficult to establish than in personal contact (cf. Sect. 7.3.5). • Team development and employee development at a distance are two central challenges for managers in virtual teams. The corresponding competencies must be developed.

7.3.5 Limits of Virtual Organizations The virtual organization transcends many boundaries: fixed boundaries of space and time for the accomplishment of tasks, boundaries of a legally defined inside and outside of the organization, or relatively permanent contractual boundaries of a membership or non-membership of the organizational participants. However, there are of course also limits to this form of organization. On the one hand – even in the age of digitalization – there are still the limits of the technical infrastructure. But there are also limits imposed on the functioning of institutions by human behavior patterns. This gives rise to areas of tension and contradictions with regard to the “boundarylessness” of virtual enterprises. This will be explained below on the basis of trust as a crucial coordination mechanism of virtual organizations (cf. Köszegi, 2001). Opportunistic human behavior, i.e., the pursuit of self-interest at the expense of others, gives rise to risks. How the opportunistic exploitation of information asymmetries as a delegation risk can also affect the client-contractor relationship of virtual organizations can be aptly described with the help of the principal-agent theory (cf. Chap. 2). The higher the need for security of cooperation partners, the

132

7  Overcoming Location Boundaries: Virtual Enterprise

higher the behavioral uncertainty, the greater the loss potential, and the more complex and strategically significant the service to be provided. Traditionally, hedging interests are satisfied by concluding contracts. The virtual organization, however, largely dispenses with explicit contractual hedging to ensure its dynamic character. Trust is its constitutive element (cf. Luhmann, 1994, 2000; Fukuyama, 1995; Kramer & Tyler, 1996; Borchardt, 2006; Kemmner & Gillessen, 2000). Virtual corporate structures rely heavily on trust, as internal and external collaborations cannot be represented in complete contracts. At the same time, however, virtual, networked structures make it more difficult for trust to emerge due to face-to-face contacts becoming less frequent. A trust dilemma arises (Sydow, 1996). The short-term nature and dynamics of virtual organization based on trust require long-term stable, informal trust relationships, generally accepted reputations, and reliable certifications or “rules of the game.” Only the long-term stability of the rules of the game guarantees the flexibility of the organization (cf. Bonus, 1998). Virtual organizations are thus about cooperative problem-solving between only loosely connected cooperation partners. The structures in which these cooperative relationships take place configure themselves dynamically and are only temporary. • How can an appropriate information supply for such organizations look like and which incentive problems have to be considered? • How are rights of action and disposal distributed in such structures and how are they attributed? If the willingness of actors to act is determined – as property rights theory teaches – by the individual usability of the consequences of action, then the securing and enforceability of property rights plays a vital role in the functioning of virtual organizations. • How can the basic problems of the principal-agent relationship between client and contractor (hidden characteristics, hidden action, hidden intention) be effectively countered in this form of organization? • How are contractual relationships to be structured in such a way that behavioral leeway for flexible action is opened up while at the same time the danger of opportunistic exploitation of this leeway can be contained? Conclusive answers to these questions cannot be given. However, the complex of problems outlined here already make one thing clear: the limits of the virtual enterprise as a supposedly “boundaryless” form of organization do not lie solely in the area of technical feasibility. Adequate digital technologies and the dynamic development taking place in this field are a necessary but not sufficient condition for the successful realization of this form of organization.

7.4 Conclusions for Management and Leadership The latest developments in digital technologies are helping more than ever to overcome traditional boundaries of space and time. They allow, facilitate, and encourage the emergence of distributed forms of work and organization. A 2016 study by the

7.4  Conclusions for Management and Leadership

133

Bertelsmann Stiftung on the topic of “2050: The Future of Work” shows the role that virtuality will continue to play in shaping workplaces and forms of work in the future: • Multilocal working, i.e., at different workplaces inside and outside the company. • Free choice of work location by employees, e.g., home office. • Mobile offices, e.g., on the train or in coworking spaces. Coworking spaces are shared work spaces in which mobile workers find not only a workplace and the necessary infrastructure but also a network to the work community and the diverse professional and private benefits of this network (Gandini, 2015; Schürmann, 2013). • Minimal or no “team presence time” and collaboration in virtual spaces. A central management task in this context is to balance possible areas of tension between the classic and the mobile-virtual design of work. In the literature, leadership at a distance is also referred to as digital leadership (see Sect. 3.4.2). Control and Trust  It is the task of the leaders and the whole team to trust each other in advance that the tasks will be fulfilled (Petry, 2016): • However, trust in the performance of tasks, regardless of where and when the work is done, also presupposes trust that “something may be said to the other person.” Who is working on what? How many resources are needed for it? This is central to any team, but it becomes even more important when working virtually. • In order to establish a culture of trust, clear guidelines are necessary within which trust is possible. The team must agree on the expectations regarding availability. This requires trust but also mutual, regular monitoring: Are agreements being kept? Do these agreements match the goals that have been set? Do they have to be adjusted because the goals cannot be achieved in this form? Steering and Letting Go  In the context of mobile-virtual work, leaders must recognize (even at a distance) when they should take on a steering support role, e.g., when there is a need for exchange. • The intensity of the support provided by managers varies depending on the personality and level of experience of the respective employee. The role of managers as coaches continues to increase in the area of tension between mobile and traditional work. • At the same time, leadership at a distance, as triggered by mobile-virtual working, requires everyone to be responsible for structuring tasks independently. This letting go requires leaders to accept that direct influence on the performance creation process is reduced. • For this, the role as a “communicator” is gaining in importance. The more employees work on a mobile basis, the more important it is to consider how, if possible, everyone can be involved not only in the formal but also in the informal communication channels. Teams that work mobile also need the opportunity to exchange information informally. It is the task of the manager to promote this

134

7  Overcoming Location Boundaries: Virtual Enterprise

and to provide both digital technologies and organizational framework conditions that make this possible. Autonomy and Transparency  Mobile working is characterized by independence and autonomy, in short freedom, in many respects: Where is work done? When do you work? Autonomy in deciding which work location is the most efficient and effective for which task is of importance. • For this purpose, it must be transparent what is currently being worked on. This is the only way to ensure the integration of all participants, regardless of where they are working. • In this context, people now often talk about “working out loud.” This is the ability to make one’s own work visible in such a way that it can also help others. Especially when work is done at different locations, organizational possibilities must be created and the appropriate IT support must be available so that  – although autonomous in the design of the work task and the choice of work location – integration through transparency is ensured. • Making one’s own work visible – both offline and online – is an important leadership task. Only in this way can leadership processes be designed in which the autonomy of the individual is given and at the same time there is transparency about the tasks and the goals achieved. In summary, it can be said that overcoming the boundaries of location per se does not yet imply a corporate competitive advantage. Only spatial distribution or location independence as the result of targeted space-time management as well as an active management task for the use of location advantages and as a response to new requirements in an environment characterized by increasing complexity and dynamics allows for the realization of sustainable advantages in global competition. A significant focus must be placed on each individual in the sense of the typology of the person working digitally.

