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Home arrow Communication arrow How Digital Communication Technology Shapes Markets: Redefining Competition, Building Cooperation
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My Take

On balance, how has digital technology revolutionized the organization of markets? I believe that markets will gravitate toward a steady state with both OR and OB. In some markets, commoditization of the product and homogeneity of preferences will support the development of OB. Just as the single village square was central to social life, Facebook could become the global social sphere. Simultaneously, increasing connectivity will enable OR as granularity in products and preferences is unleashed. From independent musicians to chefs, connectivity is likely to lessen the separation between buyer and seller. The structural changes that economists have recently been talking about are in fact a manifestation of this bimodal economy. We have high productivity sectors with OB and low productivity sectors with granularity and OR. There is a shift of labor from the former to the latter, giving rise to lower overall productivity and income inequality [43]. A subtle factor in the productivity debate is the redefinition of labor from employee, with limited control over the terms of the work, to contract worker, who has more control.

Hidden beneath the three trends is another rather stealthy, development accompanying the adoption of digital technology - excess connectivity. If individuals get overwhelmed by the demands of new links being formed continuously and incessantly, there may arise connection fatigue. Each connection brings with it some information which requires attention and processing. Will there be an organic regress from too much connectivity or will there be some external force limiting this? I think we are seeing incipient changes in our social fabric as people sense a loss of self in a sea of multiple identities. It is this sense of dislocation and drifting away from a true identity that will trigger a movement toward solitude and reduced connectivity. Solitude may fuel innovation and reignite productivity in lagging sectors, and business dynamism overall. My own assessment is that we are at a cusp - the connectivity function which was hurtling upwards exponentially, is curving around and slowing down.

 
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