There has been a revolution in computing and communications over the last few decades, and all signs point to continued rapid advancement and utilization of information technology. As a result of both technological advancements and increased competition, the cost of communications has been steadily falling, accompanying and supporting the enormous growth in the power and use of new information technologies. The processing power of microchips doubles every 18 months in accordance with Moore’s law. These developments offer a wealth of noteworthy prospects while simultaneously posing formidable obstacles. A wide range of societal sectors are currently being impacted by information technology breakthroughs, and policymakers are taking action to address issues like economic productivity, intellectual property rights, privacy protection, and the cost and accessibility of information. Choices made now will have long-term effects, so it is important to consider how they will affect society and the economy.
Electronic commerce over the Internet, a new mode of doing business, is undoubtedly one of the most important effects of the development of information technology. Despite being only a few years old, it has the potential to drastically change social and economic conditions. It already has an impact on major industries like finance, retail, and communications, and it could spread to other sectors like education and health services. It suggests the seamless integration of information and communication technologies throughout the full value chain of an electronic firm.
The effects of business models, commerce, market structure, the workplace, the labor market, education, personal life, and society at large as a whole are affected by information technology.
Business models, trade, and market organization
The importance of distance is being diminished by information technology, which has a significant impact on the workplace. The regional distribution of employment is drastically shifting across various industries. For instance, some software companies have discovered that transferring projects to countries like India or other places with lower costs helps them get around the competitive local market for software developers. Furthermore, with such arrangements, crucial projects can be done almost nonstop by utilizing the time gaps. Companies can outsource their manufacturing to other countries while still maintaining a constant connection between their marketing, R&D, and distribution departments. As a result, technology may allow for a more precise division of labor among nations, which in turn may alter the relative demand for different skills in each country. The technology makes it possible to decouple different jobs and forms of work from one another. Greater economic freedom for businesses increases regional rivalry in the markets for capital, labor, and other resources as well as infrastructure. Additionally, it makes regulatory arbitrage possible because businesses can now pick and choose which taxing authorities and other regulations to abide by.
Computers and communication technology also encourage manufacturing and distribution methods that are increasingly akin to markets. The informational obstacles to effective market functioning will be reduced by a computing and communication infrastructure that provides 24-hour, low-cost access to nearly any type of price and product information required by buyers. This infrastructure may also enable real-time transactions, eliminating unnecessary intermediaries like sales clerks, stock brokers, and travel agents that serve as a vital information conduit between buyers and sellers. Eliminating middlemen would lower costs along the value chain of manufacturing and distribution. The development of enhanced mail order retailing—in which goods can be quickly ordered over telephones or computer networks and then quickly dispatched by suppliers through integrated transport companies that heavily rely on computers and communication technologies to run their businesses—has been made possible by information technologies. Software can be sent electronically, removing the need for physical shipping altogether. There are new methods of making payments. Disintermediation occurs throughout the entire distribution chain as a result, which lowers costs, lowers end-user pricing, and increases profit margins.
The example of electronic commerce is the most effective way to explain how information technology has affected the cost structure of businesses. When doing a sale through electronic commerce as opposed to a traditional store, there are significant cost savings in the areas of physical establishment, order placement and execution, customer service, inventory carrying, and distribution. An e-commerce website may be expensive to set up and operate, but because it is always online, accessible to millions of people worldwide, and has minimal variable expenses, it is far less expensive to maintain than a traditional storefront. This allows it to scale up to meet demand. Duplicate inventory expenditures are minimized by keeping only one “store” instead of many. Additionally, because online advertising is frequently less expensive and more focused than that of conventional media, it is particularly effective at lowering the costs associated with acquiring new clients. Additionally, e-commerce retailers can verify that an order is internally consistent and that the order, receipt, and invoice match using the electronic interface. Businesses are able to migrate a large portion of their customer service online through e-commerce so that customers can access databases or manuals directly. This results in a significant cost reduction while also raising overall service quality. E-commerce businesses need a lot fewer highly skilled workers. Inventory carrying costs can also be reduced with e-commerce.The quicker the input can be ordered and supplied, the less of a requirement there is for a huge inventory. In businesses where items have a short shelf life (like bananas), are prone to rapid technological obsolescence or price decreases (like computers), or where new products are introduced quickly, the impact on costs associated with decreasing inventories is particularly noticeable (e.g., books, music). While distribution costs are dramatically decreased for digital goods like financial services, software, and travel, which are big e-commerce areas, shipping fees can significantly increase the cost of many products acquired through electronic commerce and add to the ultimate price.
