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Researcher: Jo Munson
Title: Can there ever be a “Cohesive Global Web”?
Disciplines: Economics, Ethnography (Cultural Anthropology)

John Maynard Keynes, revolutionary Economist and inventor of “Keynesian Economics”

Major Economic theories

Recall our second definition of Economics, that highlighted the concept of and importance of choice – where our desires may be infinite, but the availability of resources is finite:

[Economics is] the study of how people choose to use (scarce) resources.

This concept leads to one of the fundamental theories of Economics, also known as the “Economic Problem”. The Economic Problem arises precisely because there are finite resources in any economy. Choices therefore have to be made.

The problem with choosing any one course of action is that the benefits you could have received by taking an alternative action are forgone. This is known as the “opportunity cost” of an action. If you knew what the outcome of each possible action would be, it would be easy to minimise the “opportunity cost”, but this is rare in practice.

The challenge of any economy is to minimise the opportunity cost and make the best use of the scarce resources available to it. American Nobel Prize winning Economist Paul Samuelson suggested that an economy should seek the optimum answers to the following questions:

• What to produce?
• How to produce?
• For whom to produce?

How economies approach these questions and how firms and individuals behave has been debated by Economists since the inception of the Discipline. Some of the key theories / theorists are outlined below:

• Adam Smith’s Invisible Hand – In the 1770s, Adam Smith proposed the idea that economies function best when markets are left to make their own choices about how to allocate resources. This has come to be known as the ‘Free Market’. Smith argued that markets will naturally correct any imbalances (as if guided by an Invisible Hand) and supply will necessarily cater to demand. The Free Market Economy is in direct contrast with the concept of a ‘Command Economy’, where governments choose how resources are allocated with the marketplace.
• Marxian Economics – Karl Marx was less optimistic about market’s ability to self-govern, believing that workers in a Free Market were not compensated for the labour and value of the goods they produced, but only for their labour. The surplus value would then be creamed off by the employer whilst the labourer is left with just enough to survive. Marx indicated that if a worker was forever trapped in this cycle it “would make him at once the lifelong slave of his employer”.
• Keynesian Economics – John Maynard Keynes formulated his theories against the backdrop of the ‘Great Depression’ in the 1930s. He advocated the need for governments to intervene to lessen the duration and negative effects of economic cycles inevitable in a Free Market. Keynes believed governments should control their spending so that during periods of economic growth, taxes are increased, welfare spending is decreased and the cost of borrowing money (interest rates) increase so that when an economy enters recession, it has the ability to lower taxes and interest rates and increase welfare spending in order to stimulate a faster economic recovery. Keynesian ideas formed the basis of Macroeconomics.

There are numerous other schools of thought in Economics, but these three form a good basis from which to work. Next I will look at how these theories are applied in Economic research.

Next time (and beyond)…

I’ve had a quick reshuffle of the order, but broadly, I will be covering the following in the proceeding weeks:

• Can there ever be a “cohesive global web”?
• Ethnography 1 – Introduction & Definition
• Ethnography 2 – Disciplinary Approach
• Economics 1 – Introduction & Definition
• Economics 2 – Disciplinary Approach, the Big Theories
• Ethnography 3 – Methodologies & Analysis
• Economics 3 – Models & Methodologies
• Ethnographic Approach to the “Cohesive Global Web”
• Economic Approach to the “Cohesive Global Web”
• Ethno-Economic Approach to the “Cohesive Global Web”

Sources

Gillespie, A. 2007. Foundations of economics. Oxford: Oxford University Press.

Wikipedia. 2013. Economics. [online] Available at: http://en.wikipedia.org/wiki/Economics [Accessed: 31 Oct 2013].

Image retrieved from: http://www.pbs.org/wnet/need-to-know/tag/john-maynard-keynes/

Researcher: Jo Munson
Title: Can there ever be a “Cohesive Global Web”?
Disciplines: Economics, Ethnography (Cultural Anthropology)

Adam Smith, coined the “father of modern economics”, associated with the theory of “Classical Economics”, discussed in “Economics 2 – Disciplinary approach, the Big Theories”

A very brief introduction to Economics

In my scouring of the web and relevant books, Economics has been defined in two ways:

the study of the production and consumption of goods, and the transfer of wealth to produce or obtain these goods.

and, more briefly:

the study of how people choose to use (scarce) resources.

I like both. The former gives a better overview of the systems in which Economics operate, whilst the latter pinpoints an area of key importance to the Economist: choice – where our desires may be infinite, but the availability of resources is finite.

