Knowledge that Transforms

Eric K. Clemons is a Professor at the Wharton School, University of Pennsylvania, where he has served since 1976. His visiting appointments include Harvard University, Cornell University, Hong Kong University of Science and Technology, and the Indian School of Business. He serves on the editorial boards of Journal of Management Information Systems and International Journal of Electronic Commerce. His research specialties are in the areas of IT and business strategy, IT and financial markets, making the decision to invest in strategic IT ventures, managing the risk of strategic IT implementations, and strategic implications of e-commerce for channel power and profitability. He is the Director of the Wharton School's Sponsored Research Program in Information, Strategy, and Economics; the Area Head for Information, Strategy, and Economics; and program coordinator for the school's major in e-commerce. He also is the founder of the Hawaii International Conference on System Sciences' (HICSS) annual Competitive Strategy, Economics, and Information Systems mini-track, which had its twentieth anniversary meeting in January 2007, and the winner of two HICSS Best Paper awards.

Robert O. Briggs is the Director of Academic Affairs for the Institute for Collaboration Science and Professor of Marketing and Management at the University of Nebraska. He is also an Associate Professor of Systems Engineering at the Delft University of Technology in the Netherlands. He earned his Ph.D. in Management and Information Systems from the University of Arizona in 1994. He researches the theoretical foundations of collaboration and applies his findings to the design and deployment of new collaboration technologies and work practices. He is a codeveloper of the Collaboration Engineering discipline, and co-inventor of the ThinkLets design pattern language for collaboration processes.

Web services are interoperable and reusable software components that can be dynamically discovered and integrated over the Internet. Developed on open standards, Web services have become a promising solution to inter- and intra-organization application integration. The supply chain of Web services exhibits two distinct features that are not considered in previous literature on information and physical-good supply chain: the integration of multiple Web services and the cross-network externality effect between Web service vendors and users. In a quest to fill in the research gap, this paper studies the optimal pricing strategies of a monopolistic intermediary in the supply chain of complementary Web services. The Web service intermediary (WSI) provides both technical and aggregation services, and seeks to charge optimal subscription and listing fees. Analytical results show that in a supply chain of complementary Web services exhibiting cross-network effects, the optimal strategy for the WSI is to set the listing fee such that all service providers list on it. On the other hand, the optimal subscription fee depends on the intensity of the cross-network effect, consumers' valuation of value-added services, and the characteristics of the Web services under consideration.

This paper examines new forms of collaboration between producers and consumers that are emerging in the digital entertainment space. Taking the case of the video game industry, we show how some firms have opened a portion of their proprietary content for transformation by consumers and allowed the development of consumer-designed and consumer-implemented derivative products. By reappropriating these derivatives, video game firms are successfully outsourcing parts of their game design and development process to digital consumer networks. Applying economic analysis, we explore the potential benefits and risks associated with outsourcing to networks of consumers. We also derive the optimal combination of copyright enforcement and consumer compensation. Our results suggest that profit-maximizing producers of video games have incentive to partially open game content to their users and to remunerate the most innovative ones, under the condition that the derivatives constitute complements to, and not substitutes for, the original product. We discuss the implications on firm strategy for innovation.

Knowledge transferred in the open market via a price mechanism enjoys the benefits of avoiding internal competition, learning from external competitors, and accmulating diversified knowledge. In the market, users can access a repository of knowledge for a single price (repository pricing) or knowledge items in the repository can be sold individually (knowledge pricing). However, users have been found to prefer repository pricing but not the knowledge in the repository. This irrationality can cause market failure because users derive a suboptimal level of utility from the knowledge repository, and vendors have contradictory pricing and knowledge strategies. We empirically examine a joint explanation from two competing theoretical perspectives that accounts for this inconsistency nicely: The mental accounting perspective endorses repository pricing because it entices users with the benefits of the whole repository, whereas the transaction decoupling perspective finds expression in individually priced knowledge because it prevents the discrete benefit of knowledge from becoming obscure. By integrating the two theoretical perspectives and considering price, knowledge, and user characteristics simultaneously, the results offer important implications for the market transfer of knowledge. Repository pricing attracts users and is essential to initiate the transfer process, whereas knowledge pricing generates knowledge preference and is thus an effective approach for learning.

Majority influence is the attempt by a majority of group members to impose their common position on group dissenters during group decision making. Because of globalization, the use of cross-cultural teams in group tasks is becoming increasingly common. The objective of this study was to investigate how national culture, social presence, and group diversity may affect majority influence in a group decision-making context. A total of 183 groups participated in a large-scale empirical experiment at multiple sites. The results show that the national culture of group minorities has a significant impact on majority influence and that the use of computer-mediated communication can reduce majority influence. The findings have both theoretical and practical implications for improving the outcome and the effectiveness of group decision making in cross-cultural environments.

The literature in general suggests that selling multiple versions is more profitable than selling only a single version. However, how many versions should be offered is not as clear. Classical pricing studies suggest providing as many versions as the number of customer types, whereas some studies in information systems suggest providing only one or two versions. In reality, firms typically provide more than one or two versions, such as three in the case of Goldilocks pricing. This study explains the discrepancies in these results and observations by showing that, although profit increases with more versions, the marginal benefit of an additional version decreases rapidly. Therefore, firms sell few versions even in the presence of very small versioning-related costs such as menu and cognitive costs. This study analyzes the effects of these costs, and shows that cognitive costs have more profound effects on versioning than menu costs.

The notion of a genre system typically connotes sequences of interrelated communicative genres. This paper suggests that we can find other types of relationships among genres. Data from a field study in a large emergency room illustrate how doctors, nurses, and clerical staff routinely combine document genres not only in sequences but also in various accumulations achieved through proximity and movement. The combinations of genres add flexibility to the emergency room staff's genre use and allow them to employ individual genres for several purposes. The data allow us to explore how organizational members manage the tension between a need for continuity in communicative practices and a need for flexibility in managing a jumble of paper-based and digital information systems. In addition, it demonstrates how end users often tinker with genres' media and form in the process of altering combinations among specific genres.

Intrusion prevention requires effective identification of and response to malicious events. In this paper, we model two important managerial decisions involved in the intrusion prevention process: the configuration of the detection component, and the response by the reaction component. The configuration decision affects the number of alarms the firm has to investigate. It is well known that the traditional intrusion detection system generates too many false alarms. The response decision determines whether alarms are going to be investigated or rejected outright. By jointly optimizing these two decision variables, a firm may apply different strategies in protecting its informational assets: slow but accurate, rapid but inaccurate, or a mixture of the two strategies. We use the optimal control approach to study the problem. Unlike previous literature, which studied the problem with a static model, in our model, the decision on balancing the desire to detect all malicious events with the opportunity costs required to do so is time dependent. Furthermore, we show how the choice of an optimal mixture of reactive and proactive responses depends on the values of cost parameters and investigation rate parameters. We find that in our model, a high damage cost does not immediately translate to a preference of proactive response, or a high false rejection cost does not translate to a preference of reactive response. The dynamics of the problem, such as how fast alarms accumulate and how fast they can be cleared, also affect the decisions.