Economics and management information systems

Without exaggeration, the basic challenge of management is economics: how to choose to employ scarce productive resources to accomplish limited objectives effectively. It is well recognized today, and increasingly so in post-industrial societies, that information, broadly defined, is a strategic economic resource that must be managed if it is to be productive. A comprehensive literature has developed in the discipline of economics which concerns information, information systems, and information-related phenomena of import to management and the development of management information systems (MIS). Although this literature is vast, this overview attempts to relate some of this work to MIS and MIS research.We highlight results in three general areas: (1) those which concern the effect of information upon economic markets external to the firm, (2) those which concern issues of information and its relation to decision making and the internal organization of the firm, and (3) those which concern questions of allocation and control of information resources within the firm. In particular, attention will be directed to interpretation of the major results related to the effect of information upon markets and upon individual decision making, team theory, agency theory, decomposition theory, resource allocation and pricing, incentives, and information evaluation.