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The internet: strategy and boundaries of the firm

Zulima Magdalena Fernández Rodríguez and María Jesús Nieto Sánchez

DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de Economía de la Empresa

Abstract: Many advantages have been ascribed to the Internet. Although it lacks the necessary elements to be regarded as a strategic resource, the Internet seems to be a useful tool to provide support for business strategies.In this work we discuss how the Internet can be used to support the development of capabilities and define firm boundaries. Using a sample of Spanish firms, empirically analysed, we find positive relationships between the use of the Internet and product differentiation, as well as the introduction of organizational changes. In addition, we present evidence that the Internet reduces both internal coordination costs and transaction costs as a result of the positive relationships found between the use of the Internet, the degree of vertical integration and the establishment of technological agreements with suppliers and customers.

Date: 2005-01
New Economics Papers: this item is included in nep-com, nep-ind and nep-ino
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Citations: View citations in EconPapers (1)

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