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Digital economy and

management in Spain
Ana R. del A

guila
Antonio Padilla
Christian Serarols and
Jose M. Veciana
Introduction
The development undergone by the
information and communication technologies
(ICTs) or digital technologies during the last
decades and the innovations in business
associated with them have defined an economic
space which is known by different names,
including post-industrial society, knowledge
economy, innovation economy, online
economy, new economy, e-conomy and digital
economy[1] (Cohen et al., 2000). The digital
economy is a complex and emerging
phenomenon, related to microeconomy,
macroeconomy and the theory of organization
and administration (Orlikowski and Iacono,
2000). Its analysis now is relevant because, in
the opinion of different authors and
international organizations, the digital economy
will explain the economic growth of the coming
decades (Margherio, 1998; Kling and Lamb,
1999). Furthermore, regarding the
management area, several lines of investigation
exist on the study of the impact of the
development of the Internet on firms. We could
identify the following:
.
impact on small and medium firms;
.
impact on the mechanisms of coordination,
market and organization;
.
electronic organizations and electronic
markets;
.
Internet presence;
.
impact on the organizational structure;
.
marketing or Internet-based marketing; and
.
business models and digital economy.
In this paper, the last item, related to digital
economy, is studied in depth. In particular, the
impact of the development of the digital
economy on firms is described, by analysing the
situation in Spanish firms.
In the first place, we will explain what is
understood by digital economy. Also, its
characteristics are delimited as regards the
implications it will have in the future mainly for
industry, markets and business. The different
subsectors with which it is made up are also
described, differentiating between the
technological aspect and the economic activity
as such, and we analyse the situation of each
one of these subsections in the Spanish context.
We conclude with some final reflections about
The authors
Ana R. del A

guila is a Lecturer and Antonio Padilla is a


Senior Lecturer, both at the University of Malaga,
Malaga, Spain.
Christian Serarols is a Researcher and Lecturer at the
University of Girona, Girona, Spain.
Jose M. Veciana is a Professor at the Universitat Auto noma
de Barcelona, Barcelona, Spain.
Keywords
Electronic commerce, Internet, Start-ups, Digital,
Technological innovation, Spain
Abstract
The digital economy is an economic sector that includes
goods and services, whose development, manufacturing,
merchandising or supply depend on critical digital technol-
ogies. The digital economy can be conceptualized into four
different subsectors; on the one hand, it consists of
infrastructure and applications and, on the other, electronic
commerce and new intermediaries. This natural structure
can be directly traced to how business generates revenues.
The aim of this paper is to explain what is understood today
by digital economy and to identify its dimensions and impact
on the firm. For this purpose, it is necessary to develop its
theoretical basis. In the second part of this paper, we refer
to the results of an empirical research in the Spanish
context.
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ISSN 1066-2243
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how it is affecting and can affect in the future
the development of this digital economy in the
Spanish firms.
Digital economy: concept, characteristics
and impact of firms
The first references to the digital or new
economy are found in Tapscott (1996, 1998)
and in the report The Emerging Digital Economy
prepared by the US Department of Commerce
(Margherio, 1998). The digital economy
defines a new socio-political and economic
system, characterised by an intelligent space,
which is made up of information, instruments
of access to and processing of the information
and capacities of communication (Carley,
1999). In the US Department of Commerce
report, components of the digital economy were
identified for the first time:
.
the industry of ICTs;
.
the electronic commerce among firms;
.
the digital distribution of goods and
services; and
.
the support for the sale of tangible goods,
especially those systems and services using
the Internet as opposed to other private
telecommunication networks (Margherio,
1998).
According to Zimmermann and Koerner (1999,
2000) and Zimmermann (2000), the digital
economy[2] is based on the digitalization of
information and on the respective infrastructure
of ICTs. This concept is the one which best
defines the global impact of ICTs, not only the
Internet, on the economy. From a point of view
that is as much macroeconomic as
microeconomic, the intersection between the
technological advances and the innovations in
the business processes in the firms is considered
(Zysman and Weber, 2000). On the other
hand, according to Kling and Lamb (1999), the
digital economy is an economic sector that
includes the goods and services whose
development, production, sale or supply
depend in a critical way on digital technologies.
