The Internet is providing firms with new ways to conduct business and exchange and communicate information and ideas. In doing so, it is enabling companies to improve efficiency and develop novel ways to co-ordinate activities. Internal firm organisation and relations with employees and shareholders, for example, are being affected, as are the external relationships that firms have with suppliers, customers, competitors and other parties. Some of the changes that are occurring were explored in the report to OECD Ministers on The New Economy: Beyond the Hype (OECD, 2001a). The report concludes that the Internet and related advances in information and communication technology (ICT) are transforming economic activity, much as the steam engine, railways and electricity did in the past. They have done so by providing a catalyst for change in business – helping to spur improvements in work organisation through reductions in routine transaction costs and rationalisation of supply chains, while spawning value-generating networks.
