Page 40 - Introduction to Electronic Commerce and Social Commerce

1.5 The Digital and Social Worlds: Economy, Enterprises, and Society 17

The digital revolution is upon us. We see it every day at Table 1.3 Major characteristics of the digital economy
home and work, in businesses, schools, hospitals, on the Area Description
roads, in entertainment. For an overview, see Sidhu (2015). Globalization Global communication and collaboration;
Next, we describe three elements of the digital world: econ- global electronic marketplaces and competition
omy, enterprises, and society. Digitization Music, books, pictures, software, videos, and
more are digitized for fast and inexpensive
storage and distribution
The Digital Economy Speed A move to real-time transactions, thanks to
digitized documents, products, and services. Many
business processes are expedited by 90% or more
The digital economy, also known as the Internet economy, is Information Although the amount of information generated
an economy based on online transactions, mostly e- commerce. overload and is accelerating, intelligent search tools can help
It includes digital wireline or wireless communication net- intelligent search users find what people need
Markets Markets are moving online. Physical
works (e.g., the Internet, intranets, extranets, and VANs), com-
marketplaces are being replaced or supplemented
puters, software, and other related information technologies. by electronic markets; new markets are being
This digital economy displays the following characteristics: created, increasing competition
Business models New and improved business models and
• Many digitizable products—books, databases, maga- and processes processes provide opportunities to new
companies and industries
zines, information, electronic games, and software—are
Innovation Digital and Internet-based innovations continue
delivered over a digital infrastructure anytime, anywhere
at a rapid pace. More patents are being granted
in the world, interconnected by a global grid. We are mov- than ever before
ing from analog to digital, even the media is going digital Obsolescence The fast pace of innovation creates a high rate
(TV as of February 2009). of obsolescence
• Information is transformed into a commodity. Opportunities Opportunities abound in almost all aspects of
• Financial transactions are now digitized and chips are life and operations
embedded in many products (e.g., cameras, cars). Knowledge Fraud Criminals employ a slew of innovative schemes
on the Internet. Cybercons are everywhere
is codified.
Wars Conventional wars are changing to cyberwars or
• Work and business processes are organized in new and are complemented by them
innovative ways. Organizations Organizations are moving to digital enterprises
• Disruptive innovation is occurring in many industries (see and social businesses
Manyika et al. 2013).
Related to the shared economy is the distributed econ-
Table 1.3 summarizes the major characteristics of the omy where Uber, Airbnb, and crowdsourcing operate
digital economy.
(Guides 2015).
The digital revolution also enables many innovations, and
new ones appear almost daily, improving business processes Sharing Economy and E-Commerce
and productivity. The digital revolution provides the neces- Several EC models and companies are based on the concept
sary technologies for EC and creates major changes in the
of the sharing economy. Examples include Uber (for ride
business environment, as described in Section 1.12.
sharing), Yerdle (a sharing economy free marketplace),
Kickstarter (for crowdfunding), Krrb (a P2P marketplace),
Sharing Economy and Knok and Love Home Swap for home swapping. Money
lending is growing rapidly (lending clubs). Vacation rentals
Sharing economy refers to an economic system constructed are a large area where home and condo owners provide short-
around the concept of sharing goods and services among the
term rentals possibly for an exchange or renting (e.g., see
participating people. Also known as “collaborative consump- Airbnb, HomeAway, and VRBO).
tion” and “collaborative economy” such systems appear in
different forms and frequently use information technologies The Social Impact
in their operations. A well-known example is car sharing.
The essentials of this concept are described by Buczynski The digital revolution is accompanied by social impacts that
(2013). For an overview, see Howard (2015).
resulted in part by improved communication and collabora-
The major benefits for participants are cost reduction tion tools offered by social media. For example, smartphones
for buyers and the ability to sell more for sellers. Societal
reduce the digital divide. In addition to productivity improve-
benefits include reduction of carbon footprint (e.g., in ride ment in the economy, one can see some major social changes,
sharing), increase recycling, and increase social interactions. such as the mass participation in social networks. One impact
For comprehensive coverage, see en.wikipedia.org/wiki/ is the creation of the social enterprise (see centreforsocial-
sharing_economy.
enterprise.com/what-is-social-enterprise).