박기우, 장승권 교수와 함께 쓴 논문이 JIS(SSCI)에 실렸다. 큰 영광이다.
Yoon, S. B., Bock, G. W., & Jang, S. (2007). An evolutionary stage model of cyberspace: a case study of Samsung Economic Research Institute. Journal of information science, 33(2), 215-229.
An evolutionary stage model of cyberspace: a case study of Samsung Economic Research Institute
- Soon-Bong Yoon. Samsung Economic Research Institute, Seoul, Korea
- Gee-Woo Bock. School of Business Administration, Sungkyunkwan University, Seoul, Korea
- Seungkwon Jang. Department of Logistics and Information Systems, Sungkonghoe University, Seoul, Korea
- Received 22 June 2006
- Revised 25 June 2006
Abstract.
An evolutionary stage model of cyberspace is proposed based on the four key fundamental driving forces: Moore’s Law, Gilder’s Law, Metcalfe’s Law, and the Law of Disruption. It is suggested that the managerial tasks and information and communication technologies associated with the utilization of cyberspace will change in character over a period of time, and will evolve in patterns roughly related to the proposed four stages, namely, the node stage, the link stage, the network stage, and the space stage. Each stage is described and validated through a longitudinal single-case study of Samsung Economic Research Institute (SERI) from 1996 to 2001.
Keywords: evolution; node; link; network; space; cyberspace; case study; Samsung Economic Research Institute (SERI)
| 1. Introduction
2. Cyberspace and evolutionary stages 3. An evolutionary stage model of cyberspace |
1. Introduction
As the importance of information technology increases, cyberspace has begun to be considered a place where the rules of the New Economy have been spreading with the advent of the digital age. However, most of the existing studies on cyberspace cannot adequately explain how these fundamental rules behind cyberspace work even as cyberspace becomes a critical place for management [1, 2]. Much of this gap in understanding is due to the fact that most of the work on the subject deals with only a cross-sectional aspect of cyberspace at a certain point of time. As a result, there are very few pieces of research on the dynamics of cyberspace evolving over time along with the development of its driving forces.
This study seeks to model the dynamic changes of cyberspace from the evolutionary perspective. The proposed model, which is based on the four rules found in the New Economy, will be justified by means of a longitudinal case study on a knowledge-intensive firm in South Korea that heavily utilizes cyberspace due to the nature of its business. To this end, Yin’s case study methodology is employed [3].
This study articulates that cyberspace goes through four distinctive stages, namely, node, link, network and space. It concludes that managerial tasks and the deployment of information and communication technologies (ICT) might be different at each stage. Further to the findings and following Nolan’s data processing expenditure [4], this study proposes some workable benchmarks to distinguish each stage. Finally, several implications for researchers as well as practitioners are suggested.
2. Cyberspace and evolutionary stages
2.1. Cyberspace
Cyberspace: A word from the pen of William Gibson, science fiction writer, circa 1984. An unhappy word, perhaps, if it remains tied to the desperate, dystopic vision of the near future found in the pages of Neuromancer (1984) and Count Zero (1987) – visions of corporate hegemony and urban decay, of neural implants, of a life in paranoia and pain – but a word, in fact, that gives a name to a new stage, a new and irresistible development in the elaboration of human culture and business under the sign of technology. [1; p. 1]
When it comes to the definition of cyberspace, William Gibson is credited for inventing or popularizing the term ‘cyberspace’ because he used it in his novel, Neuromancer, in 1984. Nevertheless, many other definitions of cyberspace can be found, including the following [1; pp. 1–3]:
Cyberspace: A new universe, a parallel universe created and sustained by the world’s computers and communication lines.
Cyberspace: Accessed through any computer linked into the system; a place, one place, limitless; entered equally from a basement in Vancouver […].
Cyberspace: The tablet become a page become a screen become a world, a virtual world. Everywhere and nowhere, a place where nothing is forgotten and yet everything changes.
Cyberspace: A common mental geography, built, in turn, by consensus and revolution, canon and experiment; a territory swarming with data and lies, with mind stuff and memories of nature, with a million voices and two million eyes in a silent, invisible concert of enquiry, deal-making, dream-sharing, and simple beholding.
