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FdA Business and

Management

Bournemouth University
Partner Colleges
University Centre Yeovil

Beverley Cox

E-business

Lecturer: Dave Howell

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Contents

Page.

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Figure Table

Figure Content Source


1 Internet Users in the www.internetworldstats.
World com – January 2008

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Has the Internet Led to Greater Globalisation?

Communication and information technology has always played an


important role for business and human relationships. The information age
has become commonplace and information has become more important
than ever.

“Information is the fibre that is reweaving the fabric of societies, their


transitional systems, and their relations to others, both in the regions and
around the world”.
(Emery et al, 2001)

The internet has rapidly spread all over the world since the second half of
the 1990s becoming the biggest information and communication network
in history. Hanson (2008) suggested that new communication and
information technology is affecting not only the relations in war and peace
but also human activity at every level. This suggests that the internet is a
force which has the ability to shape personal networks and also
international politics. An example of how politics has been changed by
the internet is the case of Barack Obama whose election as president of
the United States echoed that of John F. Kennedy in his use of a new
technological media by networking that changed politics forever. Mr
Kennedy used television, Mr Obama used internet.

Mr. Obama used the Internet to organise his supporters in a way that
would have in the past required costly organising in the physical sense.
(Cain Miller, C, 2008).

These networks are made possible by the internet. People and


organizations have the ability to communicate via these networks and
these networks have greatly expanded the global flow of information.
This information flows like liquid, which moves and travels fast and easily.

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Ritzer (2010) confirms that globalisation is characterized by flows of liquid
media which suggests that the internet has in fact led to greater
globalisation.

Globalisation is the interconnectivity of people and businesses across the


planet, whether it be for promoting personal or business interests and for
taking economic, cultural or political goals further. The aim of
globalisation is to increase interdependence between otherwise
geographically segmented areas and humans (Slevin, J, 2007).

In 1960, when the internet was not readily available, Marshall McLuhan
exclaimed that electric media was turning the world into one global village
(Popova, M, 2010).

Globalisation is happening whereby regional economies, societies, and


cultures become integrated through a global network of political ideas
through communication, transportation, and trade. Globalisation is driven
by a combination of economic, technological, socio-cultural, and political
factors. The term can also refer to the crossing of national boundaries by
the circulation of ideas, languages or culture (Croucher, S, 2004). This
seeks to derail McLuhan’s theory that electric media (internet) was in fact
globalisation.

However, Friedman (2006) views globalisation as a balance between


humans and geographical areas. The significance of this balance is that
globalisation has brought down walls that limited the movement and
reach of people. As the internet expands and develops there will be more
direct power for humans, businesses and governments. This suggests
that the internet is in fact a character of globalisation and that if it did not
continue to develop then globalisation would cease to grow.

Globalisation changed during the last two decades of the twentieth


century. It became an ever present and unavoidable part of life in

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industrialised countries. Research by Tuomi (I, 2002) argues that
globalisation was not 'produced' by technological advances such as the
internet but that global connections became ever present as people and
companies used the technological advances for their own needs and
purposes which in turn led to greater globalisation. Technological
advances helped to reduce the cost of communication noticeably over
several decades enabling such technology as the internet to be used in a
variety of ways for communication that in their traditional form would
have otherwise been costly. The internet is a form of electric media or
technological medium that has allowed development of a global
information system and global telecommunications across borders which
has increased the number of standards applied globally such as copyright
laws, patents and world trade agreements. This type of communication
allows the exchange of information which plays a major role in the way
decisions are made in many countries.

The internet plays a vital role in globalisation as globalisation is driven by


technological development amongst other forces. Rapid globalisation
already existed before the internet and used to be strongly associated
with technological developments that lowered transactional costs of trade.
This is still the case with the internet being used as a means to speed up
the process (Ecipe.org, 2011).

Burnett et al (2002) confirm that McLuhan’s idea of a village/community is


maintained globally through the medium of the internet and by
communities who maintain their networks through the internet in a
variety of ways. In an ever increasing way, the internet provides another
channel for the networking of global connections and thereby weakening
the traditional geographically defined conception of the village confirming
that the internet has in fact led to greater globalisation.

However, Uimonen (2001) found the rapid global growth and expansion of
the Internet has led the world into an information age, and a new social

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form, the information society. Globalisation before the internet already
involved networking between people and businesses but in a simpler form
suggesting that globalisation led to advancing development of the
internet as globalisation created pressure for a quicker, faster, more
advanced way of networking.

According to a report by Forrester Research Inc (2009), the number of


people online around the world will grow more than 45% to 2.2bn users
over the next 5 years. 43% of the world's online population will reside in
Asia by 2013, with 17% of the global online population in China. Growth
rates in the US, Western Europe, and the major industrialized nations in
Asia Pacific such as Australia, Japan, and South Korea will slow to between
1 percent and 3 percent.

Figure 1 shows the growth of internet users in the world since 1995.

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Fig. 1

With all the above in mind, research tends to point that the greater
globalisation is in fact a union of economic events and technology
advances and it is these combinations that lead to the greater
globalisation with the internet being a major driving force (Friedman, T,
2006).

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What Has Been the Impact of “Social Computing” on Business and
Personal Interaction?

