253This chapter focuses on applications that are designed to extend an organization’s electronic reach beyond its own
organizational boundaries to customers, suppliers, and other business partners:e-businesssystems.
Although e-business systems to conduct business transactions beyond organizational boundaries did not
originate with the Web, the development of the first commercial Web browser in the mid-1990s led to an explosive
demand for the development of Web sites for e-business. The commercial potential of interactive web sites was
first exploited by dot-com(also known as “pure-play”) companies such as Amazon and eBay, as well as many
other dot-com pioneers that did not survive.
Today, an online channel for communicating and conducting business via the Internet is also an additional
channel for traditional (brick-and-mortar) companies. Traditional companies that integrate their off-line and
onlinebusiness channels as part of a multichannel strategy are often referred to as bricks-and-clicks(or
click-and-mortar) firms.
E-business systemsenable the electronic transmission of business transactions or other related informa-
tion between a buyer and seller.Continued growth in e-business systems by companies around the globe is expected due to the proven benefits
of conducting business via the Internet: a relatively cheap entry cost, a transmission speed measured in
microseconds, a multimedia communications capability, and a growing number of business partners and customers
that can be “reached” via the Internet. A more theoretical explanation for why the Internet is likely to become in
future years an even more attractive vehicle for e-business is provided by Metcalfe’s Law,which states that the
value of a network is proportional to the square of the number of connected users in the network (n^2 ). Stated
differently, there are increasing returns to be gained as more and more organizations create Web sites and link them
or more users join an online community.
In the next section, we provide a brief history of the Internet, including some of the major IT innovations that
led to the rapid commercial growth of the Internet, as well as some aspects of the legal and regulatory environments
in the United States that impacted its early growth. Since in-depth technology discussions can be found in the
chapters in Part I, in this chapter we next focus on understanding how e-business systems have impacted the way
companies in an industry compete. Specific examples of applications for B2BandB2Ctransactions as well as dot-
com applications for intermediary roles and social media platforms are then discussed. The chapter ends with some
ideas of what makes a good Web site from a consumer perspective and what makes a good social media site from
a business perspective.