nMICROECONOMIC MODEL: Info technology is a factor of production, like capital & labor
nCan be substituted for labor and capitol
nTRANSACTION COST THEORY: Firms attempt to
minimize transaction costs internally & externally
nCost of IT goes down then labor is replaced with IT
nLower transactional costs via networks
nEasier and cheaper to contract purchases & services
n*