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.

economics, increasing returns, interaction effects, management, network effects
Statistical Decision Theory; Operations Research (jel C44), Business Administration and Business Economics; Marketing; Accounting (jel M), Business Administration: General (jel M10), Marketing (jel M31)
Erasmus Research Institute of Management
ERIM Report Series Research in Management
Copyright 2000, E. den Hartigh, F. Langerak, H. Commandeur, This report in the ERIM Report Series Research in Management is intended as a means to communicate the results of recent research to academic colleagues and other interested parties. All reports are considered as preliminary and subject to possibly major revisions. This applies equally to opinions expressed, theories developed, and data used. Therefore, comments and suggestions are welcome and should be directed to the authors.
Erasmus Research Institute of Management

den Hartigh, E, Langerak, F, & Commandeur, H.R. (2000). A Managerial Perspective on the Logic of Increasing Returns (No. ERS-2000-48-MKT). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from