Digital economics and the e-business dilemma

he past few years have seen a number of debatesover whether e-business requires new or differ-ent thinking about business and strategy. Regard-less of the various views, the reality is that contemporaryinformation technologies (ITs) are facilitating rapid digi-talization, storage, and transfer of product and service ex-periences. This will not abate. So a productive exercise isto examine business strategy by looking at the economicimpacts of digitalization. Here we try to take a step backand reexamine the dynamics of e-business and its poten-tial impact on the economy from fundamental andenduring economic principles.Our aim is to provide managers of enterprises in this digi-tal age with guidance on key factors that will have a con-trolling effect on the likely evolutionary path of e-busi-ness. Moreover, these controlling factors will affect thebalance of power between market participants, specifi-cally, suppliers and entrepreneurs on the one hand andconsumers on the other. We conjecture that the evolution-ary path and the balance of power are intimately linkedand will result in a precarious economic balancing act—precarious in the sense of generating huge benefits for theeconomy as a whole, but with the potential to initiatelarge swings in the division of those benefits betweenbuyers and suppliers. As such, managers of companiesthat digitalize their offerings or use today’s Internet andother networks for business have a compelling interest tocomprehend the new economic reality and leverage it totheir respective advantage. The failure to do so can havedramatic negative consequences for the complacent party.