At present, we can speak of a new or digital
economy as ICTs, especially the Internet,
which are changing and will continue to change
in the future the direction and organization of
firms and the competition among them (Cohen
et al., 2000). The digital economy is affecting
the firms and organizations, the decisions of
location, size, organizing structure and relations
with other firms, the structure of markets, the
prices of goods and services and the
characteristics of the labour market, among
other factors (Haltiwanger and Jarmin, 2000).
In fact, the impact of the digital economy on
firms and their environment (general and
specific) can be considered starting from the
analysis of the characteristics of the digital
economy.
With the term structures (A) (see Figure 1)
we refer to the changes that are being produced
in inter-organizational relations and among
industries derived from the use of ICTs. To be
exact, we consider the phenomena of
disintermediation, reintermediation and
fragmentation or modulation of business
activities (Zimmermann, 2000; Zysman and
Weber, 2000; Shaw, 2000). On the other hand,
in the digital economy, the firms begin the
process (B) of creation of value under certain
requirements and needs, which are very specific
to the customer, and ICTs allow the firms to
redefine their processes. In the digital economy,
firms can create value in the virtual world by
means of the collection, organization, selection,
synthesis and distribution of information. The
organizations can be more efficient and flexible
if they move (duplicate) activities from the real
value chain to the virtual value chain, redefining
their business processes (Rayport and Sviokla,
Figure 1 Characteristics of the digital economy
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1994, 1995; Evans and Wurster, 1997; Ghosh,
1998; Amit and Zott, 2001).
In the digital economy, firms make or offer a
service on request and interact with the market
and specially with the customers,
individualizing and personalizing the products
and/or services (C) (Bloch et al., 1996; Haley
et al., 1996). Similar mechanisms of
coordination emerge in the market, such as
auctions, buying groups or reverse auctions.
The auctions or auction brokers are systems
that try to bring about the bid for the sale of all
kinds of products, and the buyers can be
individuals or firms (for example, the firm
Ibazar[3] and Ebay[4]). On the other hand, in
the reverse auction, the buyer fixes the price of
the product (for example, Priceline[5] and
Tuhipoteca[6]). The buying groups or buyer
aggregators are cyber-mediators which group
together a large number of buyers interested in
the same product, because in concentrating the
demand they can obtain better selling
conditions for the provider (for example,
Acompany[7] and Consumidoresonline.com[8])
(Zimmermann, 2000; del A

guila, 2000).
The firms are developing infrastructures (D)
supported in ICTs, with the objective of
responding to the new emerging structures, such
as virtual vertical markets or business-to-business
market exchange. These facilitate the interchange
of information, goods and services among firms,
and are new business models usually developed
by large firms to optimize their business
processes (Zysman and Weber, 2000; Kenney
and Curry, 2000). The main infrastructures
allow the development of e-business and come
down to the following: planning of the firm's
resources (enterprise resource planning (ERP),
developed by companies like SAP), management
of relations with the customer (consumer
relationship management (CRM), developed by
companies like Siebel Systems) and systems of
management of the supply chain (supply chain
management (SCM), developed by companies
like Manugistics).
Subsectors of the digital economy and
levels of analysis
The digital economy groups together the
sectors which facilitate physical infrastructure
(hardware) and logical elements (software), and
the whole set of activities defined by the term
electronic commerce, in its different forms, for
both tangible and intangible products
(Haltiwanger and Jarmin, 2000). To be exact,
four subsectors can be identified in the digital
economy (Margherio, 1998; Kling, 1990, 2000;
Kling and Lamb, 1999):
(1) Digital goods and services. Among others, the
electronic transfer of funds, online
information services, digital press, the sales
of software and distance learning.
(2) Mixed digital goods and services. The sale,
through the Internet, of books, music,
flowers, or services such as bookings. In this
case, the production and distribution
systems for tangible goods are the same as if
another interface were used with the
customer: mail order catalogue, telephone,
etc. The Internet is in this case a new sales
channel.
(3) Intensive production of goods and services in
ICTs. For example: market investigations,
computer-aided design and the production
of tangible goods which require controls
based on ICTs.
(4) The industry of the ICTs. This gives support
to the three former segments: hardware,
software and services, communications
equipment and services.