References Allen, T. J., & Scott Morton, M. S. (Eds.). (1994). Information technology and the corporation of the 1990s. Oxford University Press. Bonus, H. (1998). Die Langsamkeit von Spielregeln. In K.  Backhaus & H.  Bonus (Hrsg.), Die Beschleunigungsfalle oder der Triumph der Schildkröte (3. Aufl., S. 1–18). Schäffer-Poeschel. Borchardt, A. (2006). Koordinationsinstrumente in virtuellen Unternehmen. Eine empirische Untersuchung anhand lose gekoppelter Systeme. Deutscher Universitätsverlag. Bullen, C. V., & Bennett, J. L. (1990). Groupware in practice: An interpretation of work experience (Center for Information Systems Research working paper no. 205). Palala. Bullen, C. V., & Johansen, R. R. (1988). Groupware: A key to managing business teams? (Center for Information Systems Research, Sloan School of Management, working paper CISR no. 169). MIT.

References

135

Camarinha-Matos, L., Afsarmanesh, H., & Rabelo, R. (2003). Infrastructure developments for agile virtual enterprises. International Journal of Computer Integrated Manufacturing, 16(4–5), 235–254. Chang, E. (2003). A virtual logistics network and an E-hub as a competitive approach for small to medium size companies. Lecture Notes in Computer Science, 2713, 265–271. Conboy, K. (2009). Agility from first principles: Reconstructing the concept of agility in information systems development. Information Systems Research, 20(3), 329–354. Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. The Free Press. Gandini, A. (2015). The rise of coworking spaces: A literature review. Ephemera: Theory and Politics in Organization, 15(1), 193–205. Gehrckens, H. M. (2016). Agilität im Kontext der digitalen Transformation–Kernanforderung an die Organisation von morgen. In Digitale Transformation oder digitale Disruption im Handel (S. 79–108). Springer Gabler. Gilson, L. L., Maynard, M. T., Young, N. C. J., Vartiainen, M., & Hakonen, M. (2015). Virtual teams research: 10 years, 10 themes, and 10 opportunities. Journal of Management, 41, 1313–1337. Goleman, D., & Griese, F. (2007). Emotionale intelligenz (19. Aufl.). Deutscher Taschenbuch. Gora, W., & Scheid, E.  M. (2001). Organisation auf dem Weg zur Virtualität. Virtuelle Organisationen im Zeitalter von E-Business und E-Government. Springer. Grenier, R., & Metes, G. (1992). Enterprise networking: Working together apart. Digital Press. Johansen, R. (1991). Teams for tomorrow. In Proceedings of the 24th annual Hawaii international conference on systems sciences (S. 520–534). IEEE Computer Society Press. Kemmner, G.-A., & Gillessen, A. (2000). Virtuelle Unternehmen. Physica. Konradt, U., & Hertel, G. (2002). Management virtueller Teams. Von der Telearbeit zum virtuellen Unternehmen. https://opus.bibliothek.uni-­wuerzburg.de/opus4-­wuerzburg/frontdoor/deliver/ index/docId/1846/file/KonradHertel_virtuelle_Teams.pdf. Accessed 14 Jan 2020. Köszegi, S. (2001). Vertrauen in virtuellen Unternehmen. Deutscher Universitätsverlag. Kramer, R.  M., & Tyler, T.  R. (Eds.). (1996). Trust in organizations: Frontiers of strategy and research. Sage. Legrand, G. (1972). Dictionnaire de Philosophie. Bordas. Lucas, H., & Olsen, M. (1994). The impact of information technology on organisational flexibility. Journal of Organisational Computing, 4(2), 155–175. Luhmann, N. (1994). Die Wirtschaft der Gesellschaft. Suhrkamp. Luhmann, N. (2000). Vertrauen: Ein Mechanismus der Reduktion sozialer Komplexität (4. Aufl.). Enke. Mowshowitz, A. (1991). Virtual feudalism: A vision of political organization in the information age. Deelstudie in het kader van NOTA – Project Democratie en Informatiesamenleving. Müller, J., & Neyer, A.-K. (2015). Business Governance. Mitarbeiter- und Unternehmensführung in der Wissensgesellschaft. Springer. Neyer, A.  K. (2015). Die digitale Arbeitswelt und ich: Beste Freunde oder notwendiges Übel? Vortrag im Rahmen der Absolventenverabschiedung an der Martin-Luther-Universität Halle-­ Wittenberg, Halle. O’Hara-Devereaux, M., & Johansen, R. (Eds.). (1994). Global work. Bridging distance, culture and time. Jossey-Bass. Osterloh, M., & Frost, J. (2006). Prozessmanagement als Kernkompetenz, uniscope: Die SGO-­ Stiftung für praxisnahe Managementforschung. Gabler. Petry, T. (2016). Digital Leadership. Erfolgreiches Führen in Zeiten der Digital Economy. Haufe Gruppe. Picot, A. (1999). Organisation. In M. Bitz, K. Dellmann, M. Domsch, & F. Wagner (Hrsg.), Vahlens Kompendium der Betriebswirtschaftslehre (4. Aufl., Bd. 2, S. 107–180). Vahlen. Picot, A., & Neuburger, R. (1997). Der Beitrag virtueller Unternehmen zur Marktorientierung. In M. Bruhn & H. Steffenhagen (Hrsg.), Marktorientierte Unternehmensführung – Reflexionen, Denkanstöße, Perspektiven (S. 119–140). Gabler.

