How e-commerce is transforming and internationalizing service industries.pdf

How e-commerce is transforming and internationalizing service industries Cliff Wymbs Assistant Professor, Baruch College, The City University of New York, USA Keywords Services marketing, Electronic commerce, Internet, International business, Service industries, Globalization Abstract Services account for over 50 percent ($3.6 trillion) of the 1997 gross domestic product for the USA, and more than 25 percent of world trade. However, information technology and the Internet are causing fundamental changes in the economics of service industries as new, network-based, global e-commerce business models emerge and begin to dominate. This analysis attempts to isolate the key factors driving the competitive transformation and globalization of the services industries. Highlights how the Internet is changing the level of information asymmetry between the buyer and seller and how this in turn is altering industry profitability. One of the most significant developments of the 1990s in the globalizing economy is the identification of the service industries as the fastest increasing component of multinational enterprise (MNE) activity in both developing and developed countries (Dunning, 1993). Services account for over 50 percent ($3.6 trillion) of the 1997 gross domestic product for the USA and more than 25 percent of world trade (Winsted and Patterson, 1998). Almost the opposite of manufacturing industries, services are commonly regarded as being intangible, perishable, heterogeneous and usually requiring their consumption at the same time and in the same place as their production (Pitt et al., 1999). More specifically, a service depends to some extent on the interaction between the buyer and seller for its provisions (Grosse, 1996). The services sectors are very diverse and range from knowledge and information intensive areas, performed in both public and private sector organizations, to very basic services such as cleaning and maintenance. It also includes retail, wholesale,