The network economy uses technology and social networking to establish the value of goods and services, causing a shift in commercial transactions. Intellectual property rights and value networks have been revolutionized, but basic economic laws remain unchanged.
The network economy is the economic order in the framework of the technological information society. Unlike industrial revolution-inspired economies, the network economy uses technological advances such as the information market and social networking platforms to establish the value of goods and services. There are several main aspects of the network economy: its inherent structural differences from industrial economies, the role of the digital revolution, value networks and intellectual property rights.
One element of the information revolution was the creation of new forms of economy and technology in the years of the post-industrial revolution. Combined with changes in cultural and social styles, the information revolution has initiated a change in the way business is conducted. The importance of business administration and boardroom decision making has been diminished by the ability of consumers to share knowledge at scale via the information superhighway. This has caused a significant shift in commercial transactions; the advent of e-commerce and a largely digital economy have restructured the number of businesses operating. Where once the value of a product or service was determined solely by society, now, through the sharing of information by digital means, it was now fundamentally determined by consumers.
Value networks have been revolutionized by the rise of the internet economy. Sharing information on a large scale through social networks could make or break the success of a product or service. With more power in the hands of consumers, companies have also found they are being held more accountable for their actions. At the same time, however, they have seen the financial benefits of this new network economy. Suddenly, sales weren’t limited to a few demographic areas, but were able to reach all corners of the globe.
There are complicated intellectual property rights issues associated with a primarily virtual economy. Intellectual property laws grant owners exclusive rights to property deemed intangible, such as works of art. In the context of the network economy, a company is charged with protecting its intellectual property by ensuring that competitors do not steal its ideas, products or pricing structures, a very real possibility in the information age.
Although the onslaught of changes has driven the network economy and the popularity of electronic commerce, the basic economic laws remain unchanged. Creating quality products, setting pricing structures that maximize value, using positive consumer reviews, and maintaining customer-focused business models are timeless economic laws. With or without technology, these facts help maintain and grow any economic setup and, as evidenced by the network economy, can take the field in exciting new directions.
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