Digital technologies and the Internet have transformed many areas of business †from Google and Amazon to Airbnb and Kickstarter.
Huge sums of public money have supported digital innovation in business, as well as in fields ranging from
These range from social networks for those living with chronic health conditions, to online platforms for citizen participation in policymaking, to using
networks †where they connect their devices, such as phones and Internet modems, to collectively share resources and solve
which was founded in 2000 as a response to the lack of broadband Internet in rural Catalonia
where commercial Internet providers weren†t providing a connection. The idea was to build a †mesh network†where each
person in the network used a small radio transmitter that functioned like a wireless router to become a node in the Guifi net
and provides Internet connection to those who would otherwise not be able to access it 6 Growing a Digital Social Innovation Ecosystem for Europe
The Internet is approximately 40 years old, and its capacity for generating societal and economic value is understood relatively well, yet its potential for solving large-scale
good, even though the web itself was founded at CERN to further a vision of scientific knowledge sharing.
the web†s incredible growth, the use of platforms like Facebook to serve social good has
therefore, exists at the heart of the Internet. Despite the existence of a technical networking layer that could spread power
impressive success stories in obtaining a global reach, in particular campaigning sites such as Avaaz and parts of the collaborative economy and the maker movement.
context of Future Internet in Europe EXPLORING DSI NETWORK EFFECT PART PART PART 4 5 6
Digital Social Innovation in the context of Future Internet in Europe 15growing a Digital Social Innovation Ecosystem for Europe
of the network effect of the Internet i e. that the benefit of a network and its
costs), as the Internet is increasingly the technical underpinning of the sociotechni -cal fabric of our societies
-ed by the Internet and 2) the level of online services built on top of these networks. Metcalfe†s Law,(i e. that the
For example, despite the Internet being a military-funded research project and the web a scientific project at their inceptions
the Internet and web were based on open standards and a radically decentralised architecture that could be harnessed by
any actor. So the Web was able to reach a critical mass of connectivity so that both
commercial entities (like Google) and noncommercial entities (like Wikipedia were able to exploit the â€oenetwork effect. â€
Beyond the Internet, many new technol -ogies such as open hardware may have positive network externalities. Â
This network effect applies in a straight -forward manner for some services such as social networking sites like Facebook
and sites that require large user-bases like Wikipedia or Airbnb, but it may not apply
easily to some other services such as e -democracy platforms, caring networks and local currencies. For each kind of social
-ly innovative service, we want to de -termine how they can maximise their impact using the infrastructure made
available by the widespread usage of digital tools such as the Internet There are many cases of DSI being spread throughout society
and we attempt to define and cluster these in this report. They include: the collaborative economy, local exchange and trading systems, digital currencies, and awareness networks
Digital Social Innovation in the context of Future Internet in Europe 16 Growing a Digital Social Innovation Ecosystem for Europe
mediated attention, the Internet forms a natural digital substrate for collective intelligence Looking forward, collective intelligence is
-ment, the Internet offers unprecedented opportunities for collective intelligence via its increasing ubiquity and the massive
to the Internet globally in the next ten years, whilst over twenty billion objects will be connected to the Internet, trans
-mitting data coming from people, sensors the environment and objects themselves However, we cannot expect the Internet
by itself to drive innovation to help citi -zens address major societal challenges If we observe the Internet during its early
phases when it was funded primarily by research and defense, its founding princi -ples, such as network neutrality, equita
web browsers to be implemented over dif -ferent underlying platforms, avoiding pro -prietary systems and vendor lock in on the
web. This was a hard and contested battle which turned out to be the best way to do
-etary social networks, big data providers implementations of the Internet of things is convenient for users but also â€oelocks us
-cess to social data held on third-party sites and permissions to get into proprietary †app stores. †The lack of standards forces
A main Internet trend-threat is recognised today: an increasing con -centration of power in services in the
of which are based in Europe (Google controlling nearly 82%of the global search market and 98%of the mobile search
market, Facebook dominating the social networking and identity ecosystem, while Apple, Amazon and Microsoft control the
Google has developed the open source Android operating system and spawned innovation in applica -tions worldwide; Facebook has enabled
the building of thousands of apps and helped people to connect and organise However, one danger is that firms cap
INTERNET IN EUROPE The world wide web became successful because it was built on a set of royalty-free open stand
by US companies such as IBM, Google and Ciscos, partly because of the lack of alternatives Take for example the commercial success
of Google: Google has built already one of the world†s largest networks of computers and data centres for online-search results
and can repurpose their technology in or -der to expand into other data-driven ser
The future of the Internet should remain pluralistic, so that there is space for DSI alongside commercial services in the
Digital social innovation could play a central role in the development of the Future Internet and
Free Content Blogs Social networks E-democracy PEOPLE SOCIETY COLLABORATION DISTRIBUTED BIG BROTHER Commercial services Entertainment (eg.
IPTV DRM-heavy apolitical INDIVIDUALISM BUSINESS COMPETITION CENTRALLY CONTROLLED Open and distributed digital ecosystems to foster grassroots social innovation
align the capacities of the Internet better to social needs and that decentralise power to citizens
A major risk for the Future Internet is the realisation of the †Big Brother†scenario, with big industrial
Internet ecosystem. Even more worrying, the latest NSA data-gate showed that intelligence agencies and governments have been engaging in mass
Delivering a web service, Network, Research project, Research project, Advocating and campaign -ing, Maker and hacker spaces, Investing and Funding, Event, Incubators and Accelerators, Advisory or expert body, Education And Training. 3 Technology
Nesta research documented how 25%of UK adults used Internet technologies to share assets and resources in 2013 †20146
create and share on the web. It achieves this through two primary activities, Ouishare. net and collaborative economy events.
