Impacts of Information Technology on Society in the New Century
In the past few decades there has been a revolution in computing and communications, and all indications are that technological progress and use of information technology will continue at a rapid pace. Accompanying and supporting the dramatic increases in the power and use of new information technologies has been the declining cost of communications as a result of both technological improvements and increased competition. According to Moore's law the processing power of microchips is doubling every 18 months. These advances present many significant opportunities but also pose major challenges. Today, innovations in information technology are having wide-ranging effects across numerous domains of society, and policy makers are acting on issues involving economic productivity, intellectual property rights, privacy protection, and affordability of and access to information https://gazette.com.ua. Choices made now will have long lasting consequences, and attention must be paid to their social and economic impacts.
One of the most significant
outcomes of the progress of information technology is probably electronic
commerce over the Internet, a new way of conducting business. Though only a few
years old, it may radically alter economic activities and the social
environment. Already, it affects such large sectors as communications, finance
and retail trade and might expand to areas such as education and health
services. It implies the seamless application of information and communication
technology along the entire value chain of a business that is conducted
electronically.
The impacts of information
technology and electronic commerce on business models, commerce, market
structure, workplace, labour market, education, private life and society as a
whole.
1. Business Models, Commerce
and Market Structure
One important way in which
information technology is affecting work is by reducing the importance of
distance. In many industries https://publish.com.ua,
the geographic distribution of work is changing significantly. For instance,
some software firms have found that they can overcome the tight local market
for software engineers by sending projects to India or other nations where the
wages are much lower. Furthermore, such arrangements can take advantage of the
time differences so that critical projects can be worked on nearly around the
clock. Firms can outsource their manufacturing to other nations and rely on
telecommunications to keep marketing, R&D, and distribution teams in close
contact with the manufacturing groups. Thus the technology can enable a finer
division of labour among countries, which in turn affects the relative demand
for various skills in each nation. The technology enables various types of work
and employment to be decoupled from one another. Firms have greater freedom to
locate their economic activities, creating greater competition among regions in
infrastructure, labour, capital, and other resource markets. It also opens the
door for regulatory arbitrage: firms can increasingly choose which tax
authority and other regulations apply.
Computers and communication
technologies also promote more market-like forms of production and
distribution. An infrastructure of computing and communication technology,
providing 24-hour access at low cost to almost any kind of price and product
information desired by buyers, will reduce the informational barriers to
efficient market operation. This infrastructure might also provide the means
for effecting real-time transactions and make intermediaries such as sales
clerks, stock brokers and travel agents, whose function is to provide an
essential information link between buyers and sellers, redundant. Removal of
intermediaries would reduce the costs in the production and distribution value
chain https://government.com.ua.
The information technologies have facilitated the evolution of enhanced mail
order retailing, in which goods can be ordered quickly by using telephones or
computer networks and then dispatched by suppliers through integrated transport
companies that rely extensively on computers and communication technologies to
control their operations. Nonphysical goods, such as software, can be shipped
electronically, eliminating the entire transport channel. Payments can be done in
new ways. The result is disintermediation throughout the distribution channel,
with cost reduction, lower end-consumer prices, and higher profit margins.
The impact of information
technology on the firms' cost structure can be best illustrated on the electronic
commerce example. The key areas of cost reduction when carrying out a sale via
electronic commerce rather than in a traditional store involve physical
establishment, order placement and execution, customer support, strong,
inventory carrying, and distribution. Although setting up and maintaining an
e-commerce web site might be expensive, it is certainly less expensive to
maintain such a storefront than a physical one because it is always open, can
be accessed by millions around the globe, and has few variable costs, so that
it can scale up to meet the demand. By maintaining one 'store' instead of
several, duplicate inventory costs are eliminated. In addition, e-commerce is
very effective at reducing the costs of attracting new customers, because advertising
is typically cheaper than for other media and more targeted. Moreover, the
electronic interface allows e-commerce merchants to check that an order is
internally consistent and that the order, receipt, and invoice match. Through
e-commerce, firms are able to move much of their customer support on line so
that customers can access databases or manuals directly. This significantly
cuts costs while generally improving the quality of service. E-commerce shops
require far fewer, but high-skilled, employees. E-commerce also permits savings
in inventory carrying costs. The faster the input can be ordered and delivered,
the less the need for a large inventory. The impact on costs associated with
decreased inventories is most pronounced in industries where the product has a
limited shelf life (e.g. bananas), is subject to fast technological
obsolescence or price declines (e.g. computers), or where there is a rapid flow
of new products (e.g. books, music). Although shipping costs can increase the
cost of many products purchased via electronic commerce and add substantially
to the final price, distribution costs are significantly reduced for digital
products such as financial services, software, and travel, which are important
e-commerce segments.