The Internet, globalization, availability of cheap computing and mobile


technology (due to globalization and ability to obtain and transport raw
materials cheaply) combined with a generation of people who have been
brought up with the already networked highly technological world have
grouped together to provide an information economy whereby information
is not only relatively free to access but also readily available. This
information economy has given way to the social economy. Instead of
information being important, socialisation is important. This has led to a
shift in realisation that the traditional business transaction is diminishing
and value is now coming from the dynamics of a relationship. Businesses
need to develop in line with technology and the shift in business/personal
relationships (Hinchcliffe, D, 2009). Social Computing encompasses fast
growing activities like blogging, RSS, file sharing, podcasting, search
engines and user-generated content.

“The rise of the Internet and related information systems in Central and
Eastern Europe has certainly opened the door for the rise of new media
structures, the empowerment of individuals and groups, and the building
of new social relationships"
(Emery et al, 2001)

The aforementioned Barack Obama utilised social networking successfully


to raise money, spread his message, mobilise and organise volunteers as
well as inspire support from the American people (Powell, J, 2009).

Social computing has had both positive and negative impacts upon
business. Twitter like tools internal to the business in the form of intranet
enable employees to better communicate and collaborate, encouraging
employees to create consume and offer feedback which results in faster
communication solving business issues more effectively (Chorley et al

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2010). Within the business, social computing facilitates many functions
with implications, such as internal teaming, problem solving,
collaboration, and knowledge sharing. Gartnerinfo.com (2008) confirm
such interactions form the basis of meeting growing demands to improve
communications, encourage innovation and enhance collaboration. On
the flipside to this, social networking sites external to the intranet have
proven to be so popular that some businesses have had to block access to
them during working hours due to employee’s spending huge amounts of
time socialising (Roche, N, 2008).

Marketing opportunities are available in the form of advertising through


social media networks such as Facebook and Twitter where consumers
can like or follow a product, service or brand providing continuous
feedback. Research shows that customers who are members of a
business's online community spend 41 per cent more on that company's
products than non-community members and that customers are more
likely to look to the community for answers to any queries they may have
reducing the business’ support costs (Lithium, 2011).

Brand building is highly successful within social networks. Wikipedia for


example. Building a global brand like that which is recognised by millions
of people would, if done in the traditional manner, have taken years and
millions of pounds in marketing (Powell, J, 2009).

Online communities also have the ability to offer market research


opportunities for businesses by having communities with a particular
interest in a brand or product. These communities provide a valuable
insight into consumer’s minds.

Social networks such as LinkedIn offer businesses the opportunity to head


hunt future professionals by providing profiles of the potential candidates
which include their work history and applicability for professional
positions. As of January 2011, LinkedIn counted executives from all 2010

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Fortune 500 companies as members and as of December 2010 its hiring
solutions were used by 69 of the Fortune 500 companies (LinkedIn, 2011).
A downside to this is that profiles may not be as accurate as they seem.

Trust and privacy concerns are a major downside to social computing to


businesses. Social networks are meant for just that, socialising. This
means that they are relatively easy to access making them a honey pot
for virus and malware authors who have the ability to wipe out the entire
databases of business. Protection against this is costly and time
consuming (Roche, N, 2008). Temple University (2007) suggested that
organisations are still not sure how best to manage or regulate social
computing. Businesses are concerned about information leakage and
legal liabilities arising from social computing and networking usage.
Social computing makes many normally private things much more public
including corporate information, policies and procedures. Many
businesses have sensitive information and therefore require security
measures in place which can be costly and time consuming (Hinchcliffe, D,
2009).

Social computing also has a negative impact on those businesses that are
not “technology minded”. Those businesses that have no technological
background, have not been using social networks, sharing information
socially or maintaining blogs will require more education than those that
do. Hinchcliffe (2009) found that social computing requires significant
effort in most businesses to achieve effectiveness, just like a few decades
ago with personal computing skills.

The positives seem to outweigh the negatives with regard to social


computing and its impact on business. Forrester’s (2007) research
indicates this to be the case forecasting that 47% of businesses plan to
use RSS feeds, 56% of US businesses already use open source software
for user generated content (versus 39% in Europe), and a further 19% of
US businesses plan to use such software (versus 29% in Europe).

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Personal interaction too has had a positive and negative impact from
social computing. A major positive factor of social computing with regard
to personal interaction is that social networking and online communities
connect people with similar interests regardless of time or place
constraints, empowering individuals to communicate, share what they
know, search out information whilst helping others locate information that
is important to them (Hodgson, M, 2008).

Lack of face to face contact can be positive or negative for personal


interaction. Some fear that social computing has caused a huge reduction
in face to face communication and that the absence of vision is an
advantage for people who feel they don’t fit in so that they could appear
confident and make friends that they otherwise couldn’t make or join
online communities when they wouldn’t normally venture outside of their
own home. Perrolle (1998) found that attractive people are perceived to
be more competent, while ugly people tend to be devalued. Social
computing and computer networks in general remove any clue regarding
a person’s age, race or social status. On the downside though, this opens
the door to predators such as paedophiles and terrorists. Larsen (2007)
confirmed this finding that social networking sites are a paradise for
paedophiles and predators who want to harm young people. There is also
the potential for damage to reputation due to a lack of central control over
published content (TFPL Intelligent Resources, 2008).

Trust and privacy concerns again are a downside where personal


interaction is concerned with particular attention being drawn to fraud
issues. One of the most commonly reported scams for 2008 was identity
theft where online scammers posing as officials sought personal
information such as bank account (Morrissette, P, 2010).

In conclusion, social computing can be used beyond socialising to seek


advice whilst collaborating and consumer’s voices can be heard which
helps to establish good relationships between businesses and people
(Fidishun, D, 2010). It

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provides an opportunity to break down barriers and interact across
cultures and countries.

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