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Co-evolution between internal motivation and external expectation as a source of firm self-propagating function creation

2002; Elsevier BV; Volume: 24; Issue: 2 Linguagem: Inglês

10.1016/s0166-4972(02)00043-3

1879-2383

Chihiro Watanabe, Masayo Hobo,

Innovation and Knowledge Management

A rapid surge in information technology (IT) around the world is forcing firms to transform their traditional practices to a co-evolutional structure with external expectations. IT differs from other technologies in that it is characterized by dynamically increasing multiplier effects through network externalities, and its unique nature is formed during the course of interaction with institutional systems. Under the new paradigm of an information society, while the advanced innovation-oriented projects of firms are undergoing a structural change, Japan’s institutions do not function as efficiently as they did in the 1980s. As a result, Japan is experiencing a vicious cycle between non-elastic institutions and insufficient utilization of the potential benefits of IT that impedes the structural change efforts of firms. A novel concept for overcoming this impediment was triggered by the introduction of Enterprise Resource Planning (ERP) software that induces active interaction with institutional systems, thereby maximizing the benefit of network externalities leading to the creation of a firm’s self-propagating function. The advanced innovation-oriented projects of firms can be expected to develop in the process of embodying this function. Prompted by the dramatic advancement of ERP software, this paper, on the basis of an empirical analysis of the interaction between the introduction of ERP software and the creation of new functional business practices thereon attempts to demonstrate the foregoing hypothetical view with respect to advanced innovation-oriented projects of firms in the light of a new paradigm.