Although some intermediaries are eliminated by electronic commerce, it also increases reliance on other intermediaries and introduces whole new intermediary roles. Advertising, safe online payment, and delivery are a few of the intermediary services that could raise the price of e-commerce transactions. Customers may easily become overwhelmed by the sheer volume of options due to the relative ease of opening an online store and becoming an e-commerce merchant. This highlights how crucial it is to use advertising to build a brand name and boost consumer familiarity and trust. For new e-commerce start-ups, this approach can be costly and incur a high transaction cost.Due to its inherent openness, global reach, and absence of physical cues, e-commerce is also more susceptible to fraud than traditional businesses, which raises some expenses for e-commerce companies. The use of credit cards in e-commerce transactions is being protected with new technologies, but the requirement for higher security and user authentication drives up expenses. The convenience of having items delivered directly is a significant component of online business. This results in shipping expenses for tangible goods like books, which typically raise prices and negate many of the benefits of e-commerce while also dramatically increasing transaction costs.
E-commerce is rapidly growing, thanks to the Internet, into a quick-moving, open, worldwide economy with an ever-increasing number of participants. In terms of the quantity and size of businesses as well as how they compete on global marketplaces, the open and global character of e-commerce is anticipated to grow market size and modify market structure. Consumers may purchase online around-the-clock, seven days a week, and digital goods can traverse international borders instantly. Businesses must contend with growing online competition from around the world. By removing many of the distribution and marketing constraints that can prohibit businesses from getting access to international markets, the Internet is assisting in the expansion of existing markets. E-commerce offers a low-cost and effective solution to improve customer-supplier relationships while also lowering information and transaction costs for businesses on international marketplaces. Additionally, it motivates businesses to create cutting-edge strategies for marketing, providing, and sustaining their goods and services. While the potential for worldwide markets offered by e-commerce on the Internet exists, this potential is to some degree muted by a number of variables, including language barriers, the cost of transportation, local reputation, and disparities in the cost and accessibility of access to networks.
Employment and the Labor Market
In addition to the conventional face-to-face, telephone, and written means of communication, computers and communication technologies enable people to communicate with one another in new ways. They make it possible for distributed communities of actors to work collaboratively even though they hardly ever physically interact. These technologies make use of global, always-on communication infrastructures, enabling synchronous and asynchronous interactions between individuals, groups, and organizations. The usage of computers and communication technology will have an impact on social interaction in businesses. Sharing information and coordinating efforts will improve peer relationships across departmental boundaries. Due to social control issues brought up by the use of computerized monitoring systems, interactions between superiors and subordinates will become more tense. On the other hand, the use of email will remove barriers to communication across different status levels, leading to more unrestricted interactions between supervisor and subordinate.
The fact that computers and communication technologies will lessen the significance of distance also favors telecommuting and has ramifications for citizens’ residential patterns. The demand for homes in climatically and visually appealing places would rise when people discovered that they could complete the majority of their work at home rather than in a centralized workplace. Such a shift in employment from the suburbs to more rural areas would have far-reaching effects. Property values would increase in popular areas while decreasing in the suburbs. The nature and rural, historic, or picturesque aspects of life in the newly alluring locations would be in danger. Since most telecommuters would be better educated and compensated, there would be a greater demand in these locations for high-status and high-income services like upscale dining establishments and clothing boutiques. The growth of services of all kinds would also increase job prospects for the local community.
