A Managerial Perspective on the Logic of Increasing Returns

Erik den Hartigh, Fred Langerak and Harry Commandeur

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: The focus of this study is on the challenges faced by managers in effectively dealing with the new management logic of increasing returns as the information and knowledge intensity of their transformation processes rises. Dealing with these challenges is especially relevant for companies currently making the transition from capital and physical labor intensive transformation processes (old economy) to information and knowledge intensive transformation processes (new economy). For these companies, this study provides a definition of increasing returns, explains the sources of increasing returns and develops tools for monitoring the realization of increasing returns. These tools are applied at the Randstad Group, a leading temporary employment agency based in the Netherlands, currently making the transition from the old to the new economy. The study concludes with a discussion of the management implications of the new logic of increasing returns and suggestions for further research.

Keywords: economics; increasing returns; interaction effects; management; network effects (search for similar items in EconPapers)
JEL-codes: C44 M M10 M31 (search for similar items in EconPapers)
Date: 2000-11-13
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