Role of the Internet in Economic Development and Culture - Coursework Example

Role of Internet in Economic Development and Сulture 1. Introduction The internet has probably been the most profound technological innovation of the twentieth century, taking the concept of business to a ‘virtual’ level that is cost-effective, efficient, and has a global reach. Most contemporary business organisations maintain a ‘website’ for conducting business which includes marketing efforts, apart from their ‘physical’ operations like shops, stores etc, whilst many others operate solely through the internet. In this essay, an integrative study will be done on the role of the internet in contemporary businesses, and how, this technology has penetrated both organisational and social cultures in developed countries as opposed to its limited recognition and usage in underdeveloped and developing nations. The essay will attempt to analyse the application of this technology in various businesses, and how organisations are using it to gain global competitive advantage, and to enter new markets. At the time, the essay will also study how developing countries are using the technology for economic development, and whether a gap is being formed between rich and poor countries due to the advent of this technology. Concepts such as globalisation, strategic and international management and marketing, and culture will be delved into with use of established literature where necessary and every effort will be made to provide meaningful conclusions. 2. Evolution of Internet and its impact on culture and businesses At the most basic of levels, the internet can be described as a worldwide network of networks, enabling millions of smaller computers to share information with each other and to share various communications, databases, and transactions. For individual perspective, when one is connected to the internet, he/she can contact anyone else on the internet, can trade or publish ideas, and can sell products with minimum overhead costs (Reedy and Schullo 2004; Trott, 2008). With such flexibility, the internet, and its main application, the World Wide Web (WWW), have given businesses a useful alternative to carry out their operations, which is resulting in increased customer satisfaction, which in turn leads to more measures for the development of ‘online’ businesses. Reedy and Schullo (2004) summarise that the internet as a whole must liken to a tool kit containing multipurpose gadgets with many useful innovations. In order to understand the true potential of the internet, Reedy and Schullo (2004) also suggest that it is vital to also gain knowledge of the origins and evolution of the aforementioned innovations. The advent of the internet as a main personal and commercial tool was a result of the concept of technology transfer, where in the early 1980’s the initial technology leading to the internet was only used for military and scientific purposes. Later, this initial technology was made open for researchers and businesses to adopt and exploit for further development and innovation, and the internet, as we know it today, was born (Trott 2008). Hence the process of technology transfer is of promoting technical innovation through the transfer of ideas, knowledge, devices and artefacts from leading businesses, research organisations and academic research to more general and effective application in industry and commerce (Trott 2008). Although, internet has inbuilt weaknesses like security problems, they can managed optimally by successfully implementing the information security policies, including fail-safe Anti-Virus Protection system (Milberg 2000). As a result, it can be inferred that the internet itself has become a safe channel for technology transfer through the efficient and cost effective manner in which entities can transfer and share information, and also facilitate innovation through such interaction. Apart from technology transfer, by allowing people of different culture to interact in a virtual space, it also leads to exchange of cultural information between them. The internet is challenging every notion of trade routes, cultural and trade barriers that people have come to know traditionally. It is essentially bringing people together more easily and bringing new ways of organising collective action (Gangopadhyay and Chatterjee 2005).This results in people living in one culture more easily learning about new cultures and incorporating them into their lives. For example, the interest in American culture and its cultural artefacts are mainly fuelled by the mass media. Apart from Television, it is mainly aided by internet; internet based social networks, etc, with dominant role of internet influencing the behaviour of mainly the youngsters. As the internet worked its way from a medium between a limited numbers of organisations, to an essential requirement in most households especially in developed countries, organisations ambitious to enter new markets have found a new way of channelling their efforts and market analyses through this medium. These entities then expanded to other geographic areas within their countries with the internet providing the vital function of keeping communications alive and also for gaining important information about new markets. The medium was then expanded to obtain information about markets outside of the entities’ countries, with the concept of globalisation further aiding the process. It provides a framework to leverage strong brands into other markets, assimilate acquired brands, and rationalize the firm’s international branding strategy. (Douglas, Craig and Nijssen 2001). The internet is especially a great source of information for international managers to study cultural differences, especially where managing local workforce is concerned (Dowling et al 2008). It is, however, important to understand that multinational corporations (MNCs) existed well before the advent of the internet as a major force in businesses (Schuler, Budhwar, and Florkowski 2002). However, it can be asserted that the internet provided additional opportunities in terms of communication and the associated costs, and the benefit of easy access to information for existing MNCs, whilst creating new opportunities based on the same benefits for aspiring businesses including the small players. They include, for example much smaller MNEs, both in terms of staff, capital, etc, and who can be referred to as “micromultinationals” (Ibeh et al. 2004). Among the forms of businesses, which are optimally run by internet, e-commerce is the key and e-commerce goes hand-in-hand with globalization. E-commerce is an important aspect of business today. Effective technology has strengthened e-commerce collaboration, speeded up e-commerce globalization and brought on success to various