With that unifying definition established, Economics is almost always split in to 2 subdisciplines (arguably 3):

• Macroeconomics – considers the economy as a whole, covering areas such as inflation, unemployment, economic growth and international trade, usually from a government’s perspective.
• Microeconomics – focuses on the decisions of the individual or individual firms. This includes such things as the demand and supply within a particular market and the factors affecting commodity prices or a firm’s share price.
• (Econometrics) – uses economic theory, mathematics, and statistical inference to turns theoretical economic models into useful tools for economic policy making.

Economics also generally considers questions of two types, reflecting its basis in both science and social sciences:

• Positive – objective, fact based statements that may not be correct, but can be proved or disproved.
• Normative – subjective, opinion based statements that cannot be proved or disproved.

The majority of theories / statements in Economics will in fact be partially Positive and partially Normative.

Having dipped my toe in Economic waters, establishing a workable definition and some sub fields / ways of thinking about questions in Economics, I will next look at some of the big problems and theories in Economics.

Next time (and beyond)…

I’ve had a quick reshuffle of the order, but broadly, I will be covering the following in the proceeding weeks:

• Can there ever be a “Cohesive Global Web”?
• Ethnography 1 – Introduction & Definition
• Ethnography 2 – Disciplinary Approach
• Economics 1 – Introduction & Definition
• Economics 2 – Disciplinary approach, the Big Theories
• Ethnography 3 – Methodologies & Analysis
• Economics 3 – Models & Methodologies
• Ethnographic Approach to the “Cohesive Global Web”
• Economic Approach to the “Cohesive Global Web”
• Ethno-Economic Approach to the “Cohesive Global Web”

Sources

Investopedia. 2009. Economics Definition | Investopedia. [online] Available at: http://www.investopedia.com/terms/e/economics.asp [Accessed: 28 Oct 2013].

Imf.org. 2013. Back to Basics Compilation. [online] Available at: http://www.imf.org/external/pubs/ft/fandd/basics/ [Accessed: 28 Oct 2013].

Gillespie, A. 2007. Foundations of economics. Oxford: Oxford University Press.

Image retrieved from: http://www.oxonianreview.org/wp/adam-smith-a-moral-philosopher/

Researcher: Jo Munson
Title: Can there ever be a “Cohesive Global Web”?
Disciplines: Economics, Ethnography (Cultural Anthropology)

Ethnographers concern themselves with studying the
cultural differences and similarities between humans

An Ethnographer’s approach to studying humanity

Remembering then that Ethnography can be thought of as:

the study of contemporary and recent human societies and cultures

and that:

culture is the socially transmitted knowledge and behavioural patterns shared by some group of people

I now consider what makes Ethnogaphers’ approach to the study of humans distinct from that of say, Sociologists. There are three concepts particularly central to Ethnographic study:

• Holism – the concept that no one aspect of a society can be understood without understanding how it relates to all other aspects of that community.
• Relativism – the concept that the observer of a community should not judge the observed community with the prejudices and values of their own culture.
• Comparativism – the concept that for something to be considered “universal” to all humans, the diversity of global human culture must have been considered.

Relativism and Comparitivism together highlight a particular feature observed amonghst Ethnographers – they tend to fall somewhere between two extremes:

• Relativists – who concentrate on cultural differences between human socities; and
• Anti-Relatives – who concentrate on the similarities between cultures, or “human universals”.

The approaches and theories of Cultural Anthropologists has evolved over time, with Evolutionary and Functionalist ideas making way for new ideas. In the same way that Ethnographers can be thought of as Relativist or Anti-Relativist, modern Anthropology considers Materialism and Idealism:

• Materialists – Materialists believe that the material features of a community’s environment are the most important factor affecting its culture.
• Idealists – Idealists believe that human ideas affect culture more than any material features.

As with all extremes, the reality is more likely a mix of the two opposing schools of thought.

Next time (and beyond)…

The order/form of these may alter, but broadly, I will be covering the following in the proceeding weeks:

• Can there ever be a “cohesive global web”?
• Ethnography 1 – Introduction & Definition
• Ethnography 2 – Disciplinary Approach
• Ethnography 3 – Theories & Methodologies
• Economics 1 – Introduction & Definition
• Economics 2 – Disciplinary Approach
• Economics 3 – Theories & Methodologies
• Ethnographic Approach to the “Cohesive Global Web”
• Economic Approach to the “Cohesive Global Web”
• Ethno-Economic Approach to the “Cohesive Global Web”

Sources

Peoples, J. and Bailey, G. 1997. Humanity. Belmont, CA: West/Wadsworth.

Barnard, A. 2000. Social anthropology. Taunton: Studymates.