Goteo is a social network for crowdfunding and distributed collaboration (services, infrastructure, micro tasks and other resources) for encouraging the independent development of
Openspending encourages transparency and accountability, whilst participatory web platforms such as Wikigender and Wikiprogress developed by the OECD facilitate
Openspending is a data sharing community and web application that aims to track every government and corporate financial
with the support of the Open Ministry to mobilise a minimum of 50,000 votes for the proposal, primarily through social media
D-CENT is developing a decentralised social networking platform for large-scale collaboration and decision-making and is piloting open source solutions across Europe engaging new political partices, citizen
and implement open social web standard standards, contributing to the W3c Federated Social Web Working group
32 Growing a Digital Social Innovation Ecosystem for Europe Safecast is both the name of a Geiger counter built by the open source community as well as a global sensor network where
Other projects are exploring the potential of federated social network -ing, such as D-CENT and Diaspora,
-serving decentralised infrastructure for the open Internet constituted by open standards open data, free and open software and open hardware
Important developments to re-decentralise the Internet, leveraging P2p open technolo -gies, are happening at many levels.
For instance distributed social networking projects such as Diaspora, Status. net or easy-to-run servers like arkos â€
and accessibility of the Internet infrastructure Many activities in this space are driven by grassroots networks, like Observe Hack
of the Internet infrastructure. It includes projects that are using bottom up privacy-preserving and
model for the Future Internet across Europe and beyond, where communities of citizens build, operate and own open IP-based networks, a key infrastructure for individual and
Internet networks have become a key infrastructure for the development of the digital economy due to the †democratisation†of the access technologies, reducing
social networks, p2p infrastructures OPEN NETWORKS 40 Growing a Digital Social Innovation Ecosystem for Europe and experiment with services and protocols.
and obstacles regarding Internet specifications that are exposed by these edge networks The Guifi. net initiative is developing a free,
Guifi. net is connected to the Catalan Internet Exchange (CATNIX) as an autonomous system (AS) via optical fibre with IPV4 and IPV6
Guifi. net COMMUNITY NETWORKS The work by Tor on creating secure, privacy-aware and crypto tools that bounce Internet users†and websites†traffic
through †relays†run by thousands of volunteers around the world, making it extremely hard for anyone to identify the source
-vited programmers and developers to make apps and web services based on the data which to date have resulted in more than 60 applications for citizens.
combine or turn into web -based or mobile applications that citizens may find useful. The movement for more and better open data has grown significantly
set up open data websites at the regional level that can be considered good practices and in the Barcelona Metropolitan Region, the city of Barcelona is leading Multicouncil
today use blogs, wikis, social networks and hundreds of other collaborative platforms to manage their daily lives,
Commons4eu, partners got together to explore the development of collaborative web projectsâ and bottom-up broadband technologies15.
-tidisciplinary research projects are the Network of Excellence on Internet Science EINS), that aims to integrate multidisciplinary scientific understanding of Internet
networks and their co-evolution with society, and the Knowledge and Innovation Communities (KICS), promoted by the European Institute of Innovation and Technology
Internet of Thingst Open-source hardware consists of hardware whose blueprints are made publicly avail -able so that anyone can study,
anywhere/anytime access to the Internet, and to new services So-called Cyber Physical Systems (CPS),
-ing of embedded ICT systems both with one another and with the Internet, is giving rise to what has been named as Industry 4. 019
WEB SERVICE RESEARCH PROJECT EDUCATION AND TRAINING NETWORK ADVOCATING AND CAMPAIGNING EVENT INCUBATORS AND ACCELERATORS
part of a larger social network and have mapped this network in a way that has not been possible before
Social networks are defined formally as set of nodes (or network members) that are tied by one or more types of rela
the case of the DSI social network col -lected in this study, the nodes in a graph
social networks. However, it is a large sample and thus worth exploring in de -tail. The graph of the networks is given
Internet in order to accomplish innova -tion at scale by the network effect. We can define scale in terms of †scale-freeâ€
Digital Social Innovation website could introduce innovators to both other local innovators and innovators sharing similar
Social networks Diaspora Crowdsourcing Social web entrepreneurs Startup Europe Smart Cities Internet of things Innovation and innovation policy are not
new to the European union. Delivering on the Europe 2020 objectives of smart and inclusive growth depends on research
and innovation as key drivers of social and economic development and envi -ronmental sustainability. The European
Smart Cities, the Future Internet Public -Private Partnership Programme (FI-PPP and the European Cloud computing
The development of the Future Internet is addressed mainly through a number of technical projects, such as the FI PPP23
Social networks Diaspora Crowdsourcing Social web entrepreneurs Startup Europe Smart Cities Internet of things Bottom up and grassroots approaches
A counterpoint to the top-down strategy is the bottom-up, human-centred approach that is characterised by emergent forms of
community intelligence. Relevant bottom -up initiatives are the Collective Awareness Platform for Sustainability and Social
Innovation (CAPS), Web entrepreneurs young entrepreneurs in the field of active and healthy ageing, digital champions, in
-ture of social networks with a methodo -logical approach of foresights to engage stakeholders in the poliy making process
most social networks, Futurium participa -tory tools offer several features to sup -port collective foresight, such as scenario
social network Distributes and federated social networks based on open source code and open standards to promote open democracy
Internet needs to continue to be a neutral space where creativity can continue to flourish
decentralised social networking public identity management and encrypted email service The Internet ecosystem today is highly centralised The current
Internet is dominated by a handful of mainly US companies that control all the layers of the
ecosystem (app store, cloud machine learning, devices), and are imposing their rules of the game. Europe needs to invest in
future infrastructures that reflect the European values, support SMES and civic innovators and deliver public good.