Barua et al. (1999, 2001) suggest that the
digital economy is made up of those companies
whose revenues are generated directly or
partially by the Internet or those that offer
products/services related to the use of the
Internet. These authors also identify four
layers or subsectors (see Table I). In this sense,
it is relevant to analyse the volume of business
generated by the different layers and the
growth experienced in terms of revenues and
employment created. According to Barua et al.
(1999, 2001), it is foreseen that the
importance of layer 1 will diminish in keeping
with the rate at which the world population has
access to the network, and that the other layers
will continue to acquire more weight within
this new economy. However, within the
applications (layer 2), the firms with higher
growth have been the consulting ones, which
shows that there is a general concern to define
a strategy on the Internet. The intermediaries
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(layer 3) with higher growth have been the
online stockbrokers, the online travel agencies,
the portals, the auctions and the advertisers,
while the rest of the intermediaries have grown
more moderately. The ten main intermediaries
represent 23 per cent of the total revenues of
this layer. With regards to commerce through
the Net (layer 4), the growth has been very
important in what is referred to as retail sales
and in certain sectors. The greatest part of the
revenues of this layer are still due to the
computer firms; the ten most important firms
represent 32 per cent of the total revenue and
it must be pointed out that no new cyber-
trader firm exists among the first ten. This has
been the layer with the highest growth,
Table I Subsectors of the digital economy
Economic and business activity
Layer 4: online transactions This layer is made up of firms that sell products directly or offer services through the Internet to consumers or other firms.
This indicator includes businesses that sell directly to the final consumer (B2C, business-to-consumer) or other firms (B2B,
business-to-business):
Retail sales of books, music, clothing, flowers, etc. thorough the Web (Amazon, eToys, Sears.com)
Manufacturers that sell online (Dell, Cisco, IBM)
Online plane tickets (American Airlines, United Airlines, Iberia)
Entertainment (Disney.com, TrivialPursuit, Meristation)
Transport services (UPS, Fedex, Airbone)
Layer 3: intermediaries Market creators in vertical industries (VerticalNet, PCOrder)
Online travel agencies (TravelWeb, 1Travel, Expedia)
Online auctions (eBay, QXL, subasta2.com, ibazar.com)
Online stockbrokers (E*Trade, Schwab.com, DLJDirect)
Content developers (Cnet, Zdnet, Broadcast.com, Endemol)
Portals (Yahoo!, Excite, Geocities)
Online advertising firms (Doubleclick, 24/7 Media)
Malls (Dondecomprar, Netcenter)
Infrastructure
Layer 2: applications The products and services in this layer have been manufactured so as to work in the infrastructure of the previous layer.
They make the online commercial activities technolgically possible. In addition to computer applications, this layer includes
the human capital that is necessary to make the electronic commerce and the afore mentioned computer applications take
off:
Internet consultants (USWeb/CKS, Scient, Ideas4Change)
Applications for electronic commerce (Netscape, MS, Sun, IBM, BEA)
Multimedia applications (RealNetworks, Macromedia)
Software for the development of applications on the network (Adobe, NetObjects, Allaire, Vignette)
Software for search engines (Inktomi, Verity)
Online education (Sylvan, Prometric, Assymetrix)
Databases and tools for using them online (Oracle, IBM DB2, MS SQL Server)
Hosting and support services (Exodus, Globix, Verio)
Firms which allow online transactions (Sylvan, Prometric, Assymetrix)
Layer 1: infrastructure This layer is made up of those firms which offer products or services that help build the Internet infrastructure. It includes
telecommunication and fibre optic firms, firms which make hardware to access the networks and the equipment necessary
for the proliferation of electronic commerce through the Internet:
Providers of nationwide nets (Qwest, MCI Worldcom, Infovaplus)
Providers of Internet or ISP services (Mindspring, AOL, Earthlink, ICTnet, Arrakis)
Equipment for providers of nets and services (Cisco, Lucent, 3Com)
Producers of optic fibre (Pirelli, Corning)
Hardware for users and servers (Dell, Compaq, HP)
Firms which guarantee security on the network (Verisign, Entrust Technologies, ACE)
Source: The authors, following Barua et al. (1999, 2001) and Serarols (2000, 2001)
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quadrupling its revenue with respect to the
first term of 1998. It is interesting to note that
the cyber-traders represent 9.6 per cent of the
digital economy, generating revenues of
116,114 million dollars and creating 362,500
jobs.
