Digitally Enabled Output and Progress

  Introduction:

            In this post the main arguments as the emergence of Digital Economy and Entrepreneurship as positive progress with underlying effects to be discussed. The base theoretical concept of this blog is illustrating Digital Economy and Entrepreneurship as positive progress that shape the general economy today and will shed light on the impact of digitizing existing successful enterprises that commenced prior to the digital era. Essentially, current renown businesses that commenced as start-ups with exclusive digital frameworks like Amazon, Facebook, Google, and others, are examples of Digital Entrepreneurship that laid the ecosystem for digital enterprises to emerge, expand, and ripple progress to other sectors. Moreover, such emergence led to impacting general economy where businesses developed to having more reliance on the digital means and digitization. In this blogpost, the argument presented will be discussed thoroughly with emphasis on the conceptual theory introduced, where the impact of Digital Economy and Entrepreneurship on various areas of economy, business, and entrepreneurship will be hypothesized as positive progress that has negative aspects that will be examined. Potential problems presented will discuss the negative aspect of the digital era that can be eliminated, highlighting classic businesses and enterprises not coping with digital transformation and as such are missing considerable opportunities in their respective markets due to unsuitability with the ongoing advancement. First, Digital Entrepreneurship and Digital Economy will be defined academically with relevant examples, showing the terms’ magnitude of influence and growth. Secondly, the significance of Digital Economy and Entrepreneurship will be related to the article’s argument by discussing technological progress as a necessity to businesses and enterprises that commenced before the digital era, highlighting the theorised concept of the blog. After that, the impact of digitalization will be examined in terms of the emerging digital era, where a potential problem of staying out of digital reach will be debated as possible to eliminate with practical examples. The blogpost will conclude with summarizing the article.

The main concept discussed in this blog is the evolving definition of entrepreneurship in context of the emerging Digital Economy. Such emergence has caused an impact over general areas of economy, where digital enterprises have developed from being start-ups with digital framework to leading global companies with significant impact on everyday lives and overall global output. To simply put it, the concept of this article describes Digital Economy as the medium containing various underlying sectors that are all enabled through information technology and the emergence of the internet, and that medium impacted general economy, business, entrepreneurship, and living to an unprecedented point of progress that potentially has a dark side. The theory of this article describes such advancement through the digital era as positive progress, but sheds light on the possible negative aspects observed within this progress. Moreover, the argument presented asserts observed negative effects of the progress can be eliminated through the utilization of digital means and information technology measures. In defining the parameters of the utilization, coping with market standards of using digital technology is a key element in negating the negative side of progress.