Despite these many different given meanings of cyberspace, we may simplify the whole discussion to two notions of cyberspace: one is virtual reality (VR), which is closely related to data visualization, graphic user interface (GUI), networks, multimedia and graphics; the other is the internet-based artificial space which is concerned with recent developments in computing technology, and is also globally networked, computer-accessed, and computer-generated [1].
Bryant [2] also followed a similar line in adopting two definitions of cyberspace: one is virtual reality or a 3-D environment, which is seen in films like The Lawnmower Man and Disclosure; the other is a term that is coming into everyday usage and which means the world of computer networks linked with cables and routers that is capable of communicating, storing and retrieving data and information. In other words, the internet has become a common name by virtue of the invention of the world wide web (WWW).
In this paper, we shall focus on the second meaning of cyberspace because our primary interest in the managerial implications of cyberspace in business organizations coincides with the second notion. Based on this notion of cyberspace, we define cyberspace as an artificial space which is created and sustained by the computer and usually interconnected through computers and telecommunication without regard to physical geography. Here, the term ‘usually’ is used to accommodate a broader definition of cyberspace since it is possible for a person to create and maintain his/her own space in only his/her computer. For example, before the world became connected through the internet as we see it today, people did in fact enjoy computer games without any internet connections.
Cyberspace has evolved from the stand-alone computer and grown rapidly by connecting people through the internet, and is showing characteristics very different from the physical space, for example, in the death of distance, etc. This is all the more reason for investigating cyberspace longitudinally to find out its true nature. For this purpose, we will investigate the evolution of cyberspace by adopting stage theory.
2.2. Stage theories
Stage theories have been particularly useful for developing knowledge in diverse fields during their formative periods [4]. For example, Davis [5] developed a stage model on organizational development in the early days of organizational studies, and Chandler [6] proposed a four-stage model of organizational evolution. One of the better-known models was suggested by Greiner [7], who argued that organizations grow through five evolutionary stages which are separated by brief periods of ‘revolution’ or dramatic organizational change.
Studies on research and development (R&D) management and the innovation process have also developed a stage theory. In these studies, the concept of stage is one or more decisions and related behavior which are connected in some logical fashion and which proceed toward subsequent decisions. Other stage models in R&D literature focus on the process of technology innovation. Innovation process models can be divided into three categories: linear, process and dynamic [8].
Nolan and Gibson [4] first brought stage theory into the information systems arena to explain computer resource management in the organization. Although Nolan’s hypotheses were not always supported in subsequent studies, his model remains noteworthy [9–11] because the characteristics of the stages and the study of movement through the stages have provided a basis for prescriptive theory formulation [4].
By the same token, we shall use a stage model to capture the characteristics of cyberspace over time because changes in cyberspace are becoming more significant not only for business but also for everyday life while studies on cyberspace are still at an early stage.
Stage theories are based on the premise that elements in systems move through a pattern of distinct stages over a period of time and that these stages can be described. Kuznets [12] maintained two guidelines for stage theories:
(1) the characteristics of each stage should be distinct and empirically testable; and
(2) the analytical relationship of any stage to its predecessor or successor should be well defined – it must be possible to identify what processes cause an element to move from one stage to the other [4].
2.3. Propositions
Considering the guidelines by Kuznets, we develop a stage proposition and model by studying the history of cyberspace [1, 13, 14] and theories on the New Economy [15–17], and observing the pattern of growth of cyberspace.
Proposition: Cyberspace will evolve through four stages – node, link, network and space.
- P1: in the node stage, improving the capability of the node will be the key managerial task according to Moore’s Law.
- P2: in the link stage, diminishing distance will be the key managerial task according to Gilder’s Law.
- P3: in the network stage, reaching critical mass will be the key managerial task according to Metcalfe’s Law.
- P4: in the space stage, creating contents and new organizational structure will be the key task according to the Law of Disruption.
