INFORMATION ASSETS, TECHNOLOGY, AND ORGANIZATION

Although there is good reason to expect that the growth of information work and information technology will significantly affect the trade-o ffs inherent in different structures for organizing work, the theoreti cal basis for these changes remains poorly understood. This paper seek s to address this gap by analyzing the incentive effects of different ownership arrangement in the spirit of the Grossman-Hart-Moore (GHM) i ncomplete contracts theory of the firm. A key departure from earlier a pproaches is the inclusion of a role for an ''information asset,'' ana logous to the GHM treatment of property. This approach highlights the organizational significance of information ownership and information t echnology. For instance, using this framework, one can determine when 1) informed workers are more likely to be owners than employees of fir ms, 2) increased flexibility of assets will facilitate decentralizatio n, and 3) the need for centralized coordination will lead to centraliz ed ownership. The framework developed sheds light on some of the empir ical findings regarding the relationship between information technolog y and firm size and clarifies the relationship between coordination me chanisms and the optimal distribution of asset ownership. While many i mplications are still unexplored and untested, building on the incompl ete contracts approach appears to be a promising avenue for the carefu l, methodical analysis of human organizations and the impact of new te chnologies.