The five information technology blind spots of economists

On August 9, 2007, the European Central Bank (ECB) decided to organize a conference call with the twenty largest banks in Europe. The problem was that these banks were no longer lending each other money. Banks were in urgent need of money and as one of the bankers made it clear: “We need three things: we need cash, we need a lot, and we need it now” (NRC Handelsblad , 2012). The same day, the ECB started to inject 95 billion euro, followed the next day by the Federal Reserve System (FED) in the United States (US) with an injection of 24 billion US dollars. It was the first sign that something was going wrong. However, very few people understood the significance of it. [...

The five information technology blind spots of economists

On August 9, 2007, the European Central Bank (ECB) decided to organize a conference call with the twenty largest banks in Europe. The problem was that these banks were no longer lending each other money. Banks were in urgent need of money and as one of the bankers made it clear: “We need three things: we need cash, we need a lot, and we need it now” (NRC Handelsblad , 2012). The same day, the ECB started to inject 95 billion euro, followed the next day by the Federal Reserve System (FED) in the United States (US) with an injection of 24 billion US dollars. It was the first sign that something was going wrong. However, very few people understood the significance of it. [...

Big data and disruptions in business models

There are many challenges to reaping the benefits of the newest, emerging technologies. If it were easy, every business would do it and competitive advantage would easily fade away. It is in fact extremely difficult and challenging for companies to create value with emerging technologies. Every year, Gartner, a respected consultancy company, reviews the newest, emerging technologies and uses its hype cycle concept to explain the path that technologies take. The cycle consists of five phases: (i) the technology trigger phase: the invention of new technology that happens in a research lab, usually at a university (most companies outsource their fundamental research to universities nowadays). (ii) the peak of inflated expectations phase: the technology is discussed by companies at conferences and in the press. There is a great deal of talk about the new technology, but no one has used it yet. R&D projects are launched. (iii) the trough of disillusionment phase: it turns out that the technology is not as useful as it was thought to be. (iv) the slope of enlightenment phase: here, the valuable fusion of business and technology is explored. (v) the plateau of productivity phase: it is clear how business can use the technology to create value. In Gartner’s (2019) emerging technologies hype cycle, technologies such as biorobots, augmented reality cloud, decentralized web, adaptive machine learning, nanoscale 3D printing, and 5G are reviewed and positioned in the first phases. Gartner expect that these technologies will reach the plateau of productivity within 5 to 10 years.Muitos são os desafios que impedem o aproveitamento dos benefícios das tecnologias emergentes mais recentes. Se fosse simples, todas as empresas o fariam, e a vantagem competitiva desapareceria facilmente. Na verdade, é extremamente difícil e desafiador para as empresas criarem valor com tecnologias emergentes. Todos os anos, a Gartner, empresa de consultoria respeitada, analisa as tecnologias mais recentes e emergentes e utiliza o seu conceito de ciclo de hype para explicar o caminho que as tecnologias tomam. O ciclo consiste em cinco fases: (i) a fase de ativação tecnológica: a invenção de novas tecnologias, que ocorre em um laboratório de pesquisa, geralmente em uma universidade (hoje em dia, a maioria das empresas terceiriza suas pesquisas mais importantes para as universidades); ii) a fase de auge das expectativas inflacionadas: a tecnologia é discutida pelas empresas em conferências e na imprensa. Fala-se muito da nova tecnologia, mas ninguém a utilizou ainda. São lançados projetos de P&D; iii) a fase de desilusão: verifica-se que a tecnologia não é tão útil quanto se pensava; iv) a fase de declive de esclarecimento: é explorada a valiosa fusão entre negócios e tecnologia; (v) a fase de patamar da produtividade: fica claro como as empresas podem usar a tecnologia para criar valor. No ciclo de hype das tecnologias emergentes da Gartner (2019), tecnologias como biorrobôs, realidade aumentada na nuvem, web descentralizada, aprendizado de máquina adaptativo, impressão 3D em nanoescala e 5G são revisadas e posicionadas nas primeiras fases. A Gartner espera que essas tecnologias atinjam o patamar da produtividade dentro de 5 a 10 anos

RE-ENGINEERING THE DUTCH FLOWER AUCTIONS: A FRAMEWORK FOR ANALYZING EXCHANGE ORGANIZATIONS

This paper specifies a generalizable model of exchange processes and develops a process-stakeholder analysis framework to evaluate alternative market designs. This framework is applied to analyze a number of information technology initiatives in the Dutch flower markets. The Dutch flower auctions are the world's leading centers for trading cut-flowers and potted plants. We undertake a cross-case analysis and apply our framework to analyse successes and failures in the introduction of new IT-based trading mechanisms in these markets. Based on our study, we develop a number of testable propositions on: the separation of physical and informational processes in trading, the responses of stakeholders to changes in available information due to IT initiatives, and economic and incentive conditions required for adoption of new trading processes. Finally, our detailed cases illustrate the institutional and incentive constraints, and complexities encountered in the introduction of new electronic markets.Information Systems Working Papers Serie

