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e-Business and e-Commerce
e-Business and e-Commerce K. E. Corey and M. I. Wilson, Michigan State University, East Lansing, MI, USA & 2009 Elsevier Ltd. All rights reserved.
Glossary Business-to-Business (B2B) Activities utilize information and communications technologies to facilitate transactions involving intermediate goods and services. Business-to-Consumer (B2C) Transactions use information and communication technologies (ICT)enabled systems linking businesses and their customers for delivery and payment of final goods and services. Consumer-to-Consumer (C2C) Interaction is ICTenabled links between consumers for the purchase or exchange of goods and services. e-Business Is the use of ICT to facilitate the operations of an organization through the purchase or exchange of goods and services, customer service, or provision of information. e-Commerce Uses ICT for transactions online, and is a subset of e-business. e-Government Is the use of e-business approaches to the delivery of public services. Government-to-Consumer (G2C) Transactions are a form of e-business using ICT to link government and its citizens.
Introduction Electronic business, or e-business, is a wide-ranging collection of functions and activities that are facilitated by digital and electronic means. The ultimate goal of ebusiness is to establish an online presence for an organization and to provide as much interactivity and functionality as possible. e-Business relies on information and communication technologies (ICT) to improve and expand the operation and functions of an organization, such as a business, government agency, or nonprofit organization. e-Business is a recent phenomenon, lagging several years behind the initial popularity of the Internet in the early 1990s, and today with less than a decade of common presence in the most advanced economies. While often used as a synonym for e-business, e-commerce is a more specific concept associated with ICT-enabled financial transactions. Other concepts associated with e-business and e-commerce include online interactions by business, government, and between individuals. This article frames and discusses the concepts of e-business and e-commerce and many of the
interdependent relationalities among these economic and societal functions. In addition to the characteristics of ICT-enabled business, these activities also have different geographies or spatial and locational patterns. From the fundamentals and knowledge introduced in this article, the reader may be motivated to consider engaging in e-business, thereby taking advantage of the new opportunities that are offered by digital and electronic technologies. The past 50 years have witnessed the development and merger of computers and communications technologies. The power of these combined technologies created the Internet, which offers new possibilities for efficient and low-cost electronic interaction for organizations and individuals. The existence of ICT and the Internet, however, does not guarantee the presence of e-business functions. Effective and successful e-business requires three elements. First, access to and use of the Internet, which includes the ability to go online for a reasonable cost by local standards, and the knowledge and skills needed to operate a computer and to navigate cyberspace. Second, a developed financial services sector that allows electronic payments for goods and services, through banks, credit cards, invoicing, or third-party banking equivalents. The third element is an efficient delivery system through postal or transportation services to complete the transaction. The absence of one or more of these elements makes the conduct of e-business difficult if not impossible. Countries with well-established e-business sectors have sophisticated Internet, financial services, and delivery systems to support online business. There are many reasons for adopting e-business practices, with several of the leading factors listed next. Use of ICT often allows organizations to reduce costs through labor savings (automated systems, users enter data, offshoring), reduced transaction costs, more efficient delivery (electronic vs. ground/air/mail), and better tracking of operations. Organizations may provide improved services, such as recent and greater information to customers by firms or citizens by government. New markets may be served, as the global reach of the Internet offers a far larger market than possible previously, although the larger market may also carry greater competition. Consumers may prefer online sources as they have 24 h access, reduced or no travel times, and the ability to rapidly survey the market for lowest prices or best conditions. The many advantages of an e-business strategy also needs to be considered in terms of initial greater costs, not just in terms of establishing a web
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presence, but the possible need to re-engineer organization or back office practices to function electronically.
Scope and Scale of e-Business With over 1 billion people online globally, the potential now and in the future for e-business activities is substantial. Estimates of the scale of e-business activities are limited, as measurement lags behind this phenomenon, and the tendency for organizations to see data as a trade secret to be denied to competitors. In the 25 member European Union in 2005, the European Commission (2006) reported 91% of firms using the Internet, with 61% of firms having a web presence and almost a quarter of firms engaging in business-to-business (B2B) transactions online. At the national level, many countries calculate the level of online business. For example, in 2004, the United States Census Bureau (2006) cited over US$130 billion in online retail trade, with B2B e-commerce exceeding US$1.9 trillion. e-Business is often characterized by the parties involved in an online transaction, between and among business, government, and consumers. This section will briefly summarize common forms of e-business. The most easily recognized form of online activity is businessto-consumer (B2C) transactions, which link businesses and their customers for information, purchase, delivery, and payment of final goods and services. Success with B2C occurs for firms that benefit from cost savings through electronic products and content that do not involve physical movement (airline and hotel reservations, music and video downloads, etc.). Also successful are businesses that avoid local legal constraints (online gambling and adult content) and activities that can provide a wide selection at competitive prices (books, music, electronic goods, etc.). Despite the popularity of B2C commerce, it is only a small part of total online business. In the United States, B2C is only 7% of total ecommerce. The largest component of e-business, and most powerful economically, is B2B. B2B utilizes ICT to facilitate transactions involving intermediate goods and services. B2B activities include online purchasing and distribution, supply chain management, and automated trading. The challenge for analysts of B2B e-commerce is that B2B systems are an important competitive element for a firm, and system design and data are often considered proprietary and not publicized. A subset of B2B includes B2G when firms sell to governments. e-Government has several elements of e-business, such as government to consumers or citizens (G2C), as well as government services to business (G2B). Government is an important source of information, often at no charge, and the Internet is a powerful tool for the
dissemination of public data and reports. Many organizations rely upon government for business and demographic data, legal decisions, information about public policy, weather and climate, and access to forms. Government also transacts business online, such as for taxation, licenses and permits, and payment of fines. One developing function is electronic voting, which represents a complex intersection between technology, privacy, equity, and accuracy. As firms often found a need to reengineer for e-business, government also found that the structure of government, with defined roles in specific departments, did not easily translate into cyberspace. The best government websites are those that address the needs of the user, designing the site to feature needs (taxation, travel, children, etc.) rather than force visitors to search across many departments to identify the information they need. A final, and rapidly growing, dimension of e-business is transactions among consumers (C2C). The most common formats are auction websites that allow individuals and businesses to buy and sell products and services online, such as eBay. These are third-party websites that link consumers in a form of electronic flea market that also is emerging as a force for commercial sales and the auctioning of intermediate goods and services. Somewhat related to the C2C format is peerto-peer (P2P) online interaction, although this form tends not to use third parties to avoid legal implications associated with downloading of copyrighted material, such as music and video.