Image retrieved from: http://sportsillustrated.cnn.com/multimedia/photo_gallery/0908/nba.cbk.remember.when.hoops.style/content.1.html

Researcher: Jo Munson
Title: Can there ever be a “Cohesive Global Web”?
Disciplines: Economics, Ethnography (Cultural Anthropology)

The archetypal vision of Anthropological fieldwork – but times have changed…

A very brief introduction to Anthropology

Cultural Anthropology forms one of the 5 pillars of the broader field of Anthropology, namely:

• Physical Anthropology (also called Biological Anthropology)
• Archaeology
• Anthropological Linguistics
• Applied Anthropology
• Ethnography (Also known as Cultural Anthropology Social Anthropology¹)

Common to all Anthropologists is their fascination with human kind.

The scope of Anthropological study is enormous:

• Physical Anthropologists focus on the evolution of our species and the anatomical differences between different races;
• Archaeologists lean towards analysing humans through the material remains we leave; and
• Anthropological Linguists are interested in how our use of language reflects our view of our surroundings, our social hierarchy and social interactions.

Regardless of the application or particular nuance each sub field takes on, the focus is always on finding out more about human beings.

The traditional view of the Anthropologist in the field is the Caucasian middle-aged man living among the tribal peoples of Africa, but this no longer reflects the discipline.

In the latter half of the twentieth century, there began a shift from (predominantly Euro-American Anthropologists) exclusively studying pre-industrial, non-western populations to the study of cultures “closer to home”. The shift reflected the realisation that Anthropologists offer unique insights to society as a whole, not covered by fields such as Sociology. Further more, Anthropology has begun to gain credibility as an applied discipline useful in solving “real world” problems, no longer confined to the realms of academia.

What then, are the particular features that define Ethnography?

[1] Strictly speaking, many argue that Social Anthropology is distinct from Cultural Anthropology. The distinction is not universally defined but some suggest that historically, US Anthropologists have focused more on cultural differences between populations (and commonly adopt the term Cultural Anthropology), whilst UK Anthropologist look more at societal differences (and more commonly use the term Social Anthropology).

Definition: Ethnography (Cultural Anthropology)

Ethnography has been defined as “the study of contemporary and recent human societies and cultures.” where the concept and diversity of culture is central to Ethnographic study. It is further suggested that:

Describing and attempting to understand and explain this cultural diversity of one of [Ethnographers’] major objective. Making the public aware and tolerant of the cultural differences that exist within humanity is another mission of Ethnology.

I think this summarises the objectives of Ethnography clearly, although does lead me to ask what “culture” is to an Ethnographer.

Anthropological definition of culture

Culture has been defined in countless ways by Anthropologists. One formal definition that has been suggested is that:

Culture is the socially transmitted knowledge and behavioural patterns shared by some group of people

That is to say that culture is not defined by biology or race, but is defined by the environment in which we live. Culture is learned from other people in our social group, knowledge is shared such that the group can reproduce and understand one another and behavioural patterns are assumed such that the group functions well, with each member playing their role.

Culture is of course a far more complex concept than described above, but this gives an idea about what is important to an Ethnographer’s studies. In essence, the Ethnographer studies what is important to the human and the human’s social group, including what allows the group to function and what might challenge harmony within the group.

Next time (and beyond)…

The order/form of these may alter, but broadly, I will be covering the following in the proceeding weeks:

• Can there ever be a “cohesive global web”?
• Ethnography 1 – Introduction & Definition
• Ethnography 2 – Disciplinary Approach
• Ethnography 3 – Theories & Methodologies
• Economics 1 – Introduction & Definition
• Economics 2 – Disciplinary Approach
• Economics 3 – Theories & Methodologies
• Ethnographic Approach to the “Cohesive Global Web”
• Economic Approach to the “Cohesive Global Web”
• Ethno-Economic Approach to the “Cohesive Global Web”

Sources

Peoples, J. and Bailey, G. 1997. Humanity. Belmont, CA: West/Wadsworth.

Barnard, A. 2000. Social anthropology. Taunton: Studymates.

Image retrieved from: http://sumananthromaterials.blogspot.co.uk/2010/06/social-and-cultural-anthropology.html

Researcher: Jo Munson
Title: Can there ever be a “Cohesive Global Web”?
Disciplines: Economics, Ethnography (Cultural Anthropology)

Is now the time for a transparency and global cooperation on the web?

Can there ever be a “cohesive global web”?

The web is more a social creation than a technical one. I designed it for a social effect — to help people work together — and not as a technical toy. The ultimate goal of the Web is to support and improve our weblike existence in the world. We clump into families, associations, and companies. We develop trust across the miles and distrust around the corner.