Although electronic commerce
causes the disintermediation of some intermediaries, it creates greater
dependency on others and also some entirely new intermediary functions. Among
the intermediary services that could add costs to e-commerce transactions are
advertising, secure online payment, and delivery. The relative ease of becoming
an e-commerce merchant and setting up stores results in such a huge number of
offerings that consumers can easily be overwhelmed. This increases the
importance of using advertising to establish a brand name and thus generate
consumer familiarity and trust. For new e-commerce start-ups, this process can
be expensive and represents a significant transaction cost. The openness,
global reach, and lack of physical clues that are inherent characteristics of
e-commerce also make it vulnerable to fraud and thus increase certain costs for
e-commerce merchants as compared to traditional stores. New techniques are
being developed to protect the use of credit cards in e-commerce transactions,
but the need for greater security and user verification leads to increased
costs. A key feature of e-commerce is the convenience of having purchases
delivered directly. In the case of tangibles, such as books, this incurs
delivery costs, which cause prices to rise in most cases, thereby negating many
of the savings associated with e-commerce and substantially adding to
transaction costs.
With the Internet, e-commerce
is rapidly expanding into a fast-moving, open global market with an
ever-increasing number of participants. The open and global nature of
e-commerce is likely to increase market size and change market structure, both
in terms of the number and size of players and the way in which players compete
on international markets. Digitized products can cross the border in real time,
consumers can shop 24 hours a day, seven days a week, and firms are
increasingly faced with international online competition. The Internet is
helping to enlarge existing markets by cutting through many of the distribution
and marketing barriers that can prevent firms from gaining access to foreign
markets https://dailyday.com.ua.
E-commerce lowers information and transaction costs for operating on overseas
markets and provides a cheap and efficient way to strengthen customer-supplier
relations. It also encourages companies to develop innovative ways of
advertising, delivering and supporting their product and services. While
e-commerce on the Internet offers the potential for global markets, certain
factors, such as language, transport costs, local reputation, as well as
differences in the cost and ease of access to networks, attenuate this
potential to a greater or lesser extent.
2. Workplace and Labour Market
Computers and communication
technologies allow individuals to communicate with one another in ways
complementary to traditional face-to-face, telephonic, and written modes. They
enable collaborative work involving distributed communities of actors who
seldom, if ever, meet physically. These technologies utilize communication
infrastructures that are both global and always up, thus enabling 24-hour
activity and asynchronous as well as synchronous interactions among
individuals, groups, and organizations. Social interaction in organizations
will be affected by use of computers and communication technologies.
Peer-to-peer relations across department lines will be enhanced through sharing
of information and coordination of activities. Interaction between superiors
and subordinates will become more tense because of social control issues raised
by the use of computerized monitoring systems, but on the other hand, the use
of e-mail will lower the barriers to communications across different status
levels, resulting in more uninhibited communications between supervisor and
subordinates.
That the importance of distance
will be reduced by computers and communication technology also favours
telecommuting, and thus, has implications for the residence patterns of the
citizens. As workers find that they can do most of their work at home rather
than in a centralized workplace, the demand for homes in climatically and
physically attractive regions would increase. The consequences of such a shift
in employment from the suburbs to more remote areas would be profound. Property
values would rise in the favoured destinations and fall in the suburbs. Rural,
historical, or charming aspects of life and the environment in the newly
attractive areas would be threatened. Since most telecommuters would be among
the better educated and higher paid, the demand in these areas for high-income
and high-status services like gourmet restaurants and clothing boutiques would
increase. Also would there be an expansion of services of all types, creating
and expanding job opportunities for the local population.
