The New Economy: Information Technology and the Internet’s Impact on Business and Society

Posted on Aug 10, 2024 in Economy

The New Economy and Information Technology

In the last decades of the twentieth century, a revolution in the economy emerged thanks to new information technologies (IT). Some authors speak of a new era: the Information Age. In this new economy, information is a new input, supplementing traditional products and becoming a resource used independently. The information society manages this existing resource (information) with new means of transmission (the Internet, networks, etc.).

Pillars of the New Economy

The new economy is based on three pillars:

  • Economic Globalization: Markets are increasingly interconnected, leading to larger and more dynamic markets. Companies are becoming increasingly internationalized.
  • The Economy of Communication and Knowledge: Two new factors of production (knowledge and communication) enable businesses to improve productivity and organizational efficiency.
  • The Internet: A new form of organization that relies on IT and communications, which have rapidly developed and expanded thanks to advances in computer and microelectronics. The information society is based on technologies that are broken down into: hardware, software, and the Internet.

Businesses in the New Economy: The Internet and Computer Networks

Connecting multiple computers to share information is called a computer network. The Internet is a global network of interconnected computers capable of communicating with each other. The application of the Internet in business includes:

  • Better External Communication: Communication with customers, suppliers, etc., becomes more agile, efficient, and cost-effective.
  • Increased Investment and Financing Options: The absence of boundaries in the movement of capital widens financing possibilities and investment alternatives.
  • Increased Productivity: Labor relations are streamlined, and demand for skilled labor increases, benefiting the organization. These three factors boost the competitiveness of businesses.

Changes Introduced by the Internet in Business

  • Interconnection between Companies and Institutions:
    • Customer-Supplier Relationship: Facilitates communication, simplifies purchasing, invoicing, and payment processes.
    • Electronic Banking: Companies can control bank accounts and make transactions from their computers.
    • Information and Advice: Companies can access economic, legal, and other information.
    • Official Procedures: Companies can settle taxes, carry out actions with Social Security, and communicate with public administration from their headquarters.
  • Advertising and Promotion: With the advent of websites and thematic portals, companies have a new environment for promotion and advertising.
  • Telecommuting: Working from home is becoming increasingly common, eliminating geographical barriers and expanding possibilities for industrial relations.
  • Distance Staff Training: Companies can train employees through virtual courses, offering a flexible and adaptable resource.

E-Business: New Business Opportunities

E-business (electronic business) refers to the development of business on the Internet. It’s used for tasks like product analysis, market analysis, database creation, supplier and customer data management, and HR recruitment and training. New business opportunities focus on:

  • E-commerce: Increasingly, products are sold online, with customers making purchases and paying through various systems (credit card, bank transfer, money order, cash on delivery, or Paybox).
  • Electronic Banking: More banks operate solely online, offering better financing terms and traditional banking services.

Electronic Commerce

Electronic commerce (e-commerce) is conducting business online, encompassing both sales and data transmission. It’s divided into three types:

  • Business-to-Business (B2B): Trading between companies.
  • Business-to-Consumer (B2C): Businesses selling to consumers.
  • Business-to-Employee (B2E): Businesses interacting with their employees.

Types of B2B

  • Procurement (e-procurement): Improves integration between client and supplier.
  • Sales (e-sale): Companies sell products to other companies online.
  • Sectoral Markets (e-marketplaces): Companies in the same sector connect to buy and sell products.

Modalities of B2C Commerce

  • Virtual Stores (e-shop)
  • Virtual Auctions (e-auction)
  • Virtual Shopping Malls (e-mall)

B2E commerce provides employees with tools, information, and special deals.

Advantages and Disadvantages of E-commerce

Advantages

  • Mass reach communication and advertising channel.
  • No intermediaries.
  • Allows selling and providing digital services.
  • Enables the creation of virtual enterprises.
  • Legal validity of transactions and contracts without paper.
  • Protection of intellectual property rights.
  • Consumer protection against misleading advertising and fraud.
  • Security of transactions and payment methods.

Disadvantages

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Models of Electronic Exchange

Forms of electronic relationships between firms include:

  • EDI (Electronic Data Interchange): Primarily uses email.
  • Sectoral Applications: Use specific networks for companies in a sector not connected to the Internet.
  • The Internet: Public authorities have established stable, simple, and secure relationships with businesses and citizens through B2A (Business-to-Administration) and C2A (Citizen-to-Administration).

With the single window, businesses and consumers save time, effort, and money.

New Technologies and Society

Benefits

  • Training: People can learn what they want, anytime and anywhere.
  • Quality of Life: New technology frees up time for family and personal life.
  • Participation in Society: Allows for real-time expression of opinions.
  • Inclusion of Disabled Individuals: People with disabilities can work remotely.

Drawbacks

  • Changes in Employment: Potential job displacement due to automation.
  • Lack of Privacy: Concerns about data security and privacy.
  • Harmful Effects of Computer Work: Potential health issues related to prolonged computer use.