International Entrepreneurship in Small and Medium Size Enterprises Orientation, Environment and Strategy
Orientation, Environment and Strategy
- The McGill International Entrepreneurship series
Chapter 9: Economic Efficiency in Traditional and Dot.Com Firms: A Theoretical Approach
9. Economic efficiency in traditional and dot.com firms: a theoretical approach Khaled Soufani and Terence Tse INTRODUCTION Dot.com-centered activities in the newly emerging global economy expose businesses worldwide to a significantly larger number of customers and markets where the buying and selling of information, products and services are increasingly exercised via computer networks. This global situation exposes enterprises of all sizes operating in different business activities, industries and sectors to strategic challenges that require them to consider the potential threats and opportunities that face them with some degree of urgency. One of the important opportunities that can be considered by many firms, especially smaller enterprises, is their ability to become more competitive in order to expand in both domestic and international markets through increased economic efficiency. Economic efficiency relates to choosing the least-cost combination of inputs and also producing the maximum feasible output from the existing resources (Sawyer, 1985). Economic efficiency in any market critically depends on the amount and the nature of information about products, costs, competition and customer taste that are available to both buyers and sellers (Whinston et al., 1997). When the three economic agents that are engaged in major economic activities in any market (consumers, firms and the government) are not endowed with proper information, the market may be inefficient or even fail to function. Market failure does not mean that nothing good has happened, but it means that the best attainable results have not been achieved (Raynauld et al., 1994). International businesses have never before...
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