the creation of the internet, the R&d fund -ing at CERN led to the invention of the
Web) Encourage people to think about Who could implement it (European Commission, national governments, mu -nicipal etc
we†ll email their pledge back to them af -ter six months (this keeps people on their
Magna carta for the Internet Enabling open infrastructures Innovation Labs Incubators & accelerators Knowledge sharing & networking
Magna carta for the Internet Enabling open infrastructures Innovation Labs Incubators & accelerators Knowledge sharing & networking
is supported the Google programme Google for Entrepreneurs36 that in 2011 created a campus where innovation and start-ups can meet
The Impact Hub of Vienna37 is a network of several cities across the world which, according to their websites,
The Internet is the best example of the power of interoperability. Its open architecture has given billions of
people around the world access to information, the possibility to add (web) content and services themselves, access to devices and modular applications that talk to one another
OPEN PLATFORMS Users of the Internet ecosystem include the independent application and service provid -ers who have the right to use the future Internet infrastructure (including both data in
a raw and processed form, as well as access to computing resources). Any privileged access provided to the owner/managers of the infrastructure would alter free competi
Federated Social Web â€oedo-not-track†technologies should be implemented in order to give users control over their social data and sensitive information, to make it easier for businesses to
An important effort towards a federated identity system Is federated the W3c Social Web Working Group58 to develop
The federated web standards will also be implemented within the EC-funded D-CENT Project59 that is piloting federated social applications for participatory
Future Internet users must be able to come (no barriers to entry) and go (no barriers
A Magna carta for the Internet Tim Berners Lee, the inventor of the Web is advocating for a sort of Magna carta for the Internet to estabilish basic rights
and freedoms, to keep the Internet open, without surveillance and censorship, and to halt power abuses from Governments
and corporations. The Magna carta for the Internet goes along with recent UN General assembly (UNGA) resolution on The
Right to privacy in the Digital Age. 68. A Magna carta for all Web users could be directly crowd-sourced from the Web itself
engaging effectively in multi-stakeholder processes Distributed and open architectures Community and bottom-up networking 5. 3 RESEARCH AND INNOVATION SUPPORT
Community and bottom-up networking is an emerging mode of the Future Internet, where communities of citizens can
and management systems, distributed secure Clouds, distributed search, and federated social networking It can also include the development of open source mobile phone alternatives such as Fairphone69 on top of which a whole
This should include the use of social networking platforms, independent media and other news applications. For instance, the elaboration of a newsletter or creating a DSI
strategy blog would be a helpful instrument to spread the message from the European Commission and to provide updated information about policy deployment
Wide Web Foundation81 illustrate examples of how this could be captured and measured. Another metric to focus on could
As an example, the Fukushima prefecture in Japan hosts a map of the Safecast data on its website, and in
and future Internet infrastructures At regulatory level, The Digital agenda emphasises the need to adopt open standards and interoperable solutions to
Daniel Kaplan Founder and CEO, The next-Generation Internet Foundation Simona Levi Founder, Forum for the Access to Culture and Knowledge
11 http://www. nesta. org. uk/sites/default /files/good incubation wv. pdf 1 Combinatorial innovation means
â€oedoes the Web Extend the Mind†available online at: http://www. ibiblio org/hhalpin/homepage/publications
/websci2013-halpin-web-extend-the-mind pdf and published as Harry Halpin â€oedoes the web extend the mind?