Through these propositions, we seek to answer the following research question: How does cyberspace evolve over a period of time? We think that companies can foresee the future of cyberspace where they are working, and they can plan, organize, manage and control cyberspace for themselves more effectively and efficiently by answering this question. The propositions are summarized in Table 1 and an evolutionary stage model, along with the explanations of each stage, follows in the next section.
3. An evolutionary stage model of cyberspace
3.1. The node stage
A node can be compared to a dot in geometry. An electronic container such as a personal computer (PC) exists in a stand-alone mode and it does not affect other electronic containers at the first stage. Therefore, the focus of each node resides in improving its own information and knowledge processing capability. This means that Moore’s Law can be applied at this stage.
Moore’s Law asserts that if we measure the developmental pace of microchip technology, the amount of data storage that a microchip can hold doubles every year, or at the slowest every 18 months. Indeed, Gordon Moore, the co-founder of Intel and after whom Moore’s Law is named, noticed that the microchip capacity seemed to double each year up to the year 1965. Because the pace of change has slowed down a little over the recent years, the definition has altered with Gordon Moore’s approval to reflect that the doubling of microchip capacity occurs every 18 months [18]. George Gilder [19] called this world where Moore’s Law can be applied ‘microcosm’. ‘Microcosm’ is the neologism formed by combining the two words: ‘mikros’ which means small and ‘kosmos’ which means world or order.
Where Moore’s Law and microcosm operate, customers are likely to increase the capability of their own stand-alone PCs to create their own cyberspace in them. This leads customers to care for the quality and the cost of products and services. They want to buy a quality product or service at a lower price. This tendency ensures that companies lower the cost of their products and services while maintaining their quality. Therefore, the tendency can affect business organizations in two ways. First, firms in the ICT industry such as Intel would increase the scale of integration on a chip in order to survive. Second, companies in other industries would increase their capacity of information and knowledge processing while lowering the cost incurred by using economies of scale [20].
3.2. The link stage
As the computing capability at each node grows, people seek another use of computing power. This results in communication between nodes, which may be called a ‘link’. The link arises mainly from the use of email and is boosted by broadband network technology. While node expresses only its position, link conveys the concept of distance, similar to a line in geometry. The sharp increase in information traffic through ICT brings the death of distance according to Gilder’s Law [21].
Following Gilder [22] who insisted that bandwidth triples every 12 months at the same cost, Evans and Wurster [23] called this phenomenon Gilder’s Law. According to Blumberg Capital [24], information traffic had tripled every year while telephone charges had decreased by 10% every year for the last 10 years. With higher bandwidth, people can exchange a lot of digital content in cyberspace that could be exchanged only through CD or DVD in the past. George Gilder [22], again, called this world ‘telecosm’. The term ‘telecosm’ consists of two parts: ‘tele’ meaning distance, and ‘kosmos’ meaning world or order. The combination of Gilder’s Law and telecosm implies that minimizing distance through ICT is critical in this world.
In the business world, the death of distance may be considered the equivalent of the ‘death of time’. Therefore, customers put more emphasis on speed in addition to the quality and cost of products and services. Accordingly, every managerial activity should be performed on a real-time basis and firms should speed up all business processes as fast as they can through ICT and the economies of connectivity [25].
3.3. The network stage
The links among nodes eventually lead to a network of nodes and the formation of a virtual community. A network comprises aggregates of connections made of links. Network is different from link in two aspects. First, in links, nodes are connected to form one-to-one or one-to-many relations. In networks, nodes are constructed to form a shape of many-to-many relations. This means that many-to-many interaction among groups of people occurs in cyberspace beyond one-to-one or one-to-many interaction. Second, there is no distinction among nodes in a network while there is a distinction between the center and the periphery in links. This means information and knowledge are scattered all over nodes, and can be accessed and exchanged from any node in a network, similar to peer-to-peer commerce, notably in the case of Napster. At this stage, Metcalfe’s Law applies.
