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'''Impact of the Internet on Business Landscapes''' |
'''Impact of the Internet on Business Landscapes''' |
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The Small Business Administration (SBA) labels a company by a large or small business by using annual recipts and number of working employees. These factors allow the SBA to understand and monitor how a business operates. There is no perfect solution for categorizing a small or large business across all the sectors. The SBA 2018 report states that there are are 30.2 million businesses labeled as small. This leaves about 30,000 firms labeled as large. <ref>{{Cite web|last=Mogos|first=Serban|date=July 2013|title=The Impact of Social Media on Business Performance|url=https://aisel.aisnet.org/cgi/viewcontent.cgi?article=1348&context=ecis2013_cr|url-status=live|access-date=2/28/21}}</ref> |
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Large and small businesses are essential to the economy. As of 2019, there are more small businesses than large businesses within the United States. These smaller businesses have positively contributed to job creation and competition. <ref>{{Cite web|last=Miller|first=Derek|date=August 22, 2019|title=What is the Actual Impact of Small Business on the Economy?|url=https://www.thebalancesmb.com/small-business-impact-on-the-economy-4175064|url-status=live|access-date=2/28/21}}</ref> The increase use of the Internet has enabled a wider range of jobs and has been the reason some jobs are now obsolete. According to the McKinsey's global SME survey, in the past 15 years, the Internet reported to destroy half a million jobs but generate 1.2 million new ones. The survey found that for every job destroyed, 2.6 new jobs were created. The influence of the internet has accounted for GDP growth over the past 15 years. Small businesses are now able to reach new customers, suppliers and potential employees because of the ability of media platforms through the internet.<ref>{{Cite journal|last=Manyika, Roxburgh|first=James, Charles|date=October 2011|title=The great transformer: The impact of the internet on economic growth and prosperity|url=http://ict-industry-reports.com.au/wp-content/uploads/sites/4/2011/11/2011-the-great-transformer-McKinsey-Oct2011.pdf|journal=McKinsey Global Institute|pages=1-10}}</ref> |
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The increase use of the internet has had significant impact upon the competitive structures of the United States economy, specifically upon smaller businesses. Studies indicate that the primary benefits of access to the internet for small businesses are the direct and indirect network effects, lower search costs and greater price dispersions. |
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Social media applications are used by large and small businesses for marketing and branding of their services and products. The platforms have allowed small businesses to develop strategies to make personal connections with individuals who may have an interest in their product and returning consumers. The growth of the internet will continue to increase over the next decade so it's important that businesses make the right changes in order to adapt and compete within the economy. Smaller businesses will be able to more efficiently use social media. The ability to socialize and share opinions in forms of blog posts or comments will allow smaller businesses to build a stronger relationship with their consumers. <ref>{{Cite web|last=Shabbir|first=Malik Shahzard|date=2016|title=Impact of Social Media Applications on Small Business Entrepreneurs|url=file:///Users/mariabarrett/Downloads/ImpactofSocialMediaApplicationsonSmallBusinessEntrepreneurs.pdf|url-status=live|access-date=2/28/21|website=University of Lahore}}</ref> |
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Studies demonstrate that within the past years small independent businesses have made less of an appearance across many sectors of the economy, this is due to the power of large corporations that use their market dominance to exclude their rivals to compete. There are multiple reasons to encourage and bring back competitive markets because small businesses allow for more consumer benefits and provide a more equally distribution of income and increase job opportunity. <ref>{{Cite web|last=Mitchell|first=Stacy|date=August 2016|title=Monopoly Power and the Decline of Small Business|url=https://www.ilsr.org/wp-content/uploads/downloads/2016/08/MonopolyPower-SmallBusiness.pdf|url-status=live|access-date=March 3rd, 2021|website=Institute for Local Self-Reliance}}</ref> |
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According to the research by McKinsey Global Institute, the internet has become the driving force behind GDP growth in developed economies over the past 5 years. It has accounted for a 21 percent increase in GDP. <ref>{{Cite web|last=Manyika|first=James|last2=Roxburgh|first2=Charles|date=October 2011|title=The Great Transformer: The Impact of the Internet on Economic Growth and Prosperity|url=http://ict-industry-reports.com.au/wp-content/uploads/sites/4/2011/11/2011-the-great-transformer-McKinsey-Oct2011.pdf|url-status=live|access-date=March 3rd, 2021|website=McKinsey Global Institute}}</ref> The internet is considered a two sided market by indirect and direct network effects. Smaller businesses thrive with indirect network effects because it encourages more buyers and sellers. The increase numbers of participant on one side of an enterprise leads to an increase on the other market side. Direct network effects are related to the size of media application. For example, studies demonstrate that telecommunication networks like Skype, Facebook and LinkedIn consumers utility depend on the presence of other users. <ref>{{Cite web|last=Justus|first=Haucap|last2=Heimeshoff|first2=Ulrich|date=January 2013|title=Google, Facebook, Amazon, Ebay: Is the Internet Driving Competition or Market Monopolization?|url=https://www.econstor.eu/bitstream/10419/68229/1/73435858X.pdf|url-status=live|access-date=March 3rd, 2021|website=Dusseldorf Institute for Competition Economics}}</ref> |
