Tuesday, February 13, 2007

e-Business Theoretical Review

Since the beginning of the 1990s, innovative information technology induced a structural change in both social and economic spheres especially through the digitalisation of information and the networking of computers (Hagel and Singer 1997). Today these technologies are an integral part of daily life: digital technologies and their influences on the transfer of information are ubiquitous. The results of this development are clear: innovative information technologies such as Internet, mobile telecommunications and interactive television. The digitalisation and spread of information via electronic data pathways or networks serve as a pace maker for future economic growth that is comparable with the significance of the printing press in the 15th century or motorisation in the 20th century. The information society is respectively characterised by the intensive use of information technologies and the resulting change from an industrial to a knowledge society (Evans and Wurster 1997).

This constant and rapid development of technology in the accompanying Net Economy has inevitably had a significant influence on various possibilities for developing innovative business concepts as on electronic information and communication networks and realising these by establishing a new company (e-ventures) (Kollmann 2006). The term ‘e-entrepreneurship’ describes the act of establishing these new companies specifically in the Net Economy (Matlay 2004). Recent research has established that e-Entrepreneurs differ from their traditional counterparts in that all of their economic transactions take place online, via the Internet (Chulikavit and Rose 2003).

The basis of the Net Economy is formed by four technological innovations: telecommunication, information technology, media technology and entertainment (the so called TIME markets). These innovations had, and continue, to, significantly impact the possible ways in which information, communication and transactions are managed (Kollmann 2001). Kolmann (2006) argues that the Net Economy refers to the commercial use of electronic data networks, that is to say, a digital network economy, which, via various electronic platforms, allows the conclusion of information, communication and transactional processes.”

The ‘Net Economy’ is related to the New Economy. The literature on the New Economy is however not clear. Some observers might agree that the new economy is a revolutionary occurrence while others could perceive it as an evolutionary step in the ever changing landscape of entrepreneurship and small business development (Afuah and Tucci 2003; Christensen and Maskell 2003). The “old” economy is characterized largely by physical information flows that are relatively slow moving and transforming (Boddy, Boonstra et al. 2002). Conversely, the “new” economy is defined by digital information stored in computers and shared or transferred almost instantly through internal and/or external networks (Loasby 2001).

E-business (Electronic-Business) is part of this New Economy and can be described as the new business logic that operates in a world without boundaries. It refers to a broader definition of Electronic Commerce, not just buying and selling but also servicing customers, providing an integrated business environment and offering added value services (Turban, Lee et al. 1999). Virtual markets refer to e-business and are markets in which business transactions are conducted via open networks based on the fixed and wireless Internet infrastructure (Amit 2001). These markets are characterized by high connectivity (Dutta 1999), a focus on transactions (Balakrishnan 1999), the importance of information goods and networks (Shapiro 1999), and high reach and richness of information (Evans 1999). Virtual markets have unprecedented reach because they are characterized by a near lack of geographical boundaries. There are several other characteristics of virtual markets that, when considered together, have a profound effect on how value creating economic transactions are structured and conducted. These include the ease of extending one’s product range to include complementary products, improved access to complementary assets, new forms of collaboration among firms, the potential reduction of asymmetric information among economic agents through the Internet, and real-time customizability of products and services (Amit 2001).

It is now widely acknowledged that the Internet is fundamental to the new economy and that it has the potential to transform the competitive landscape at both micro- and marco-economic levels. The Internet impacts upon established practices as well as on new ways of conducing business. It has effected the competitive environment at regional, national and international levels (Norton 2001).

Afuah, A. and C. Tucci (2003). Internet Business Models and Strategies. London, McGraw-Hill.

Amit, R. a. Z., C. (2001). "Value Creation in E-Business." Strategic Management Journal 22: 493-520.

Balakrishnan, A., Kumara, SRT., Sundaresan, S. (1999). "Manufacturing in the digital age: exploiting information technologies for product realization." Information Systems Frontier 1: 25-50.

Boddy, D., A. Boonstra, et al. (2002). Managing Information Systems: An Organisational Perspective. Harlow, Pearson Education Ltd.

Christensen, J. and P. Maskell (2003). The Industrial dynamics of the New Digital Economy. Cheltenham, Edward Elgar Publishing Ltd.

Chulikavit, K. and J. Rose (2003). E-Commerce and the Internationalisation of SMEs. in H. Etemand and R. Wright Globalisation and Entrepreneurship: Policy and Strategy perspectives. Cheltenham, Edward Elgar.

Dutta, S., Segev, A. (1999). "Business transformation on the Internet." European Management Journal 17: 466-476.

Evans, P., Wurster, TS. (1999). Blown to Bits: How the New Economics of Information Transforms Strategy. Boston, MA, Harvard Business School Press.

Evans, P. B. and T. S. Wurster (1997). "Strategy and the new economics of information." Harvard Business Review 75(5): 71-82.

Hagel, J. and M. Singer (1997). Net Chain. Boston, Harvard Business School Press.

Kollmann, T. (2001). "Measuring the acceptance of electronic marketplaces." Journal of Computer Mediated Communication 6(2).

Kollmann, T. (2006). "What is e-entrepreneurship? - fundamentals of company founding in the net economy." Int. J. Technology Management 33(4): 322-340.

Loasby, B. (2001). "Time, knowledge and evolutionary dynamics: why connections matter." Journal of Evolutionary Economics 11(4): 393-412.

Matlay, H. (2004). "e-Entrepreneurship and small e-business development: towards a comparative research agenda." Journal of Small Business and Enterprise Development 11(3): 408-414.

Norton, R. (2001). Creating the New Economy: The Entrepreneurs and the US Resurgence. Cheltenham, Edward Elgar Publishin Ltd.

Shapiro, C., Varian, HR. (1999). Information Rules: A Strategic Guide to the Network Economy. Boston, MA, Harvard Business School Press.

Turban, E., J. Lee, et al. (1999). Electronic Commerce A Managerial Perspective. New Jersey, Prentice.

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