In the early 1980s, Robert Metcalfe, the founder of 3COM and the developer of the Ethernet protocol, put forward a law concerning the power of networking. Metcalfe asserted that the value of network will increase by ‘V × n(n–1)’ where ‘V’ stands for ‘the original value of network’ and ‘n’ for ‘the number of users’ [26]. In other words, the more people use a network, the more valuable the network will be. We name this kind of world ‘synegocosm’, following the same line as the terms ‘microcosm’ and ‘telecosm’. Synegocosm means that nodes and people with common interests or goals can generate synergy by establishing relationships in a network.
Synegocosm implies that customers recognize the value of relationship among members of a community and of the size of the community. At the same time, the core task of the firm shifts from the death of distance to the expansion of area. Therefore, firms should increase the number of nodes by taking part in networks or making an effort to form and maintain virtual communities and e-marketplaces to increase their customer base as well as to maximize the value of their products and services. Second, the value of products, services and companies will grow exponentially if a network reaches its critical mass based on the economies of network or the principle of network externalities [16].
3.4. The space stage
When networks pile up, space will literally emerge as a ‘final’ evolutionary stage of cyberspace. However, it will certainly not be the ‘ultimate’ stage. We can only expect that synergy among networks will occur in this meta-networked space although the final outcome is still vague. Therefore, one can hardly imagine which law will govern the next stage of cyberspace. However, there is no doubt that the internet and the new inventions derived from ICT will continue to be ‘killer applications’ [18].
Killer applications disrupt the firm and society in general, so that the old conventions and practices of society no longer work as before. Moreover, the foundations of society and the firm start to dismantle and the fabric of society changes dramatically. There have been many killer applications in human history, from the steam engine in the industrial revolution to spreadsheet software program for financial management and business, and the Mac’s what-you-see-is-what-you-get (WYSIWYG) graphic user interface. In this regard, we can argue that in the future, killer applications will open up a new horizon of the world.
In addition to killer applications, Downes and Mui [18] also referred to the death of the transaction cost theory developed by Coase [27], who had questioned why business firms happened to be built and thrived. The answer he had put forward was that business firms are invented to reduce transaction cost, for otherwise, business people would have to spend a lot to transact in the market. In sum, transaction cost causes business firms to form because it is cheaper to keep firms for transactions than to trade with others individually [27]. However, when cyberspace is truly realized, transaction cost will be close to zero because one can easily search for the trader who can offer the lowest price possible in cyberspace, whilst it is virtually impossible to look for this in real markets. Therefore, the role and significance of the firm will no longer be sustainable as before, while its contents will be more critical than ever.
We name this new era ‘neocosm’, in which the value of cyberspace goes up by creating new contents. In the neocosm era, creativity is required to increase the firm’s value due to knowledge externality, or the economies of knowledge [28]. Furthermore, direct transactions between buyers and sellers, outsourcing, and virtual organizations will spread as a general way of organizing companies. This model is conceptualized in Figure 4 in the form of a cylinder.
We can anticipate that the standardization of core technologies and infrastructure among various networks will be critical for communication and synergy among networks. From the customer’s point of view, customization will seek to recognize the new value of meta-networking. Customers will appreciate the firm’s creativity embodied in devices such as the PC, personal digital assistant (PDA), mobile phone, etc. Therefore, companies will try to develop unique contents for each individual customer. Furthermore, there are chances that existing organizational forms will be disrupted and new organizational forms such as a virtual office or a remote doctor will emerge because the transaction cost of these new organizational forms will be close to zero [25].
4. Research methodology
In order to support this hypothetical evolutionary stage model and propositions, the case study method is deployed. Case studies are the preferred strategy when ‘how’ and ‘why’ questions are being posed, when the researcher has little control over events, and when the focus is on a contemporary phenomenon within some real-life context [3], which is the case for this research. Because research on cyberspace is still primitive, this research will be an exploratory and descriptive case study rather than an explanatory and prescriptive one.
