Abstract

The adoption of information technology has had major impacts on firm and industry organization. The personal computer industry has evolved from a value chain with well-defined roles for firms in different industry segments to a flexible global value network through which PC firms outsource many of their activities to increasingly capable suppliers. The industry’s value network is organized mostly through market mechanisms, particularly for routine activities. A smaller number of complex activities involve closer trust-based relationships, but market discipline is used to reduce the risk of opportunism. IT has played a major role in this transformation. For routine activities, IT enables standardization and automation of processes, allowing effective coordination via market transactions. For more complex activities, IT supports close integration of activities through internal IT systems or customized interorganizational systems.