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56 Part One Organizations, Management, and the Networked Enterprise

These systems provide a solution that takes advantage of new interactive digital
technology and opportunities created by a host of technologies such as GPS.
The firm developed new ways to coordinate production, manufacturing, and
sales. The diagram also illustrates how management, technology, and organiza-
tional elements work together to create system solutions.

COMPLEMENTARY ASSETS: ORGANIZATIONAL
CAPITAL AND THE RIGHT BUSINESS MODEL

Awareness of the organizational and managerial dimensions of information sys-
tems can help us understand why some firms achieve better results from their
information systems than others. Studies of returns from information technol-
ogy investments show that there is considerable variation in the returns firms
receive (see Figure 1.8). Some firms invest a great deal and receive a great deal
(quadrant 2); others invest an equal amount and receive few returns (quadrant
4). Still other firms invest little and receive much (quadrant 1), whereas others
invest little and receive little (quadrant 3). This suggests that investing in infor-
mation technology does not by itself guarantee good returns. What accounts for
this variation among firms?
The answer lies in the concept of complementary assets. Information
technology investments alone cannot make organizations and managers more
effective unless they are accompanied by supportive values, structures, and
behavior patterns in the organization and other complementary assets. Business
firms need to change how they do business before they can really reap the
advantages of new information technologies.
Some firms fail to adopt the right business model that suits the new
technology, or seek to preserve an old business model that is doomed by new
technology. For instance, recording label companies refused to change their

FIGURE 1.8 VARIATION IN RETURNS ON INFORMATION TECHNOLOGY
INVESTMENT

Although, on average, investments in information technology produce returns far above those returned
by other investments, there is considerable variation across firms.
Source: Based on Brynjolfsson and Hitt (2000).

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