International Competition in the E-conomy

International Competition in The E-conomyÔ

Engineering 298A.3/Business Administration 290C (CC#26721)
PEIS 130 (CC#71439)
* This is a core course in the Management of Technology Program (MOT).
110 South Hall, Wednesdays 2:00-5:00
Spring Semester, 1999

INSTRUCTOR: Michael Borrus

642-3067, BRIE, 2234 Piedmont

Office hours: To be determined

Course Description and Syllabus Assignment Student List

DESCRIPTION: This seminar will explore the emerging E-conomyÔ --i.e, international competition in the development and application of electronic commerce and its underlying information infrastructure – and examine its implications for management of technology. The industrial economy we have known is being fundamentally transformed as e-commerce and information technology pervade the organization and practice of major economic sectors from electronics and traditional manufactures to retailing and financial services. Once-dominant competitive strategies and long-established business models are no longer reliable guides to competitive success as new upstarts with new approaches change the market dynamics. Yet, in the supposedly borderless, cowboy-capitalism of the E-conomyÔ , governments are still being called upon to set and enforce rules, old and new. Our aim is to make sense of these developments.

Three other UC faculty members (Steven Cohen (DCRP), Peter Lyman (SIMS) and John Zysman (PoliSci) and their students will join in our effort to parse this vitally important, but maddeningly elusive transformation. From time to time we will also be joined by other academics (on and off-campus) whose work is highly relevant, internet/e-commerce visionaries whose views are highly regarded, and internet/ecommerce corporate leaders whose strategies are highly capitalized. Consequently, we will use an eclectic mix of theoretical, historical and practical perspectives throughout the course (though no special familiarity with any of them will be presumed).

The course will be organized around four thematic blocs that will be examined sequentially: Bloc 1)Context and significance: What is the nature and extent of the E-conomyÔ and how new is it really? Bloc 2)Market evolution: Which firms and sectors are driving the development of E-commerce, what are their strategies and what is the competitive state of play? Bloc 3)Political and social issues: What roles are governments playing at home and abroad, and what are the issues for policy? Bloc 4)Theoretical and practical issues: Do these developments create the need for new theories and methods (political, social or business) and how can we manage such radical technological change effectively?

REQUIREMENTS: Enrollment is limited and requires the consent of the instructor. Students will be expected to undertake one substantial research project, either individually or in teams, requiring both traditional and on-line research skills. In-class participation is encouraged and will be rewarded.

SYLLABUS: All students should purchase the Class Reader, if it can be afforded. Readings will also be on reserve at the Engineering School and Haas School libraries. All required readings are in the Class Reader (or their web addresses are!)

SYLLABUS

January 20. Overview: International Competition in The E-conomyÔ

This class will feature an interactive (in the pre-computer sense of the term) overview of the entire course. All administrative details will also be taken care of at this time. The following readings will help provide a political and economic context for this class and for the course.

Brad De Long, "How New Is Today’s Economy?" available at http://econ161.berkeley.edu/Comments/How_New.html
"A connected world: A survey of telecommunications," The Economist, Survey September 13, 1997
Shapiro, Carl and Hal Varian, "The Information Economy," chapter 1 in Information Rules (Boston: Harvard Business School Press, 1999)

January 27. What can we learn from Historical Analogs?

This week we examine developments in E-commerce and information technology by placing them within the comparative historical perspective of the emergence of other tranformative technologies in the last century, and the policy and business strategies that evolved to regulate them.

David, Paul "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox" in American Economic Review 1990 (80)2.
John, Richard R., "The Politics of Innovation," Daedalus, v.127, #4, Fall, 1998.
Noam, Eli, excerpt from "Beyond Telecommunications Liberalization: Past Performance, Present Hype and Future Direction, in William Drake, ed., The New Information Infrastructure: Strategies for U.S. Policy (NY: 20^th Century Fund Press, 1995)

February 3. Definitions and Metrics: Significance of the E-conomyÔ

This class raises the question of what we mean by an information economy and by E-Commerce. Do the changes brought about by information technologies require distinctly new concepts and methods of analysis and measurement? Do they raise new kinds of economic or political questions requiring new institutions?