A hopeful inditement of the web’s potential from the “father of the web”, Sir Tim Berners Lee (Tim BL), but unfortunately, we are developing mistrust on the web. Whether or not it was the intention of Tim BL and other pioneers of the internet and the web, the power over the infrastructure and development of the web has long been routed in the Western English speaking world.

As the rest of the world has begun to engage with, depend upon and contribute to the web, the US/UK-centric view of the web is being challenged. This distrust for a web where 80% of web traffic is passed through US servers is not limited to the likes of the ever elusive and separatist nations such as North Korea, but by some of the largest economies in the world. Brazil’s President Dilma Rousseff voiced her dismay at the NSA’s “miuse” of the web to spy on her private email and correspondence and duly threatened to install Fibre-optic submarine cables that link Brazil directly with Europe, bypassing the current connection via a single building in Miami. German, Mexican and French leaders are also outraged by being victims of the NSA’s “snooping”.

The world’s second largest economy, China, has long dissociated itself from the outside web and US ogliopolistic companies such as Facebook and Twitter, through the implementation of its “Great Fire Wall”. Whilst on the one hand Westerners may view such measures as restrictive, perhaps there is a protective element to such actions that in retrospect, we too may have aspired to.

Discontinuity in global web use is often far less politically motivated and often evades our press. It may shock you to know that Google is not the search engine of choice in some of the world’s most technologically advanced nations. This reaslisation leads me to wonder how other cultures use the web, how can the web work better for them? is the web fit for purpose to move into frontier nations where literacy is far from universal and the concerns rather more fundamental than a 140-character regurgitation of our lunch can cater for?

Why would we want a cohesive global web anyway?

I believe that for the web to establish harmony and be “fit for purpose” as it expands and develops into a global phenomenon, it will have to become more representative of its diverse user base. It seems to me that there are a great deal of reasons why having a cohesive centrally governed (or at least cooperatively governed) web would benefit global society, examples include:

• Economic growth / stability
• Social & political stability
• A more diverse pool of ideas / talent for invention and innovation
• Increased collaboration across nations
• Increased tolerance of other cultures
• Improved security & safety
• Improved use as a tool to combat poverty
• Improved cross-cultural communication

However, the world has had a fractious history – is it therefore too much to hope that the web could transcend our propensity to be territorial and militant? What else might the web be destined for if it cannot sit comfortably within a global society?

The aim of my report will be to assess how two distinct disciplines would approach the feasibility of a "cohesive global web" and how they might come together to approach the problem from a multidisciplinary perspective. I have chosen the following disciplines for my review:

• Economics – primarily because I believe that Economics can be seen in a wealth of our current usage and the “cost benefit” argument seems to play a big role in whether we choose to collaborate / engage with a concept.
• Ethnography (Cultural Anthropology) – because I believe we will only make progress with the concept of a cohesive global web by moving away from our Anglo-centric view and observing the thoughts and experiences of other cultures.

Next steps…

My understanding of both fields is currently naïve at best, so I am excited to discover how the two fields will affect my perspective, and how they will come together to form a research methodology for looking at the future cohesiveness of the web. In the next week I will be compiling a to do list for the remainder of the semester and beginning to delve into my disciplines of choice.

Sources

Nytimes.com. 2013. Log In – The New York Times. [online] Available at: http://www.nytimes.com/2013/10/14/business/international/google-jousts-with-south-koreas-piecemeal-internet-rules.html?_r=0 [Accessed: 23 Oct 2013]

The Verge. 2013. Cutting the cord: Brazil’s bold plan to combat the NSA. [online] Available at: http://www.theverge.com/2013/9/25/4769534/brazil-to-build-internet-cable-to-avoid-us-nsa-spying [Accessed: 23 Oct 2013]

Heine, J. 2013. Beyond the Brazil-U.S spat. [online] Available at: http://www.thehindu.com/opinion/op-ed/beyond-the-brazilus-spat/article5186893.ece [Accessed: 23 Oct 2013]

Illustration: Gade, S. Retrieved from: http://www.thehindu.com/opinion/op-ed/beyond-the-brazilus-spat/article5186893.ece

How many people carry matches these days?/Susan Sermoneta ©2012/CC BY 2.0

Question
How can corporations be encouraged to open their data (so that we know it’s safe to drink the water)?

Background
The benefits to corporations of opening their data is well documented, but they are not necessarily appreciated in all sectors of industry.

Prospecting for oil and gas with the aim of engaging in hydraulic fracturing (‘fracking’) operations causes some popular concern which could be alleviated by the more open availability of real-time monitoring data.