136

7  Overcoming Location Boundaries: Virtual Enterprise

Piller, F.  T., & Reichwald, R. (2009). Wertschöpfungsprinzipien von Open Innovation. In A. Zerfaß & K. Möslein (Hrsg.), Kommunikation als Erfolgsfaktor im Innovationsmanagement (S. 105–120). Gabler. Radut, C. (2009). Virtual corporations, enterprise and organization. Economia. Seria Management, 12(1), 121–135. Reichwald, R., & Möslein, K. (2003). Telekooperation und Virtualisierung. In H.-J.  Bullinger, H. J. Warnecke, & E. Westkämper (Hrsg.), Neue Organisationsformen im Unternehmen. Ein Handbuch für das moderne Management (S. 725–740). Springer. Reichwald, R., Höfer, C., & Weichselbaumer, J. (1996). Erfolg von Reorganisationsprozessen. Leitfaden zur strategieorientierten Bewertung. Schäffer-Poeschel. Reichwald, R., Möslein, K., Sachenbacher, H., & Englberger, H. (2000). Telekooperation: Verteilte Arbeits- und Organisationsformen (2. Aufl.). Springer. Reiß, M. (1992). Spezialisierung. In E. Frese (Hrsg.), Handwörterbuch der Organisation (3. Aufl., S. 2287–2296). Schäffer-Poeschel. Romero, D., & Molina, A. (2010). Virtual organisation breeding environments toolkit: Reference model, management framework and instantiation methodology. Production Planning & Control, 21(2), 181–217. Sambamurthy, V., Bharadwaj, A., & Grover, V. (2003). Shaping agility through digital options: Reconceptualizing the role of information technology in contemporary firms. MIS Quarterly, 27, 237–263. Scholz, C. (2000). Virtualisierung als Wettbewerbsstrategie für den Mittelstand? Erste Erfahrungen und ergänzende Überlegungen. In H. Albach, D. Specht, & H. Wildemann (Hrsg.), Virtuelle Unternehmen: ZfB-Ergänzungsheft 2 (S. 201–222). Springer. Schröder, L. (2014). Digitale Arbeit bedarf der Humanisierung – einige Vorschläge für die Praxis. Gute Arbeit, 26(1), 17–20. Schürmann, M. (2013). Coworking Space: Geschäftsmodell für Entrepreneure und Wissensarbeiter. Springer. Staehle, W.  H. V. (1991). Redundanz, Slack und lose Koppelung in Organisationen. In W. H. V. Staehle & J. Sydow (Hrsg.), Managementforschung, 1 (S. 313–345). de Gruyter. Sydow, J. (1996). Die virtuelle Unternehmung – eine Vertrauensorganisation. Office Management, 44, 10–13. Vogl, G., & Nies, G. (2013). Mobile Arbeit. Betriebs- und Dienstvereinbarungen. Analyse und Handlungsempfehlungen. Bund. Waber, B., Magnolfi, J., & Lindsay, G. (2014). Workspaces that move people. Harvard Business Review, 92(10), 68–77.

Chapter 8

The Human Being in the Boundaryless Enterprise: New Demands on Employees and Managers

Abstract  As shown in Chap. 1, the organizational-technical change, change in values, and rapid developments in the field of artificial intelligence are changing the diverse tasks of people in the boundaryless organization. Historically evolved organizational structures are changing with unprecedented radicality and speed as a result of digital technologies. Traditional structures of the world of work, including working hours, work locations, qualifications and vocational training, competencies, and hierarchies are being called into question and must be further developed in an appropriate form. In the future, the supporting activities made possible by artificial intelligence will subdivide the tasks of managers to a greater extent and bring leadership to the fore. This change must be reflected in competencies and thus also in personnel development.

8.1 The Human Being in the Boundaryless Organization: “Working World 4.0” As shown in Chap. 1, the organizational-technical change, change in values, and rapid developments in the field of artificial intelligence are changing the diverse tasks of people in the boundaryless organization. Historically evolved organizational structures are changing with unprecedented radicality and speed as a result of digital technologies. Traditional structures of the world of work, including working hours, work locations, qualifications and vocational training, competencies, and hierarchies are being called into question and must be further developed in an appropriate form. In the future, the supporting activities made possible by artificial intelligence will subdivide the tasks of managers to a greater extent and bring leadership more to the fore. This change must be reflected in competencies and, thus, also in personnel development.

© Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 A. Picot et al., The Boundaryless Enterprise, https://doi.org/10.1007/978-3-658-40054-5_8

137

138

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

In the context of competence development, the employee is seen as a being capable of change and learning. For management and organization, this means that only on the basis of an analysis of the situation and motivation of the individual employee can a meaningful design of the work organization and its framework conditions take place. The design should be flexible and, if possible, adapted to the requirements of employees and the environment. The basis of this flexibility is the recognition that self-fulfillment and work content are becoming an increasingly strong need for the employee. This was the finding of a 2017 study that surveyed millennials aged 20–34 in Europe (Südwestrundfunk et al., n.d.). In this study, 54% of 20- to 24-year-­ olds stated that for them, work was primarily an opportunity for self-fulfillment. These findings should be taken into account when designing the working world of the future (Work 4.0). This also shows that the dissolution of boundaries between the private sphere and the world of work is continuing to progress. The classical perspective and the traditional image of man are being replaced by a new image of man with changed assumptions and expectations for the working world of the future. It is therefore important to meet the changing needs and expectations of employees. On the one hand, this is done through flexible working time models (e.g., sabbaticals, parental leave, elder care), mobile workplaces, or also through multifunctional room design in companies. On the other hand, it is also about increasing the efficiency and productivity of employees through the digitalization of company and inter-company value creation. At the same time, framework conditions are to be created that improve the motivation, well-being, communication, cooperation, and information exchange of employees. Thus, the human being as a part of the organization receives a central role. The employee must be viewed in his or her entirety, i.e., with his or her individual abilities and skills, as the most important and valuable resource in the boundaryless organization and be empowered accordingly.

8.1.1 The Importance of People in Changing Competitive Conditions Due to the intensification of the competitive situation of companies in the course of globalization, the strategic potentials for achieving competitive advantages are increasingly shifting toward the factor “people.” Young, qualified, and innovative employees are becoming a bottleneck factor due to demographic change. The average age of the workforce is rising, while the number of young applicants is falling (Schirmer, 2016). This development leads to a change of the employer market to an employee market (Holste, 2012), so companies increasingly have to “apply” to skilled workers (Papmehl & Tümmers, 2013). As the success of a company nowadays depends less and less on material resources, but is significantly influenced by talented employees (Heider-Winter, 2014), a “war of talents” is emerging, a competition between companies for young, highly qualified workers (Holste, 2012). This is why it is not uncommon to speak of a “talent economy”.

8.1  The Human Being in the Boundaryless Organization: “Working World 4.0”

139

8.1.2 New Models of Work Structuring in the Boundaryless Organization The previous chapters show that in the course of changing competitive conditions, globalization, and digitalization, not only has the spectrum of conceivable forms of coordination and organization shifted; the variety of available forms of coordination has also increased. In the course of this, the patterns of division of labor are also changing – not only between companies and organizational units but also between employees. In networks and virtually operating companies, for example, labor division occurs in different locations and over different times. For this reason, the support of service creation, coordination, and communication through digital technologies is indispensable today. This applies all the more against the backdrop of increasingly networked production or Industry 4.0 (cf. Chap. 4). At the level of work organization, these new organizational models have a profound impact: • Peer-to-peer instead of hierarchy: In addition to cross-departmental and cross-­ company collaboration, project work is also rising. Also, the formal position is no longer in the foreground. The decisive factors are professional and social competencies. Responsibilities and powers are explicitly set out in role descriptions, although these can change from project to project and are therefore not permanent. • Agile instead of rigid: Standardized processes are shared between companies without this being visible to the customer or employees, which means that networking is becoming increasingly important. This requires greater structural, content-related, and spatial flexibility as well as the permanent further development of collaboration structures. Agile organizations are characterized primarily by the fact that there are no disciplinary power hierarchies but that work primarily takes place in self-organized project teams with defined and changing roles. In short, all these models of work replace the hierarchy-oriented, highly structured organizational concepts. The principle of networking, which underlies the boundaryless organizations, is thus also found within the company and is primarily reflected in two concepts: team concepts and networking. Team Concepts The concepts of modularization addressed in Chap. 5 involve restructuring into small, manageable units with decentralized decision-making authority and their own responsibility for results. The underlying tasks tend to be constant and are characterized by a high degree of complexity. Such tasks, which occur, for example, in the production of complex, high-value products or in highly innovative, time-­ critical processes with a strong market focus and need for flexibility, require spontaneous and direct engagement in communication relationships (cf. Picot & Reichwald, 1991; Lawler, 1992; Harris & Sherblom, 2018). Furthermore, their fulfilment requires scope for interpretation and design, which is created by combining task contents into a holistic task structure (vertical task integration) as well as an extensive transfer of scope for action and decision-making power.