Webster, Frank, Chapter 2 of Theories of the Information Society (London and New York; Routledge, 1995)
Hal Varian and Jeff MacKie-Mason, "Economic FAQs About the Internet," from McKnight and Bailey eds., Internet Economics (Cambridge: MIT Press, 1997)
Marvin Sirbu, "Telecommunications technology and Infrastructure", in Annual Review of the Institute for Information Studies - 1992, pp 155-180, at http://www.cs.cmu.edu/afs/andrew.cmu.edu/usr9/sirbu/www/pubs/ipaper.html

February 10. The Co-dependence of Policy and the Market: Understanding the Transition to the New Information Infrastructures with Guest Speaker, Brian Kahin, Office of Science and Technology Policy, the White House.

This class uses the recent historical development of the principal information infrastructures underlying E-commerce to examine the role that politics and political actors are playing in the emergence of the E-conomyÔ . Here we initially highlight some of the key policy issues that we return to later in the semester.

Information Infrastructure Task Force, The Clinton Administration, "A Framework for Global Electronic Commerce," July 1997 at http://www-06.nist.gov/eleccomm/ecomm.htm
Bar, Borrus "The Future of Networking," BRIE Monograph, 1994, available at: http://socrates.berkeley.edu/~briewww/pubs/rp/network.html
"A Wrinkle in Internet Time" and other documents at http://www.ksg.harvard.edu/iip/stm308m/stp308m.html, Section 2: History of the Internet

February 17. Competition in the New E-conomyÔ with Guest Speaker, Brad Delong, Associate Professor, Economics, University of California, Berkeley.

This week we look at competition to control the key interface specificactions that provide access to the internet and, potentially, to E-commerce. We examine how far competition in the market in fact resembles the theories and historical experiences examined in the first few weeks.

Yoffie, David B., and Cusumano Michael A., Chapter 3 from Competing on Internet Time : Lessons from Netscape and its Battle with Microsoft, (NY : Free Press, 1998).
Two page problem statement due for class project.

February 24. Enabling Technologies and Competition on the Supply Side with Guest Speaker, Prof. Martin Kenney, UC Davis

This week we look at competition to provide the underlying tools and technologies (software and systems) necessary to make E-commerce a reality. Are new firms the principle vehicles for the new tools and technologies? Can established firms adjust successfully?

Kenney, Martin, "E-Commerce: Implications for Firm Strategy and Industry Configuration," with James Curry, manuscript, 1998.
Kenney, Martin, "The Internet, New Firm Formation and Enterprise Patterns" with James Curry, manuscript, 1998.

March 3. Business-Business E-Commerce: Where the action is with Guest Speaker, Elliot Maxwell, US Department of Commerce (responsible for Ecommerce activities).

If retail E-Commerce business models are still in rapid flux, business-business models appear more stable. Or is that merely a first generation illusion? How is business-business E-Commerce differing systematically from its retail counterpart and what are the implications for the competitive evolution of the underlying business models?

Department of Commerce, 1998. "The Emerging Digital Economy: Electronic Commerce Between Businesses," case studies of Federal Express, Cisco, Dell, Boeing and GE, available at http://www.ecommerce.gov/Append3.pdf

March 10. Retail E-Commerce: Is Amazon an Archetype or already a Relic? with Guest Speaker, Michael Kleeman, Principal, Boston Consulting Group

This week we explore the emergence of retail E-commerce focusing on the vices and virtues of its leading poster-child, retailing phenomenon Amazon.com. Does Amazon have a sustainable business model or is it simply the beneficiary of being the early-mover? What characteristics are likely to define on-line retail success, as practiced by firms like Dell? How can established retailers respond?

Boston Consulting Group and shop.org, "The State of On-line Retailing", November 18, 1998.