By reducing the fixed cost of
employment, widespread telecommuting should make it easier for individuals to
work on flexible schedules, to work part time, to share jobs, or to hold two or
more jobs simultaneously. Since changing employers would not necessarily
require changing one's place of residence https://ukrnova.com,
telecommuting should increase job mobility and speed career advancement. This
increased flexibility might also reduce job stress and increase job
satisfaction. Since job stress is a major factor governing health there may be
additional benefits in the form of reduced health costs and mortality rates. On
the other hand one might also argue that technologies, by expanding the number
of different tasks that are expected of workers and the array of skills needed
to perform these tasks, might speed up work and increase the level of stress
and time pressure on workers.
A question that is more
difficult to be answered is about the impacts that computers and communications
might have on employment. The ability of computers and communications to
perform routine tasks such as bookkeeping more rapidly than humans leads to
concern that people will be replaced by computers and communications. The
response to this argument is that even if computers and communications lead to
the elimination of some workers, other jobs will be created, particularly for
computer professionals, and that growth in output will increase overall
employment. It is more likely that computers and communications will lead to
changes in the types of workers needed for different occupations rather than to
changes in total employment.
A number of industries are
affected by electronic commerce. The distribution sector is directly affected,
as e-commerce is a way of supplying and delivering goods and services. Other
industries, indirectly affected, are those related to information and
communication technology (the infrastructure that enables e-commerce),
content-related industries (entertainment, software), transactions-related
industries (financial sector, advertising, travel, transport). eCommerce might
also create new markets or extend market reach beyond traditional borders.
Enlarging the market will have a positive effect on jobs. Another important
issue relates to inter linkages among activities affected by e-commerce.
Expenditure for e-commerce-related intermediate goods and services will create
jobs indirectly, on the basis of the volume of electronic transactions and
their effect on prices, costs and productivity. The convergence of media,
telecommunication and computing technologies is creating a new integrated
supply chain for the production and delivery of multimedia and information
content. Most of the employment related to e-commerce around the content
industrie https://homepage.com.uas
and communication infrastructure such as the Internet.
Jobs are both created and
destroyed by technology, trade, and organizational change. These processes also
underlie changes in the skill composition of employment. Beyond the net
employment gains or losses brought about by these factors, it is apparent that
workers with different skill levels will be affected differently. E-commerce is
certainly driving the demand for IT professionals but it also requires IT
expertise to be coupled with strong business application skills, thereby
generating demand for a flexible, multi-skilled work force. There is a growing
need for increased integration of Internet front-end applications with
enterprise operations, applications and back-end databases. Many of the IT
skill requirements needed for Internet support can be met by low-paid IT
workers who can deal with the organizational services needed for basic web page
programming. However, wide area networks, competitive web sites, and complex
network applications require much more skill than a platform-specific IT job.
Since the skills required for e-commerce are rare and in high demand,
e-commerce might accelerate the up skilling trend in many countries by
requiring high-skilled computer scientists to replace low-skilled information
clerks, cashiers and market salespersons.
3. Education
Advances in information
technology will affect the craft of teaching by complementing rather than
eliminating traditional classroom instruction. Indeed the effective instructor
acts in a mixture of roles. In one role the instructor is a supplier of
services to the students, who might be regarded as its customers. But the
effective instructor occupies another role as well, as a supervisor of
students, and plays a role in motivating, encouraging, evaluating, and
developing students. For any topic there will always be a small percentage of
students with the necessary background, motivation, and self-discipline to
learn from self-paced workbooks or computer assisted instruction. For the
majority of students, however, the presence of a live instructor will continue
to be far more effective than a computer assisted counterpart in facilitating
positive educational outcomes. The greatest potential for new information
technology lies in improving the productivity of time spent outside the
classroom. Making solutions to problem sets and assigned reading materials
available on the Internet offers a lot of convenience. E-mail vastly simplifies
communication between students and faculty and among students who may be
engaged in group projects. Advances in information technology will affect the
craft of teaching by complementing rather than eliminating traditional
classroom instruction. Indeed the effective instructor acts in a mixture of
roles. In one role the instructor is a supplier of services to the students,
who might be regarded as its customers. But the effective instructor occupies
another role as well, as a supervisor of students, and plays a role in
motivating, encouraging, evaluating, and developing students. For any topic
there will always be a small percentage of students with the necessary
background, motivation, and self-discipline to learn from self-paced workbooks
or computer assisted instruction. For the majority of students, however, the
presence of a live instructor will continue to be far more effective than a
computer assisted counterpart in facilitating positive educational outcomes.