Functions and Content of e-Business As a force that has had significant influence on the ways we live, work, learn, and entertain ourselves, e-business is barely a human generation old, from electronic financial transactions 40 years ago to Internet-enabled commerce only a decade old. However, during this relatively short life span e-business has evolved from infancy to maturity, and e-business functions are continuing to develop. These functions have evolved from consisting principally of simple commercial transactions on the Internet to include also informational exchanges that draw on myriad technologies that transform the ways that we go about the business of living and of doing business. These transformations impact the economy, society, culture, polity, environment, geography, and time. The deep penetration of and growing reliance on e-business and e-commerce have resulted in the blurring of the lines between the physical worlds and the virtual online worlds. For the purposes of the conceptual framework being introduced here, it means that the contemporary concept of e-business is a blend of material and electronic functions. Increasingly, it means that today,
e-Business and e-Commerce
e-business is a complementary mixture and partial integration of electronic technology supported business and physical business functions. Over time, the proportion of this mix is shifting increasingly to the electronic-enabled end of this electronic-to-material spectrum. Given the increasing complexity and diversity of e-business functions, it is useful to frame them for clearer understanding and for use in business strategizing. Given the contemporary forces of information technology and globalization, these various e-business functions should be conceptualized within the context of the global knowledge economy and network society. In this context three major e-business activities may be identified and framed in a spectrum of business and economic functions and factors. These include: production functions; consumption functions; and quality of life and amenity factors. These three general sets of functions are linked and networked by means of such electronic technologies as the Internet and other telecommunications with multimedia content delivered via cable, telephone line, wireless, and satellite broadcasting. Production Functions Production may involve the generation of an innovation, such as an idea, the creation of a service, or the making of a good. These outputs in turn may or may not be developed further into a commercially marketable item. These outcomes may be electronic or material, but they were produced as a result of being electronically enabled. Examples include: basic research conducted in a university laboratory that produces an innovative scientific idea that has preliminary attractiveness for venture capital investment; a research and development department within a company tests and further demonstrates the commercial viability of life science process to be used in medical care, and it buys majority equity in its further development; production functions also include business and producer services whereby one firm provides special services, such as legal or accounting or advertising services to other firms; and public institutions such as governments provide producer services, as in the case of weather forecasts, taxes, and regulations. Consumption Functions (or e-Commerce) Consumption involves the use of a process, service, or good. Consumption may or may not require the exchange of money such as in the cash purchase of an automobile; this is an e-commerce example. Further, e-commerce may involve the exchange of information in order to gain access to services or to be more informed as in the example of searching many e-government functions. As in the cases of the various production functions, in consumption functions there is not necessarily a sharp
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distinction between the electronic world and the material world. As e-commerce deepens and matures, there often is better integration between online consumption and traditional physical retailing. For example, it is more common today to be able to make a purchase over the Internet and retrieve it or return it at a physical location such as the firm’s store. Quality of Life and Amenity Factors In a global economy, where in many advanced national and regional economies, commercially value-added knowledge and innovative services are creating more jobs than manufacturing industries. In such places, the needs of knowledge workers must be addressed, if such workers are to be grown locally and other such workers are to be attracted to the locality. Consequently, human capital development, a long-recognized factor of production, may be more strategically framed as a factor of quality and amenity so that it is instrumental in nurturing and retaining a knowledge-economy workforce for a particular region. This is an e-business factor that can confer competitive advantage on a locality. In addition to human capital, quality of life and amenity factors such as a nearby attractive natural environment and creative and cultural assets are elements that enrich and reinforce the knowledge economy e-business advantage of a place. Further, in a global economy labor market where highdemand knowledge workers have virtually unlimited mobility, a local climate of tolerance, and a creative culture are critical factors that complement all the other e-business functions noted throughout this article. e-Business Spectrum In sum, e-business may be framed by a conceptual framework encompassing the principal economic, social, cultural, environmental, and spatial organizational factors that shaped development in a global knowledge economy. These functions are connected and linked by flows of information and knowledge that result in geographies of flows and content. The principal challenge empirically in engaging locally the study and/or the initiation of e-business and e-commerce is overcoming data and information availability – or lack of it. Frequently, marketing data may be available, but without the locational specificity and geographical breakdown needed for maximizing business decision making.