March 17. Early Adoption, Launch Markets and Lead Users: Demand-side Drivers with Guest Speakers, Mark Kvamme, CEO, USweb/CKS and Prof. Francois Bar, Stanford

This week, we look at the role played by lead industrial users in shaping the trajectory of both technology and competition in the new economy. What roles do users play and how should they be integrated into provider strategies? Does information technology really enable competitive differentiation in the industries in which it is applied?

Francois Bar, "Information Infrastructure and the Transformation of Manufacturing," in Drake, ed. The New Information Infrastructure: 55-74.
National Research Council, Information Technology in the Service Society, "Summary and Overview", pp 1-23 (Washington DC: National Academy Press, 1994)
G.J. Mulgan, Communication and Control, The Guilford Press, 1991. Chap11: "Transnational Corporate Networks" pp 220-242.

March 24. SPRING BREAK

Work on your class projects!

March 31. Government Policy: Structuring the Market with Guest Speaker, Elliot Maxwell, US Department of Commerce (responsible for Ecommerce activities) (invited).

This week begins several weeks in which we examine the significant impacts, for good or ill, that government policies will have on competition in the E-conomyÔ . Here we explore how policy decisions will affect market structure, focusing on the Microsoft case. Is this the first, most notable antitrust action in the new E-conomy or merely a vestige of the old economy?

Stephen Graham, James Cornford and Simon Marvin, "The socio-economic benefits of a universal telephone network. A demand-side view of universal service" Telecommunications Policy, V.20, N. 1, Jan/Feb 1996, pp.3-10.
Bar, Borrus and Steinberg, "Islands in the Bit-Stream: Mapping the Interoperability Debate," Industrial Economics and New Technologies, 1996, available at http://www-leland.stanford.edu/~fbar/inter.html

April 7. Government Policy: When Social Policy Becomes Economic Policy with Guest Speaker, Prof. Pam Samuelson, UCB

This week we examine whether social policies fashioned for earlier economic times can be directly applied to the E-conomyÔ . We focus on the knotty problems of intellectual property rights in digital content and commerce, and on privacy issues.

Julie E. Cohen, A Right to Read Anonymously: A Closer Look at "Copyright Management" in Cyberspace, 28 Conn. L. Rev. 981 (1996)
Peter P. Swire & Robert E. Litan, None of Your Business: World Data Flows, Electronic Commerce, and the European Privacy Directive (October 21, 1997)
Center for Democracy and Technology, Who's Watching You and What are you telling them? (this site will analyze the cookies gathered by your browser and tell you what they have been able to figure out about you)

April 14. Policy in the Global Context: International and Comparative Issues with Guest Speaker Prof. Peter Cowhey, UCSD, former Chief, International Bureau, Federal Communications Commission

This week we examine the policy questions from an international and comparative perspective. Are international rules necessary? How should they be arrived at? What impacts will they have on global competition?

François Bar and Emily Murase "Electronic Trading Across Boundaries: Creating International Policies for the Emerging Network Marketplace" forthcoming in Transatlantic Trade Cooperation in Asia: Sectors, Issues, and Modalities, (Council on Foreign Relations, 1998)
Peter Cowhey, new manuscript, to be distributed in class.

April 21. Do States Matter in the (Supposedly) Borderless E-conomyÔ ? with Guest Speaker, Jonathan Feiber, Principal, Mohr, Davidow Ventures

The final three weeks of class we reexamine the questions posed at the outset of the course. How significant is the new E-conomyÔ ? Does it pose something fundamentally new for our political and economic practice? We start, this week, by discussing whether the global E-conomy is really borderless.

"Electronic Cash and the End of National Markets," Stephen J. Kobrin, Foreign Policy, Summer, 1997.
Batty, Michael. 1997. "Virtual Geography." Futures 29 (4/5): 337-352.

April 28. Is There A Social Theory of the Transformation: What impacts can we discern on the direction of society?

No required readings for this week. Class discussion will ask social theorists would have viewed the current transformation. Use the time to work on your class project!

May 5. Conclusions

No required readings. This class will feature an extensive interactive wrap-up in which we seek to highlight what has been learned over the semester.