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One industry that the increase access of the internet has affected is the news industry. The news industry is in competition with the greater presence of online news media. According to the study, 57 percent of newspaper readers now turn to digital sources for news channels. This study argues that media aggregation allows small news sites to gain more interaction because of the need for high quality news information from larger firms. <ref>{{Cite web|last=Doh-Shin|first=Jeon|last2=Nasr|first2=Nikrooz|date=July 16, 2014|title=Aggregators and Competition Among Newspapers on the Internet|url=http://publications.ut-capitole.fr/15561/1/Gautier_15561.pdf|url-status=live|access-date=March 3rd, 2021}}</ref> |
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Search costs are defined as the the costs of looking for information. It is easier to discover and compare information through the internet. Lower search costs allow consumers to gather a range of prices for the specific product. This reduces price dispersion. The internet supports consumer spending by providing different retailers who produce a variety of products. Lower search cost support a more competitive structure because show that it is easier to find unique and rare products of the increase of firms presence on the internet. <ref>{{Cite web|last=Goldfarb|first=Avi|last2=Tucker|first2=Catherine|date=August 2017|title=Digital Economics|url=https://www.nber.org/system/files/working_papers/w23684/w23684.pdf|url-status=live|access-date=March 3rd, 2021|website=National Bureau of Economic Research}}</ref> |
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Revision as of 19:06, 3 March 2021
Impact of the Internet on Business Landscapes
Rewrite/New:
The increase use of the internet has had significant impact upon the competitive structures of the United States economy, specifically upon smaller businesses. Studies indicate that the primary benefits of access to the internet for small businesses are the direct and indirect network effects, lower search costs and greater price dispersions.
Studies demonstrate that within the past years small independent businesses have made less of an appearance across many sectors of the economy, this is due to the power of large corporations that use their market dominance to exclude their rivals to compete. There are multiple reasons to encourage and bring back competitive markets because small businesses allow for more consumer benefits and provide a more equally distribution of income and increase job opportunity. [1]
According to the research by McKinsey Global Institute, the internet has become the driving force behind GDP growth in developed economies over the past 5 years. It has accounted for a 21 percent increase in GDP. [2] The internet is considered a two sided market by indirect and direct network effects. Smaller businesses thrive with indirect network effects because it encourages more buyers and sellers. The increase numbers of participant on one side of an enterprise leads to an increase on the other market side. Direct network effects are related to the size of media application. For example, studies demonstrate that telecommunication networks like Skype, Facebook and LinkedIn consumers utility depend on the presence of other users. [3]
One industry that the increase access of the internet has affected is the news industry. The news industry is in competition with the greater presence of online news media. According to the study, 57 percent of newspaper readers now turn to digital sources for news channels. This study argues that media aggregation allows small news sites to gain more interaction because of the need for high quality news information from larger firms. [4]
Search costs are defined as the the costs of looking for information. It is easier to discover and compare information through the internet. Lower search costs allow consumers to gather a range of prices for the specific product. This reduces price dispersion. The internet supports consumer spending by providing different retailers who produce a variety of products. Lower search cost support a more competitive structure because show that it is easier to find unique and rare products of the increase of firms presence on the internet. [5]
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- ^ Mitchell, Stacy (August 2016). "Monopoly Power and the Decline of Small Business" (PDF). Institute for Local Self-Reliance. Retrieved March 3rd, 2021.
{{cite web}}: Check date values in:|access-date=(help)CS1 maint: url-status (link) - ^ Manyika, James; Roxburgh, Charles (October 2011). "The Great Transformer: The Impact of the Internet on Economic Growth and Prosperity" (PDF). McKinsey Global Institute. Retrieved March 3rd, 2021.
{{cite web}}: Check date values in:|access-date=(help)CS1 maint: url-status (link) - ^ Justus, Haucap; Heimeshoff, Ulrich (January 2013). "Google, Facebook, Amazon, Ebay: Is the Internet Driving Competition or Market Monopolization?" (PDF). Dusseldorf Institute for Competition Economics. Retrieved March 3rd, 2021.
{{cite web}}: Check date values in:|access-date=(help)CS1 maint: url-status (link) - ^ Doh-Shin, Jeon; Nasr, Nikrooz (July 16, 2014). "Aggregators and Competition Among Newspapers on the Internet" (PDF). Retrieved March 3rd, 2021.
{{cite web}}: Check date values in:|access-date=(help)CS1 maint: url-status (link) - ^ Goldfarb, Avi; Tucker, Catherine (August 2017). "Digital Economics" (PDF). National Bureau of Economic Research. Retrieved March 3rd, 2021.
{{cite web}}: Check date values in:|access-date=(help)CS1 maint: url-status (link)