†Proceedings of the ACM Web Science Conference (2013): 139-147 3 Over-the-topâ is a general term for
service providers that develop services that are utilized over a network that is owned by traditional network operators
Big OTT are Google, Skype, Youtube Netflix, Facebook, Amazon and EBAY 4 Sestini, Fabrizio.``Collective awareness
platforms: Engines for sustainability and ethicsâ€.  Technology and Society Magazine, IEEE 31.4 (2012): 54-62
/sites/digital-agenda/files/IA4SI%20 %E2%80%93%20fact-sheet%20 v02. pdf Nesta and Young Foundation Discussion
/sites/default/files/event/attachments /Copy%20of%20generating social Innovation%20v4. pdf Innovation platform. Measurement for policy
Social network Analysis: Methods and Applications. Cambridge: Cambridge University Press D. Watts and S. Strogatz (1998
/45 http://en. wikipedia. org/wiki /Knowledge commons 46 http://bit. ly/1kivc4h 47 http://www. w3. org
standpoint, see the Communia website http://bit. ly/V2knnk 50 http://es. wikipedia. org/wiki
/Reinventing innovation policy Policy Tools and Action 20 http://ec. europa. eu /information society/digital-agenda
/25 http://www. internet-of-things -research. eu 26 https://ec. europa. eu/digital-agenda
51 http://es. wikipedia. org/wiki /Interfaz de programaci%C3%B3n de aplicaciones 52 http://es. wikipedia. org/wiki
/Extensible markup language 53 http://es. wikipedia. org/wiki /Resource description framework 54 http://linkeddata. org /55 http://www. w3. org/TR
/rdf-sparql-query /56 http://www. theopeninter. net /57 http://en. wikipedia. org/wiki /Dataportability
58 http://www. w3. org/Social/WG 59 http://dcentproject. eu 60 http://es. wikipedia. org/wiki
/Hypertext transfer protocol secure 61 http://es. wikipedia. org/wiki /Red privada virtual 62 http://en. wikipedia. org/wiki /End-to-end encryption
63 https://abc4trust. eu /64 http://www. ftc. gov/system/files /documents/reports/data-brokers
-call-transparency-accountability -report-federal-trade-commission-may -2014/140527databrokerreport. pdf 65 http://www. citizenme. com 66 http://openpds. media. mit. edu
/72 http://www. nesta. org. uk/sites/default /files/good incubation wv. pdf 29 http://www. citizens. is
/blogs/monkey-cage/wp/2014/01/22 /brazil-let-its-citizens-make-decisions -97growing a Digital Social Innovation Ecosystem for Europe
/76 http://www. nominettrust. org. uk/sites /default/files/Nominet%20trust%20-%20 Triple%20helix%20overview%20paper
http://www. e-living. net/sites/default /files/field/image/internet-of-things-2. jpg
Page 35 Brendan Lea (2013) â€oeopen Data Institute Annual Summit 2013†online Flickr Open Data Institute Knowledge for
http://www. robotshop. com/blog /en/dfrobotshop-rover-or-arduino-on -tracks-3708 Accessed 29th january 2015
http://en. wikipedia. org/wiki /Arduino#mediaviewer/File: Arduino316 jpg Accessed 29th january 2015 Page 47
//budgetparticipatif. paris. fr/bp/jsp/site /Portal. jsp? document id=133&portlet id=100 Accessed 29th january 2015
com/2013/04/10/web-2-0-vs-web-3-0 -what-really-Is accessed-the-difference
http://do. minik. us/blog/oecd bli Accessed 29th january 2015 Page 85 online http://caps2020. eu Available
through a dedicated website and a published handbook 5. Implement the professional development activities for mobile learning across other faculties at the
University of Wollongong and disseminate in web-based template form to other universities across Australia and overseas
appointed, and a prototype project website was created. The leadership team, together with professional development and IT experts, met fortnightly for planning and monitoring,
Web-based learning Literacy education Reflective practice Adult education •Final project conference to present findings
project website •Publication of edited book •Long-term evaluation Products from each phase Phase 1
Website of exemplars and strategy descriptions Phase 4 Final conference Edited book Project report Final public website
Evaluation Reeves & Hedberg 2003 Review of literature and existing initiatives Formative evaluation of PD workshops
project website Effectiveness evaluation of 12 learning environments Effectiveness evaluation of whole project Peer review of
project website At the end of Phase 1, the project structures had been put into place (i e.,, project management, team
meetings, project website), a literature review had been conducted, and the educational affordances of the devices had been investigated and reported
communication from one site to another. When teachers had designed their learning tasks, they were able
blogs, content analysis of artefacts, and so on, to investigate the nature and effects of the pedagogical
supports and assessment items) and uploaded descriptions of pedagogies to the project website Proceedings ascilite Melbourne 2008:
and the project website. A final 2-day conference was held after all cases had been implemented and evaluated at the end of the second year of the project.
The project website also includes succinct case study descriptions and exemplars of the pedagogies developed for the m-learning devices.
conference papers and workshops, on the website and through other means such as listservs and electronic newsletters
a project website, literature review created as an Endnote library with embedded papers, a searchable catalogue of educational affordances of the mobile devices, a
updates for the website to reflect the progress of the project, creating a system to monitor and maintain
The project website served as a focal point for the project activities, schedule and resources. In each
phase, the substantive value of the website grew, both as an important communication device and as a
and the technology affordances page for the ipod on the project website Proceedings ascilite Melbourne 2008:
Web pages from the project website Conclusion Although general guidelines on the use of technology have been delineated by MCEETYA (2005
teachers†action learning within a web environment. In P. Kommers, & G. Richards (Eds.),Edmedia
the Internet Safety Group†s survey of teenage mobile phone use. Netsafe: Wellington, NZ Norman, D. A. 1988.
Email: janh@uow. edu. au Please cite as: Herrington, J.,Mantei, J.,Herrington, A,.Olney I,
http://www. cabinetoffice. gov. uk/sites/default/files/resources/uk-government-ict-strategy-2011 0. odt
Benefits of ICT and Internet use...9 ICT adoption and firm performance...11 Use of ICT and Internet among SMES...
11 Adoption of Internet e-commerce by SMES...13 Towards e-business integration...18 II. BARRIERS TO USE...
19 Unsuitability for business...19 Enabling factors: internal ICT and managerial knowledge...20 Cost of developing
Information and communication technology (ICT) connectivity (PCS and Internet) is very widespread in businesses of all sizes.
-business and Internet use programmes. However commercial considerations and potential returns are the principal drivers of small business adoption and profitable use.
