Economic Efficiency in Traditional and Dot.Com Firms: A Theoretical Approach

Posted: 4 Nov 2009

See all articles by Khaled Soufani

Khaled Soufani

Concordia University, Quebec - Department of Finance

Terence Tse

ESCP Europe

Date Written: 2004


A theoretical framework is developed that illustrates the conceptual role of information on the World Wide Web in enhancing the economic efficiency of activities.Also developed is an efficiency-chain model that theoretically evaluates the effects on each stage in the efficiency chain when more information is derived from or passed through the Internet. Integral to this model are "single stage efficiency gains" (the overall improvements that may result from the efficiency gains in each agent, isolated and independent of the others) and the "ripple effect" (spillover effects in multiple stages and multiple enterprises).As enterprises respond to the needs of information-aware customers by pursuing information-intensive strategies designed to enhance economic efficiency, they can better satisfy the needs of other customers as well. Given the abundance of information and the low cost of searching the Internet, competition is likely to become intense. As a result, firms must strive to mine information and increase their information intensity in order to win customers. Enterprises that fail to use the newly emerging information-intensive networks on the World Wide Web to gain efficiency that matches the efficiency gains of others are doomed to diminish with time. (SAA)

Keywords: Information dissemination, Customer relations, Electronic commerce, Internet, Firm efficiency, Information management, Supply chains

Suggested Citation

Soufani, Khaled and Tse, Terence, Economic Efficiency in Traditional and Dot.Com Firms: A Theoretical Approach (2004). International Entrepreneurship in Small and Medium Size Enterprises: Orientation, Environment and St, Vol. , p. 178-188 2004. Available at SSRN:

Khaled Soufani (Contact Author)

Concordia University, Quebec - Department of Finance ( email )

Montreal, Quebec H3G 1M8
(514) 848-2926 (Phone)
(514) 848-4500 (Fax)

Terence Tse

ESCP Europe ( email )

79 Avenue de la Republique
Paris, 75011

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