Value Configurations of Organizations

Value Configurations of Organizations

Petter Gottschalk (Norwegian School of Management, Norway) and Hans Solli-Saether (Norwegian School of Management, Norway)
DOI: 10.4018/978-1-60566-648-8.ch002
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Abstract

To comprehend the value that information technology provides to organizations, we must first understand the way a particular organization conducts business and how information systems affect the performance of various component activities within the organization. Understanding how organizations differ is a central challenge for both theory and practice of management. For a long time, Porter’s (1985) value chain was the only value configuration known to managers. Stabell and Fjeldstad (1998) have identified two alternative value configurations. A value shop schedules activities and applies resources in a fashion that is dimensioned and appropriate to the needs of the client’s problem, while a value chain performs a fixed set of activities that enables it to produce a standard product in large numbers. Examples of value shops are professional service organizations, as found in medicine, law, architecture and engineering. A value network links clients or customers who are or wish to be interdependent. Examples of value networks are telephone companies, logistic and postal services, retail banks and insurance companies.
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1. Value Configurations Of Organizations

To comprehend the value that information technology provides to organizations, we must first understand the way a particular organization conducts business and how information systems affect the performance of various component activities within the organization. Understanding how organizations differ is a central challenge for both theory and practice of management. For a long time, Porter’s (1985) value chain was the only value configuration known to managers. Stabell and Fjeldstad (1998) have identified two alternative value configurations. A value shop schedules activities and applies resources in a fashion that is dimensioned and appropriate to the needs of the client’s problem, while a value chain performs a fixed set of activities that enables it to produce a standard product in large numbers. Examples of value shops are professional service organizations, as found in medicine, law, architecture and engineering. A value network links clients or customers who are or wish to be interdependent. Examples of value networks are telephone companies, logistic and postal services, retail banks and insurance companies.

This chapter presents the three value configurations – the value chain, the value shop, and the value network. Then, the three different value configurations are compared according to some key characteristics, for example use of information systems. Nine design parameters are presented as building blocks of organizational structure. Finally, this chapter shows how organizational culture might influence organizations.

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