Economics of Information Systems:

In today’s economy, information technology (IT) has fundamentally transformed the

availability of information, which in turn has changed the economics and business
practices in a wide range of industries. Dramatic advances in information technology
and the nature of economic competition are forcing firms to come up with new ways
of organizing work. At the NUS School of Computing, as in many other leading
universities, there is a growing interest in the application of economics to numerous
new research frontiers in e-commerce, information technology products and
industries, and the use of information and IT in business and society. The group’s
research encompasses cutting-edge studies that address salient business and societal
level questions that intersect with business analytics, social media, mobile
marketing, digitization of social processes, and the power of crowds. This group uses
state-of-the-art methodologies including field experiments, analytical modeling, and
econometric modeling to improve our understanding of the fast-changing digitized
world. Key themes of this research are:

1. NETWORK EFFECT AND EXTERNALITY

In economics, an externality is the benefit or cost that the action of a person (or a
firm) effects on other people (or other firms). Classic examples of externalities
include public goods (benefit) and pollution (cost). When an externality exists, we
typically need to rely on policy interventions to improve the welfare of the parties
involved and therefore it requires careful research designs to identify the best overall
welfare maximizing policy. In IT-related industries, examples of externalities are
abundant due to network effects, which mean that one individual’s adoption of a
product may increase the utility of other existing buyers. Ever since the beginning
of research in information systems (IS), economics of network effects have provided
a useful and important perspective into the management of IT and design of
government policy towards IT. Our research group has made valuable contributions
to this important stream of IS research by analyzing the network effects and spillover
effects in several novel IT contexts, including recommendation system effects on
product demand, do-not-call policy effect on privacy, social network formation and
content creation, contagion effect on social networks, online word-of-mouth, and
blockbuster effect on crowd sourcing platforms.
2. LABOR ECONOMICS AND PRODUCTIVITY
In knowledge-intensive industries such as software, information technology, and
biotech, human resource management (HRM) is often the most critical factor that
affects productivity, performance of R&D, and innovation outcomes. Researchers in
information systems and technology management are applying labor economics
methods to study the productivity of IT investments, the characteristics of
knowledge workers, and firm-level R&D performance. Our research is making
significant contributions in this area by studying how IT investment may affect
entrepreneurship spawning at firm and individual levels, and how IT affects the
production function of software firms. We also characterize the career path and R&D
performance of knowledge workers, and improve the methods for analyzing inventor
mobility by constructing a better data set collected from a leading professional social
network.

3. PRICING AND CONTRACT THEORY

Contract theory and the associated empirical studies has been one of the most
popular mainstream research topics in microeconomics due to its wide applicability
on pricing, auctions, employee compensation contracts, and various contracts
between firms. There are a number of new and popular research topics that utilize
these analytical tools in the Information Systems area. For example, IT outsourcing
has become a common business practice. Our research has contributed to the
literature by investigating how to optimize the contract design to improve the risk
and return balance of the outsourcing clients. Pricing of digital goods is one of the
most popular topics for analytical modeling in the information systems literature.
Our research has advanced the understanding of how to price data services for
vendors in emerging new technologies such as modern supply chain management,
cloud computing service providers, and location-based-service coupon apps. Last
but not least, our research has also contributed by studying how buyout options of
online auctions may affect customer decisions.

Foundation of E-Business:
E-business has made shopping easy for us. We don’t need to go anywhere physically;
we can shop from home and get great deals too. E-business or Online business means
business transactions that take place online with the help of the internet. The term e-
business came into existence in the year 1996. E-business is an abbreviation for
electronic business. So the buyer and the seller don’t meet personally. n today’s world,
we are exposed to various forms of e-Business. Since its emergence, it has grown by
leaps and bounds. Some predict that it may very soon overtake brick and mortar stores
completely. While that remains to be seen, we cannot ignore the immense role it plays
in the current global economy.

Features of Online Business

Some of the features of Online Business are as follows :

• It is easy to set up

• There are no geographical boundaries

• Much cheaper than traditional business

• There are flexible business hours

 • Marketing strategies cost less

• Online business receive subsidies from the government

• There are a few security and integrity issues

• There is no personal touch

• Buyer and seller don’t meet

• Delivery of products takes time

• There is a transaction risk

• Anyone can buy anything from anywhere at anytime

• The transaction risk is higher than traditional business

Learn more about Online Transactions and Security of e-Transactions here

Types of e-Commerce

Now there are actually many types of e-Businesses. It all depends on who the final
consumer is. Some of the types of e-commerce are as follows:

Business-to-Business (B2B)
Transactions that take place between two organizations come under Business to
business. Producers and traditional commerce wholesalers typically operate with this
type of electronic commerce. Also it greatly improves the efficiency of companies.

