The Internet is providing firms with new ways to conduct business and
exchange and communicate information and ideas. In doing so, it is enabling
companies to improve efficiency and develop novel ways to co-ordinate
activities. Internal firm organisation and relations with employees and
shareholders, for example, are being affected, as are the external relationships
that firms have with suppliers, customers, competitors and other parties. Some
of the changes that are occurring were explored in the report to OECD Ministers
on The New Economy: Beyond the Hype (OECD, 2001a). The report concludes
that the Internet and related advances in information and communication
technology (ICT) are transforming economic activity, much as the steam
engine, railways and electricity did in the past. They have done so by providing
a catalyst for change in business – helping to spur improvements in work
organisation through reductions in routine transaction costs and rationalisation
of supply chains, while spawning value-generating networks.
