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Chapter 1 Information Systems in Global Business Today 57

old business model, which was based on physical music stores for distribu-
tion rather than adopt a new online distribution model. As a result, online
legal music sales are dominated not by record companies but by a technology
company called Apple Computer.
Complementary assets are those assets required to derive value from
a primary investment (Teece, 1988). For instance, to realize value from
automobiles requires substantial complementary investments in highways,
roads, gasoline stations, repair facilities, and a legal regulatory structure to set
standards and control drivers.
Research indicates that firms that support their technology investments
with investments in complementary assets, such as new business models,
new business processes, management behavior, organizational culture, or
training, receive superior returns, whereas those firms failing to make these
complementary investments receive less or no returns on their information
technology investments (Brynjolfsson, 2003; Brynjolfsson and Hitt, 2000;
Davern and Kauffman, 2000; Laudon, 1974). These investments in organiza-
tion and management are also known as organizational and management
capital.
Table 1.3 lists the major complementary investments that firms need to
make to realize value from their information technology investments. Some
of this investment involves tangible assets, such as buildings, machinery,
and tools. However, the value of investments in information technology
depends to a large extent on complementary investments in management
and organization.
Key organizational complementary investments are a supportive business
culture that values efficiency and effectiveness, an appropriate business model,
efficient business processes, decentralization of authority, highly distributed
decision rights, and a strong information system (IS) development team.

TABLE 1.3 COMPLEMENTARY SOCIAL, MANAGERIAL, AND ORGANIZATIONAL
ASSETS REQUIRED TO OPTIMIZE RETURNS FROM INFORMATION
TECHNOLOGY INVESTMENTS

Organizational assets Supportive organizational culture that values efficiency and effectiveness
Appropriate business model
Efficient business processes
Decentralized authority
Distributed decision-making rights
Strong IS development team
Managerial assets Strong senior management support for technology investment and change
Incentives for management innovation
Teamwork and collaborative work environments
Training programs to enhance management decision skills
Management culture that values flexibility and knowledge-based decision
making.
Social assets The Internet and telecommunications infrastructure
IT-enriched educational programs raising labor force computer literacy
Standards (both government and private sector)
Laws and regulations creating fair, stable market environments
Technology and service firms in adjacent markets to assist implementation

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