Business-to-Consumer (B2C)
When a consumer buys products from a seller then it is business to consumer
transaction. People shopping from Flipkart, Amazon, etc is an example of business to
consumer transaction. In such a transaction the final consumer himself is directly
buying from the seller.
Consumer-to-Consumer (C2C)
A consumer selling product or service to another consumer is a consumer to consumer
transaction. For example, people put up ads on OLX of the products that they want to
sell. C2C type of transactions generally occurs for second-hand products. The website
is only the facilitator not the provider of the goods or the service.

Consumer-to-Business (C2B)
In C2B there is a complete reversal of the traditional sense of exchanging goods. This
type of e-commerce is very common in crowd sourcing based projects. A large number
of individuals make their services or products available for purchase for companies
seeking precisely these types of services or products.

Consumer-to-Administration (C2A)
The Consumer-to-Administration model encompasses all electronic transactions
conducted between individuals and public administration. Some examples of
applications include

• Education – disseminating information, distance learning, etc.

• Social Security – through the distribution of information, making payments, etc.

• Taxes – filing tax returns, payments, etc.

• Health – appointments, information about illnesses, and payment of health

services, etc.
Business-to-Administration (B2A)
This part of e-commerce encompasses all transactions conducted online by companies
and public administration or the government and its varies agencies. Also, these types
of services have increased considerably in recent years with investments made in e-
government.

Data Management:
Data management is an administrative process that includes acquiring, validating,
storing, protecting, and processing required data to ensure the accessibility,
reliability, and timeliness of the data for its users. Organizations and enterprises are
making use of Big Data more than ever before to inform business decisions and gain
deep insights into customer behavior, trends, and opportunities for creating
extraordinary customer experiences.

To make sense of the vast quantities of data that enterprises are gathering, analyzing,
and storing today, companies turn to data management solutions and platforms. Data
management solutions make processing, validation, and other essential functions
simpler and less time-intensive.

Leading data management platforms allow enterprises to leverage Big Data from all
data sources, in real-time, to allow for more effective engagement with customers,
and for increased customer lifetime value (CLV). Data management software is
essential, as we are creating and consuming data at unprecedented rates. Top data
management platforms give enterprises and organizations a 360-degree view of their
customers and the complete visibility needed to gain deep, critical insights into
consumer behavior that give brands a competitive edge.

Data Management Challenges

While some companies are good at collecting data, they are not managing it well
enough to make sense of it. Simply collecting data is not enough; enterprises and
organizations need to understand from the start that data management and data
analytics only will be successful when they first put some thought into how they will
gain value from their raw data. They can then move beyond raw data collection with
efficient systems for processing, storing, and validating data, as well as effective
analysis strategies.

Another challenge of data management occurs when companies categorize data and
organize it without first considering the answers they hope to glean from the data.
Each step of data collection and management must lead toward acquiring the right
data and analyzing it in order to get the actionable intelligence necessary for making
truly data-driven business decisions.
 Data Management Best Practices

The best way to manage data, and eventually get the insights needed to make data-
driven decisions, is to begin with a business question and acquire the data that is
needed to answer that question. Companies must collect vast amounts of information
from various sources and then utilize best practices while going through the process
of storing and managing the data, cleaning and mining the data, and then analyzing
and visualizing the data in order to inform their business decisions.

It’s important to keep in mind that data management best practices result in better
analytics. By correctly managing and preparing the data for analytics, companies
optimize their Big Data. A few data management best practices organizations and
enterprises should strive to achieve include:

• Simplify access to traditional and emerging data

• Scrub data to infuse quality into existing business processes
• Shape data using flexible manipulation techniques

It is with the help of data management platforms that organizations have the ability
to gather, sort, and house their information and then repackage it in visualized ways
that are useful to marketers. Top performing data management platforms are capable
of managing all of the data from all data sources in a central location, giving
marketers and executives the most accurate business and customer information
available.

Benefits of Data Management and Data Management Platforms

Managing your data is the first step toward handling the large volume of data, both
structured and unstructured, that floods businesses daily. It is only through data
management best practices that organizations are able to harness the power of their
data and gain the insights they need to make the data useful. In fact, data
management via leading data management platforms enables organizations and
enterprises to use data analytics in beneficial ways, such as:
• Personalizing the customer experience
• Adding value to customer interactions
• Identifying the root causes of marketing failures and business issues in real- time
• Reaping the revenues associated with data-driven marketing
• Improving customer engagement
• Increasing customer loyalty