The Role of Information Technology in Organization Design HENRY C. LUCAS, JR., AND JACK BAROUDI See the Guest Editors* Introduction for authors' biographies. ABSTRACT: We introduce a set of information technology variables which can be used in designing organizations. We first discuss traditional design variables and then present a series of options enabled by modem information technology (IT). We use these IT design variables to describe four prototypical organizations that are beginning to appear in the workplace: virtual, negotiated, traditional, and vertically integrated. It is argued that an organization designer must also consider how structure and technology influence job tasks and people in order to be successful. We then discuss potential implementation difficulties, particularly in motivating traditional organiza- tions to take advantage of IT design variables. We conclude that the design of infonnation technology and the design of organizations are largely becoming the same task. KEY WORDS AND PHRASES: interorganizational systems, networked organization, organization design, strategic information systems, virtual organization. THE DESIGN OF ORGANIZATIONS IS A FUNDAMENTAL MANAGEMENT TASK. Mintzberg states the problem simply: Every organized human activity . . . gives rise to two fundamental and opposing re- quirements: the division of labor into various tasks to be performed and the coordina- tion of these tasks to accomplish the activity. The structure of an organization can be defined simply as the sum total of the ways in which it divides its labor into distinct tasks and then achieves coordination among them. [19, p. 2] Mintzberg's description ofthe design task is appealing because it is simple. In reality, there are a large number of ways to divide labor and to coordinate tasks in the organization. There are various design strategies and variables that can be used in the organizational design process. For example, one design strategy is to encourage decentralized management. Top-level managers delegate decision making to local managers to have decisions made where a response to a problem is needed and to train lower-level managers in decision making. An example of a design variable is the Acknowledgment: The authors would like to thank Professors Wanda Orlikowski and Daniel Robey for their insightful suggestions. Journal ofManagement Informalion Systems / Spnngl994,'\/ol. 10,No.4,pp. 9-23 Copyright© M.E. Sharpc,Inc., 1994