Spatial Organization of e-Business Geographies of e-Business The geography of e-business has many elements and dimensions depending on the aspects addressed. At one level is the spatial pattern of ICT infrastructure, decided by the location of fiber optic and telecommunications
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networks that carry telecommunications and the Internet, and the nodes that direct and focus flows of electronic information. Patterns of infrastructure are evident at a number of scales, with leading and lagging cities, regions, countries, and continents. e-Readiness indices based on ICT data show that the leading continents are North America, Europe, and Asia, and leading countries are Denmark, the United States, Sweden, Switzerland, and the United Kingdom. Least ready to engage in e-business are Africa and Latin America. More concentrated than Internet infrastructure is the location of Internet hosts for e-business, which tend to be found in the most advanced economies and leading cities. At its most advanced, the pattern of global e-business consists of flows among the world’s leading urban economies, with cities such as New York, London, and Tokyo playing core roles in this phenomenon. Among the spatial factors that shape e-business are language and culture, local and national laws, regional tastes and preferences, currencies, and privacy regulations. Scaling up from the local to regional or national to international level means e-business operations face a far more complex and nuanced market than previously. The three elements of e-business noted at the start of this article – access, transaction, and delivery – all have spatial dimensions that need to be considered by producers and consumers. New Geographies in an Era of Digital and Intelligent Development The reader should not be misled into thinking that business and commerce, enabled by ICT has eliminated distance or geography. Location and proximities still matter a great deal and they affect the ways that we behave and conduct business. These technologies, and our growing reliance on them and our expectations for their continuous improvement, have influenced and are changing the ways that we think about and perceive distance and the spatial organization of our new increasingly networked worlds. While there are patterns of convergence of electronic technologies and interconnectedness, and there is growing ubiquity of these technologies globally and locally, there remain many areas of the world, peoples, businesses, and institutions that are not networked or connected or if connected, are poorly so. Therefore, even in this widely discussed networked society and global economy, there is a great deal of unevenness in the distribution of information and digital infrastructure and/or access to such technologies. Cities and city-regions function as principal locations where trade and e-business converge. In the global knowledge economy city-regions serve as hubs where networks and e-business flows of transactions come
together. These highest-order urban places, in the context of the global knowledge economy, host globally dominant financial services and complementary functions such as world-class cultural institutions in the arts, higher education, and corporate headquarters, among other business-related and business-supported assets. The overarching business functional context of the global knowledge economy and network society is development. In this context, economic development and economic growth alone are not sufficient for being competitive in an era of technology-induced globalization. Development in the global knowledge economy, while driven by economic development and progress, recognizes the importance also of civil societal advancement, including material and environmental advancement and equity promotion for a majority of the populations of city-regions. The economic development component of this comprehensive development framework in the global knowledge economy is driven by the e-business spectrum and its production, consumption, and quality of life and amenity factors. Because of spatial unevenness, there frequently needs to be a parallel public policy priority for equity to counter the inexorable momentum and movement toward development inequities and disparities. In the current era of ICT-facilitated globalization, two additional types of development require explication: digital development and intelligent development. Digital development involves ensuring that high-speed broadband Internet infrastructure is distributed equitably and provided throughout a city, region, or country’s settlement space. Given the continuous improvement and pervasive competitive environment of the global economy, ensuring an initial distribution of first-generation digital infrastructure may not be sufficient to ensure ongoing comparative advantage; consequently, constant upgrading and modernization of ICT infrastructure is required. In addition, the business and government interests of an area must recognize and operate with complementarity, usually in some form of alliances or partnerships, and from a position of intelligent development. Intelligent development is digital development that is informed by effective market data and empirical research, combined with the application of cutting-edge and tested theory and conceptual frameworks that reflect best practices and benchmarking for monitoring business innovations and evaluation of the implementation of the selected business model. Intelligent development in the context of effective e-business practice involves attention to the geography of digital development and intelligent development patterns. Areas that are underserved by digital infrastructure have less business potential and opportunity. These are places that represent gaps and disparities in the spatial organization of development; such areas can retard the
e-Business and e-Commerce
competitiveness and intelligent development trajectory of a city-region, thereby slowing the entire region’s growth and advancement. Policies of equitable development and private–public partnerships are means that can be employed to address the need for widespread intelligent development.