Despite these advantages, rapid growth in businesses†purchases and sales over the Internet has yet to materialise.
Broad definitions of e-commerce (including established EDI as well as Internet transactions suggest that in 2000 total on-line transactions were generally 10%or less of total business sector sales and
behind larger firms in Internet transactions For small firms to adopt e-business and e-commerce strategies and tools,
small-firm systems, network infrastructure and Internet-related support services. Lack of reliable trust and
e-mail and the Internet and their applications can have on their business. 4 In advanced OECD countries
Communication via e-mail and the Internet can help to improve external communication, in either B2c or B2b contexts,
Benefits of ICT and Internet use ICT and e-commerce offer benefits for a wide range of business processes.
At inter-firm level, the Internet and e-commerce have great potential for reducing transaction costs and increasing the speed and reliability of transactions.
Internet-based B2b interaction and real-time communication can reduce information asymmetries between buyers and suppliers and build closer
Internet, with the goods and services ordered over the Internet, and payment and ultimate delivery of the goods
such as the Internet, EDI (electronic data interchange), Minitel and interactive telephone systems 10 In the B2c context, the Internet and e-commerce can be effective tools for better communication
A corporate Web site that provides information on products, services or technologies can enhance the quality of a firm†s services to customers and attract new customers.
SMES€ motives for Internet commerce include reaching new/more customers, geographic expansion of market and improvement of service quality
Another firm with 40 employees, has established a company-wide intranet with an on-line BBS (bulletin
These companies†intranet and electronically integrated customer database not only provide the latest client-related information,
Internet and e-commerce enable SMES that remain in local and regional markets because of a lack of information and marketing capability
Internet technology makes it possible to transmit order information seamlessly between different systems. It can therefore provide small
Moreover, the Internet can convey the ideas of knowledge-based small businesses. Extensive use of ICT can allow micro-enterprises with ideas and
sales by exploiting their intellectual property over the Internet 11 ICT adoption and firm performance
inter-company computer networks Recent OECD analysis shows the impacts of ICTS and e-business strategies on firm performance
Use of ICT and Internet among SMES The use of ICT by SMES is increasingly common according to survey for OECD countries.
While Internet penetration is generally higher in larger enterprises, the gap between larger firms and SMES is narrowing.
countries, Internet penetration rates for medium-sized firms (50-249 employees) are the same and
while in countries with lower Internet penetration (Portugal, Greece, Mexico) there are larger dispersions across firms in different size classes (OECD, 2002c
Figure 1. Internet penetration by size class, 2001 or latest available year Percentage of businesses using the Internet
50 60 70 80 90 100 Fin lan d Sw ed en De nm ar
Note 3. Internet and other computer-mediated networks Source: OECD, ICT database and Eurostat, Community Survey on ICT usage in enterprises 2002, May 2003
Data available from surveys in some countries indicate that SMES use the Internet (and e-mail
common use of the Internet is general information searches (Figure 2). Other uses include communication via e-mail, providing information about a company†s products, services and technologies via the corporate
SMES purchase some standard materials, office equipment and software over the Internet, but only a small
share conduct B2c and B2b Internet e-commerce for nonstandard products. A study of 484 SMES with
fewer than 250 employees in Lanarkshire (Scotland) shows a similar pattern of Internet use. Around 60
%of the firms with the Internet use it to learn about competitors, customers or suppliers.
include providing product information (56%),setting up a Web page (54%),purchasing goods/services 53%)and building customer connections (48%)(Scally et al.
Figure 2. Internet use by SMES in Japan, 2001 6 %8 %17 %18 %20 %23
Percentage of responses of 1 700 SMES with 300 or fewer employees using the Internet as of August 2001
Adoption of Internet e-commerce by SMES Computers and access to the Internet have become common in most OECD countries, but sales
and purchases over the Internet have yet to take off. While available data suggest that electronic commerce
is growing, it still accounts for a relatively small proportion of economic activity for firms of all sizes
Purchasing over the Internet is more common than selling. For 16 countries for which both Internet purchasing and Internet sales data are available, only one
in eight on average reported making Internet sales. Twice as many businesses on average use the Internet for purchases as for sales (Figure 3), with between 63%and 93%of businesses reported using the Internet
except in Greece and Luxembourg (OECD, 2002c 14 Figure 3. Businesses using the Internet for purchasing and selling, 20011
Percentage of businesses with ten or more employees 0 20 40 60 80 100 De
nm ar k Ja pa n 2 Fin lan d Sw ed en Au str
alia Ne w Ze ala nd Au str ia No rw ay Ne the rla
%Businesses using the Internet Businesses receiving orders over the Internet Businesses ordering over the Internet
Note: The results of the Eurostat survey are based on a selection of industries that changes slightly across countries
The main sectors covered are manufacturing, wholesale and retail trade, hotels and restaurants, transport, storage and
1. Beginning of 2001 for Internet use; purchases and sales refer to 2000, for Canada,
for Denmark and Norway, Internet use refers to 2002 and purchases and sales refer to 2001
and placed refer to Internet and other computer-mediated networks 4. All businesses 5. Orders received
and placed over the Internet and other computer-mediated networks Source: OECD, ICT database, August 2002;
larger firms is greater for Internet purchases than for Internet sales. In Norway, for instance, more than
Internet purchasing seems to be sensitive to firm size, with the largest firms having the highest percentages
However, the propensity to sell over the Internet seems less sensitive to firm size. The