  Starting with Digital Economy, the term will be explicitly defined in this article as the global network of economic and social activities enabled by computers and digital technologies (Bukht and Heeks, 2017). Other definitions of Digital Economy usually carry the same understanding, for example, the economic output enabled by ICT (information and communication technology) or the range of economic activities that use digitized information, or simply, as the “Internet Economy” with emphasis on the emergence of the internet (Bukht and Heeks, 2017). In some other cases, defining Digital Economy is left to be defined implicitly as the capacity of the term can be limiting to understanding underlying concepts. The reason the definition was chosen is to solidify the academic perspective that will be carried forward in this article. The second term to be defined is Digital Entrepreneurship, where it is the creation of new ventures or the transforming existing businesses by developing novel digital technologies (Zhang and Collier, 2016). Such definition is quite coherent with the article’s underlying theory, highlighting two types of Digital Entrepreneurship later labelled, but other definitions have shown other perspectives on the implications the term defines. Other definitions include the digitization of physical assets of a company, providing products and services exclusively online, and the use of digital technology to initiate business opportunities. Regarding the underlying theory of the article and the definition, Digital Entrepreneurship can be inclusive of both starting innovative business ideas with exclusive digital framework or developing digital technologies around an existing business to meet modern-day standards. The inclusive definition chosen includes two approaches of how Digital Entrepreneurship can be carried out, and as such the categories are be exemplified. The categories will be labelled in this article as direct or indirect Digital Entrepreneurship. The first example of direct Digital Entrepreneurship would be Amazon.com, where the business is directly dependent on an internet enabled platform showing various products sold, and as such cannot be carried out without internet, the platform or digital framework. A second example would be Facebook, a leading example of social media sites, exclusively hosting services through digital input and output hosting over 2.7 billion users in 2020 (Tankovska, 2021). The extent of reach and influence Amazon, Facebook, and others have globally on personal data is unprecedented, making it key companies in producing large sets of world-wide data that is monetized and form a significant part of revenue, called today Big Data. The two examples are major corporations that have started as sizeable start-ups that are directly digital and have developed through digital means into giga-companies among the largest globally with quite an impact on general economy. The second category labelled indirect Digital Entrepreneurship can include any business operating before the emergence of the internet that has evolved into being digitally enabled, exemplifying that would be Nike as a leading sports-based equipment and apparel company. In Nike’s case, the business launched midway through the 20^th century in the 1960s and have evolved into the most valuable apparel brand globally (Brand Finance, 2021). Nike focused on using Big Data and analytics to develop a digital strategy through various methods including digital marketing, e-commerce campaigns, mobile applications, and online websites to address the current customer base’s reliance on digital means (Flynn, 2015). Specifying Nike’s example further, any Nike customer can now access a platform to directly communicate with the company concerning everything related to the purchase and product (Flynn, 2015).  Another example of businesses undergoing digital transformation would be corporations in the banking sector, or Barclays as an example. Researching Barclays’ case, the banking corporation was launched more than 300 years ago and has recently developed from a classic banking approach to potentially enabling customers to use the bank’s various services online without any personal interaction. According to research done by Wanjuki published by the University of Nairobi on Barclays Kenya, embracing digital marketing and digitization has improved client reachability and satisfaction (Wanjuki, 2014).  Digitizing the banking sector reflected on the finance and payment industries, where companies like Paypal exclusively operate to facilitate digital payments, providing an account and wallet service to process transactions completely online. Nowadays, it is difficult to find businesses that do not have an online presence or a website for customers to reach digitally, and as such highlighting the necessity of pre-internet corporations using digital technologies to cope and compete in any given market. Hence, the information and examples provided can assert the underlying concept of how the digital era has directly and indirectly effected the parent concepts of entrepreneurship and business, and thus created the term Digital Entrepreneurship with its corresponding influence.

            After defining the two main terms, Digital Economy and Entrepreneurship, the scalability, size, and impact of the digital era is to be examined. In the essence of analysing the emergence of the terms, the size of digital output to general output must be compared and forecasted. Digital Economy was defined earlier as “the global network of economic and social activities enabled by computers and digital technologies”, and as such, the term has been separated from other economic activities and can be represented as percentage of total output that is exclusive to digital technology. Research done in 2016 calculated digital output for 15.5% of total global GDP and forecasted an increase to 24.5% by 2024 (Huawei and Oxford Economics, 2017). Another report published by Accenture Strategy used regressed macro data to predict that 22.5% of global GDP is going to be digital output by 2020 (Knickrehm et al, 2016). Given observed progress, digital output compounded rate of growth (CAGR) will possibly accelerate and reach more in output share percentage than calculated. The growth shown is relevant to other sectors of the economy as the magnitude of influence digital output has on other industries is significant due to the interconnectedness of activity causing a ripple effect.

The progress emphasised on has considerable influence on general day-to-day lives and is theorised to be positive with negative aspects that can be eliminated. The negative aspects highlighted in the argument are likely due to incompatibility with technological progress and will mostly befall corporation and business entities holding onto classic or traditional entrepreneurship and business models, where evidence has shown it is not sufficient. Compatibility and utilisation of digital technology are solutions to mentioned problems that may befall corporations that are not digitally enablled. As aforementioned, the extent of reach and influence of giant digital companies and platforms is unprecedent and has caused a ripple effect on other sectors of economy. Today, seven out of the ten largest global corporations are technology-based companies (Szmigiera, 2021). Among them are the earlier examples mentioned of direct Digital Entrepreneurship, Amazon, and Facebook. In Amazon’s case, the company has reshaped the retail market into a new digitally enabled nature lead by it, where underlying sectors and corresponding market participants have no means of competing without either coping with digital standards or accepting the dominant domain by using the technology Amazon and other significant online retailers provide.