What Does the Future Hold for e-Business? The bursting of the dot-com bubble in the year 2000 demonstrated that doing business and conducting commerce electronically did not exempt us from the need to adhere to the fundamentals of sound investment principles and the best practices of planning and doing business. The relatively short life span of e-business has been characterized by experimentation, learning, and change. No longer are these increasingly pervasive electronic-facilitated economic and societal functions new to our individual and collective experience. These functions have evolved and can be expected to continue to be dynamic and continuously changing well into the foreseeable future. As computers and Internet access move from being optional to being a necessity in most advanced economies, we confront the significance and implications of ubiquitous computing. Once access is assumed rather than an option, it means that lacking access, as an individual, organization, community, region, or country, carries with it exclusion from the leading form of economic interaction. Also, the ability to shift production to low-cost areas suggests a world of new centers and peripheries, where the centers are the leading urban nodes in the network society and the peripheries are those locations that cannot or will not engage with the new technologies. The equity implications and spatial contrasts such outcomes suggest may reshape the nature of the knowledge economy and network society. As e-business and e-commerce evolve we can expect further melding of the electronic and material worlds by means of such activities as social networking, for example, Second Life. This site reveals a virtual world that is three dimensional; it consists of a digital continent that includes a wide spectrum of economic and social activities where participants can create and construct marketplace and other e-realities that involve trading and the use of currency. Increasingly, there are spillovers from and to the virtual and physical worlds. Second Life has attracted nearly 3 million inhabitants from around the world. Social networking has been attributed to stimulating new interest in e-commerce. The concepts and the conceptual frameworks introduced in this article should enable the reader to earn an initial understanding of the complexities and
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evolutionary changes that are inherent in e-business and e-commerce. Given the individual and personal scalability of these two functions, this article may serve as a stimulus for readers to consider initiating and engaging in e-business and/or e-commerce. See also: Business Services; Capital and Space; Capitalism; Civil Society; Competitiveness; Digital Divide; Entrepreneurship; Global Production Networks; Globalization and Transnational Corporations; Information Technology; Knowledge Economy; Knowledge Intensive Business Services; Local Economic Development; Uneven Development; Venture Capital.
Further Reading Acs, Z. J. and Armington, C. (2006). Entrepreneurship, geography, and American economic growth. Cambridge: Cambridge University Press. Albrechts, L. and Mandelbaum, S. J. (eds.) (2005). The network society: A new context for planning? New York: Routledge. Beinhocker, E. D. (2006). Origin of wealth: Evolution, complexity, and the radical remaking of economics. Boston: Harvard Business School. Clarke, S. E. and Gaile, G. L. (1998). The work of cities. Minneapolis: University of Minnesota. Corey, K. E. and Wilson, M. I. (2006). Urban and regional technology planning: Planning practice in the global knowledge economy. New York: Routledge. European Commission, Enterprise and Industry Directorate General (2006). The 2006 European E-Business Readiness Index. http:// ec.europa.eu/enterprise/ict/policy/ebi/ebi-2006-sh-prel-data-rep.pdf (accessed Sep. 2007). Fletcher, R. G., Moscove, B. J. and Corey, K. E. (2001). Electronic commerce: Planning for successful urban and regional development. In Williams, J. F. & Stimson, R. J. (eds.) International urban planning settings: Lessons of success, pp 431--467. Amsterdam: JAI. Friedman, T. L. (2006). The world is flat: A brief history of the twenty-first century. New York: Farrar, Straus and Giroux. Gottmann, J. (1983). The coming of the transactional city. College Park, MD: University of Maryland Institute for Urban Studies. Huggins, R., Izushi, H. and Davies, W. (2005). World knowledge competitive index 2005. Pontypridd: Robert Huggins Associates Ltd. Kellerman, A. (2002). The internet on earth: A geography of information. Chichester: Wiley. Leinbach, T. R. and Brunn, S. D. (2001). Worlds of e-commerce: Economic, geographical and social dimensions. Chichester: Wiley. Murdoch, J. (2006). Post-structuralist geography: A guide to relational space. London: Sage Publications. Rogers, E. M. (1976). Communication and development: The passing of the dominant paradigm. Communication Research 3, 213--240. United States, Census Bureau (2006). E-Stats. http://www.census.gov/ eos/www/papers/2004/2004reportfinal.pdf (accessed Sep. 2007). Yeung, H. W. C. (2005). Rethinking relational economic geography. Transactions of the Institute of British Geographers 30, 37--51.
Relevant Websites http://www.americasnetwork.com America’s Network. http://www.topics.developmentgateway.org dgCommunities, Knowledge Sharing and Collaboration Worldwide. http://www.forrester.com Forrester Research.
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http://www.lboro.ac.uk GaWC – Globalization and World Cities, Loughborough University. http://www.globaltechforum.eiu.com Global Technology Forum. http://www.InsidePolitics.org Inside Politics, Darrell West of Brown University. http://www.internetworldstats.com Internet Usage World Stats – Internet and Population Statistics. http://www.jupiterresearch.com JupiterResearch – Market Research, Analysis, and Advice. http://www.itu.int Market Information and Statistics (STAT), International Telecommunication Union.
http://www.oecd.org Organisation for Economic Co-operation and Development (OCED). http://www.pewinternet.org Pew Internet and American Life Project. http://www.secondlife.com Second Life: Your World. Your Imagination. http://www.census.gov The 2007 Statistical Abstract, US Census Bureau. http://forum.maplecroft.com World Economic Forum – Global Health Initiative, Maplecroft.
