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The Economics of the Digital Society

Edited by Luc Soete and Bas ter Weel

This important book presents a unique body of research into the economics of the digital society. It questions how modern economies have been transformed as a result of digital goods and markets, and explores the policy implications and challenges of this revolution.
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Chapter 4: Adoption and diffusion of e-business and the role of network effects

Huub Meijers


4. Adoption and diffusion of e-business and the role of network effects* Huub Meijers 4.1 INTRODUCTION The Internet is an essential part of the infrastructure of the Information Society. It already facilitates a myriad of new possibilities and opportunities to assist and run businesses differently from what we know from the past. Proprietary systems facilitated enterprise resource planning in the 1980s and 1990s, but these systems operated in stand-alone settings. Today these systems are largely replaced by open standard software and what is more, they are connected through networks. It is mainly because of the open standards that many firms have been able to adopt the Internet at low prices and that information can be easily shared. Especially when this information is fed into new communication standards like XML then the communication becomes very smooth and rich (see e.g. Lucking-Reiley and Spulber, 2001). Developing such protocols requires extensive cooperation of buyers and sellers within industries and organizations like RosettaNet support the development of (open) e-business standards.1 What we see now is just the beginning of e-business, e-commerce or e-government. However, if we take the long-term view, not only communication about goods, but also the production process itself, will be embraced by this extremely pervasive innovation process. This will happen relatively slowly and its path is difficult to predict because the high degree of complementarity with other developments and applications of information technologies. It is a well-established view that investment in ICT as such has little impact...

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