Denmark and Sweden, smaller businesses that use the Internet appear to have roughly same propensity to
sell over the Internet as larger ones (Figure 4 15 Figure 4. Internet purchases and sales by size class, 2000
Percentage of businesses in each size class 80 60 40 20 0 20 40 60 80
or placed over the Internet and other computer-mediated networks Source: OECD, ICT database, August 2002;
In terms of volume, Internet sales by SMES are far below those of larger firms. In the case of
more than 5%of sales originating on the Internet in 2000, and a maximum of 1. 2%of businesses (in
Denmark) had Internet sales whose value was more than 50%of overall sales. However, for smaller
businesses, Internet sales are lower relatively, with around 11%of businesses having a share of Internet
sales greater than 1%,compared to over 19%in the case of larger firms (in Sweden)( OECD 2002c
Percentage of businesses for any given country whose sales over the Internet as a share of total sales are greater
2001, selling over the Internet by micro-enterprises with 5-9 employees declined from 16%to 13%and by
Most Internet e-commerce transactions are domestic rather than cross-border transactions Figure 6). The Eurostat†s E-commerce Pilot Survey indicates that European companies mainly sell over
the Internet to locations within Europe. In Austria, Denmark and Finland, exports to Europe represent
between 55%and 63%of total exports of goods. The share of international Internet sales is particularly
house, is linked to the Internet via phone lines or, increasingly by a VSAT connection. It serves an average
Figure 6. Share of Internet sales in domestic and international markets, 2000 or latest available year
There is a wide range of reasons why SMES do not make more active use of the Internet and e
19 European countries shows that around 40%do not use the Internet for selling because they consider that
Internet e-commerce does not suit their type of business and/or products (Figure 7). Other reasons for not
costs and benefits, insufficient customer access to Internet and technology concerns, such as on-line security. In Canada, among businesses that did not buy
or sell over the Internet, 56%believed that their goods or services did not lend themselves to Internet transactions
Figure 7. SMES in Europe: Reasons for not using the Internet for selling, 2001 3
%5 %16 %16 %40 %2 %9 %14 %20 %40 %3 %6 %18 %17 %43 %0%10%20%30%40%50
Customer's access to Internet is insuff icient It w ould not pay off No skilled personnel
Percentage of 1 427 firms with fewer than 250 employees not using the Internet in 19 countries (15 EU member
In sectors such as construction and among some small retailers, the view that Internet e-commerce is unsuitable for their business is relatively strong.
Some SMES in transport services also consider that the Internet does not suit their industry.
firm with 90 employees and an emphasis on personal contact with clients decided not to adopt the Internet
Very few of its regular customers had used the Internet and some preferred receiving confirmation of their order via fax or telephone
The firms that adopt Internet and e-commerce are likely to have within the firm someone who has a reasonable amount of knowledge of the specific technology and/or technology
A study of small ICT companies with 3-80 employees suggests that the Internet was adopted by
necessarily an obstacle to the decision to adopt Internet e-commerce. However, internal technological capabilities still matter because adoption of e-commerce cannot succeed without an understanding of the
e-commerce sales of magnet products via the site had reached already more than USD 700 000, and the site
In 1996 a company employee bought a personal computer at his own expense to use the Internet
which helped the company to create the Web page and took training to enable him to update it
To increase the number of visits to the site, the company used both an on-line campaign and
to (potential) customers lured 1 000 visitors to the site during the peak early month.
were encouraged to engage in Internet e-commerce SMES may also lack managerial understanding and skills for e-business.
cost of basic Internet use is well within their marketing Budget for example, in the United states, typical
Internet charges †USD 10-35 a year for a domain name (i e. Web site address) and USD 10-100 a month
outsource Web page design and updating, have found it difficult to contain site development costs which
%1%Website maintenance Telephony ISP charges/website hosting Responding to e-mails Advertising License fees Bank fees
Other Note: Percentage of total investment in Internet e-commerce. N=34 Source: Ernst & young (2001 Logistics services, e g. package collection and delivery, also matter.
While they can be subcontracted to private delivery services, some may charge higher rates to small businesses because of
Items such as software, music and books can be delivered over the Internet, but the volume of such on-line delivery is still very small.
with a slow Internet connection and small download capacity rather than a high-speed (broadband connection For the SME leaders in e-commerce, narrow cost factors are likely to become less important
The availability of a wide range of Internet connections and other communication services preferably at competitive prices, is very important in that it allows small businesses to choose different and
Slow Internet connections and data transfer have discouraged in fact some SMES from adopting Internet: a majority of
SMES with 10-249 employees in Austria, Greece, Italy, Luxembourg, Spain, Portugal and the United
Kingdom indicated excessively slow or unstable data communication as a major hindrance to Internet use Eurostat, 2002
Business use of the Internet via broadband connection (xdsl) by firm size, 2001 Percentage of businesses with ten or more employees using the Internet
0 10 20 30 40 50 60 70 80 Finland Italy Austria Spain Portugal United
Internet access prices are a key determinant of Internet and e-commerce use by individuals and businesses (Figure 13.
Countries with lower access costs typically have a greater number of Internet hosts and electronic commerce has developed rapidly in countries with unmetered (flat-rate) access (OECD
Price of 40 hours of Internet use at peak times, August 2001, in PPP dollars
Internet use with almost double the users (almost 8) per 100 inhabitants in 2002, even if China has
but less than five Internet users per 100, presumably for cultural and political reasons Internet access charges relative to income also matter.
