The Virtual Economy: Four Useful Distinctions

The author makes four useful distinctions for talking about the rise of the virtual economy. They are e-business, commonly called e-commerce, telecommuting, and audio- and video- conferencing. Together these four technologies have changed the ways firms conduct business.

E-business refers to the multitude of software and internet-based applications that permit the core functions of a business to be handled online by software alone or a combination of software and human work. The core functions of businesses that can be replicated online include ordering, payment processing by online check or credit card #, accounts payable, shipping, inventory management, payroll management, and the calculation of tax liabilities. Bills and order confirmations are simply emailed. The fact that all this information is online means that it can be accessed anywhere. The fact that the data in e-business web-based infrastructures in commonly held off-site in server warehouses gives the firm extra security for their data that is not available in an analog paper-based business where data is kept onsite and subject to destruction by fire or flood.

Telecommuting is the term that is used to describe working remotely given the required connections to be able to “synch up” with the office/headquarters. With the proliferation of affordable laptops and personal computers, people can work on business projects remotely with all of the tools they would normally have at the office. In Sweden, one business experimented by paying some workers for their time while they telecommuted from the train on their rides to and from work each day (Townsend et al, 2008).

Audio- and video- conferencing reduce the expense of air travel in certain situations for international firms or firms that conduct business in cities which are long distances apart. More than just a two-way phone call, audio- and video- conferencing permits multiple parties in …

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