140

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

In general, teams are defined very differently in the literature (cf. Hollenbeck et al., 2012). The diverse definitions can be traced back to some essential core characteristics, which can be reflected by the definition approach of Katzenbach and Smith (1994).

Characteristics of Teams (Katzenbach & Smith, 1994) Teams are therefore characterized by: • Common tasks and objectives. • Mutual complementation of the problem-solving and decision-making skills as well as the technical and methodological qualifications of the individual team members. • The transfer of responsibility to the group rather than to individuals. • The development of a mutual sense of responsibility. • Group cohesion and team spirit, as well as relatively intense two-way relationships and frequent team interaction. • Greater ability of each team member to influence shared decisions and shared outcomes of the group. • Holistic task definition and equipment with corresponding resources for task fulfilment as well as holistic responsibility for the products/services to be created. • Flat hierarchies. • Leaders, elected by the team and subject to rotation, coordinate the teams, facilitate meetings, and supervise members.

Teams can be roughly differentiated into three types: • Classical teams, which according to Parker can be categorized along the three dimensions, namely, purpose, duration, and membership, and which are based on a certain structuring through the clear demarcation between project leader and executing team (Parker, 1994). • Virtual teams to support problem-oriented and distributed collaboration (cf. Sect. 7.3.4). • Agile teams based on changing role concepts and self-responsible actors. The introduction of teams and the associated involvement of employees in decision-­making and responsibility processes opens up the possibility for companies to increase the productivity and quality of operational value creation processes and to integrate the experiential knowledge of team members. Team concepts promote the flexibility and autonomy of employees at their workplace that is necessary for new corporate structures. Especially empowerment, i.e., the transfer of responsibility combined with autonomy and self-determination, is important in developing employees’ creative potential (Seibert et al., 2011). In addition, team concepts help to increase employees’ job satisfaction (Khuong & Tien, 2013) and to extend their

8.1  The Human Being in the Boundaryless Organization: “Working World 4.0”

141

sense of responsibility for each other and for the whole processes (cf. Gottschall, 1994). In the control of creative behavior in teams, the team climate plays an important role, which can be specifically shaped by a transformational leadership style (Eisenbeiss et al., 2008; Chen et al., 2013). The practical success of team concepts is linked to a number of conditions. The acceptance and support of team concepts by management, team-oriented information systems, and the adaptation of remuneration and incentive systems to reward teamwork and cooperative performance can be considered as important prerequisites. In addition, team structures give rise to new roles for employees and, above all, managers. They must accept the underlying decentralized and delegative structures and also enable their employees to do so. Therefore, in addition to individual training measures, comprehensive team-building measures and training of team skills are often required. Networking In addition to teams, another new model of work structuring is crystallizing in boundaryless corporate structures: the formation of networks. This is recognizable or even required on several levels: personnel, organizational, and technical. Figure 8.1 provides an overview of this. As was made clear in Chap. 6, various forms of organizational networks can increasingly be identified as an intermediary form of coordination between the market and the hierarchy. These are characterized above all by relationships of varying degrees of closeness or cooperation between companies and corporate units and can arise at different levels in principle between competitors, customers, and suppliers. The prerequisite for this organizational network formation is infrastructural networking at the technical level. This is because cooperation and networks in their various facets can only be realized if technologies exist that enable inter-company communication and process control (cf. Chap. 4). Chapter 6 also made it clear that organizational networks pose new tasks for management in particular, which were previously less of a challenge in closed corporate structures. These include building

Fig. 8.1  Three levels of networking

Personal networking Supports

Needs

Organizational networking

Needs

Supports

Technichal, infrastructural networking

142

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

trust and a common corporate culture. In turn, this can only be achieved if greater networking is also ensured at a personal level and personal networking is promoted. Personal networking includes, on the one hand, the establishment and expansion of relationships with cooperation partners and, on the other hand, the coordination of the division of labor in the provision of services with independent external partners or the coordination of autonomous teams. The handling of mostly relatively complex individual case and project tasks that arise here requires rapid access to extensive amounts of information and targeted communication with possibly frequently changing communication partners (cf. Bellmann & Wittmann, 1991). Against this background, the basic models of human information and communication behavior discussed in Chap. 3 become even more relevant. Overall, inter-­ company arrangements thus require greater networking both at the technical and personnel levels. At the same time, personal networking and technical, infrastructural networking support organizational networking. Or to put it another way, technical networking (cf. Chap. 4) as the basis for organizational networking (cf. Chap. 6) is supplemented by personal networking.

8.2 The New Role of Customers, Employees, and Managers in the Boundaryless Organization 8.2.1 The New Role of the Customer When the boundaries between the company and its environment, suppliers, and sales markets become blurred, the role of the customer must also be redefined. Increased competition and the possibilities offered by digital technologies make it necessary to take into account the individual customers with their individual needs and wishes and to view sales markets less as anonymous, largely homogeneous markets and more as segmented markets. Approaches such as mass customization (cf. e.g. Piller, 2006; Hvam et  al., 2008; MacCarthy et  al., 2003) or relationship marketing (cf., e.g., Peppers and Rogers 2004; Zhang et al., 2016) show possibilities for this. Modern customer-supplier relationships emerge when services are co-­ created by different units and partial services of one unit are passed on to other units via interfaces. The customer has become more diverse and specific: behind “the customer” can be the end consumer, value-added partner in networks, distribution partner in trade, or value-added partner following in the process chain. Long-term relationships between partners and the resulting trust can, on the one hand, reduce transaction costs on both sides. On the other hand, the experience of many companies shows that the acquisition of new customers is much more time-consuming and costly than the maintenance and expansion of existing customer relationships. The individualization of products and services as well as the bundling of solutions with regard to specific customer requirements presupposes intensive communication and cooperation with the customer. This happens especially in a digitalized working environment on several

8.2  The New Role of Customers, Employees, and Managers in the Boundaryless…

143

information channels simultaneously. Customer information of a high quality enters the company. They are the promoters of innovation and change in the range of services. The customer is moving to the center of companies’ efforts. The former internal orientation of companies is increasingly replaced by an external or customer orientation (Bauer, 2000). This is also summarized under the term “interactive value creation” (Reichwald & Piller, 2009; Piller et al., 2017). As already shown in Chap. 5, “interactive value creation” describes the allocation of a service, previously provided by the employees of a company, to one or more customers or other market participants through a call for participation.