Glossary Business-to-Business (B2B) Activities utilize information and communications technologies to facilitate transactions involving intermediate goods and services. Business-to-Consumer (B2C) Transactions use information and communication technologies (ICT)enabled systems linking businesses and their customers for delivery and payment of final goods and services. Consumer-to-Consumer (C2C) Interaction is ICTenabled links between consumers for the purchase or exchange of goods and services. e-Business Is the use of ICT to facilitate the operations of an organization through the purchase or exchange of goods and services, customer service, or provision of information. e-Commerce Uses ICT for transactions online, and is a subset of e-business. e-Government Is the use of e-business approaches to the delivery of public services. Government-to-Consumer (G2C) Transactions are a form of e-business using ICT to link government and its citizens.
Introduction Electronic business, or e-business, is a wide-ranging collection of functions and activities that are facilitated by digital and electronic means. The ultimate goal of ebusiness is to establish an online presence for an organization and to provide as much interactivity and functionality as possible. e-Business relies on information and communication technologies (ICT) to improve and expand the operation and functions of an organization, such as a business, government agency, or nonprofit organization. e-Business is a recent phenomenon, lagging several years behind the initial popularity of the Internet in the early 1990s, and today with less than a decade of common presence in the most advanced economies. While often used as a synonym for e-business, e-commerce is a more specific concept associated with ICT-enabled financial transactions. Other concepts associated with e-business and e-commerce include online interactions by business, government, and between individuals. This article frames and discusses the concepts of e-business and e-commerce and many of the
interdependent relationalities among these economic and societal functions. In addition to the characteristics of ICT-enabled business, these activities also have different geographies or spatial and locational patterns. From the fundamentals and knowledge introduced in this article, the reader may be motivated to consider engaging in e-business, thereby taking advantage of the new opportunities that are offered by digital and electronic technologies. The past 50 years have witnessed the development and merger of computers and communications technologies. The power of these combined technologies created the Internet, which offers new possibilities for efficient and low-cost electronic interaction for organizations and individuals. The existence of ICT and the Internet, however, does not guarantee the presence of e-business functions. Effective and successful e-business requires three elements. First, access to and use of the Internet, which includes the ability to go online for a reasonable cost by local standards, and the knowledge and skills needed to operate a computer and to navigate cyberspace. Second, a developed financial services sector that allows electronic payments for goods and services, through banks, credit cards, invoicing, or third-party banking equivalents. The third element is an efficient delivery system through postal or transportation services to complete the transaction. The absence of one or more of these elements makes the conduct of e-business difficult if not impossible. Countries with well-established e-business sectors have sophisticated Internet, financial services, and delivery systems to support online business. There are many reasons for adopting e-business practices, with several of the leading factors listed next. Use of ICT often allows organizations to reduce costs through labor savings (automated systems, users enter data, offshoring), reduced transaction costs, more efficient delivery (electronic vs. ground/air/mail), and better tracking of operations. Organizations may provide improved services, such as recent and greater information to customers by firms or citizens by government. New markets may be served, as the global reach of the Internet offers a far larger market than possible previously, although the larger market may also carry greater competition. Consumers may prefer online sources as they have 24 h access, reduced or no travel times, and the ability to rapidly survey the market for lowest prices or best conditions. The many advantages of an e-business strategy also needs to be considered in terms of initial greater costs, not just in terms of establishing a web
285
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e-Business and e-Commerce
presence, but the possible need to re-engineer organization or back office practices to function electronically.
Scope and Scale of e-Business With over 1 billion people online globally, the potential now and in the future for e-business activities is substantial. Estimates of the scale of e-business activities are limited, as measurement lags behind this phenomenon, and the tendency for organizations to see data as a trade secret to be denied to competitors. In the 25 member European Union in 2005, the European Commission (2006) reported 91% of firms using the Internet, with 61% of firms having a web presence and almost a quarter of firms engaging in business-to-business (B2B) transactions online. At the national level, many countries calculate the level of online business. For example, in 2004, the United States Census Bureau (2006) cited over US$130 billion in online retail trade, with B2B e-commerce exceeding US$1.9 trillion. e-Business is often characterized by the parties involved in an online transaction, between and among business, government, and consumers. This section will briefly summarize common forms of e-business. The most easily recognized form of online activity is businessto-consumer (B2C) transactions, which link businesses and their customers for information, purchase, delivery, and payment of final goods and services. Success with B2C occurs for firms that benefit from cost savings through electronic products and content that do not involve physical movement (airline and hotel reservations, music and video downloads, etc.). Also successful are businesses that avoid local legal constraints (online gambling and adult content) and activities that can provide a wide selection at competitive prices (books, music, electronic goods, etc.). Despite the popularity of B2C commerce, it is only a small part of total online business. In the United States, B2C is only 7% of total ecommerce. The largest component of e-business, and most powerful economically, is B2B. B2B utilizes ICT to facilitate transactions involving intermediate goods and services. B2B activities include online purchasing and distribution, supply chain management, and automated trading. The challenge for analysts of B2B e-commerce is that B2B systems are an important competitive element for a firm, and system design and data are often considered proprietary and not publicized. A subset of B2B includes B2G when firms sell to governments. e-Government has several elements of e-business, such as government to consumers or citizens (G2C), as well as government services to business (G2B). Government is an important source of information, often at no charge, and the Internet is a powerful tool for the
dissemination of public data and reports. Many organizations rely upon government for business and demographic data, legal decisions, information about public policy, weather and climate, and access to forms. Government also transacts business online, such as for taxation, licenses and permits, and payment of fines. One developing function is electronic voting, which represents a complex intersection between technology, privacy, equity, and accuracy. As firms often found a need to reengineer for e-business, government also found that the structure of government, with defined roles in specific departments, did not easily translate into cyberspace. The best government websites are those that address the needs of the user, designing the site to feature needs (taxation, travel, children, etc.) rather than force visitors to search across many departments to identify the information they need. A final, and rapidly growing, dimension of e-business is transactions among consumers (C2C). The most common formats are auction websites that allow individuals and businesses to buy and sell products and services online, such as eBay. These are third-party websites that link consumers in a form of electronic flea market that also is emerging as a force for commercial sales and the auctioning of intermediate goods and services. Somewhat related to the C2C format is peerto-peer (P2P) online interaction, although this form tends not to use third parties to avoid legal implications associated with downloading of copyrighted material, such as music and video.