In the UK, all industrial activities are subject to health and safety audits and some involve continuous, around the clock monitoring. For example Cuadrilla Resources employ Ground Gas Solutions to provide 24 hour monitoring of their explorations in the UK. Ground Gas Solutions monitoring aim to:

provide confidence to regulators, local communities and interested third parties that no environmental damage has occurred. (GGS, 2013)

Currently the data collected through this monitoring is made public via reports to regulation authorities, which can be subject to significant delay, are often written in technical language, and are not easily accessed by the general public.

My argument is that real time (or close to real time) monitoring data could be made open without any damage to the commercial advantage of the companies involved, and, if clearly and unambiguously presented (e.g. via a mobile app), could go some way to alleviating public concerns, particularly regarding the possible contamination of drinking water. Exploring what motivates some corporations to make their data open and the challenges they have overcome to do this, may suggest successful strategies for encouraging proactive, open behaviour within industry.

Disciplines
Anthropology – Considers key aspects of social life – identity, culture, rationality, ethnicity and belief systems.

Anthropologists aim to achieve a richness in the description of encounters they have with people and places, and have a strong tradition of creating narratives and developing theories that describe and  attempt to explain human behaviour. In the context of the exploration industry, how might an anthropologist explore the underlying cultural values and prevalent beliefs of people working within corporations?

I believe that exploring this issue through the lens of anthropology would provide some insight into the workings of the energy exploration business and uncover useful data that may indicate strategies for encouraging corporations to share real time monitoring data.

Economics – Analyses the production, distribution, and consumption of goods and services.

The widespread use of empirical data related to economic exchange together with emerging theories of human behaviour appear to underpin this discipline, which I believe have significant value to the study of my question. Exploring the commercial incentives for opening real time monitoring data from the perspective of differing economic theories combined with the data collection methodologies prevalent within this discipline can provide useful understandings of the question, which may point to practical solutions.

Anthropological Economics: an interdisciplinary approach
The question: “How can corporations be encouraged to open their data?” appears to call for solutions that tackle not simply the “bottom line” of economic necessity, but also the culture that requires individuals within corporations to maintain secrecy in order to maintain or improve their employers market position. From my current naive standpoint, a combination of the anthropologists qualitative, narrative-driven approach to studying human behaviour with the economists quantitative, theory-dominated view of commercial interaction looks like a worthwhile approach to gaining a better understanding of the key issues.

Proposed reading list
Anthropology:
Eriksen, T. H., 2004. What is Anthropology? London: Pluto Press.
Eriksen, T. H., 2001. Small Places, Large Issues: An Introduction to Social and Cultural Anthropology. London: Pluto Press.
Fife, W., 2005. Doing Fieldwork. Basingstoke, UK: Palgrave Macmillan.
Miller, D. ed., 1995. Acknowledging Consumption. London: Routledge.

Economics:
Fogel, R. W., Fogel, E. M., Guglielmo, M. and Grotte, N., 2013. Political Arithmetic : Simon Kuznets and the Empirical Tradition in Economics. Chicago: University of Chicago Press.
Giudici, P. and Figini, S., 2009. Applied Data Mining for Business and Industry. London: Wiley.
Isaac, R. M. and Norton, D. A., 2011. Research in Experimental Economics: Experiments on Energy, The Environment, and Sustainability Governance in the Business Environment. Bingley, UK: Emerald Group Publishing.
Quiggin, J., 2011. Zombie Economics: How Dead Ideas Still Walk Among Us. Woodstock: Princeton University Press.

Picking up from where I left off last week – I want to shift the focus firmly onto the impact of the Web/Internet on business competition as I move on from broad principles of management/economics to specifics. The examples used below are taken from Boddy’s ‘Management, An Introduction’.

I kick off with a consideration of Google as an illustration of the impact that the Web/Internet has had on competition between businesses. Google exemplifies a company created to use the Web/Internet – it is a pure e-business company built entirely around information technology. Since the search engine serve is free, it generates revenues by providing advertisers with the opportunity to deliver online advertising that is relevant to search results on a page. The advertisements are displayed as sponsored links, with the message appearing alongside search results for appropriate keywords. They are priced on a cost-per-impression basis, whereby advertisers pay a fixed amount each time their ad is viewed. The charge depends on what the advertiser has bid for the keywords, and the more they bid the nearer the top of the page their advertisement will be. Google has rapidly expanded the range of services it offers.

Pure e-businesses such as Google which focuses on search processes (other examples include easyGroup which exclusively sells its services online and eBay which facilitates online transactions) can be contrasted with companies existing before the Web/Internet but which use it to support many of their activities. They may still perform the same functions, but the Web/Internet often enables them to offer new services through an additional distribution channel online (such as banks).

