Title: Web 2.0 and its effect on the strategic directions of business firms and the boundary of the firm

Authors: Som Sekhar Bhattacharyya

Addresses: Strategic Management, Faculty Room No-212, Training Block, National Institute of Industrial Engineering, NITIE Campus, Vihar Lake Road, Mumbai 400 087, India

Abstract: This paper develops frameworks explaining the future strategic directions business firms will be necessitated to undertake because of the advent of Web 2.0. This conceptual paper explores the effect of Web 2.0 on the boundary of firms and its value chain. The paper presents that Web 2.0 will make the boundary of the firm porous as the concept of a free-flowing loose network of relationships of both formal and informal organisations, customers, individuals and institutions will become dominant. The firm value chain would get altered, as it would get more distributed and fragmented. Business firms would face both challenges and opportunities because of the distributive ability and agility of Web 2.0 participants. Managers based on the proposed frameworks can take decisions on innovation strategies for firm boundary consideration regarding outsourcing various value chain functions and further on the nature and extent of adopting and absorbing the Web 2.0 participants.

Keywords: Web 2.0; world wide web; internet; strategic direction; business models; strategic management; firm boundaries; value chains; porous boundaries; loose networks; free-flowing networks; formal relationships; informal relationships; organisations; customers; individuals; institutions; dominance; fragmentation; distributed chains; distributive ability; agility; managers; decision making; innovation strategies; outsourcing; business competition; business growth.

DOI: 10.1504/IJBCG.2011.038698

International Journal of Business Competition and Growth, 2011 Vol.1 No.4, pp.346 - 358

Available online: 22 Feb 2011 *

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