What is E-Entrepreneurship? - Fundamentals of Company Founding in the Net Economy

2_Kollmann 11/2/06 8:58 pm Page 322 322 Int. J. Technology Management, Vol. 33, No. 4, 2006 What is e-entrepreneurship? – fundamentals of company founding in the net economy Tobias Kollmann Chair for E-Business and E-Entrepreneurship, University of Duisburg-Essen, Campus Essen, Universitaetsstr. 9, D-45141 Essen, Germany E-mail: tobias.kollmann@uni-due.de Abstract: Internal and external information and communication processes at enterprises across almost every industry sector have been increasingly supported by electronic information technologies. The fundamental advantages of such technologies insure that this trend will continue in the future. The constant development of technology in the accompanying Net Economy has had a significant influence on various possibilities for developing innovative business concepts based on electronic information and communication networks and realising these by establishing a new company (e-ventures). Against this background, the term ‘e-entrepreneurship’ respectively describes the act of establishing new companies specifically in the Net Economy. Therefore, this article focuses on answering the following questions: which environment and which possibilities does the Net Economy offer for new and innovative entrepreneurial activities? Keywords: e-business; e-entrepreneurship; net economy, phases of development; success factors. Reference to this paper should be made as follows: Kollmann, T. (2006) ‘What is e-entrepreneurship? – fundamentals of company founding in the net economy’, Int. J. Technology Management, Vol. 33, No. 4, pp.322–340. Biographical notes: Professor Dr Tobias Kollmann studied economics at the universities of Bonn and Trier. He received his PhD in the discipline of marketing with his doctoral thesis ‘The acceptance of innovative telecommunication and multimedia systems’ from the University of Trier, Germany. In 1997, he entered industry and worked as a Consultant for the METRO Group, Switzerland. During this time he became one of the founding shareholders of autoscout24.de, currently the largest virtual used car exchange market in Europe. Since October 2001 he has held the Chair of E-Business at the Christian-Albrechts-University of Kiel, Germany. Since 2005 he is Professor for e-business and e-entrepreneurship at the University of Duisburg-Essen. 1 What is e-entrepreneurship? Fundamentals of company founding in the net economy During past years, internal and external information and communication processes at enterprises across almost every industry sector have been increasingly supported by electronic information technologies. The fundamental advantages of technologies such as Copyright © 2006 Inderscience Enterprises Ltd. 2_Kollmann 11/2/06 8:58 pm Page 323 What is e-entrepreneurship? 323 these (e.g. internet), especially in regard to their efficiency and effectiveness, assure that this trend continues into the future. The constant and rapid development of technology in the accompanying Net Economy has inevitably had a significant influence on various possibilities for developing innovative business concepts based on electronic information and communication networks and realising these by establishing a new company (e-ventures). Against this background, the term ‘e-entrepreneurship’ respectively describes the act of establishing new companies specifically in the Net Economy (Matlay, 2004). The expansion of the classical use of the term ‘entrepreneurship’ raises, however, several questions that will be answered by this article: • which environment and which possibilities does the Net Economy offer for new and innovative entrepreneurial activities? • what is different or what unusual features can be found in establishing companies in the Net Economy? • what are the building blocks and phases of development involved in setting up a company in the Net Economy? 2 The Net Economy The basis of the Net Economy is formed by four technological innovations: telecommunication, information technology, media technology and entertainment (the so-called TIME markets). These innovations had, and continue to, significantly impact the possible ways in which information, communication and transactions are managed (Kollmann, 2001). The increased support of business processes using electronic systems takes centre stage here. There are a number of terms for this that can be identified (e.g. e-business, e-commerce, information economics, network economics), which can, to some degree, be used synonymously (Jelassi and Enders, 2005). It is easiest to structure and clarify the terms, define their boundaries and field of application by using the Shell Model of the Net Economy, which will subsequently be described in more detail (see Figure 1). The initial assumption in the Shell Model is the general development towards an information society (see Figure 1). Since the beginning in the 1990s, innovative information technology induced a structural change in both social and economic spheres especially through the digitalisation of information and the networking of computers (Hagel and Singer, 1997; Tapscott, 1996). Whereas just a few years ago, computers and networks were reserved for only a few specialists, today they are already an integral part of daily life: digital technologies and their influence on the transfer of information are ubiquitous. The results of this development are clear – innovative information technologies such as the internet/WWW, mobile telecommunications and interactive television (ITV). These technologies are changing the world as radically as the steam engine, loom, railways and tractor once did (Pruden, 1978). The digitalisation and spread of information via electronic data pathways or networks serve as a pace maker for future economic growth that is comparable with the significance of the printing press in the 15th century or motorisation in the 20th century. The information society is respectively characterised by the intensive use of information technologies and the resulting change from an industrial to a knowledge society (Evans and Wurster, 1997). Analogously, from a global economic 2_Kollmann 11/2/06 8:58 pm Page 324 324 T. Kollmann point of view, there is an obvious shifting from the traditional economic sectors of agriculture, production and (non-virtual or rendered) services towards the information industry sector. Figure 1 The shell model of the net economy Against this background, one of the central characteristics of the post-industrial computer society is the systematic use of information technology (IT) as well as the acquisition and application of information that complements work-life and capital as an exclusive source of value, production and profit. Information becomes an independent factor of production (Porter and Millar, 1985; Weiber and Kollmann, 1998) and thus establishes the information economy (see Figure 1). From a historical perspective, initially only the product characteristics (quality) and corresponding product conditions (e.g. price, discount) determined if a product was successful (Kirzner, 1973; Porter, 1985). At that point it was important to either offer products or services to the customer that were either cheaper than (cost leadership) or qualitatively superior (quality leadership) to the competitor’s product. Thereafter, the first major successes, two additional factors joined the scene–time (speed) and flexibility (Meyer, 2001; Stalk, 1988). At this point, it was important to offer products/services at a certain point in time at a certain place (availability leadership). Additionally it became crucial to allow for customer-oriented product differentiation of important product characteristics (demand leadership). Information technologies have now created an environment in which information is more easily accessible and can be increasingly used for commercial purposes.