databases, and applications are largely nonintegrated. The strength of this strategy is
local responsiveness. Its weakness is the lack of integration which has the potential
to severely impede efforts to implement global business strategies.
(ii) Headquarters Driven. Headquarters imposes corporate wide IT solutions on sub-
sidiaries. This is particularly useful for global firms that strive for worldwide effi-
ciencies. Advantages are that centralized IT provides for the coordination and control
needed for efficient operations throughout the firm along with some efficiencies of its
own. Bringing together headquarters and subsidiary systems staffs may result in
some organizational learning. Disadvantages are the clash of this one corporatewide
IT solution with local needs and customs, especially if there is not a strong global
business push, and the threat of local rejection.
(iii) Cooperative. Headquarters attempts to influence rather than control the IT
choices of its subsidiaries. Personnel are exchanged regularly and joint application
development efforts are initiated. Subsidiaries modify applications developed by
headquarters. This approach closely parallels the more general international strategy
that seeks to rapidly disseminate corporate innovation. Advantages are that systems
developed this way are more likely to be adopted, and the organizational learning that
results from sharing ideas. Disadvantages are the time and effort required for coordi-
nation and the variability of outcomes that results from indirect control.
(iv) Integrated. IT applications that reach across national boundaries to meet a
firm’s diverse objectives. Systems are integrated using international standards and a
planned, common IT architecture that meets the needs of various sized organizational
units operating in diverse environments. Application modules are divided into com-
mon and locally tailored parts. Data entities are shared worldwide and universal data
dictionaries and databases are developed. Innovation, in this setting, is a two-way
street with headquarters benefiting from the knowledge of subsidiaries as well as the
reverse. Few companies have reached this level of development.
28.5 NEW BUSINESS PARADIGMS: USING IT TO TRANSFORM ORGANIZATIONS
(a) Changing External Information Flows. Traditionally, information flows have
gone vertically, up the hierarchy, or horizontally among members of a work group,
or to subsidiaries, but they have all remained within a singlefirm’s boundaries. When
transactions needed to be sent externally, hard copy was used, for example, sending
them by fax. A new class of interorganizational systems has emerged that linkto-
gether, electronically, independent organizational entities. These systems have the
potential of creating new organizations, altering the structure of industries, and
changing the economics of business.
(i) Interorganizational Systems. SABRE, American Airlines’ travel reservation sys-
tem, was started in the late 1960s to better manage American’s aircraft seat inventory.
Specifically, American desired to tie passenger information directly to a seat number
on a flight. Because of the size and complexity of the system (a heavy data commu-
nications load combined with a huge transaction volume, a large database, and the
need to be highly reliable), it was beyond the technology at the time and it took many
years to develop.
28 • 12 INTERNATIONAL INFORMATION SYSTEMS