Tuesday, February 13, 2007

Introduction to ValueWeb2

e-Business has the potential of generating tremendous new wealth, mostly through entrepreneurial start-ups and corporate ventures. It is also transforming the rules of competition for established businesses in unprecedented ways. One would thus expect e-business to have attracted the attention of scholars in the fields of entrepreneurship and strategic management (Amit 2001). The advent of e-business presents a strong case for the confluence of the entrepreneurship and strategy research streams as argued by Hitt and Ireland (Hitt 2000) and McGrath and MacMillan (McGrath 2000). Yet, academic research on e-business is sparse. The Literature has neither articulated the central issues related to this new phenomenon, nor has it developed theory that captures the unique features of virtual markets (Amit 2001). In 2001 Amit and Zott attempt to fill this theoretical gap by seeking to identify the sources of value creation in e-business. This research reviews how value is created within the theoretical views of the value chain framework (Porter 1985), Schumpeter’s theory of creative destruction (Schumpeter 1942), the resources-based view of the firm (Barney 1991), strategic network theory (Dyer 1998) and transaction costs economics (Williamson 1975). Analysis revealed four primary and interrelated value drivers of e-businesses: novelty, lock-in, complementarity, and efficiency. According to Amit and Zott (2001) the presence of these value drivers, which are anchored in the received entrepreneurship and strategic management theory, enhances the value-creation of e-business.

The bursting of the dot.com bubble in the Fall of 2001 market a turning point for the web and the companies that created value. Many people concluded that the web was over hyped, when in fact bubbles and consequent shakeouts appear to be a common feature of all technological revolutions (Perez 2002). Shakeouts typically mark the point at which an ascendant technology is ready to take its place at a Center stage. The pretenders are given the bum’s rush, the real success stories show their strength, and there begins to be an understanding of what separates one from the other. The concept of “Web 2.0” began with a conference brainstorming session between O’Reilly and MediaLive International. Dale Doughtery, web pioneer and O’Reilly, noted that far from having “crashed”, the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What is more, the companies that had survived the collapse seemed to have some things in common. One agreed that the dot-com collapse marked some turning point for the web, and introduced the second stage of the Internet: Web 2.0 (O'Reilly 2005).

Today we can see new start-ups like YouTube and Facebook, that are worth Millions and in some cases Billions of Dollars. These companies highlight the importance and maturity of the Internet, called Web 2.0. With Web 2.0 however we see that it are not only entrepreneurial start-ups and corporate ventures that are frontrunners and content participants, but the whole crowd that uses the Internet for private manners are becoming more relevant. With Web 2.0 new features of the Internet transactions and participations are taking place. More and different stakeholders add value in e-business. This raises questions which value drivers we can find in Web 2.0 and which one are more important. Are the value drivers mentioned by Amit and Zott stil applicable and relevant? Are there new value drivers and which value drivers are more important in Web 2.0? By looking at these factors we are indirectly looking at the business models that are important in the New Internet. Providing more insight in value drivers and business models in Web 2.0 enables companies and entrepreneurs to adopt and prepare to take advantage of opportunities in this next stage of the Internet.

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

Barney, J. (1991). "Firm resources and sustained competitive advantage." Journal of Management 17: 99-120.

Dyer, J., Singh, H. (1998). "The relational view: cooperative strategy and sources of interorganizational competitive advantage." Academy of Management Review 23: 660-679.

Hitt, M., Ireland, RD. (2000). The intersection of entrepreneurship and strategic management research. The Blackwell Handbook of Entrepreneurship. L. Sexton, Landstrom, H. Oxford, Blackwell: 45-63.

McGrath, R., MacMillan, IC. (2000). The Entrepreneurial Mindset. Boston, MA, Harvard Business School Press.

O'Reilly, T. (2005). What is Web 2.0: Design Patterns and Business Models for the Next Generation of Software. O'Reilly.

Perez, C. (2002). Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. Cheltenham, Edward Elgar.

Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York, Free Press.

Schumpeter, J. (1942). Capitalism, Socialism, and Democracy. New York, Harper.

Williamson, O. (1975). Markets and Hierarchies, Analysis and Antitrust Implications: A study in the Economics of Internal Organization. New York, Free Press.

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