As well as offering new ways of doing business, the Web/Internet also affects the way services are created and delivered. Examples include: delivering media content; satellite freight tracking services; and, social networking sites. Picking up on this last example in particular, social networking sites (types of community systems) enabling people to exchange information have grown very quickly. Setting up blogs is one major use, as are websites through which people with particular interests exchange information. They are significant for businesses even if they extend beyond the firm, since customers can use them to exchange positive or negative information about the company. These applications affect the strategy and competiveness of organization.

The publishing industry (compare music, film and journalism) is an example of a business model founded on information (its gathering, processing and dissemination) for whom the Web is the biggest threat. As digitisation and the Web have reduced the cost of the dissemination of information, it undermines the value proposition of those industries built on its premise.

There is also an internal business impact of the Web in terms of changing various aspects of organisational activity. Common information systems based on the Web/Internet move information between organizations, often having direct links with customers. This is part of a broader assessment of how information technology, in general, is affecting the way that business is carried out.

One way to consider the impact of the Web/Internet on business is by geographic reach. Inter-organisational information systems link organisations electronically by using networks that transcend company boundaries. They enable firms to incorporate buyers, suppliers and partners in the redesign of their key business processes, thereby enhancing productivity, quality, speed and flexibility. New distribution channels can be created and new information-based products and services can be delivered. In addition, many information systems radically alter the balance of power in buyer-supplier relationships, raise barriers to entry and exit and, in many instances, shift the competitive position of industry participants.

From an alternative perspective as an information system, the Web/Internet has had wide effects on managing data, information and knowledge. It can, for example, be used to integrate processes, from suppliers through to customer delivery. Managers must ensure that their organisation makes profitable use of the possibilities that the Web/Internet offers in a way that suits their particular business; and, not just as a technology challenge, but also as a ‘people challenge’. For example, network systems help people to communicate and interact with each other, but they do not define how they should do so (such as who should gain access to which part of the system or who is responsible for responding to customer comments on a blog – these are matters to be implemented and modified in the light of experience).

A useful distinction can be made between intranets and extranets. The former is a private computer network operating within an organisation, using Web/Internet standards and protocols and security protected. An extranet is a closed, collaborative network that uses the Web/Internet to link businesses with specified suppliers, customers or other trading partners. It can be linked to business intranets where information is accessible through a password system.

The simplest Web/Internet applications provide information, enabling customers to view products or other information on a company website; conversely, suppliers use their website to show customers what they can offer. Web/Internet marketplaces are developing in which groups of suppliers in the same industry operate a collective website, making it easier for potential customers to compare terms through a single portal. The next stage is to use the Web/Internet for interaction. Customers enter information and questions about, say, offers and prices. The system then uses the customer information, such as preferred dates and times of travel, to show availability and costs.

Another use is for transactions, when customers buy goods and services through a supplier’s website. Conversely a supplier who sees a purchasing requirement from a business (perhaps expressed as a purchase order on the website) can agree electronically to meet the order. The whole transaction, from accessing information through ordering, delivery and payment, can take place electronically.

Finally, a company achieves integration when it links its own information system to customers and suppliers: it becomes an e-business. Dell Computing is an example. Other companies use the Web/Internet to create and orchestrate active customer communications (e.g. Kraft, Intel and Apple). These communications enable companies to become closer to their customers and to learn how best to improve a product/service much more quickly than is possible through conventional market research techniques.

In conclusion, the Web/Internet is radically challenging many established ways of doing business. Combined with political change, this is creating a wider, often global, market for many goods and services.

Next week, in my final post, I will round up on the topics of e-commerce and e-business and the associated challenges faced by businesses in managing innovation and change.

This week I start by looking at business strategy from the perspective of economics. There are basic economic principles underpinning the determination, choice and evaluation of business strategy.

As mentioned in my post on management studies from a few weeks’ back, right strategies (the ways in which organizations address their fundamental challenges over the medium to long-term) are crucial for businesses to survive and beat the competition. Strategic-minded thinking includes comprehensive consideration and reflection upon a business’ mission statement and its vision. For both economists and management theorists, therefore, the aims of a business determines its strategy. Equally relevant, however, for both disciplines are internal capabilities and industry structure/conditions.

