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This chapter explores some theoretical elements of the economics of systems integration (and disintegration) by placing the idea of systems integration within the context of evolutionary economics. It argues that systems integrators (as firms) and systems integration (as a key capability within and across firms) perform a central function as the visible hand of much modern industrial activity, especially in complex products and systems. The latter includes a significant subset of capital goods, such as mobile communication systems, military systems, corporate information technology networks, train engines, aircraft, intelligent buildings, air traffic control systems, and tailored software packages.

This chapter explores the reciprocal relationship between technological innovation and the boundaries of the firm, and the paths in which firm boundaries might be expected to follow under different circumstances. It argues that while one might follow Langlois (2003) in believing that there will be a tendency for large, vertically-integrated firms to become less common in the technological environment that is currently unfolding, other tendencies will also be afoot, leading to a spectrum of different types of inter- and intra-firm relationships. This includes the creation of new giant enterprises whose evolution in the early 20th century was described by Chandler (1962, 1977) as the imposition of a ‘visible hand’ to reduce uncertainties in market-based relationships.

Explores some theoretical elements of the economics of systems integration (and disintegration) by placing the idea of systems integration within the context of evolutionary economics. The authors argue that systems integrators (as firms) and systems integration (as a key capability within and across firms) perform a central function as the visible hand of much modern industrial activity, especially in complex products and systems. The latter include a significant subset of capital goods such as mobile communication systems, military systems, corporate information technology networks, train engines, aircraft, intelligent buildings, air‐traffic control systems and tailored software packages.

Adam Smith's notion of the ‘invisible hand’ is countered with Chandler's notion of a ‘visible hand’ that replaces market mechanisms in coordination and allocation of resources. Firms continued to grow through the internalization and centralization of their processes until developments in computing and communications offered opportunities for decentralization, cost cutting, and less administrative complexity. Soon after that, the application of IT allowed improved coordination and production. Firms continue to grow and shrink simultaneously. This chapter discusses the types of transactions a firm will make, trends in employment, patterns of ownership, and control in a knowledge economy.

This chapter shows how the “visible hand” of an activist state made Confederates more likely to resort to far stronger state action when war endangered the survival of slavery. Whether it was government investment in railroads, government ownership of key industries, or government regulation of commerce, Confederates adopted centralized control of the economy with surprisingly little opposition. States' objections to a strong central government, so prominent in the South under the old Union, did little to slow down the growth of the Confederate state. In antebellum debates, secessionists never imagined creating a Confederate Leviathan, but their general economic philosophy certainly helped make one possible. The creation of a strong Confederate state revealed the powerful sense of nationalism that knit together the supporters of the Confederacy's slave society.