Functions and Content of e-Business As a force that has had significant influence on the ways we live, work, learn, and entertain ourselves, e-business is barely a human generation old, from electronic financial transactions 40 years ago to Internet-enabled commerce only a decade old. However, during this relatively short life span e-business has evolved from infancy to maturity, and e-business functions are continuing to develop. These functions have evolved from consisting principally of simple commercial transactions on the Internet to include also informational exchanges that draw on myriad technologies that transform the ways that we go about the business of living and of doing business. These transformations impact the economy, society, culture, polity, environment, geography, and time. The deep penetration of and growing reliance on e-business and e-commerce have resulted in the blurring of the lines between the physical worlds and the virtual online worlds. For the purposes of the conceptual framework being introduced here, it means that the contemporary concept of e-business is a blend of material and electronic functions. Increasingly, it means that today,
e-Business and e-Commerce
e-business is a complementary mixture and partial integration of electronic technology supported business and physical business functions. Over time, the proportion of this mix is shifting increasingly to the electronic-enabled end of this electronic-to-material spectrum. Given the increasing complexity and diversity of e-business functions, it is useful to frame them for clearer understanding and for use in business strategizing. Given the contemporary forces of information technology and globalization, these various e-business functions should be conceptualized within the context of the global knowledge economy and network society. In this context three major e-business activities may be identified and framed in a spectrum of business and economic functions and factors. These include: production functions; consumption functions; and quality of life and amenity factors. These three general sets of functions are linked and networked by means of such electronic technologies as the Internet and other telecommunications with multimedia content delivered via cable, telephone line, wireless, and satellite broadcasting. Production Functions Production may involve the generation of an innovation, such as an idea, the creation of a service, or the making of a good. These outputs in turn may or may not be developed further into a commercially marketable item. These outcomes may be electronic or material, but they were produced as a result of being electronically enabled. Examples include: basic research conducted in a university laboratory that produces an innovative scientific idea that has preliminary attractiveness for venture capital investment; a research and development department within a company tests and further demonstrates the commercial viability of life science process to be used in medical care, and it buys majority equity in its further development; production functions also include business and producer services whereby one firm provides special services, such as legal or accounting or advertising services to other firms; and public institutions such as governments provide producer services, as in the case of weather forecasts, taxes, and regulations. Consumption Functions (or e-Commerce) Consumption involves the use of a process, service, or good. Consumption may or may not require the exchange of money such as in the cash purchase of an automobile; this is an e-commerce example. Further, e-commerce may involve the exchange of information in order to gain access to services or to be more informed as in the example of searching many e-government functions. As in the cases of the various production functions, in consumption functions there is not necessarily a sharp
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distinction between the electronic world and the material world. As e-commerce deepens and matures, there often is better integration between online consumption and traditional physical retailing. For example, it is more common today to be able to make a purchase over the Internet and retrieve it or return it at a physical location such as the firm’s store. Quality of Life and Amenity Factors In a global economy, where in many advanced national and regional economies, commercially value-added knowledge and innovative services are creating more jobs than manufacturing industries. In such places, the needs of knowledge workers must be addressed, if such workers are to be grown locally and other such workers are to be attracted to the locality. Consequently, human capital development, a long-recognized factor of production, may be more strategically framed as a factor of quality and amenity so that it is instrumental in nurturing and retaining a knowledge-economy workforce for a particular region. This is an e-business factor that can confer competitive advantage on a locality. In addition to human capital, quality of life and amenity factors such as a nearby attractive natural environment and creative and cultural assets are elements that enrich and reinforce the knowledge economy e-business advantage of a place. Further, in a global economy labor market where highdemand knowledge workers have virtually unlimited mobility, a local climate of tolerance, and a creative culture are critical factors that complement all the other e-business functions noted throughout this article. e-Business Spectrum In sum, e-business may be framed by a conceptual framework encompassing the principal economic, social, cultural, environmental, and spatial organizational factors that shaped development in a global knowledge economy. These functions are connected and linked by flows of information and knowledge that result in geographies of flows and content. The principal challenge empirically in engaging locally the study and/or the initiation of e-business and e-commerce is overcoming data and information availability – or lack of it. Frequently, marketing data may be available, but without the locational specificity and geographical breakdown needed for maximizing business decision making.