Analysis of the digital economy in Spain
With the objective of determining the situation
of the digital economy in Spain and its impact
on the firm, based on the preceding theoretical
bases, we propose a method of analysis from
two aspects, which join together the four layers
or subsectors as shown below:
(1) Infrastructure (OECD, 2000, 2001):
.
Characteristics of the CIT sector in
Spain:
CIT manufacture;
telecommunications; and
other CIT services.
.
Relative importance of the CIT sector:
countries with a high intensity in
CITs;
countries with an average intensity in
CITs; and
countries with a low intensity in CITs.
.
Number of servers connected to the
Internet/1,000 inhabitants.
.
Number of secure servers/million
inhabitants.
.
Internet servers.
.
Secure servers.
.
Internet multimedia contents.
(2) Economic and business activity (INE, 2001;
AECE and MCYT, 2000; authors'
empirical study):
.
Sectors with greater prospects of growth.
.
Factors which bring about the Internet
evolution in Spain.
.
Entrance barriers.
.
The role of public administration.
.
Development of electronic commerce.
.
Presence in the Internet.
.
Sales through the Internet.
.
Products and services.
.
Objectives.
.
Impact of electronic commerce on
the firms.
.
Intermediaries.
For the analysis of these variables, both
secondary and primary sources have been used.
Among the first can be found, among others:
.
the OECD;
.
the Instituto Nacional de Estad stica
(National Institute of Statistics);
.
the Asociacio n Espan ola de Comercio
Electro nico (Spanish Association of
Electronic Commerce); and
.
the Ministerio de Ciencia y Tecnolog a
(Spanish Ministry of Science and
Technology).
As a primary source, reference has been made
to the conclusions in a Delphi study carried out
to determine the situation of electronic
commerce in Spain (Serarols, 2000).
Infrastructure: analysis of the ICT sector in
Spain
According to the recent report Measuring the
ICT Sector, made by the OECD (2001), in
the ICT sector in Spain imports exceed exports,
although in the period 1990-1998 exports grew
at an annual ratio of 21.5 per cent, in relation to
the 13.7 per cent growth of all the exports of
goods and services. However, the imports grew
an annual 10 per cent in comparison with the
10.8 per cent growth of the total imports of
goods and services. In the aforementioned
report, the OECD has determined the
importance of the ICT sector in relation to the
entire business sector of each country, starting
from the following variables:
.
employment;
.
added value;
.
investigation and development; and
.
imports and exports.
According to this comparison, Spain belongs to
the group of countries with low intensity in
ICTs, that is, the relative importance of the
sector in the whole of the economy is low.
Other indicators to determine, in this case, the
development of the Internet and electronic
commerce are, among others, the following:
.
the number of computers connected to the
Internet;
.
the number of secure servers
(infrastructure); and
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.
the contents of Internet multimedia
(applications) (OECD, 2000).
According to these data, the relative position of
Spain with regards to other countries is
unfavourable. The USA, Canada, New Zealand,
Australia, Iceland and Sweden are above the
average of the OECD in the number of
computers connected to the Internet and in
secure servers. Group 2, composed of
Switzerland and Luxembourg, is situated above
the average of all the countries of the OECD as
far as secure servers, because in these countries
the financial sector is traditionally very
important. Group 3 has a high number of
computers connected to the Internet, but is
belowaverage as far as secure servers. In group 4,
in which Spain is situated, the cost of access to
the Internet jeopardizes its development, and the
countries in this group are below the average of
the OECD, both in the number of computers
connected to the Internet and the number of
secure servers. The countries in this group must
develop policies directed towards extending
electronic commerce and the universal access to
the Internet (OECD, 2000).
Electronic commerce through the Internet
and new intermediaries: a business and
economic perspective
In the analysis of the business and economic
component of the digital economy we rely
basically on Serarols' empirical study, made on
the basis of a panel of experts on electronic
commerce at a national level. The definition of
an expert in the above-mentioned study was the
following:
. . . that individual whose situation and personal
resources enable him to contribute a relevant input
for the objectives of the study (Dalkey, 1967;
Ortigueira Bouzada, 1984; Bell and Olick, 1989;
Landeta, 1999).