8.2.2 The New Role of the Employee The changed framework conditions explained in Chap. 2, such as digitalization, changing values, and new organizational solutions in particular, are creating new demands on people’s skills. This applies to managers as well as to employees (Schwuchow & Gutmann, 2016). From dealing with digital media and fast, lifelong learning ability and openness in this regard to personal responsibility and creativity, there is a facet of skills and abilities that go beyond the previous basic requirements of social, technical, and methodological skills for employees (MÜNCHNER KREIS, 2016, 2020). Ability to Make Decisions on One’s Own Responsibility Due to the flattening of hierarchies (cf. Chap. 1), development toward network-­ oriented organizations (cf. Chap. 6), and emerging distributed, virtual organizational structures (cf. Chap. 7), the role of employees can shift from executing “orders” to becoming decision-makers. Within the framework of these organizational structures, increased self-leadership and leadership at a distance (Genner et al., 2017) can be realized under certain conditions. By performing certain work tasks independent of location and time, there is a certain flexibility that allows more freedom in work design, leading to more decision-making freedom for employees (Snellman, 2014; Madden & Jones, 2008). In the course of “empowerment”, employees are, on the one hand, provided with more power and responsibility; on the other hand, they are also enabled to deal with it. This autonomy and freedom to act is perceived as a critical motivator for employees (Doppler & Lauterburg, 2014). Particularly important in employee empowerment is an open error culture, i.e., in order to develop into a decision-maker, it must be possible to learn from mistakes (Schwuchow & Gutmann, 2016). The employee must therefore be enabled and supported to make independent decisions in a decentralized manner and to represent them in a sustainable way. However, the freedom created by digitalization also demands greater personal responsibility and self-reflection. In particular, the constant accessibility and the new responsibilities can mean a high level of stress and possibly excessive demands for the employees. This situation must be addressed through suitable personnel development measures in the sense of responsible and sustainable employee management (Burghardt, n.d.). This includes the

144

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

development of new competencies as well as acting on one’s own responsibility, which is realized by the corresponding regulations. In this context, the approach of “shared leadership” plays an essential role. This is understood as the distribution of leadership responsibility, i.e., all team members are involved in the interactive leadership process. The team member who has the necessary skills for the task at hand always takes on the leadership work. The focus is on expert knowledge rather than the team member’s formal position in the organization (Pearce, 2004). Shared leadership is becoming increasingly important as it contributes to the emergence of trust in teams, which subsequently has a positive impact on team performance (Drescher et al., 2014). Media Competence As analog media are increasingly being replaced by digital media in everyday work, media skills in various forms are gaining central importance for all employees (i.e., staff and managers) (Franken, 2016). In particular, highly digitized work environments require employees to have extensive knowledge of information technology (Falter et al., 2018). On the one hand, this includes basic application knowledge; but above all, it also includes the knowledge and ability to assess when which media are ideally used and when media are consciously no longer used. The goal must be to build up a high level of media competence among all employees in order to enable them to work confidently in the networked, globalized world and to be able to act and succeed in the organizational solutions outlined in this book (Lembke &Soyez, 2012). Employees thus need to work on consistent self-reflection of their behavior as already addressed (de Wet et al., 2016). This is a central aspect of media literacy and must therefore be integrated into the qualification of employees and managers. Willingness to Learn, Openness, and Creativity In the future, employees will be required to deal with new developments in digitalization and technological progress even more quickly than before. In doing so, it is necessary to embrace the resulting changes in the working world. They should look beyond their own field of activity with foresight and be open to both innovation and change. In addition to the ability to make decisions on one’s own responsibility and media competence, the ability to be able and willing to adapt quickly to new circumstances is thus becoming increasingly important (Burghardt, n.d.). This means that the familiar must be questioned and daily routines reflected upon in order to reevaluate them if necessary (Franken, 2016). Creativity takes on an essential aspect in this process. Creativity is seen as an essential aspect for innovation and is therefore an important competence. Creativity refers to the generation of new and at the same time useful ideas (Amabile & Pratt, 2016). Creativity is composed of three components (Amabile, 1983): • The technical knowledge and know-how. • The task motivation, i.e., the attitude toward the task as well as the individual incentives to perform this task. • Going through the creative process, which is mostly unconscious but can also be supported by creativity techniques.

8.2  The New Role of Customers, Employees, and Managers in the Boundaryless…

145

Resilience Organizations and their members should actively meet their diverse challenges in terms of operational performance. This comprises an interplay of innovative capacity and the ability of a company to withstand strategic upheavals, to emerge strengthened from possible crisis situations, and to use unforeseeable events as impulses for necessary strategic and organizational changes (Hansen et al., 2011; Heller et al., 2012; Starecek, 2013). This so-called resistance or resilience (Buchholz & Knorre, 2012) does not yet follow a uniform understanding of the term. Rather, resilience is mostly considered at the individual level and is often described in terms of the core competencies of employees, which in varying degrees determine the innovative capacity of an organization alongside other skills as so-called innovation potential (Hoopes & Kelly, 2004). Six resilience factors can be identified in the literature: self-perception and external perception, self-control, self-efficacy, self-efficacy expectation, social skills, and stress management and problem-solving skills (Fröhlich-Gildhoff & Rönnau-Böse, 2009). Resilience, that is, an individual’s resilience, can manifest itself in different ways over time or depending on the stress situation. Resilience can be developed and fostered, among other things, by critically examining one’s own resources and abilities (Scharnhorst, 2010). In the organizational context, organizational resilience is often considered in the context of organizational change or innovation capacity and assigned to organizational and personnel factors. These include the aspects of innovation climate, material and financial resources, organizational learning, and the qualifications and competencies of employees (Rolfe, 2019).

