Information Technology And The Rebirth Of Federalism

The research of Brynjolfsson, Malone and others at MIT Sloan suggest that all we need to do is allow the information-technology enabled natural devolution of governance to local communities and most, if not all, of our current ills will be resolved by the natural diversity and competition between these groups.

Title: The incredible shrinking company. Economist, 00130613, 12/15/90, Vol. 317, Issue 7685

<snip> Computers were supposed to centralise decision-making and produce ever-bigger firms. They seem to have done just the opposite

PEERING into its crystal ball in 1958, the Harvard Business Review said that computers would revolutionise American business. By the end of the 1980s they would ensure that American business would be concentrated as never before. The economy would be dominated by a few giant firms. Within each firm important decisions would be made by a handful of executives with access to the firm’s single, big computer.

The exact opposite has occurred. In America the average number of employees per firm has been falling since the late 1960s; but more and more of those employees have a computer on their desk. Instead of centralising, most businesses have spent the past few decades decentralising. Within big firms all around the world, bosses have been pushing authority down the management hierarchy. Anecdotes about how they have done this abound: most famously in firms like Benetton, Frito-Lay and Toyota, to name but a few. But there is still dispute over why bosses have delegated so enthusiastically. Mr Erik Brynjolfsson of MIT’S Sloan School of Management has now completed some new research on the links between information technology and declining firm size which may explain the "why". <snip>

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