The experts, selected from among the members
of the main organizations or those involved in
matters of electronic commerce, were the
following:
.
private organizations involved in electronic
commerce and the Internet (Associacio n
Espan ola de Comercio Electro nico, First
Tuesday, Commercenet, etc.);
.
governmental organizations (Chambers of
Commerce, Ministry of Public Works,
etc.);
.
academics and research workers
(University of Girona, University of
Granada, etc.); and
.
professionals and businessmen in this new
economy (IBM, ICTnet, Andersen
Consulting, etc.).
In general terms, according to the third study
on electronic commerce in Spain carried out by
the Spanish Association of Electronic
Commerce (AECE) and the Ministry of
Science and Technology (MCYT), it is
expected that the electronic commerce
intended for the final consumer (business-to-
consumer, B2C) will generate a business figure
of 450 million euro in Spain during the year
2001. According to Baquia Inteligencia (2001),
the electronic commerce among firms
(business-to-business, B2B) will generate a
business figure of 2,740 million euro in the year
2001, six times more than the electronic
commerce B2C.
According to the experts consulted, the
sectors which are expected to show higher
growth prospects in Spain, as far as electronic
commerce, are the intermediaries of
information, the financial services, tourism,
education and computer science. According to
the same source, in the future the Spanish
Internet market will be dominated by the
intermediaries, and among the factors, which
will motivate the evolution of the Internet in
Spain, are the new access technologies through
mobile devices (WAP, UMTS), greater
bandwidth technologies (cable) and access
through the TV (interactive TV). They are
followed by the lowering of access costs,
reduction in prices of the products and services
offered in the Internet and security. In Spain,
what we could call entrance barriers to the
digital economy are noticeable. Some of them
are the following: lack of business culture as
regards electronic commerce, consumer habits
and security, the non-existence of a legal
framework, the scarcity of a critical mass of
users, costs, having a product which is
inadequate for the channel and the technology.
As for public administrations, according to
the panel of experts, these must speed up the
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liberalization of the sectors involved and
establish a suitable legal framework. To be
exact, they refer to three groups of legal factors,
which must be negotiated in order to potentiate
electronic commerce through the Internet. The
first priority group affects the protection of
data, security, privacy and confidentiality,
electronic banking, financial services and the
encryption of data. The second group, of high
priority, includes copyrights, contracts, Internet
offences and access services to the Internet. The
aspects of medium priority are the following:
jurisdiction, taxes on the Internet, freedom of
expression, domains and responsibility of the
providers of Internet services.
From the business point of view, it is difficult
to determine the number of firms which are
developing electronic commerce in Spain, as
official statistics only exist in relation to the
sector of retail commerce: 500,000 firms (INE,
2001). According to the data of December
2000, 4.88 per cent of the firms of this sector
use electronic commerce, understood as ``any
method of transaction or interchange of
commercial information based on the
transaction of data on communication networks
such as the Internet''. According to the same
source of information, the level of the
implementation of electronic commerce
reached 89.19 per cent in the case of the malls.
And the profile of the firm which uses electronic
commerce in this sector is, broadly defined, the
following: a firm located in Catalonia or
Valencia, dedicated to the specialized
commerce of products (leisure, health and
household equipment), and with a staff of more
than 20 people (INE, 2001).
However, recent data are available related to
presence on the Internet. According to the study
carried out by the AECE and the Ministry of
Science and Technology (AECE and MCYT,
2000), 32.4 per cent of the Spanish firms have a
presence on the Internet. On the other hand, and
according to the panel of experts consulted in the
Delphi study, the Spanish firms with greater
presence on the Internet are the large ones (more
than 250 workers), followed by the medium ones
(51-250 workers), the small ones (5-50 workers)
and finally the microfirms (less than five). If we
centre on the sales process through the Internet,
the larger firms are the ones that sell more. These
data from the panel of experts are emphasized by
the study carried out by the AECE and the
MYCT (AECE and MYCT, 2000) where it can
be seen that the Spanish firms with greater
presence and volume of sales are the large ones,
followed by the medium ones and finally the
small ones.