8.2.3 The New Role of the Manager Manager and/or Leader? Senge (1990) vividly illustrates in a metaphor how the role of the manager is to be understood as architect and designer. He compares the manager to the designer of a ship –not, as one might expect, to a captain, navigator, or helmsman. After all, what would be the point of the captain ordering the ship to turn 30 ° to a port if the designer has installed a rudder that cannot be used to make such a turn? Ultimately, the designer sets the course for the ship’s fortunes – the captain can later merely assume the conditions he faces. Senge is suggesting that managers must increasingly concern themselves with the design and architecture of their organization. Management is responsible for ensuring that processes are designed in such a way that employees can perform the required tasks, that processes are successfully coordinated, and that appropriate incentive systems (i.e., performance evaluation and compensation systems) are created to motivate employees (see Schreyögg & Koch, 2010). However, the design task also includes influencing intangible components and the secret “laws” in the company – the corporate culture. Due to the many changes in the world of work, the demands on leadership and influences on corporate culture also vary. In the age of digitalization, the role of the

146

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

manager is changing as the complexity of work processes increases. In the future, it is expected that the role of the leader will also have to change continuously in order to continue to be successful (Alexander, 2006). Observation in different environments and in the literature reveals a new hybrid of the leadership role – that of the “manager-leader.” For the leader, it means not only taking on the role of manager but also that of leader and fulfilling the associated tasks (Buchen, 2005). In the Area of Tension between “Management” and “Leadership” The terms “management” and “leadership” are often used as synonyms. Although there are some similarities, their job descriptions are very different, which Kotter (1990), among others, has discussed in detail in his book. The discussion of whether the position of a manager or a leader should be taken in an organization is becoming increasingly important as managers perceive their role as insufficient and strive for leadership (Malik, 2006). In addition, there is the shift in management tasks mentioned in Sect. 8.1 due to the rapid development of artificial intelligence. Operational competencies and skills are therefore increasingly being replaced by social competencies. Learning and implementing social competencies presents managers with the challenge of breaking away from their old role. This requires, among other things, the ability to let go, for example, with regard to employee control (Fuchs, 2006; cf. Chap. 7). New Roles and Demands on Managers In particular, the “empowerment” of employees changes the tasks of the manager to a considerable extent. It is no more extended instruction, control, and decision-­ making that dominate their activities but personal leadership and support of employees and teams, networking and relationship management with the outside world, the design of visions and the implementation of changes, as well as the architecture and design of the company and its potential. The relationship-oriented aspects of the leadership task are coming more to the fore. The demands on managers resulting from these new forms of employee management essentially extend to the areas of social and communication skills, integration skills, negotiation skills, and trust-­ building skills. The development and exploitation of employee potential ultimately depends to a decisive extent on the skills of managers. The leadership trend for the new world of work is increasingly moving toward transformational leadership, in which managers act as role models, encourage their employees to think creatively, and support them individually (Schwuchow & Gutmann, 2016). Managers cannot force employees’ knowledge and creativity. Instead, it is necessary to develop and implement suitable framework conditions for creating freedom, initiative, self-­ realization, and empowerment, which poses new challenges for managers. Social Competence Social competencies are necessary for any position in an organization because they involve people-to-people behavior. However, the definition of these competencies with regard to managers has changed due to the technological-organizational change. In the future, social competencies among managers will mean, above all, being able to transcend previous requirements, build relationships of trust across

8.3  Conclusions for Management and Leadership

147

spatial boundaries, and break down resistance (Posé, 2016). The appreciation of the individual is increasingly coming to the fore. Openness, empathy, and open-­ mindedness toward employees are essential prerequisites for developing trust on both sides (Justen, 2015). Ability to Change The rapid and partly unplannable changes in the context of the boundaryless organization, which arise due to technological progress, require a rethinking in the design of the personal accompaniment of these processes. Different influencing factors have to be considered separately, but also in a cause-effect context. Managers face the challenge of preparing employees for the increasing complexity and densification of work (Schwuchow & Gutmann, 2016). To do so, they must not only drive change but also provide orientation to employees in particular (Fabig & Haasper, 2016) in order to keep resistance to a minimum and bring about effective change (Bauernhansl et al., 2014). Promoting and Challenging Employees Leadership is increasingly characterized by creating framework conditions to enable employees to perform their tasks independently and efficiently (Doppler & Lauterburg, 2014). Working and learning must be possible within the changing processes, with managers having a crucial role (Franken, 2016). The role of managers is moving toward staff developers, coaches, and mentors. They accompany the individual employees on their way, care intensively, and develop them. It is therefore one of the most important tasks of managers to enable each individual employee for the respective tasks, which can change rapidly, and to ensure their further development.

8.3 Conclusions for Management and Leadership The explanations in this chapter have shown that in boundaryless organizations the view of people is undergoing a significant change. The employee is seen as a critical factor for success in the competition of the future. This employee-focused tendency shapes both the technological-organizational challenges and the competence development in the boundaryless organization. In this context, the HR department in particular is challenged to design its personnel development offerings in such a way that the changing competencies can be developed in a task- and employee-­ oriented manner. Cross-generational personnel development: Representatives of different generations exhibit different behaviors when it comes to using digital media. For generations Y and Z, dealing with modern technologies is already an everyday occurrence. Generation Z in particular is the first generation to be confronted with digital technologies in all walks of life from early childhood onward and is thus also socialized (Klaffke, 2014).

148

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

• A core challenge in companies is to bring different people, regardless of age, equally up to date and qualified (Franken, 2016). • One method of arranging this within a company is to form mixed-age teams to allow for the possibility of mutual knowledge sharing (Franken, 2016). • A particular method that some large companies now use is so-called reverse mentoring. Here, the experienced, older employees learn from younger employees. The model thus reverses the traditional roles of mentoring (Franken, 2016). Human resource development through technology-enhanced learning: In the course of digital possibilities of information exchange and knowledge generation, knowledge can be provided directly at the workplace through cloud solutions and mobile devices. One approach to IT-supported learning is “blended learning,” i.e., learning content is delivered both digitally and face-to-face. Blended learning allows employees to access knowledge through short videos or augmented reality applications. Other options include interactive communities or FAQs on a knowledge platform in the cloud to provide interactive support and exchange. Individualized personnel development: Long-term personnel development appears difficult due to the trends and developments shown. Instead of training and further training for specific job profiles in a “linear” form, an organization should be created which can react to changes as innovatively as possible. Concepts for personnel development must be geared to the individual needs of the employee. In this area, artificial intelligence will also play a relevant role in the future, as it will increasingly be able to determine the respective need for competencies based on individual competency profiles and configure corresponding learning offers. To this end, it is essential that the HR department of an organization in particular focus more strongly on generating, collecting, and evaluating data (Wirges et al., 2020). A high-quality data basis is ultimately necessary in order to train an artificial intelligence with a high-quality data set and thus to have a basis for effective data-based decisions. Organizational learning: The concept of organizational learning is suitable for the development of the company, taking into account organizational-technical change, the change in values, and the increase in the importance of new competences. In the context of organizational learning, the organization does adapt not only to changing environmental constellations but also to changing internal organizational conditions such as motives, needs, interests, goals, values, and norms of the members of the organization. In contrast to individual learning, organizational learning thus takes place in the jointly shared reality that results from the needs, motives, values, and norms of several organizational members (cf. Probst & Büchel, 1997). It is crucial that not only individual organizational members learn but that the organization as a whole is enabled to anticipate the new environmental conditions. The aim is to break down traditional organizational structures and adapt the organization both to changing competitive conditions and to new internal organizational conditions such as changing needs and values of the members of the organization.