Spatial Organization of e-Business Geographies of e-Business The geography of e-business has many elements and dimensions depending on the aspects addressed. At one level is the spatial pattern of ICT infrastructure, decided by the location of fiber optic and telecommunications
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networks that carry telecommunications and the Internet, and the nodes that direct and focus flows of electronic information. Patterns of infrastructure are evident at a number of scales, with leading and lagging cities, regions, countries, and continents. e-Readiness indices based on ICT data show that the leading continents are North America, Europe, and Asia, and leading countries are Denmark, the United States, Sweden, Switzerland, and the United Kingdom. Least ready to engage in e-business are Africa and Latin America. More concentrated than Internet infrastructure is the location of Internet hosts for e-business, which tend to be found in the most advanced economies and leading cities. At its most advanced, the pattern of global e-business consists of flows among the world’s leading urban economies, with cities such as New York, London, and Tokyo playing core roles in this phenomenon. Among the spatial factors that shape e-business are language and culture, local and national laws, regional tastes and preferences, currencies, and privacy regulations. Scaling up from the local to regional or national to international level means e-business operations face a far more complex and nuanced market than previously. The three elements of e-business noted at the start of this article – access, transaction, and delivery – all have spatial dimensions that need to be considered by producers and consumers. New Geographies in an Era of Digital and Intelligent Development The reader should not be misled into thinking that business and commerce, enabled by ICT has eliminated distance or geography. Location and proximities still matter a great deal and they affect the ways that we behave and conduct business. These technologies, and our growing reliance on them and our expectations for their continuous improvement, have influenced and are changing the ways that we think about and perceive distance and the spatial organization of our new increasingly networked worlds. While there are patterns of convergence of electronic technologies and interconnectedness, and there is growing ubiquity of these technologies globally and locally, there remain many areas of the world, peoples, businesses, and institutions that are not networked or connected or if connected, are poorly so. Therefore, even in this widely discussed networked society and global economy, there is a great deal of unevenness in the distribution of information and digital infrastructure and/or access to such technologies. Cities and city-regions function as principal locations where trade and e-business converge. In the global knowledge economy city-regions serve as hubs where networks and e-business flows of transactions come
together. These highest-order urban places, in the context of the global knowledge economy, host globally dominant financial services and complementary functions such as world-class cultural institutions in the arts, higher education, and corporate headquarters, among other business-related and business-supported assets. The overarching business functional context of the global knowledge economy and network society is development. In this context, economic development and economic growth alone are not sufficient for being competitive in an era of technology-induced globalization. Development in the global knowledge economy, while driven by economic development and progress, recognizes the importance also of civil societal advancement, including material and environmental advancement and equity promotion for a majority of the populations of city-regions. The economic development component of this comprehensive development framework in the global knowledge economy is driven by the e-business spectrum and its production, consumption, and quality of life and amenity factors. Because of spatial unevenness, there frequently needs to be a parallel public policy priority for equity to counter the inexorable momentum and movement toward development inequities and disparities. In the current era of ICT-facilitated globalization, two additional types of development require explication: digital development and intelligent development. Digital development involves ensuring that high-speed broadband Internet infrastructure is distributed equitably and provided throughout a city, region, or country’s settlement space. Given the continuous improvement and pervasive competitive environment of the global economy, ensuring an initial distribution of first-generation digital infrastructure may not be sufficient to ensure ongoing comparative advantage; consequently, constant upgrading and modernization of ICT infrastructure is required. In addition, the business and government interests of an area must recognize and operate with complementarity, usually in some form of alliances or partnerships, and from a position of intelligent development. Intelligent development is digital development that is informed by effective market data and empirical research, combined with the application of cutting-edge and tested theory and conceptual frameworks that reflect best practices and benchmarking for monitoring business innovations and evaluation of the implementation of the selected business model. Intelligent development in the context of effective e-business practice involves attention to the geography of digital development and intelligent development patterns. Areas that are underserved by digital infrastructure have less business potential and opportunity. These are places that represent gaps and disparities in the spatial organization of development; such areas can retard the
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competitiveness and intelligent development trajectory of a city-region, thereby slowing the entire region’s growth and advancement. Policies of equitable development and private–public partnerships are means that can be employed to address the need for widespread intelligent development.