4.1. Research design
In terms of case design, one research institute in South Korea, namely Samsung Economic Research Institute (hereafter SERI), is selected for several reasons. First, SERI is one of the heaviest users of the internet. According to Alexa Research, the page views of the SERI homepage ranked first among the homepages of think-tanks across the world in April 2001. Second, the authors had a chance to observe the evolutionary process of cyberspace as Chief Knowledge Officer and a chief researcher in SERI over a period of time, and could have access to SERI performance data that is rarely available to outsiders. These reasons come under what Yin [3] called an extreme or unique as well as revelatory case because the investigators have the opportunity to observe and analyze a phenomenon previously inaccessible to scientific investigation, which justifies the single-case study research design.
4.2. Data collection
Data was primarily collected through on-site observation for a five-year longitudinal study, from 1996 to 2001. In addition, semi-structured interviews were conducted with 23 researchers and staff in the institute (representing 20% of total employees) in June 2001. Furthermore, data from documents was also collected to form the third source of evidence. The documents included annals, written reports and administrative documents as well as information from the database, the intranet and the internet.
4.3. Framework for research and data analysis
Yin [3] recommended setting up a framework to analyze and interpret observed data in order to increase the generalization of a case study. To this end, Yin’s [3] case study methodology is employed:
(1) research objectives and related questions are defined and relevant propositions are established;
(2) the relationship between propositions and data is tested; and
(3) various analysis standards to interpret the findings are suggested.
In addition, the results are reviewed from three viewpoints:
(1) the purpose of using cyberspace;
(2) the deployment of ICT; and
(3) the impact on organizational performance.
5. Case study: Samsung Economic Research Institute
5.1. Company background
The case company, SERI, was established in 1986 as an affiliated research institute of the Korean conglomerate, Samsung Group. It was separated from the group to become an independent research institute in 1991. Its research domains range from economics and business management to consulting services. SERI consists of five divisions: economics, management, consulting, public policy and research support. Furthermore, there are eight departments under the five divisions, in which 90 researchers and 25 administrative staff work.
5.2. The node stage
5.2.1. Purpose
SERI recognized the value of cyberspace and set up a major strategy to utilize cyberspace as a major ‘place’ for publicity, launching its homepage in September 1996. Although the launch might not be early compared to world-class think-tanks in the advanced countries, the institute may still be considered one of the earliest to realize the potential of the internet and cyberspace.
5.2.2. Deployment of ICT
Indeed, the node stage of SERI started even before 1996, when each researcher was given one desktop PC. As shown in Table 2, the power of PCs doubled every year in terms of CPU, hard disk and memory. Furthermore, we could confirm that the cost per research report was decreasing each year by comparing the cost per node and the number of reports produced. The slight increase in the cost per report in 1999 reflects the additional costs incurred when SERI replaced desktop PCs with laptops.
In addition to PCs and laptops, printers as well as fax and copy machines were used extensively to improve researchers’ productivity. Furthermore, stand-alone CD-ROM databases such as ABI/INFORM were introduced. Several individuals started to use a scheduler for their own information management purposes.
5.2.3. Impact on organizational performance
As the above data shows, Moore’s Law was supported in that the capability of each node to process and save information and knowledge increased dramatically at the node stage.
As one could imagine, the introduction of many computing facilities and tools into the institute made a huge impact on the working life of SERI researchers. According to one of them, many changes happened at this stage:
Before 1997, we didn’t use presentation tools like MS-PowerPoint. But in 1998, we had more and more occasions to use presentation tools, and we found that the power or capacity of our PC was noticeably far below the level we must have for opening a file and even booting up the system. It annoyed and irritated us. But when the PCs were upgraded to Pentium II in 1999, these problems rapidly diminished.
Another researcher commented in a similar vein:
The still and moving picture files which I produced had to be stored, and their number was increasing dramatically. With internet surfing rapidly becoming a part of everyday life and even a research activity itself, data storage capacity became a critical factor in doing research. So the zip drive made by Iomega was purchased. But it was not a solution because of its limited storage capacity, which was only 100 MBytes. It also took a lot of time to retrieve data (from a zip disk). But in 1999, our PCs were replaced and the new machines provided enough storage capacity to resolve the problem.