%but inequalities in income distribution means the Internet is not affordable for a large proportion of the population.
In 2002,8%of the population in Brazil were Internet users and almost 10 %in Mexico, very much lower than Europe and the US (ITU data, 2004
Some placed detailed corporate information on the site to illustrate their technology and financial base (Tiessen et al.
security, protection of credit-related information and secure system firewalls. As more on-line clients demand secure transaction environments, SMES are likely to face increasing costs for system protection
among the most important perceived barriers to Internet use by businesses (B2b and B2c), although large
and have a larger share of transactions over the Internet (OECD, 2002c). Barriers to Internet commerce for businesses included payment uncertainties and contract, delivery and guarantee
uncertainties, with very wide variations in perceived barriers across countries, and unsuitability the major barrier. Payment uncertainties were relatively important in Italy, Spain, Austria, the United kingdom, and
Small and large businesses facing barriers to Internet payments, 2000 Percentage of businesses using a computer with ten or more employees
Concerns about privacy and legal protection for Internet purchases are the two first obstacles pointed out in
use in the country, taxation of Internet sales), while large firms are more sensitive to international strategy
an e-commerce site 46.8 18.9 45.3 33.4 39.3 33.6 27.3 35.4 28.6 33.6 Making needed
the Internet as part of business strategy 21.5 27.0 21.8 22.3 24.8 22.4 31.8 27.9 31.1
Taxation of Internet sales 28.5 23.6 28.3 27.1 17.6 26.8 19.9 15.6 19.1 16.5 Inadequate legal
protection for Internet purchases 42.6 63.5 43.6 41.6 34.4 41.4 55.7 49.1 54.5 34.1 Source:
Most Internet e-commerce transactions are domestic rather than cross-border. Although there may be other reasons,
reason for not using the Internet (European commission, 2002a The fear of being left with no satisfactory recourse against a transaction counterpart has been
remarkably persistent among Internet users. In the United states, 60%of Internet users indicate difficulties in obtaining satisfactory redress as a reason for reluctance to buy on line (OECD, 2002d.
Most B2c transactions are relatively small (e g. less than USD 100) and hardly justify costly legal procedures or even
organisational structures and restructure business processes to make better use of the Internet and the
interviews with 217 firms that were early adopters of Internet and e-business strategies (OECD, 2002a
less well-formed opinions about factors affecting their Internet efforts, either positively or negatively Interestingly enough, this group of early adopters was concerned not particularly about general cost
and Internet strategies. Internet e-commerce can enable businesses to reach a wider and possibly more
targeted range of customers either locally or globally, either in B2b transactions (automobiles, textiles) or
Cross-sector surveys show that there are some differences in the use of the Internet by SMES
In Europe, only around a third of SMES receive orders over the Internet. Their most common use of the Internet is for distribution of product/service information (Figure 15.
A slightly higher percentage of firms in manufacturing, wholesale and business services receive orders over the Web
than those in retail and construction. Some SMES send order confirmations via the Internet, although it is
not clear how many of these orders were received over the Web rather than through other means, such as
fax or telephone Figure 15. SMES in Europe: commercial activities using the Internet, 2001 58%63%63
%68%71 %26%33 %37%38%35 %24%26%31%29%30 %0 %20 %40
Percentage of responses of firms with fewer than 250 employees using the Internet in 19 countries (15 EU
and inns, restaurants and travel agencies have been active in fostering cross-border Internet e-commerce The Internet allows travellers direct access to travel recommendations, reviews and local tourism
information, many of which was distributed previously only through the physical offices of (large) travel agencies. Small players with a Web page can now attract those preferring personalised (and possibly less
expensive) services. Some small travel agencies, making the most of ICT, take advantage of direct on-line sales of (discounted) airline tickets
Since the Internet and many travel-related sites allow on-line customers to compare the price of
The volume of Internet e-commerce in tourism, has grown very rapidly, but still largely involves ticketing for passenger transportation and accommodation.
The Internet is used mainly for travel-related information and promotion. In the United states, where on-line travel sales grew rapidly from
people used the Internet for travel planning, little changed from 2002 due to the slower growth of â€oewiredâ€
households, but over 42 million people (30 percent of the adult population) used the Internet to book travel
suited for purchase over the Internet. In addition, most travel products, like air travel and hotel rooms, are
Transaction costs over the Internet can be significantly lower than those of traditional distribution channels
However, use of Internet commerce in the tourism sector is likely to concentrate on B2c rather
Use of Internet commerce among SMES in the retail industry is lower than in business services
Several studies suggest that even the most price-sensitive Internet consumers respond very strongly to well-known, heavily branded (large) retailers, such as amazon com.
An early study of Internet brand establishment analysing 20 000 on-line consumers who compared and purchased books from
33 on-line bookshops found that most did not choose the lowest price offer and that the shop†s name/brand
leading consumer products sold over the Internet (OECD, 2002c. Projections for on-line apparel sales in
the adoption of costly EDI or the Internet. Some small textile producers consider that a Web site which
It uses the Internet to receive orders and to send digital images of products only to known clients (which then sell to other
) Another textile producer with 300 employees does not use the Web for buying and selling because
Brian decided to use the Internet to reach much a wider market without radically increasing his overhead costs.