Exemplifying the retail market case, renown toy retailer ToysRus has been recently battling closure and bankruptcy in 2018, where much of that loss is credited to failure in competing with the market and incorporating technology (Bolton et al., 2019). In this case, digital progress is one the reason for the renowned business to face closure, but as mentioned beforehand, coping with the market can possibly eliminate the negative aspect of lagging behind. By coping with market standards, ToysRus could re-enter the market by developing a digital presence and marketing strategy, resulting in possibly regaining the foothold it lost in the retail toys market through digital means. On the other hand, accepting the dominant domain would mean that ToysRus and other struggling retail companies use digital platforms like Amazon to have more of a digital presence. It is noteworthy that Amazon and other large platform companies share their significant technology with other companies by hosting partnerships for a price, exemplifying the terms Digital Monetization and Platform Economies. As the retail sector and Amazon example can be referring to direct Digital Entrepreneurship, it can also be relevant to indirect Digital Entrepreneurship. Going back to Nike’s case, the brand embraced an approach of indirect Digital Entrepreneurship and as so initiated digital marketing strategies and enabled itself through providing a digital platform, evolving from prior approach. Additionally, Nike and other retailers utilise the reach of large digital companies by selling products in platforms like Amazon and others, marking using internet-enabled platforms evident successful strategy.

Adding on the potential negative aspects, the advancement in platform services and digital technologies provided by dominant companies is not always accessible, where corporations can create further barriers to entry in their selected markets and increase dominance. Utilising platforms and technologies created by advanced corporations may lead to monetizing the progress emphasised on, producing a market gap with digitally enabled dominant leaders and smaller firms struggling to meet market standards of advancement. In regulating such instances, anti-trust organisations and trade commissions have been investigating mega digital companies, with much of their focus on limiting monopolisation and digital corporations monetizing progress, but relevant consensus has not been clearly formed (Mendoza, 2016). An example for Anti-trust cases in digital markets would be the Federal Trade Commission of the United States launching an investigation on Google in 2010. Where in this case, vertical competitor alleged Google was using anticompetitive methods to promote the company’s own services and advertised partners over eligible competitors through search engine results, but the case concluded with no further filings and no consensus of guilt towards Google as the search engine’s algorithms for paid advertisements were disclosed and possible “search bias” to non-partner competitors was examined and presumed just (Mendoza, 2016). Anti-trust laws concerning digital companies with significant dominance in the market has been developed further in recent years, where multiple instances ended with courts fining companies with considerable penalties and instituting relevant framework for future assessment (Pepall and Richards, 2020).

Conclusion:

Concluding the article, the main theorised concept of this blog was defining the emergence of Digital Economy and Entrepreneurship as general positive progress with negative aspects that could be eliminated and regulated. Defining Digital Economy and Entrepreneurship, the definitions chosen are explicit and coherent with the content’s concepts, where Digital Economy was defined as “the global network of economic and social activities enabled by computers and digital technologies”, and Digital Entrepreneurship as “the creation of new ventures or the transforming existing businesses by developing novel digital technologies”. As Digital Entrepreneurship is further examined, the term was inclusive of two different approaches, a direct approach with ventures enabled by digital framework exclusively, and an indirect approach with existing business transforming digitally to cope with market standards and utilize technology. The article carries the classification forward to exemplify companies, where Amazon and Facebook correspond to the direct approach, while Nike and Barclays adopting digital transformation show the indirect approach. The magnitude of Digital Economy to total output was analysed and related to referenced forecasts, where the data shows more promise than expected in earlier years. The size, scalability, and impact of the digital output was described and is theorised to have “rippled” to other sectors leading to general positive progress. Such progress comes with negative aspects, but the article tries to prove that potential problems could be eliminated through coping with digital standards, accepting dominant technologies by using it, or regulating misconduct. An example to assert nullifying negative aspects showed the renowned toy retailer “ToyRus” going through risk of closure due to failure to compete and not being digitally enabled, highlighting a different approach as Nike partnering with Amazon and other platforms exemplified an indirect approach to Digital Entrepreneurship through using digital platforms. The dominance and magnitude of digitally enabled companies emphasised on is subject to damaging competition in underlying markets through monetization and monopolisation, where anti-trust laws in this area of economy are as not as clear as others, but significant regulation has been developed recently due to relevance.

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