stakeholders. (Wang 2003) 3. Globalisation This brings us to the concept of globalisation. Globalisation, as defined by Morrison (2006, p.374), is, “multidimensional processes which are leading to broader and deeper integration between countries and peoples”, providing new opportunities but also uncertainties. Contrary to the popular assumption that globalisation is about bringing world economies together, the core of the concept, though, is about creating a single entity out of the world (Bitzenis 2004). It is a concept which was given a boost by aspiring large multinational organisations, which opened up operations in overseas markets with the opening up of such markets, and importantly due to the development of technologies like internet. As globalisation has now got most of the world’s countries involved in global trade as opposed to national or regional trade, countries are now striving to create a uniform global economic environment so trade transactions can be more flexible and accessible (Mennen 2006). Globalisation has transformed many aspects of traditional business methods, where each function of the traditional model, like sales and marketing, human resource management, etc have all been given the additional ‘international’ element to them. Importantly, to do so, MNCs while entering or after entering the new markets have to understand the new market’s or country’s or territories’ cultures, as culture seems to be the most complex issue for international managers to deal with (Gangopadhyay and Chatterjee 2005; Morrison 2006). To fulfil that, international managers of MNCs, use internet technology to gain information on local international markets and their culture for launching new products and even for recruiting local workforce. Internet based technology trade has become an important globalisation medium, with intellectual properties and other licenses exchanged and utilized by MNCs with companies of other nations who need them (Rycroft 2002). 4. Role of Internet in creating the gap between rich and poor countries It is expected that in the twenty first century, globalisation is going to accelerate to such an unimaginable pace that the very business organisations that have thrived and provided the global community with their services will be greatly challenged in the next decade or so as the internet increases further in usage and popularity (Gangopadhyay and Chatterjee 2005). It may even be inferred that the pressures imposed through the growth of the internet may even overtake the role of these business organisations. These pressures may not just be economical, but also social and political. These pressures may not just be economical, but also social and political. The growth of the internet has such broad implications for individual countries and their people that it is inevitable that there will be concerns regarding social, political, and cultural aspects due to internet inspired globalisation. Although international economic and financial organisations like the World Trade Organisation, International Monetary Fund, World Bank etc will continue to strive towards achieving a global economy, there is also a community level concern regarding the implications of international interdependencies, and the subsequent loss of national sovereignty and local identity, and this concern is gradually escalating, and has the potential for birthing nationalism and protectionism (Islam and Hossain 2006; Morrison 2006). 4.1 Digital Divide In spite of the far reaching properties of the internet as explained above, there is still something called a ‘digital divide’, a term given by political and telecommunication circles to amplify the disparity between those individuals and countries that have access to computers and the internet, and those that do not. This disparity may not just be age and education related, but is also dependent on economic, cultural and geographic differences. As the world is becoming a single entity, there is concern for those countries and parts of countries that still do not use internet technology, or cannot use it due to social and cultural boundaries, and also economic barriers (Gangopadhyay and Chatterjee, 2005). This may mean that a kind of underclass is being created, which will be left out from new avenues of education, communication and commerce resulting from the information revolution of the internet. There is a growing feeling that as one section of the world is getting better and richer, another section is getting poorer with a formidable gap being formed between the two (Morrison 2006). 4. 2 Hofstede’s cultural dimensions Hofstede (1994), in his classifications, places most Asian and Eastern European countries in the high power-distance, highly collectivist, masculine, and uncertainty avoiding cultural dimensions. A high power-distance denotes a central figure or even central groups of authority in society and families that controls activities that may threaten traditional methods. At the same time, collectivism helps share this control as a group, masculinity adds the masculine strength and passion to resist any idea that may threaten the collectivist view of control. In addition, uncertainty avoidance eliminates entry of anything that may cause ambiguity and confusion within the traditional structure. Hence culture, if particularly said developing and under-developed countries’ cultures (which are mainly steeped in old traditional mode) plays a big role as a barrier to new innovations and technologies that may change traditional methods. The above are also the geographical areas that have found to be amongst those with least access to internet technology, confirming the strong role of culture in keeping technology at bay (Gangopadhyay and Chatterjee 2005). Consequently these geographic areas are also part of the more underdeveloped or developing nations. So it is evident that limited or no access to the information revolution through internet has affected these geographic areas in terms of their economies as well. 5. Developing countries using technologies like internet as a tool for economic development Although, developing and underdeveloped countries are not using technologies as much expected due to above discussed reasons, there are some exceptions. That is, another factor to consider is that within areas with cultural barriers, sub-locations that are open to worldwide change particularly the internet technology have actually seen growth. This is confirmed by Islam and Hossain (2006), where they suggest that in developing, but culturally restricted countries like China, the more open a region to internet technology, the higher is its economic growth, and the rural areas, which does that, experience faster reduction of poverty. Also in growing economies like India, technology has been embraced by