The site has attracted customers not only in the United kingdom and Ireland but also throughout the world Australia;
customers who have bought an instrument through the site. Some customers, impressed by the presentation of the
violin-related site among individuals, dealers and others interested in the instrument Source: UK E-commerce Awards (http://www. ecommerce-awards. co. uk/)and the company Web site
B2b on-line marketplaces and auction sites have also not been attractive to many SMES in the sector particularly in the light of most of these markets
its recent Internet forms) as a strategic necessity for not losing business with car producers (i e. their
attempted to integrate different communication networks into a single Internet network. This should allow high quality, high speed and security measures to protect the transmission of confidential data and other
The Internet-based EDI, ANX (Automotive Network Exchange) was started in 1994 and operated in the United states from 1998-2002 and was aimed at EDI integration involving ENX (Europe
The adoption and use of Internet and e-business strategies depend on sector characteristics. The products of services like tourism,
well-suited for purchase over the Internet. In addition, in sectors such as tourism and parts of retail and
Barriers to Internet commerce also vary among sectors. In tourism, incompatibility of systems and the dominance of relatively small agents with less capability impedes efficient Internet transactions
along the supply chain, especially for B2b transactions. In the retail sector, the problem of confidence
SMES have been slower than larger firms to adopt Internet and e-business strategies despite the potential benefits.
All OECD countries have introduced programmes to speed SME e-business and Internet development. However, the recent features of e-business and Internet use will also structure policy.
First and foremost, most e-commerce is B2b rather than B2c, which means government policy needs to focus
Next, most Internet e-commerce transactions are domestic rather than cross-border. Finally, use varies widely among sectors,
Governments have used many policies to encourage the diffusion of e-business and Internet use from fostering technological diffusion to creating a favourable business environment with fair and
also been evolving, with the focus shifting from connectivity and building simple web presence, to more
Firms will stay with traditional business processes if Internet commerce is unsuitable for their business,
Some are sophisticated as users of the Internet and e-business as larger firms, while others make no use at all.
The largest benefits for the Internet -using firms may derive from generating internal process efficiencies
The availability of a wide range of high quality Internet and communication services at competitive prices is particularly important,
applications and services such as streaming audio and video over the Internet with much higher quality.
opportunity for SMES to obtain affordable higher speed Internet connections (OECD, 2001b. In developing countries, multi-user services can be a very important tool for increasing coverage and use of
The open architecture of the Internet does not necessarily result in more open markets, because e-commerce among businesses is initiated usually by dominant companies in value
E-business and Internet strategies appear to be reinforcing market structures and the role of these
While Internet commerce provides SMES with opportunities to participate in new supply chains and markets, they may compete
SMES with new incentives to adopt Internet and e-commerce in order to enter new markets. Governments establish new e-market models through e-procurement initiatives
and Internet programmes focused on SMES Three new directions are emerging in such policies. These are in addition to initiatives that aim at
Internet and e-commerce adoption. National branches and 250 consultants help SMES and entrepreneurs prepare and implement their ICT action plan.
NET site (www. ause. net) and ebiz. enable site www. strategis. ic. gc. ca/sc indps/ebiz/engdoc/homepage. php
Training is provided increasingly over the Internet and, in some cases, in conjunction with ICT and e-commerce awareness and business consultation services.
the Internet. Forem†s Web site provides a meeting place for businesses (e g. job vacancy advertising), a list of training programmes and aids for training
customised Internet and e-commerce training to SMES. Since its start in 1996, more than 3 000 students have been hired
a special emphasis on training in the use of the Internet, e-mail and new management
Turkey KOSGEB KOSGEB, with more than 40 service centres and 25 Internet cafã s across the country contributes to building computer and Internet literacy in SMES
United kingdom Learndirect SMES are a priority group for the on-line service. Each course, looking at a specific business
wide range of e-business environment, Internet and ICT use issues. eeurope 2005, Helping SMES to go
and exploit e-business and Internet strategies. In addition, specific policies have been common in areas seen to be crucial for initial uptake (e g. awareness, managerial and ICT
Bricklin, D. 2002), â€oesmall Business and Web Sites†(available at http://www. bricklin. com/smallbusiness. htm
on Internet Use by SMES, Tokyo, November Council of the European union (2000), eeurope 2002 Action Plan, June (available at
Gertner, R. H. and R. S. Stillman (2001), â€oevertical Integration and Internet Strategies in the Apparel
Mehrtens, J.,P. B. Cragg and A m. Mills (2001), â€oea Model of Internet Adoption by SMES€, Information
http://www. chusho. meti. go. jp/hakusyo/h13/download/2001eibunzennbun. pdf Moodley, S. 2002), â€oee-Business in the South african Apparel Sector:
Scally, T.,M. Stansfield and K. Grant (2001), â€oean Investigation into the Use of the Internet and
Scupola, A. 2002), â€oeadoption Issues of Business-to-business Internet Commerce in European SMES€, in Proceedings of the 35th Hawaii International Conference on System Sciences 2002 (available at
Smith, M d. and E. Brynjolfsson (2001), â€oeconsumer Decision-making at an Internet Shopbot: Brand Still Mattersâ€, The Journal of Industrial Economics, December, pp. 541-558
Zixiang, A t. and O. Wu (2004), â€oediffusion and Impacts of the Internet and E-commerce in Chinaâ€, GEC
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