Customer Reviews

The Global Internet Economy

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This is an excellent history of the Internet Economy and as such highly recommended. Without no doubt one of the best history books available.

The book is somewhat difficult to evaluate because the topics covered are so broad. The book describes how things did happen. But it does not try to predict or construct the future. It must be compared to Moschella's Customer Driven IT which identifies the challenges of the innovation system and draws a different scenario.

The deregulation and disintegration of the hierarchical telecommunications industry to free market based structure is described in this book as in some others. When the e-commerce did not catch up to the degree originally expected, Internet is paradoxically heralded as a remarkable social success, with rapid global penetration, but largely a business failure (Kogut, page 438). But this claim - like a typical market research - focuses on revenue generation and reintermediation, and does not recognize the intermediate form between hierarchy and market, the networked process and related disintermediation. In The Global Internet Economy, this comes as some kind of an afterthought:

"A primary effect of the Internet has been to render the back-office operations, such as customer service, more efficiently. These activities were not captured in the definitions of B2B and B2C but may in fact constitute the bulk of the explanation for the increase in productivity observed in the 1990s" (Kogut, page 443).

From consumer perspective, Internet may substitute or streamline many key everyday processes, such as going to library, or to look at prices in the shops, or buying tickets or paying bills. It is this convenience value is undervalued in Internet productivity statistics (Kogut, page 459).

This is the third phase in the formation process of an industry. In the first, pre-commercial and early commercial phases government and universities played vital roles. In the second phase, venture capital (with the ease of exit provided by new technology-oriented stock exchanges) was the midwife for creation of the industry, and in the third phase large firms were able to integrate the techniques into their technological toolkit (Kenney, pages 69-70).

"The U.S. institution of venture capital played a central role in the rapid formation of new dedicated Internet firms that were established to define and occupy the new economic space" (Kenney, page 70). Almost 90 % of venture capital in the latter half of the 1990s vent to Internet-related companies (Kogut, page 446).

As a summary, this book is about history. Now when we are in that "third phase" we need scenarios and roadmaps for the future, but the book does not try to synthesize these.