Business-Driven IT Transformation at Royal Philips: Shedding Light on (Un)Rewarded Complexity

In 2013, Royal Philips was two years into a daunting transformation. Following declining financial performance, CEO Frans van Houten aimed to turn the Dutch icon into a “high-performing company” by 2017. This case study examines the challenges of the business-driven IT transformation at Royal Philips, a diversified technology company. The case discusses three crucial issues. First, the case reflects on Philips’ aim at creating value from combining locally relevant products and services while also leveraging its global scale and scope. Rewarded and unrewarded business complexity is analyzed. Second, the case identifies the need to design and align multiple elements of an enterprise (organizational, cultural, technical) to balance local responsiveness with global scale. Third, the case explains the role of IT (as an asset instead of a liability) in Philips’ transformation and discusses the new IT landscape with its digital platforms, and the new practices to create effective business-IT partnerships

How to Design Online Models for Micro-lending in Developing Countries? Making Sense to MYC4 in Africa

This article explores a micro-lending platform linking investors mostly located in developed countries and micro-entrepreneurs located in Africa. At the heart of this social and economic innovation is the online auction model, a concept that has been intensively investigated and used in developed countries. However, little knowledge exists about how these new models are used and implemented in developing countries, and about how existing theories are able to explain such an emerging innovative phenomenon. The article makes two main contributions. First, it applies a theoretical pluralist approach to further improve our understanding of MYC4, an online auction model for micro-lending purposes being applied in Africa and selected as our case study. Secondly, it uses the understanding produced from data analysis of MYC4 to validate propositions derived from three theoretical approaches. Our analysis shows that the three theoretical approaches differ in their basic assumptions – critical dimensions – and in the usefulness of their propositions, two of them being more valuable than the third one for drawing up guidelines for designing and implementing online auction markets and for identifying implications regarding the role of information, technology and the stakeholders involved

The Role Of Product Quality Information, Market State Information And Transaction Costs In Electronic Auctions

Electronic auctions have rapidly increased in popularity, but the consequences of switching to an electronic auction are unclear. In part this is because multiple changes occur at the same time so one can only observe the combined effect of these changes and not the effect of each separate change. For instance, electronic bidders face lower transaction costs, but also have less information about product quality and about the state of the market such as the number of bidders. In this paper, we report a study of bidding behavior at a large Dutch flower auction in which we are able to separate some of these effects. We compare electronic bidders with traditional bidders and when correcting for quality differences and seasonal effects, we find that they to bid lower on average than traditional buyers, as predicted by Bakos (1991, 1997). The electronic bidders were divided in two subgroups, internal bidders and external bidders. The external bidders had less product quality information and market state information than the internal bidders. This led the external bidders to not only bid significantly higher than the internal bidders, but in fact as high as the traditional bidders. Both these effects run counter to theoretical predictions and some possible alternative explanations are offered. In general, it highlights the importance of focusing the information flows that occur in a market

How Will Online Affiliate Marketing Networks Impact Search Engine Rankings?

In online affiliate marketing networks advertising web sites offer their affiliates revenues based on provided web site traffic and associated leads and sales. Advertising web sites can have a network of thousands of affiliates providing them with web site traffic through hyperlinks on their web sites. Search engines such as Google, MSN, and Yahoo, consider hyperlinks as a proof of quality and/or reliability of the linked web sites, and therefore use them to determine the relevance of web sites with regard to search queries. In this research we investigate the potential impact of online affiliate marketing networks on the ranking of advertisers’ web sites in search results. This article empirically explores how seven different affiliate marketing networks affect the rankings of the advertising web sites within web search engines. The field study followed intensively seven online affiliate marketing networks for twelve weeks after their launch. The results indicate that newly started affiliate networks effectively improve the rankings of advertising web sites in search engine results. Also, it was found that the effects of affiliate marketing networks on search engine rankings were smaller for advertising web sites operating in highly competitive markets. Another finding was that a growth in visitors coming from search engines was present as a result of the improvement of search engine rankings. Finally, the results indicate that cost-benefit metrics associated with affiliate marketing programs, such as the average marketing cost will decrease when the positive effects of affiliate marketing on search engine rankings are taken into account