Widespread telecommuting should make it easier for people to work flexible hours, work part-time, share jobs, or hold two or more jobs at once since it lowers the fixed cost of employment. Telecommuting should boost job mobility and hasten professional advancement because switching employers wouldn’t necessarily mean moving one’s location. This greater adaptability may also lessen work-related stress and boost job satisfaction. There may be additional advantages in the form of decreased health costs and mortality rates because job stress is a significant factor influencing health. On the other side, one could also make the case that technology, by increasing the variety of jobs required of employees and the range of abilities required to complete them, may speed up work and raise the stress and time pressure on employees.
Whether computers and communications will have an impact on employment is a subject that is more challenging to address. There is worry that people will be displaced by computers and communications since these technologies are faster than humans at performing mundane activities like accounting. The counterargument to this claim is that, even if computers and communications result in the loss of certain jobs, new ones will be created, especially for computer specialists, and that an increase in output would result in more jobs overall. Instead of changing the overall job situation, computers and communications will likely affect the types of workers required for various occupations.
Electronic commerce has an impact on many businesses. Given that e-commerce is a method of selling and distributing goods and services, the distribution industry is immediately impacted. Other industries that are indirectly impacted include those that are connected to information and communication technology (the framework that supports online shopping), those that are concerned with content (software, entertainment), and those that are concerned with transactions (the financial sector, advertising, travel, and transport). Additionally, eCommerce may open up brand-new markets or expand existing ones past geographical boundaries. The number of jobs will increase as the market grows. The connections between the various activities impacted by e-commerce are a significant additional challenge. Spending on intermediate goods and services associated with e-commerce will indirectly lead to the creation of jobs due to the volume of electronic transactions and their impact on pricing, costs, and productivity.A new integrated supply chain is being developed for the creation and delivery of multimedia and informational content as a result of the convergence of media, telecommunications, and computing technologies. The majority of e-commerce jobs are located in content sectors and on communication networks like the Internet.
Technology, commerce, and organizational change both create and destroy jobs. These processes are also responsible for shifts in the distribution of skills in the workforce. It is obvious that workers with different skill levels will be affected differently, beyond the net employment gains or losses brought about by these factors. E-commerce is undoubtedly a factor in the demand for IT specialists, but it also necessitates the combination of strong business application abilities with IT competence, creating a need for a flexible, multi-skilled workforce. Integration of Internet front-end apps with enterprise operations, applications, and back-end databases is becoming increasingly important. Low-paid IT professionals who are capable of handling the organizational services required for simple web page programming can fulfill many of the IT skill criteria needed for Internet assistance. However, complicated network applications, wide-area networks, and competing websites demand far more expertise than a platform-specific IT position. E-commerce may speed up the upskilling trend in many nations by needing highly skilled computer scientists to replace low-skilled information clerks, cashiers, and market salespeople because the talents required for e-commerce are uncommon and in great demand.
Instruction
Information technology advancements will have an impact on teaching by enhancing rather than replacing traditional classroom instruction. An effective teacher plays a variety of roles. In one capacity, the instructor serves the pupils, who could be thought of as its clients. However, an excellent educator also serves as a student supervisor, encouraging, evaluating, and developing students in addition to their other roles as instructors. There will always be a small minority of students who have the prerequisite knowledge, drive, and self-discipline to learn via self-paced workbooks or computer-assisted education for every topic. However, for the vast majority of students, having a human instructor present will continue to be much more beneficial in supporting successful educational results than a computer-assisted equivalent. The potential for new information technology to increase productivity outside of the classroom is the highest. It is quite convenient to make answers to reading assignments and problem sets available online. Communication between students and instructors, as well as between those who may be working on group projects, is greatly facilitated by email. Information technology advancements will have an impact on teaching by enhancing rather than replacing traditional classroom instruction. An effective teacher plays a variety of roles. In one capacity, the instructor serves the pupils, who could be thought of as its clients. However, an excellent educator also serves as a student supervisor, encouraging, evaluating, and developing students in addition to their other roles as instructors. There will always be a small minority of students who have the prerequisite knowledge, drive, and self-discipline to learn via self-paced workbooks or computer-assisted education for every topic. However, for the vast majority of students, having a human instructor present will continue to be much more beneficial in supporting successful educational results than a computer-assisted equivalent. The potential for new information technology to increase productivity outside of the classroom is the highest. It is quite convenient to make answers to reading assignments and problem sets available online. Communication between students and instructors, as well as between those who may be working on group projects, is greatly facilitated by email.