References

149

This is especially true if the organizational models discussed in the individual chapters of this book are implemented and further developed, which ultimately can only realize their potential with and through employees. However, it must also be made clear that this does not apply to all future scenarios of a digital economy. For example, the development of platforms can be observed in which employees find few opportunities for self-determined work. Instead, they and their work performance are largely determined by algorithms. In addition, there is growing uncertainty as to what role humans will have in a digital economy in which today’s human-machine interaction will be substituted in the future by fully automated processes of value creation in industry and administration. Keywords here are Industry 4.0 with largely fully automated production processes as well as the currently emerging discussions about transhumanism. In summary, it can be said that one thing has been obvious not only since the advent of new digital technologies in the organizational world: changing framework conditions require an innovative, critical, and open-ended discussion about the form in which technological-organizational change, changing values, and people’s personal expectations and needs can go hand in hand.

References Alexander, J. (2006). The challenge of complexity. In F. Hesselbein & M. Goldsmith (Eds.), The leader of the future 2: Visions, strategies, and practices for the new era (pp. 85–94). Wiley. Amabile, T. M. (1983). The social psychology of creativity: A componential conceptualization. Journal of Personality and Social Psychology, 45(2), 357–377. Amabile, T. M., & Pratt, M. G. (2016). The dynamic componential model of creativity and innovation in organizations: Making progress, making meaning. Research in Organizational Behavior, 36, 157–183. Bauer, R.  A. (2000). Vertriebsorganisation. Kundenorientierung durch effektive Strukturen. In R.  Reichwald & H.-J.  Bullinger (Eds.), Vertriebsmanagement: Organisation-­ Technologieeinsatz-­Personal (pp. 35–83). Schaeffer-Pöschel. Bauernhansl, T., Hompel, M., & Vogel-Heuser, B. (2014). Handbuch Industrie 4.0. Bd. 1: Produktion. Springer. Bellmann, K., & Wittmann, E. (1991). Modelle der organisatorischen Arbeitsstrukturierung: Ökonomische und humane Effekte. In H.-J.  Bullinger (Hrsg.), Handbuch des Informationsmanagements im Unternehmen (Bd. 1, S. 487–515). Beck. Buchen, I. H. (2005). Training future manager-leaders. Performance Improvement, 44(8), 20–22. Buchholz, U., & Knorre, S. (2012). Interne Unternehmenskommunikation in resilienten Organisationen. Springer. Burghardt, Y. (n.d.). Digitalisierung stellt hohe Anforderungen an die Kompetenzen der Mitarbeiter. http://www.kerkhoff-­consulting.de/presse/pressemitteilungen/pressedetails/news/ digitalisierung-­stellt-­hohe-­anforderungen-­an-­die-­kompetenzen-­dermitarbeiter.html?tx_news_ pi1%5Bcontroller%5D=News&tx_news_pi1%5Baction%5D=detail&cHash=f8c656967ed6 eb56609d050b4b248d68. Accessed 17 Jan 2017. Chen, G., Farh, J.-L., Campbell-Bush, E.  M., Wu, Z., & Wu, X. (2013). Teams as innovative systems: Multilevel motivational antecedents of innovation in R&D teams. Journal of Applied Psychology, 98, 1018–1027.

150

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

de Wet, W., Koekemoer, E.  N., & Nel, J.  A. (2016). Exploring the impact of information and communication technology on employees’ work and personal lives. SA Journal of Industrial Psychology, 42(1), 1–11. Doppler, K., & Lauterburg, C. (2014). Change Management: Den Unternehmenswandel gestalten. Campus. Drescher, M., Korsgaard, M., Welpe, I., Picot, A., & Wigand, R. (2014). The dynamics of shared leadership: Building trust and enhancing performance. The Journal of Applied Psychology, 99, 771–783. Eisenbeiss, S. A., van Knippenberg, D., & Boerner, S. (2008). Transformational leadership and team innovation: Integrating team climate principles. Journal of Applied Psychology, 93, 1438–1446. Fabig, C., & Haasper, A. (2016). IT Management: Erfahrungen und Trends. Books on Demand. Falter, M., Bürkin, B., & Hadwich, K. (2018). Ausprägungen der Digitalisierung im Arbeitsumfeld und deren Auswirkungen auf das Mitarbeiterwohlbefinden. In C. Arnold & H. Knödler (Eds.), Die informatisierte Service-Ökonomie: Veränderungen im privaten und öffentlichen Sektor (pp. 65–92). Springer Gabler. Franken, S. (2016). Führen in der Arbeitswelt der Zukunft: Instrumente, Techniken und Best Practices. Springer Gabler. Fröhlich-Gildhoff, K., & Rönnau-Böse, M. (2009). Resilienz, Resilienzförderung und der Personenzentrierte Ansatz. Gesprächspsychotherapie und Personenzentrierte Beratung, 40(4), 217–221. Fuchs, J. (2006). Karriere zur Employability—wie man im 21. Jahrhundert Karriere macht. In J. Rump, T. Sattelberger, & H. Fischer (Eds.), Employability management (pp. 179–186). Gabler. Genner, S., Probst, L., Huber, R., Werkmann-Karcher, B., Gundrum, E., & Majkovic, A.-L. (2017). IAP Studie 2017: der Mensch in der Arbeitswelt 4.0. ZHAW Züricher Hochschule für Angewandte Wissenschaften, IAP Institut für Psychologie. Gottschall, D. (1994). Sand im Betriebe. Manager Magazin, 12, 234–247. Hansen, A., Trantow, S., Richert, A., & Jeschke, S. (2011). Strategien und Merkmale der Innovationsfähigkeit von kleinen und mittleren Unternehmen. In S. Jeschke (Ed.), Innovation im Dienste der Gesellschaft: Beiträge des 3. Zukunftsforums Innovationsfähigkeit des BMBF (pp. 263–285). Campus. Harris, T. E., & Sherblom, J. C. (2018). Small group and team communication. Waveland Press. Heider-Winter, C. (2014). Employer Branding in der Sozialwirtschaft: Wie Sie als attraktiver Arbeitgeber die richtigen Fachkräfte finden und halten. Springer Gabler. Heller, J., Elbe, M., & Linsenmann, M. (2012). Unternehmensresilienz  – Faktoren betrieblicher Widerstandsfähigkeit. In F.  Böhle & S.  Busch (Eds.), Management von Ungewissheit (pp. 213–232). Neue Ansätze jenseits von Kontrolle und Ohnmacht. Hollenbeck, J., Beersma, B., & Schouten, M. (2012). Beyond team types and taxonomies: A dimensional scaling conceptualization for team description. Academy of Management Review, 37, 82–106. Holste, J. H. (2012). Arbeitgeberattraktivität im demographischen Wandel: Eine multidimensionale Betrachtung. Springer Gabler. Hoopes, L., & Kelly, M. (2004). Managing change with personal resilience. 21 keys for bouncing back & staying on top in turbulent organizations. MK Books. Hvam, L., Mortensen, N. H., & Riis, J. (2008). Product customization. Springer. Justen, K. (2015). Führungskräfte müssen Change Management können. Human Resources Management, 06/2016. http://www.humanresourcesmanager.de/ressorts/artikel/ fuehrungskraefte-­benoetigen-­changemanagement-­kompetenzen-­308808887. Accessed 20 Dec 2016. Katzenbach, J. R., & Smith, D. K. (1994). The wisdom of teams. Harper Business.