If we analyse the presence and sales of
Spanish firms in the Internet by autonomous
communities, great geographical differences
can be observed. For example, the firms which
appear more on the Internet are those
established in Madrid (44.3 per cent), the
Balearic Islands (39.4 per cent), Valencia (33.5
per cent) and Catalonia (33.2 per cent),
whereas at the other extreme are situated
Castilla-La Mancha (17.8 per cent) and
Extremadura (18.9 per cent). The firms with
electronic commerce are situated mainly in
Madrid (20.4 per cent), the Balearic Islands
(16.5 per cent), Murcia (13.7 per cent) and
Catalonia (10.9 per cent). Castilla Leo n (2.2
per cent) has the smallest percentage of firms
with electronic commerce. The products and
services, which are sold most in Spain via the
Internet, are, according to the panel of experts,
books, digital contents, magazines, access
services to information and CDs/videos. In a
second group, there are the financial services,
hardware, software and travel. According to
AECE and MCYT (2000), the products that
are bought most by the Spanish users of the
Internet are books (35.2 per cent), music (35.1
per cent) and electronics (31.3 per cent).
However, in this study it is clear that the
products sold most by Spanish firms[9] are food
(13.1 per cent), hotel bookings, etc. (12.5 per
cent) and electronics (12.3 per cent).
As additional aspects with regard to the
behaviour of the firms that sell via the Internet,
the following stand out (AECE and MCYT,
2000):
.
A total of 24.2 per cent have their Web
page integrated in a mall of firms. This is
most common in the sector of great
consumption (57.5 per cent) and the car
industry (40.8 per cent) and less in the
publishing sector (1.4 per cent).
.
A total of 58.7 per cent of the firms have
begun to sell through the Internet during
the last year.
.
A total of 43.5 per cent of the firms selling
through Internet sell to other firms (B2B).
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The sector of great consumption (86.4 per
cent) and distribution (66.6 per cent) are
the ones which are developing the B2B at
the greatest extent, and the publishing
sector the least (9.5 per cent).
.
The majority of the firms (63.5 per cent)
state that electronic commerce represents
between zero and 10 per cent of the total
invoicing; 48.8 per cent of the firms have
generated between zero and five million
euro from their sales through the Internet
during the last year.
The objectives pursued by the Spanish firms in
relation to the Internet tend to be the following:
.
to advertise, sell their products and
services;
.
to open up to new markets; and
.
to improve the customer services.
These objectives coincide remarkably with the
results obtained by the INE (2001) and by the
ACE and MCYT (2000). In the opinion of
experts, electronic commerce transforms the
relations of firms with their customers and
redefines the products, processes and business
models. Finally, in relation to the
intermediaries (search motors, malls or virtual
commercial centres, financial intermediaries,
digital magazines, etc.) and, in the opinion of
the experts, these will be the ones which will
move the greater part of business in the
Internet. In addition, according to the experts,
the functions, which these firms develop in
Spain, will be to:
.
put in contact offer with demand;
.
facilitate searching;
.
create confidence;
.
provide infrastructure; and
.
create traffic.
Conclusions
The digital economy is based on the
digitalization of information and on the
infrastructure of ICTs. It is made up of firms
which offer purely digital products and services,
mixed products and services, firms which carry
out the production of goods and the offering of
intensive services in ICTs, together with
activities defined by the term electronic
commerce, and the segments of the industry of
ICTs, which support the rest of the identified
segments (physical and logical infrastructure).
These elements give rise to four subsectors or
layers of the digital economy:
(1) infrastructure;
(2) applications;
(3) intermediaries; and
(4) commerce through the Internet.
For each of these subsectors the design and use
of indicators are necessary to inform on the
degree of development in the firms and to make
possible comparisons among the different
countries. The importance, which the digital
economy is acquiring on an international level,
is explained, partly, by the development during
these last years of the business use of the
Internet, or ICTs in general. It can be seen how
the use of the Internet is bringing about
significant changes in the products, processes,
structures and infrastructures of the firms.
Based on the aforementioned layers grouped
in two aspects, infrastructure and business and
economy activity, a method of analysis of the
digital economy in Spain is proposed. In
making this analysis, indicators from secondary
as well as primary sources are used, constructed
upon information from an empirical study
made on a group of experts. From the analysis
of all the indicators described, it can be
concluded that in Spain the sector of ICTs is of
relative importance. To be exact, it can be
stated that it belongs to the group of countries
with ``low intensity in ICTs'', in the terminology
of the OECD.