The greatest potential for new information technology lies in improving the
productivity of time spent outside the classroom. Making solutions to problem
sets and assigned reading materials available on the Internet offers a lot of
convenience. E-mail vastly simplifies communication between students and
faculty and among students who may be engaged in group projects.
Although distance learning has
existed for some time, the Internet makes possible a large expansion in
coverage and better delivery of instruction. Text can be combined with audio/
video, and students can interact in real time via e-mail and discussion groups.
Such technical improvements coincide with a general demand for retraining by
those who, due to work and family demands, cannot attend traditional courses.
Distance learning via the Internet is likely to complement existing schools for
children and university students, but it could have more of a substitution
effect for continuing education programmes. For some degree programmes,
high-prestige institutions could use their reputation to attract students who
would otherwise attend a local facility. Owing to the Internet's ease of access
and convenience for distance learning, overall demand for such programmes will
probably expand, leading to growth in this segment of e-commerce.
As shown in the previous
section, high level skills are vital in a technology-based and knowledge
intensive economy. Changes associated with rapid technological advances in
industry have made continual upgrading of professional skills an economic
necessity. The goal of lifelong learning can only be accomplished by
reinforcing and adapting existing systems of learning, both in public and
private sectors. The demand for education and training concerns the full range
of modern technology. Information technologies are uniquely capable of
providing ways to meet this demand. Online training via the Internet ranges
from accessing self-study courses to complete electronic classrooms. These
computer-based training programmes provide flexibility in skills acquisition
and are more affordable and relevant than more traditional seminars and
courses.
4. Private Life and Society
Increasing representation of a
wide variety of content in digital form results in easier and cheaper
duplication and distribution of information. This has a mixed effect on the
provision of content. On the one hand, content can be distributed at a lower
unit cost. On the other hand, distribution of content outside of channels that
respect intellectual property rights can reduce the incentives of creators and
distributors to produce and make content available in the first place.
Information technology raises a host of questions about intellectual property
protection and new tools and regulations have to be developed in order to solve
this problem.
Many issues also surround free
speech and regulation of content on the Internet, and there continue to be
calls for mechanisms to control objectionable content. However it is very
difficult to find a sensible solution. Dealing with indecent material involves
understanding not only the views on such topics but also their evolution over
time. Furthermore, the same technology that allows for content altering with
respect to decency can be used to filter political speech and to restrict
access to political material. Thus, if censorship does not appear to be an
option, a possible solution might be labelling. The idea is that consumers will
be better informed in their decisions to avoid objectionable content.
The rapid increase in computing
and communications power has raised considerable concern about privacy both in
the public and private sector. Decreases in the cost of data storage and
information processing make it likely that it will become practicable for both
government and private data-mining enterprises to collect detailed dossiers on
all citizens. Nobody knows who currently collects data about individuals, how
this data is used and shared or how this data might be misused. These concerns
lower the consumers' trust in online institutions and communication and, thus,
inhibit the development of electronic commerce. A technological approach to
protecting privacy might by cryptography although it might be claimed that
cryptography presents a serious barrier to criminal investigations.
It is popular wisdom that
people today suffer information overload. A lot of the information available on
the Internet is incomplete and even incorrect. People spend more and more of
their time absorbing irrelevant information just because it is available and
they think they should know about it. Therefore, it must be studied how people
assign credibility to the information they collect in order to invent and
develop new credibility systems to help consumers to manage the information
overload.
Technological progress
inevitably creates dependence on technology. Indeed the creation of vital
infrastructure ensures dependence on that infrastructure. As surely as the
world is now dependent on its transport, telephone, and other infrastructures,
it will be dependent on the emerging information infrastructure. Dependence on
technology can bring risks. Failures in the technological infrastructure can
cause the collapse of economic and social functionality. Blackouts of
long-distance telephone service, credit data systems, and electronic funds
transfer systems, and other such vital communications and information
processing services would undoubtedly cause widespread economic disruption.
However, it is probably impossible to avoid technological dependence.
Therefore, what must be considered is the exposure brought from dependence on
technologies with a recognizable probability of failure, no workable substitute
at hand, and high costs as a result of failure.
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