socialmedian: Enterprise 2.0: The Nature of the Firm

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Source: ReadWriteWeb

Aug 20, 2008

Summary

The break-up of behemoth, vertically integrated enterprises commenced in the 1970's, got a boost from junk bond financing in the 1980's, and accelerated in the 1990's with globalization. Now, late in the 2000's, Social Media (aka Web 2.0) is adding another gear that will accelerate the fundamental restructuring of the enterprise.

This is a big story. That is why ReadWriteWeb is dedicating a new "channel" to Enterprise 2.0. I will be editing this channel and we are looking for part time writers to contribute to the channel. More on that later.

The Firm

Peter Drucker, the greatest management thinker of all time, pointed out that the "firm" is a relatively recent innovation, designed to do the things that individuals cannot easily do on their own. Ronald Coase later created a theoretical model (Coase's Theorem) to describe why firms exist, based on the difference between internal and external transaction costs. If the transaction cost was lower internally, then it made sense to organize that work internally. If the transaction cost was lower externally, then it

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