With respect to the development of the
Internet and electronic commerce in Spain, and
according to variables like the number of servers
connected to the Internet and the number of
secure servers; its relative position in
comparison with other countries is also
deficient, as the average of the countries of the
OECD is situated between 59.3 Internet servers
for every 1,000 inhabitants and in Spain this
number is reduced to 22.8. This means that,
according to the overall classification of the
OECD, Spain is situated in this group of
countries because the cost of access to the
Internet holds back its development. This is
evident from quantitative indicators such as, for
example, the number of Internet servers, which
is below the average of the OCED. Therefore,
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specific policies are necessary in Spain to
develop electronic commerce and universalize
the service. Policies such as the imposition of
flat rates for access to the Internet, or rates
independent of the time of connection to the
network, put into practise in Spain only a few
months ago, seem to be going in this direction.
As far as the business and economy activity,
according to the latest statistics, the volume of
business-to-consumer electronic commerce
expected for the year 2001 is 450 million euro,
while the business-to-business electronic
commerce will be 2,740 million euro for the
same period. This is because the sectors with
greater expectation of growth are those of
intermediaries of information, financial
services, tourism, and education and computer
science. The main barriers for the firms to enter
the digital economy are the lack of business
information as regards electronic commerce,
consumer habits, security and the non-
existence of a legal framework, among others.
Therefore, it is important to design and approve
what we could call ``the norms of the digital
economy'' which affect aspects such as privacy,
security, property rights, etc.
Other indicators related to this business and
economic aspects reflect the following: in Spain
the number of firms, having a presence on the
Internet, is still reduced (32.4 per cent of
them), and those with more presence are the
large firms (more than 250 employees). The
differences as far as presence on the Internet
and the use of electronic commerce among the
autonomous communities are noticeable. The
indicators reflect that Madrid, the Balearic
Islands, Valencia and Catalonia are situated, in
this order, among the communities where there
are more firms with presence on the Internet;
and Madrid, the Balearic Islands, Murcia and
Catalonia are those which have more firms
using electronic commerce. The products sold
most are still those based on information, such
as books, magazines, digital contents, CDs,
videos, financial services and also electronics
(hardware and software) and travel. The
experience of the Spanish firms as far as
electronic commerce is limited, as only 58.7 per
cent of the firms started to sell on the Internet
last year.
If we apply the above-mentioned model
about the Internet use, it can be stated that the
majority of Spanish firms are situated in the
second stage (presence on the Internet), as a
preliminary step to the third (e-business). The
reason for this is that their objectives in relation
to the Internet are to advertise and sell their
products and services and not yet to transform
the business internally and externally using
Internet technologies. In the analysis of the
Spanish firms, it is noticeable that the
intermediaries are acquiring importance, and
they will presumably form a large part of
business on the Internet.
On general lines, it must be stated as a final
reflection that there is much to be done in order
to reach the same level as other countries of the
OECD, as regards the development of the
digital economy and its applications in the
firms. The firms will have to adapt rapidly to
this new environment, passing on to the stage of
integration, to the improvement of their
competitiveness through the integrated
application of Internet technologies, at both
internal (modification of their organizational
structures) and external (interorganizational
relations with providers and consumers) level.
Future research may examine more
managerial implications of the development of
the digital economy and knowledge society. It is
necessary to examine the influence of intangible
factors on the success of companies at this time,
because the infrastructure or technology is not
enough. Furthermore, the role of the new
intermediaries in the development of new
products and services for business may be
considered. Moreover, more contributions,
both theoretical and practical, are necessary in
order to build the above-mentioned norms of
the digital economy, so important for the new
environment.
Notes
1 In this paper we will use the term digital economy
following Margherio (1998), Kling and Lamb (1999),
Mayer and Price (1999), Carley (1999), Orlikowski
(1999), Zimmerman and Koerner (1999), Zimmerman
(2000) and del A

guila (2000), among others.


2 It must be specified that the concept of digital
economy is wider than that of information economy
(Katz, 1986; Kling, 1990), defined as all the
informational goods and services, including
publications, leisure, research, legal services,
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insurance and education. The digital economy includes
means of production, which are excluded from the
information economy, such as computerised
manufacturing.
3 See www.ibazar.es
4 See www.ebay.com
5 See www.priceline.com
6 See www.tuhipoteca.es/
7 See www.acompany.com
8 See www.consumidoresonline.com/
9 Percentage of firms that sell each type of product.
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