References

151

Khuong, M. N., & Tien, B. D. (2013). Factors influencing employee loyalty directly and indirectly through job satisfaction – A study of banking sector in Ho Chi Minh City. International Journal of Current Research and Academic Review, 1(4), 81–95. Klaffke, M. (Ed.). (2014). Generationen-Management: Konzepte, Instrumente, Good-Practice-­ Ansätze. Springer Gabler. Kotter, J. P. (1990). A force for change. Free Press. Lawler, E.  E. (1992). The ultimative advantage: Creating the high-involvement organization. Jossey-Bass. Lembke, G., & Soyez, N. (2012). Digitale Medien im Unternehmen. Perspektiven des betrieblichen Einsatzes von neuen Medien. Springer Gabler. MacCarthy, B., Brabazon, P. G., & Bramham, J. (2003). Fundamental modes of operation for mass customization. International Journal of Production Economics, 85(3), 289–304. Madden, M., & Jones, S. (2008). Networked workers. Pew Internet and American Life. Malik, F. (2006). Leadership um Unternehmen  – Trends und Perspektiven. In H.  Bruch, S.  Krummaker, & V.  Bernd (Eds.), Leadership  – Best practices und trends (pp.  285–297). Springer Gabler. MÜNCHNER KREIS. (2016). Chancen reflektiert wahrnehmen in einer digitalisiert-vernetzten Lebens- und Arbeitswelt. Positionspapier 2016 des MÜNCHNER KREIS-Arbeitskreises “Arbeit in der digitalen Welt”. https://www.muenchner-­kreis.de/fileadmin/dokumente/ Aktuelles/Positionspapier_Arbeit_130917_web.pdf. Accessed 14Jan 2020. MÜNCHNER KREIS. (2020). Kompetenzentwicklung für und in der digitalen Arbeitswelt; Positionspapier des Arbeitskreis “Arbeit in der digitalen Welt”. München. Papmehl, A., & Tümmers, H. J. (2013). Die Arbeitswelt im 21. Jahrhundert: Herausforderungen, Perspektiven, Lösungsansätze. Springer Gabler. Parker, G. M. (1994). Cross-functional teams. Jossey-Bass. Pearce, C. L. (2004). The future of leadership: Combining vertical and shared leadership to transform knowledge work. Academy of Management Executive, 18(1), 47–57. Peppers, D., & Rogers, M. (2004). Managing customer relationships. A strategic framework. Wiley. Picot, A., & Reichwald, R. (1991). Informationswirtschaft. In E.  Heinen (Hrsg.), Industriebetriebslehre: Entscheidungen im Industriebetrieb (9. Aufl., S. 241–393). Gabler. Piller, F.  T. (2006). Mass Customization: Ein wettbewerbsstrategisches Konzept im Informationszeitalter (4. Aufl.). Gabler/DUV. Piller, F., Möslein, K., Ihl, C., & Reichwald, R. (2017). Interaktive Wertschöpfung kompakt. Springer Gabler. Posé, U. (2016). Die Digitalisierung kann soziale Kompetenz nicht ersetzen. Human Resources Manager, 06/2016. https://www.humanresourcesmanager.de/ressorts/artikel/die-­ digitalisierung-­kann-­sozialekompetenz-­nicht-­ersetzen-­657406666. Accessed 21 Dec 2016. Probst, G. J., & Büchel, B. (1997). Organisationales Lernen: Wettbewerbsvorteil der Zukunft (2. Aufl.). Gabler. Reichwald, R., & Piller, F. (2009). Interaktive Wertschöpfung: Open Innovation, Individualisierung und neue Formen der Arbeitsteilung. Gabler. Rolfe, M. (2019). Positive Psychologie und organisationale Resilienz. Springer. Scharnhorst, J. (2010). Resilienzforschung in Theorie und Praxis: Individuelle Widerstandskrafteine notwendige Kernkompetenz? In Deutsche Gesellschaft für Personalführung e.V (Hrsg.), Personalführung, 1 (S. 34–41). Deutsche Gesellschaft für Personalführung e.V. Schirmer, U. (2016). Demografie Exzellenz: Handlungsmaßnahmen und Best Practices zum demografieorientierten Personalmanagement. Springer Gabler. Schreyögg, G., & Koch, J. (2010). Grundlagen des Managements (2. Aufl.). Gabler. Schwuchow, K., & Gutmann, J. (2016). Personalentwicklung 2017: Themen, trends, best practices 2017. Haufe Gruppe.

152

8  The Human Being in the Boundaryless Enterprise: New Demands on Employees…

Seibert, S. E., Wang, G., & Courtright, S. H. (2011). Antecedents and consequences of psychological and team empowerment in organizations: A meta-analytic review. Journal of Applied Psychology, 96, 981–1003. Senge, P. M. (1990). The leader’s new work: Building learning organizations. Sloan Management Review, 1, 7–23. Snellman, C.  L. (2014). Virtual teams: Opportunities and challenges for e-leaders. ProcediaSocial and Behavioral Sciences, 110, 1251–1261. Starecek, M. (2013). Organisationale Resilienz für strategielose Zeiten. http://www.controller-­­ institut.at/fileadmin/user_upload/Starecek_Organisationale_Resilienz.pdf. Accessed 14 Jan 2020. Südwestrundfunk, Bayrischer Rundfunk, & ZDF. (n.d.). Anteil der Millennials in Europa, die der Aussage “Arbeit ist für mich vor allem eine Möglichkeit zur Selbstverwirklichung” zustimmen. Statista. https://de.statista.com/statistik/daten/studie/725504/umfrage/umfrage-­zur-­bedeutung-­ von-­arbeit-­fuer-­die-­selbsverwirklichung-­nach-­alter-­bei-­millennials/. Accessed 08 Jan 2020. Wirges, F., Ahlbrecht, M., & Neyer, A.-K. (2020). HR-analytics. Springer Gabler. Zhang, J. Z., Watson, G. F., Palmatier, R. W., & Dant, R. P. (2016). Dynamic relationship marketing. Journal of Marketing, 80(5), 53–75.