Like management theory, economists adopt Porter’s five forces model of competition (Michael Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors, 1980) which set out to identify those factors which are likely to affect an organization’s competitiveness. These five forces are:

• The bargaining power of suppliers
• The bargaining power of buyers
• The threat of potential new entrants
• The threat of substitutes
• The extent of competitive rivalry

I will be returning to these five forces next week in the context of considering, specifically, how they apply to the effects of the Web. In the meantime, it is worth pointing out that the five forces model does have limitations. For example, it is a largely static model whereas conditions change over time requiring strategy to evolve over time. Notably, also, Porter’s model suggests that success is dependent on competition rather than the potential for collaboration and cooperation (such as with those downstream vertically from a supplier).

Value chain analysis is also closely linked to the five forces model (according to the definition of Sloman, Hinde and Garratt, value chain “shows how value is added to a product as it moves through each stage of production from the raw material stage to its purchase by the final consumer”). Analysis of the value chain involves evaluating how each of the various operations within and around an organization contributes to the competitive position of the business). Ultimately it is these value-creating activities, which can be primary or support activities, that shape a firm’s strategic capabilities.

Turning to growth strategy, it is worth making a nod here to vertical integration (this will become more relevant when considering the effects of the Web in facilitating disintermediation of value chains over the next two weeks). There are a variety of reasons why forward or backward vertical integration might lead to cost savings (such as through economies of scope and scale), including: production economies; coordination economies; managerial economies; and financial economies. The major problem with vertical integration as a form of expansion is that the security it gives the business may reduce its ability to respond to changing market demands.

Other points of comparison and dissimilarity between management and economics can start to be drawn. For example, a point of difference is economics’ focus on theories related to short-term/long-term profit maximization. There is much debate among economists about whether profit-maximizing theories of the firm are unrealistic (largely due to a lack of information or lack of motivation). This focus is where costs concepts and graphs (demand curves in particular) come in.

A more practical illustration given by Sloman, Hinde and Garratt in respect of the search for profits is the video games war where there are high costs, but also high rewards, from a long-term perspective. In considering the secret of success in the market, online gaming capability and global connectivity are significant factors. Moreover, connection to the internet has facilitated a move towards the use of consoles as ‘digital entertainment centres’, in which users can download content. These developments are likely to continue as long as broadband internet connectivity improves and remains fairly cheap to use.

Finally, in economics, there are various theories of strategic choice (such as cost leadership, differentiation and focus strategy). These strategies can be combined. For example, Amazon had a clear niche market focus strategy – to sell books at knockdown prices to online customers – and this has become a mass market with the spread of the Web and due to lower costs.

Next week, I want to move the focus firmly onto the impact of the Web on business competition as I move on from broad principles of management/economics to specifics. I will kick off with a consideration of Google’s business model.

Am trying to focus back in on my original assertion about what I was going to study. This was whether there are differences between subjects and their degree of separation from the www, and their primary ontologies. Although I was going to use economics and psychology or perhaps sociology and their attendant ontologies to create a spotlight with which to examine this question, this would still involve looking at the ontologies of a range of other subjects.

I was going to use economics as a focus, as I think it perhaps represents something that might be wrong with how we talk about knowledge in general and reasons for studying, working together, collaborating – ultimately: trust.

A lot of work that we do is tied into research programs that are underwritten by governments as being part of some economic promise. For example, the last Labour government’s education policy was predicated partly on the premise (stemming from research in the 1950s that re-emerged in the 1970s (need to find and cite)) that countries with a more highly educated population tend to do better economically. Thus following Tomlinson’s recommendations, the Diploma system was introduced, only partially, which in fact had the consequence of introducing a system that did the opposite of what he had intended.

This however, being loosely accepted: that the more highly educated a population is, the more wealthy their country, it would seem to follow that it makes sense to make use of emerging technologies to help to educate this population. There is a body of research on this – how technology can be ubiquitous; it can get to the places that teachers can’t, and can help to make learning something that is always ‘on’.

There are actually so many problems with these assertions that it would take a whole other blog post, or perhaps even, essay, or perhaps even, thesis to go into them – but I’m happy to accept that 1) learning is basically a Good Thing and that 2) technology can help to mediate it. I might perhaps then reluctantly accept that it’s possible that if you have a lot of learning, you might end up creating more wealth for your country, however some of the data for this is possibly correlative rather than strongly causal.

But to get back to my original question, it is whether there might be said to be an economics of ontologies? Could we find out whether there are some subjects that lend themselves, via their objects of knowledge to be shared and studied on the web? And that therefore are more accessible and therefore might end up generating more money?

