Understanding the Digital Economy: Data, Tools, and Research

Citation

Larsen, P. (2003), "Understanding the Digital Economy: Data, Tools, and Research", Journal of Documentation, Vol. 59 No. 4, pp. 487-490. https://doi.org/10.1108/00220410310485785

In May 1999, the United States Department of Commerce held the White House Conference on “Understanding the digital economy – data, tools and research” to explore the effects of the growth of communications and information technology and that growth's effects on the US economy[1]. Erik Brynjolfsson and Brian Kahin collected 14 papers presented at or responding to this conference in a volume of the same name.

Meditations on the digital age and its manifold wonders are widely available. Understanding the Digital Economy, with its sober and scholarly tone, is a welcome alternative – the articles, for the most part, remain rooted firmly in the present and resist the urge to present futurist fantasies as likely short‐term accomplishments. The contributors focus on description and analysis rather than prediction, and their approaches are varied. Two elements that color all the essays, however, are a wide variation in the meaning of “digital economy” and a problem with timeliness.

While Brynjolfsson and Kahin's introduction attempts to develop an overarching concept to tie the different ideas together into a coherent whole, there seems no firm consensus on the meaning of the term “digital economy.” Some contributors take it to mean the use of electronic tools in otherwise “normal” business activities – examining, for example, the differences between on‐line retailers and their “brick and mortar” competitors. Others address the changes in local, regional, national, and global economies caused by the growth of communications technologies. Still others examine the social and economic effects of the digital divide. This lack of consensus is both a strength and weakness for the collection. On the one hand, the authors grapple with many different problems and issues, and their different approaches illuminate each other's work. On the other, however, the disparity in both the approaches and the terms and concepts employed creates a tension between the works that is not always productive.

Timeliness is, perhaps, a greater problem. Scholarly studies are, by their nature, poorly equipped to deal with current technological issues. Serious scholarship requires time to collect and analyze data, form and test hypotheses, write articles, and go through the long processes of editing, review, and publishing. Meanwhile, technological change continues unabated. As a result, published analysis is nearly always out of date on technological matters. None of the articles in Understanding the Digital Economy draw on data later than 1999, and the articles cited are more often from the mid‐1990s or earlier. As a result, the effects of the dot‐com collapse and associated slowdown in information technology development and deployment are entirely absent from the collection, leaving the reader wondering how the authors would have addressed it. Despite this handicap, however, most of the articles present ideas sufficiently elastic to survive the passage of time. For example, Paul A. David's “Understanding digital technology's evolution” includes examination of the tension between users who need a stable software environment to maximize efficiency and software manufactures who need an unstable environment of continual upgrades to maintain profits and market share. By focusing on continuing issues, the article largely avoids timeliness problems. Additionally, few of the articles present themselves as the last word on any specific aspect, much less the whole, of the digital economy. By presenting ongoing research and clearly identifying further questions that need to be answered, the essays leave room for growth and remain relevant.

These two general issues aside, the main focus of the collection is directly on business practice and how technological change has affected both providers and consumers. Even within this narrower theme, substantial divisions can still be observed. A major problem in defining the digital economy is measuring the effects of technological adoption on both specific businesses and the economy as a whole. Michael D. Smith, Joseph Bailey and Erik Brynjolfsson's “Understanding digital markets: review and assessment” considers a specific business environment (online retailers) and examines those pressures, measures, and solutions, while David's article, above, is an example of a broader view, examining attempts to measure information technology's effects on the economy as a whole. Two other articles, “Small companies in the digital economy” by Sulin Ba, Andrew B. Whinston and Han Zhang and “Small business, innovation, and public policy in the information technology industry” by Josh Lerner, contrast approaches to the viability of small companies in the new business environment. This broad range of approaches, while certainly not exhausting the topic, makes the best of the amorphousness of “digital economy” and provides many avenues for further exploration.

While the bulk of the papers examine the effects of information technology growth on business, some take a more societal approach, tracking the impact of those changes on the social landscape. In “Technological change and the wage structure”, Lawrence F. Katz describes an income divide based on technological expertise while Donna L Hoffman and Thomas P. Novak explore how race, income, and gender effects that expertise in “The growing digital divide”. The issues they raise are troubling – already disadvantaged groups will be further handicapped by technologies that could reduce inequality. However, Heather E. Hudson's “Extending access to the digital economy to rural and developing regions” fails to present a convincing solution. While “wiring the world” is an attractive goal, her paper largely ignores the massive barriers of literacy and training required for productive Internet usage. Increasing the telecommunications infrastructure without addressing the educational requirements of underserved populations is unlikely to benefit anyone much.

The collection ends, appropriately, with a cautionary essay. “The truth is not out there: an enacted view of the ‘digital economy’“ by Wanda J. Orlikoeski and C. Suzzane Iacono remind the reader that the digital economy is a cultural construct. Despite many futurist's visions of predetermined technological development, organizations and societies can make choices about how the emerging technologies will effect everything from job processes to modes of living. It is not necessary to embrace each new development without reservation. It is possible for organizations of all sorts to choose technologies that enhance their core missions rather than change their missions to match the capabilities of technology. And most important of all, the digital economy, in all its multiplicity of definitions and associations, is the product of many individual choices, not a huge monolithic entity somehow driving all before it into an uncertain future.

Understanding the Digital Economy is hardly the last word on its subject. It is, however, an excellent place for people from a multitude of backgrounds and with a multitude of interests to begin to examine this complex and developing concept.

Note

1. See www.ta.doc.gov/digeconomy/default.htm for a description of the conference and PDF files of some of the papers.