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Adverse Effects of E-Commerce 35 predicts that customers will spend about $2 million a minute on the Internet (Town, 1999). The impact of e-commerce is realized in many different ways both positive and adverse. Many of the benefits come from improved consumer convenience, expanded choices and lower prices. E-commerce has provided opportunity for better interactions with partners, suppliers, and targeted customers for service and relationships. E-commerce can improve product promotion through masscustomization and one-to-one marketing. It offers a new direct channel for selling existing products, reduces the cost of some processes (e.g., information distribution), and reduces the time to market. E-commerce also improves customer service through automated services and round-the-clock operation, providing the customers with choice, information, convenience, time, and savings with improvements that add value to their shopping. E-commerce can also be used as an interactive medium that fosters social interaction. Many consumers and sellers use the Internet not only as a tool for information gathering and e-commerce, but also view the Web as a means to keep in touch and interact with each other. People often prefer web surfing to watching TV because it is a more interactive medium for entertainment on the Internet. Although e-commerce has provided a number of opportunities and benefits to customers and businesses, concerns have surfaced about privacy, security, frauds, consumer protection, and abuse of personal information. Many equate the loss of privacy with loss of personal freedom (Borck, 2001). On the other hand, ecommerce also affects such areas as composition of trade, labor markets, taxation, and prices. Some of these effects of e-commerce are unintentional and create adverse business and personal conditions that could have societal consequences. This chapter describes the various adverse effects or problems created by the advent of the Internet and e-commerce revolution. While the adverse effects of ecommerce and the Internet do not fit into mutually exclusive categories, we categorize them into three hierarchical levels: societal and economic, business, and individual and focus discussion on the adverse affects each of these levels. ADVERSE SOCIETAL AND ECONOMIC EFFECTS As e-commerce continues to grow rapidly, it could have significant effects on the structure and functioning of a society at an aggregate level. The impacts of these changes are diverse and likely to widen the digital divide among nations, alter the composition of trade, disrupt labor markets, and change taxation (Anonymous, Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
36 Sharma and Gupta 2000). In this section, we briefly discuss some major adverse societal impacts of e-commerce. Widening Digital Divide The term Digital divide means a lack of equal access to computer technologies and the Internet in particular, creating a gap between those who have and those who have not. One dimension of the digital gap follows demographics of gender, race, and social class. Another dimension follows the economic gap between wealthy and poor countries. Millions of technologically disenfranchised have-nots, who cannot afford the cost of that technology and training, are walled off from potentially life-changing tools and knowledge. Therefore, they feel isolated in the virtual world. For example, although growth has been very strong in Europe, particularly in Sweden and Finland, the United States still accounts for more than three-quarters of all e-commerce transactions. Despite the promise of “borderless” trade, most e-commerce is still national or within the continents (Bassols & Vickery, 2001). The digital divide gap between the technology haves and have-nots presumably is also across white, wealthy, and urban Americans with computers and Internet access on the one hand and minority, poor, and rural Americans who lack computers and Web access on the other (Quay, 2001). Today the real digital divide is the chasm between those who use Internet technologies to improve their lives and those who do not. Another digital divide is based on geography. Disparities in the location and quality of Internet infrastructure, even the quality of phone lines, have created gaps in access (Quay, 2001). Hindered by poverty and a poor telecommunications infrastructure, Internet penetration rates in the developing regions range from less than 1 percent to 3 percent, which is far below the 25 percent to 50 percent penetration rates seen in many wealthy and developed nations (Rombel, 2000). E-commerce and access to the Internet create an enormous disparity in wealth and a great need to spread and disperse this wealth and connectedness for a socially sustainable benefit. A Threat of Information Warfare In information warfare, hackers, by controlling an organization’s computer systems, obtain a significant advantage by changing the flow of information, altering information, or shutting down a system completely. A computer system may not only be shut down, but also could be destroyed by infiltration and distribution of various computer viruses. The breakdown of major information systems such as banking networks or electricity grids could be a devastating event, altering the economy of a nation and the daily life of its population. While the online Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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About the Authors 259 Eric Cloete B
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