Harvard Business Review
New technologies, obsolete organizations
Harvard Business Review
Adaptation on rugged landscapes
Management Science
Incomplete information, task assignment, and managerial control systems
Management Science
Imitation of Complex Strategies
Management Science
Designing Work Within and Between Organizations
Organization Science
Organization Design and Effectiveness over the Innovation Life Cycle
Organization Science
Governance-Knowledge Fit in Systems Development Projects
Information Systems Research
Determining Optimal CRM Implementation Strategies
Information Systems Research
Journal of Management Information Systems
Supply Portfolio Concentration in Outsourced Knowledge-Based Services
Organization Science
Interorganizational information systems visibility and supply chain performance
International Journal of Information Management: The Journal for Information Professionals
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Systems composed of activity choices that interact in nonsimple ways can allow firms to create and sustain a competitive advantage. However, in complex systems, decision makers may not always have a precise understanding of the exact strength of the interaction between activities. Likewise, incentive and accounting systems may lead decision makers to ignore or misperceive interactions. This paper studies formally the consequences of misperceiving interaction effects between activity choices. Our results suggest that misperceptions with respect to complements are more costly than with respect to substitutes. As a result, firms should optimally invest more to gather information about interactions among complementary activities--e.g., concerning network effects--than about interactions among substitute activities. Similarly, the use of division-based incentive schemes appears to be more advisable for divisions whose products are substitutes than for divisions that produce complements. It is further shown that system fragility is not necessarily positively correlated with the strength ofthe interaction between choices. While systems of complements become increasingly fragile as the strength of interaction increases, systems of substitutes can become increasingly stable.