the larger population, increasing the demand for technologically proficient people along with new innovations in technology (Islam and Hossain 2006; Morrison 2006). This has also prompted the recognition for the need for new educational programmes by regional governments to educate people from the most remote areas of the country about computers and in using the internet. The government(s) have increased the annual expenditure on computer education to meet with demands of the high population. India has the fourth largest number of internet users in the world trailing behind China, USA and Japan; and boasts of having the second largest number of mobile phone users, trailing only behind China. (Press et al. 2002). In particular, there is a pressing need to investigate the extent of market orientation of the entering firms in those developing countries where the process of economic diversification is taking place rather rapidly (Kaynak and Arbalaez 2000). Whilst cultural barriers pose one aspect of barriers to entry for internet technology, extreme economic poverty has been another factor that has restricted certain nations from advancing to the new worldwide revolution. This is especially true for many countries in Africa, where poverty is a worrying factor, and most generations are fading away without even remote access to technology. However, on the positive side, many measures are underway to bring the information age to these poorer nations, which may improve the peoples’ living standards, reduce poverty and importantly economically develop those nations. Considerable improvements have been noticed, for example, in the case of a group of Senegalese farmers, where a project was implemented to provide these farmers with up-to-date prices in the market for their products through the internet, and they saw a considerable rise in income per month as a result (Logan 2005). One of the key factors for the economic development of a country is that, its citizens need to have good health and be able to give higher productivity. Where disease and poverty have been two major factors of causing deaths in many African nations, internet technology can provide information to individuals and medical personnel, which can be used to counter these diseases and implement prevention methods. The other way in which internet is helping the African Nations economically and also socially is by helping them to garner funds for constructive activities. That is, many charitable organisations from the developed world have used the internet to take collective action to raise funds and resources to provide food, shelter, healthcare, and even education in these parts of the world by raising awareness of the situation through the internet medium. 6. Cultural differences and internet’s role in bridging them The advancement of this internet technology has created a global culture of its own, where internet has become a daily commodity for most ‘connected’ people. The primary way they express themselves to the world is through online communication networks, in terms of socialising, shopping, entertainment, trading, and even relationships, this internet culture may indeed effectively replace traditional cultural identity by creating a homogenisation of cultures (Morrison, 2002; 2006). Taking into consideration Hofstede’s dimensions, the implications of such a homogenisation, whilst it may bring some communities together, there is the danger of other communities going farther away due to various barriers discussed. This may effectively create a segregation of communities that are defiant to this change, and are in further danger of continued poverty and associated problems due to lack of information and technology use. However, this cultural differences and opposition to technology can be corrected or bridged through apt usage of internet technology. India is one of the best examples from the developing countries on how cultural barriers can be overcome by embracing technology, even without losing cultural identity and preferences. Internet is prominently used in the rural parts of India, where traditional culture is at its strongest point. That is, although traditional culture is strongest, agriculture is the main activity in those areas and technology is used to aid the rural people in that activity. This can be seen in the initiative taken by one of the major Indian companies in the private sector, ITC, short for Imperial Tobacco Company. ITC-IBD has created an Information technology as well as Internet-enabled rural ‘channel’ called eChoupal (“translated in Hindi as village meeting place”) to help the farmers in the cultivation of crops and also the selling of the cultivated product. (Dangi and Singh 2010, p.181). They give the farmers quality inputs such as accurate weather report, correct information about sowing seeds, herbicides, etc through kiosks with Internet access, which will be run by a sanchalak (a computer literate farmer). (Dangi and Singh 2010). Then, importantly, e-Choupal by giving updated information through the internet about the market prices of various crops and products enables the farmers to directly sell to the traders, removing the dominance of the middlemen. This goes against the popular belief of losing one’s identity as a result of the information revolution. Hence measures can be taken to educate the more defiant communities of the advantages of internet technology, and its use to increase productivity and efficiency by effective communication, and gaining of information, rather than as an evil entity that threatens one’s cultural identity Conclusion In the final analysis, it can be said that although there is a gap between rich and poorer countries and communities due to the advancement of internet technology, there are also some positive aspects like growing awareness of about these technologies in the poorer countries. That is, many communities are still oblivious of the existence of internet technology, which means lot has to be done to bring technology to these areas. However, globalisation and the advanced technologies is reaching sizable sections of the people all over the world, particularly in developing and underdeveloped countries, leading to positive impacts. The main concern for many anti-globalisation and anti-internet technology groups is the loss of individual cultural identities. However, the growth of the internet is a constant spurring force for globalisation, and the new phase of globalisation with this driving force has the potential to change every facet of people’s lives (Morrison 2006). Sizable improvements in internet technology adoption have been noticed through the efforts of various MNCs, government bodies, charitable and other international organisations like the UN. 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