What Does the Future Hold for e-Business? The bursting of the dot-com bubble in the year 2000 demonstrated that doing business and conducting commerce electronically did not exempt us from the need to adhere to the fundamentals of sound investment principles and the best practices of planning and doing business. The relatively short life span of e-business has been characterized by experimentation, learning, and change. No longer are these increasingly pervasive electronic-facilitated economic and societal functions new to our individual and collective experience. These functions have evolved and can be expected to continue to be dynamic and continuously changing well into the foreseeable future. As computers and Internet access move from being optional to being a necessity in most advanced economies, we confront the significance and implications of ubiquitous computing. Once access is assumed rather than an option, it means that lacking access, as an individual, organization, community, region, or country, carries with it exclusion from the leading form of economic interaction. Also, the ability to shift production to low-cost areas suggests a world of new centers and peripheries, where the centers are the leading urban nodes in the network society and the peripheries are those locations that cannot or will not engage with the new technologies. The equity implications and spatial contrasts such outcomes suggest may reshape the nature of the knowledge economy and network society. As e-business and e-commerce evolve we can expect further melding of the electronic and material worlds by means of such activities as social networking, for example, Second Life. This site reveals a virtual world that is three dimensional; it consists of a digital continent that includes a wide spectrum of economic and social activities where participants can create and construct marketplace and other e-realities that involve trading and the use of currency. Increasingly, there are spillovers from and to the virtual and physical worlds. Second Life has attracted nearly 3 million inhabitants from around the world. Social networking has been attributed to stimulating new interest in e-commerce. The concepts and the conceptual frameworks introduced in this article should enable the reader to earn an initial understanding of the complexities and
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evolutionary changes that are inherent in e-business and e-commerce. Given the individual and personal scalability of these two functions, this article may serve as a stimulus for readers to consider initiating and engaging in e-business and/or e-commerce. See also: Business Services; Capital and Space; Capitalism; Civil Society; Competitiveness; Digital Divide; Entrepreneurship; Global Production Networks; Globalization and Transnational Corporations; Information Technology; Knowledge Economy; Knowledge Intensive Business Services; Local Economic Development; Uneven Development; Venture Capital.
Further Reading Acs, Z. J. and Armington, C. (2006). Entrepreneurship, geography, and American economic growth. Cambridge: Cambridge University Press. Albrechts, L. and Mandelbaum, S. J. (eds.) (2005). The network society: A new context for planning? New York: Routledge. Beinhocker, E. D. (2006). Origin of wealth: Evolution, complexity, and the radical remaking of economics. Boston: Harvard Business School. Clarke, S. E. and Gaile, G. L. (1998). The work of cities. Minneapolis: University of Minnesota. Corey, K. E. and Wilson, M. I. (2006). Urban and regional technology planning: Planning practice in the global knowledge economy. New York: Routledge. European Commission, Enterprise and Industry Directorate General (2006). The 2006 European E-Business Readiness Index. http:// ec.europa.eu/enterprise/ict/policy/ebi/ebi-2006-sh-prel-data-rep.pdf (accessed Sep. 2007). Fletcher, R. G., Moscove, B. J. and Corey, K. E. (2001). Electronic commerce: Planning for successful urban and regional development. In Williams, J. F. & Stimson, R. J. (eds.) International urban planning settings: Lessons of success, pp 431--467. Amsterdam: JAI. Friedman, T. L. (2006). The world is flat: A brief history of the twenty-first century. New York: Farrar, Straus and Giroux. Gottmann, J. (1983). The coming of the transactional city. College Park, MD: University of Maryland Institute for Urban Studies. Huggins, R., Izushi, H. and Davies, W. (2005). World knowledge competitive index 2005. Pontypridd: Robert Huggins Associates Ltd. Kellerman, A. (2002). The internet on earth: A geography of information. Chichester: Wiley. Leinbach, T. R. and Brunn, S. D. (2001). Worlds of e-commerce: Economic, geographical and social dimensions. Chichester: Wiley. Murdoch, J. (2006). Post-structuralist geography: A guide to relational space. London: Sage Publications. Rogers, E. M. (1976). Communication and development: The passing of the dominant paradigm. Communication Research 3, 213--240. United States, Census Bureau (2006). E-Stats. http://www.census.gov/ eos/www/papers/2004/2004reportfinal.pdf (accessed Sep. 2007). Yeung, H. W. C. (2005). Rethinking relational economic geography. Transactions of the Institute of British Geographers 30, 37--51.
Relevant Websites http://www.americasnetwork.com America’s Network. http://www.topics.developmentgateway.org dgCommunities, Knowledge Sharing and Collaboration Worldwide. http://www.forrester.com Forrester Research.
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http://www.lboro.ac.uk GaWC – Globalization and World Cities, Loughborough University. http://www.globaltechforum.eiu.com Global Technology Forum. http://www.InsidePolitics.org Inside Politics, Darrell West of Brown University. http://www.internetworldstats.com Internet Usage World Stats – Internet and Population Statistics. http://www.jupiterresearch.com JupiterResearch – Market Research, Analysis, and Advice. http://www.itu.int Market Information and Statistics (STAT), International Telecommunication Union.
http://www.oecd.org Organisation for Economic Co-operation and Development (OCED). http://www.pewinternet.org Pew Internet and American Life Project. http://www.secondlife.com Second Life: Your World. Your Imagination. http://www.census.gov The 2007 Statistical Abstract, US Census Bureau. http://forum.maplecroft.com World Economic Forum – Global Health Initiative, Maplecroft.