The Structural and Performance Effects of Internetworking

Businesses worldwide are currently making substantial investment in the internet-enabling of their operations, and our research shows this investment is profoundly affecting the scope, structure and performance of firms. Deeply internetworked firms are more focused, less hierarchical and form external partnerships more readily. However, though clear operational benefits derive from such enabling, little IT-derived competitive advantage is noted from the transition. By differentiating operational from strategic internetworking we explain why this might be so. Moreover, this lack of any discernable competitive advantage does not make operational internetworking any less significant. Consequent to the internet's appearance, new forms of organisation and better methods of operational integration and control are emerging. Failure to invest in operational internetworking as quickly as peers might render tardy organisations uncompetitive in the face of more specialised, less hierarchical, more partnership-capable and more operationally-efficient competitors.