Even though distant learning has been around for a while, the Internet allows for a significant increase in coverage and improved training. Students can communicate in real time via e-mail and discussion groups, and text can be blended with audio and video. These technical advancements are in line with a general call for retraining from individuals unable to attend conventional courses due to work and family obligations. Internet-based distance learning is expected to supplement current educational systems for children and college students, but it may replace programs for continuing education more so. High-profile universities may exploit their reputation to draw students who might otherwise enroll in a nearby facility for some degree programs. The general demand for these programs will undoubtedly increase due to the accessibility and convenience of the Internet for distance learning, which will fuel expansion in this e-commerce niche.
High-level skills are essential in a technology-based and knowledge-intensive economy, as was demonstrated in the previous section. Continuous professional skill improvement is now a business necessity as a result of changes brought on by the industry’s rapid technological advancements. The only way to achieve lifelong learning is to strengthen and modify already-existing educational systems in both the public and private sectors. The complete spectrum of contemporary technology is the focus of the demand for education and training. Information technologies have the unique ability to offer solutions to this demand. Internet-based online training options include self-study courses and full-fledged electronic classrooms. In comparison to more conventional seminars and courses, these computer-based training programs offer flexibility in the learning of skills, are more inexpensive, and are more pertinent.
Personal and Social Life
Information may be duplicated and distributed more easily and affordably as a result of the growing representation of a wide range of content in digital form. On the distribution of content, there are conflicting results. One advantage is that content can be supplied for less per unit. Conversely, the incentives for content producers and distributors to create and make content available in the first place may be diminished by the distribution of content outside of platforms that respect intellectual property rights. New techniques and laws must be created to address the issues that information technology creates with the protection of intellectual property.
Free speech and the regulation of online content are other hot-button concerns, and ways to censor offensive material are still needed. However, coming up with a practical solution is quite challenging. Understanding not just the opinions on such subjects but also how they have changed over time is necessary when dealing with obscene material. Furthermore, the same technology that enables decency-related content modification also enables the filtering of political discourse and the restriction of access to political resources. So, if censorship doesn’t seem to be an option, labeling might be a solution. The intention is for consumers to make more educated choices about what information to avoid.
Concerns regarding privacy have grown significantly both in the public and private sectors as a result of the quick increase in computing and communications capabilities. It is conceivable that as the cost of data processing and storage decreases, it will be feasible for both public and private data mining companies to compile thorough dossiers on every individual. Nobody is aware of who is now gathering personal information about people, how that information is utilized and shared, or how it might be abused. These worries make consumers less likely to trust online businesses and communications, which hinders the growth of online commerce. Cryptography is a technological method of privacy protection, but it has been argued that it is a significant obstacle to criminal investigations.
People today are supposedly overwhelmed by information. There is a lot of inaccurate and incomplete information available online. People spend an increasing amount of time learning useless knowledge because it is available and they believe they should be aware of it. In order to create and develop new credibility systems to aid consumers in managing the information overload, it is necessary to study how people assign credibility to the information they get.
Reliance on technology is a natural byproduct of technological advancement. In fact, constructing critical infrastructure ensures reliance on it.The world will depend on the developing information infrastructure much as it does now on its telephone, transportation, and other infrastructures. Technology dependence carries some risk. Economic and social functionality may fail as a result of technological infrastructure failures. There would surely be significant economic upheaval if long-distance telephone service, credit data systems, electronic funds transfer systems, and other essential communications and information processing services were to go down. However, avoiding technological dependence is probably impossible. The risk posed by dependency on technologies that have a known chance of failure, no viable alternative available, and large costs as a result of failure must thus be taken into account.
To address the hazards and perils that the current computing and communications revolution poses to contemporary society, rigorous social science research is necessary. Such research would be useful for both technology design and social policy. Decisions must be thoroughly considered. Many decisions being taken now will cost money or be challenging to change in the future.