Social and Economic Transformation in the Digital Era

E-commerce can be implemented as a sustaining innovation to enhance the current way of doing business (i.e., focus primarily on improving the business transformation efficiency). In such case, companies fail to identify and capitalize on many of the Internet's opportunities. In fact, e-commerce is a disruptive innovation—an innovation that revolutionizes and transforms traditional commerce. To capture its full benefits, the disruptive attributes or characters of e-commerce innovation must be identified and implemented in a viable business model.

The framework introduced in this chapter can be applied to evaluate whether a company's e-commerce business model is viable. Specifically, a viable e-commerce model satisfies many of the following characteristics (see also Lee, 2001):

• Design programs that take advantage of the Internet network effects and other disruptive attributes to achieve a critical mass of installed base of customer

• Leverage on a single set of digital assets to provide value across many different and disparate markets

• Build trust relationships with customers through e-business communities or e-webs to increase their costs of switching to other vendors

• Transform value propositions and organizational structures for enhanced value creation

• Generate synergy effects on e-commerce product and service offerings

In sum, a viable business model in the digital economy must follow the fundamental economic principles (various costs and revenue/pricing models) and, most important, must be able to identify and capitalize on the disruptive attributes of the Internet commerce.