It seems at first glance, that physics might be one of these subjects. Physics research can be large scale and tend to be carried out by large communities who share resources.  Is there something about the nature of physics that makes people more likely to collaborate? Are they perhaps true seekers after knowledge who are less motivated by economics / reward than say, chemists? (Apologies to all you pioneering, truth-seeking chemists out there.) Would this then mean that by the very nature of a subject, if it attracts more people who care more about discovery, or truth, then they may well as a result, collaborate more, and could easily use technology in order to do this, but they care less about creating wealth, so that all web-based subjects that can easily or practically use the web to be studied are never going to be worth funding by governments who only care about short-term goals?

This seems on the face of it, rather facile, but it does intersect with another debate about why there still seem to be less girls studying physics, and in general, science subjects. (This debate appears worldwide, but I shall for now confine myself to the UK.) There was recently some speculation about whether the Big Bang Theory was attracting more people to the subject, but this generated some scathing responses from researchers who had determined that take up of physics was in fact governed by early influences.

This week I looked at the workings of competitive markets: first in basics, before turning more specifically to my research question around how the Web has changed competition between businesses from an economic viewpoint. I continue to refer to the Sloman, Hinde and Garratt book, ‘Economics for Business’ (5th ed).

As outlined in my posts on management studies from previous weeks, firms are greatly affected by market environments (particularly when it comes to pricing strategies). The more competitive the market, the greater the domination of the market over firms (e.g. resulting in ‘price takers’ nearer the model of the ‘perfectly competitive’ market when price is entirely outside a firm’s control, rather than ‘price setters’ nearer the model of the monopolistic, ‘imperfect’ market).

Although price is often at the heart of competitive strategy, the significance of non-price factors of competition should also not be underestimated. By differentiating one firm’s products from another’s, such as through design and marketing/advertising, firms seek to influence demand. Of course, the most dramatic growth in advertising expenditure over the last decade or so is on the internet (which increased from virtually nothing in 1998 to nearly 20% of all UK total advertising expenditure in 2008 based on data in the Advertising Strategic Yearbook 2009).

The better a firm’s knowledge of a market, the better it will be able to plan its output to meet demand. In particular, knowledge related to the size and shape of current and future demand choices by consumers is critical to the investment decisions that businesses make (Philip Collins, OFT Chairman, Speech 2009). Such predictions include the strength of demand for a firm’s products followed by responsiveness to any changes in consumer tastes (particularly when the economic environment is uncertain). Collecting data on consumer behavior is therefore highly valued by businesses, assuming it can be analyzed properly so it can be used to estimate price elasticity and forecast market trends and changes in demand. Price elasticity as a concept is the measure of the responsiveness of quantity demanded to a change in price. Methods for measurement include market observations, market surveys and market experiments.

Conversely, consumers face a similar problem when they have imperfect information about, in particular complex, products/services. In finding ways for consumers to trust information provided by sellers, establishing a reputation and third parties helping firms to signal high quality can assist. For example, Sloman, Hinde and Garratt refer to the online auction site eBay providing a feedback system for buyers and sellers so they can register their happiness or otherwise with sales.

The supply side of the market is just as important as the demand side. Businesses can increase their profitability by increasing their revenue or by reducing their costs of production. Both these concepts are subject to economic theorizing to discover the particular output at which profits are maximized. The answer in any one case is heavily dependent on the amount of competition in the market which is measured, in turn, by concentration levels.

E-commerce is a force at work undermining concentration (dominance by large consumers) and bringing more competition to markets. Its effects include:

• Bringing larger numbers of new, small firms to the market (‘business to consumer’/B2C and ‘business to business’/B2B e-commerce models), which can take advantage of lower start-up and marketing costs.

• Opening up competition to global products and prices, resulting in firms’ demand curves becoming more price elastic particularly when transport costs are low.

• Adding to consumer knowledge, through greater price transparency (e.g. through price comparison websites) and online shopping agents giving greater information on product availability and quality.

• Encouraging innovation, which improves product quality and range.

On the other hand, e-commerce disadvantages still include – for example – issues around delivery (such as timing) and payment security. Furthermore, larger producers may still be able to undercut small firms based on low cost savings from economies of scale.

Sloman, Hinde and Garratt provide an interesting case study of the challenges to Microsoft by the antitrust authorities in the EU and the US – something which I am very familiar with as a former competition lawyer. This example is illustrative of the balancing exercise required when assessing the virtues of allowing very large firms to be unfettered in terms of their potential exclusionary practices, versus allowing smaller firms a more even playing field to challenge such large firms which could dampen the latter’s investment in innovation over the long-term.

Of course, new internet-only firms (such as Facebook and Google) have very different business models from that of Microsoft, including the provision of numerous free products as part of a desire to create large networks of users and heavy dependence on tailored advertising revenues.

Next week, I will look at business strategy this time from an economic (rather than management) perspective.