Following this line of opinion, the Chief Information Officer (CIO), who initiated these hardware investments, assessed the changes positively:
Although upgrading PCs and purchasing zip drives and CD writers cost a lot, we have noticed that the unit cost of producing research papers has dramatically decreased at the same time. Specifically, we can point out the fact that the investments on hardware are able to get rid of the tedious work previously done by researchers. It means low value-added tasks are no longer hindering our researchers’ productivity. Moreover, I believe productivity is increasing because the researchers are happy with these changes.
5.3. The link stage
5.3.1. Purpose
As the internet became popular in South Korea, organizations began to launch their own homepages. SERI launched its homepage in 1996. At first, the homepage focused on publicizing the institute itself. The homepage consisted of six categories: introduction, research areas, research results, statistical data, recruitment, and introduction to Special Interest Group (SIG) fellowship/internship. However, the emphasis of the homepage gradually moved from promotion to communication.
5.3.2. Deployment of ICT
In July 1997, the institute decided to upload and provide free access to the results of all its 11 years’ worth of research. The decision triggered a tremendous increase in internet traffic as shown in Table 3, reflecting the fact that Gilder’s Law was setting in. In addition, SERI began to send its ‘mail-(maga)zine’ to its clients through the internet. With that, the amount of data exchanged and number of clicks per day increased dramatically, while the costs of communication and clicks decreased rapidly.
The launch of its homepage represented communication between SERI and external parties. At the same time, the intranet opened up communication paths and accelerated the speed of communication between researchers inside the organization. The institute tried to pool the information and knowledge of each researcher into groupware (e.g. a bulletin board system) and on the on-line database in order to improve communication and knowledge sharing among researchers.
5.3.3. Impact on organizational performance
As far as the institute was concerned, the effort was successful. Thus, many researchers appreciated the change, especially using the internet and email. A researcher pointed out the value of the communication tools as follows:
When we communicated with other researchers (in the past), we had to meet them in person or contact them by telephone. But now, we are using groupware including email and bulletin board systems, which facilitates communication.
The changes happened not only within the institute but also in relations with the outside world. Another researcher spoke of his experiences:
We used to distribute research papers in hard-copy form, and readers did not get to know authors. Interestingly, after posting the files of research papers on the homepage of SERI, the number of people commenting on a paper and asking the author to lecture or write articles is steadily increasing.
5.4. The network stage
5.4.1. Purpose
As it may be observed, the link stage was mostly based on one-way and one-to-one or one-to-many relationships. In order to overcome the inherent limitation and shortcoming, SERI revamped its web site and operation method in July 1999. The institute reorganized its web site into four categories:
(1) home;
(2) database of reports and data;
(3) forum; and
(4) vertical portal for economics and management.
This major change at the web site aimed to create virtual places within which knowledge could be created and exchanged in an interactive manner.
5.4.2. Deployment of ICT
SERI started to run its web site on a membership basis. In particular, under the forum section, virtual communities for professional interests were organized. Members not only exchanged information and knowledge in a many-to-many mode on a real time basis, but also created off-line human networks. As the champion of SERI forum, the CIO assessed this change:
Surprisingly, SERI became the Number One site among non-profit organizations in the world in terms of the number of hits according to Alexa Research. The SERI forums, as SIGs, can be credited for this. In Korea, we can find a lot of non-specialist forums, but our SERI forums are specialized forums dedicated to economics and management-related SIGs, and are very unique.
5.4.3. Impact on organizational performance
As the number of forums increased, Metcalfe’s Law started to work. These forums significantly contributed to the institute’s reputation and value. Furthermore, these networks provided positive feedback to offline activities such as co-authoring and the publishing of books. A researcher highlighted other positive aspects of the SERI forum, noting that it vitalized his creativity and research activity.
I am happily using the SERI forum located at our homepage because I can occasionally find very good data and literature that are hardly seen at other internet sites.
SERI channeled its effort more toward external parties than toward internal members at this stage, although the institute itself and internal members also benefited indirectly from the effort. Furthermore, SERI began to sell its own commercially published books through the e-marketplace, and this operation generated some profits. Thus, the manager in charge of the publication section said:
Currently, we are advertising our published books on the internet. After all, I believe the order of books using the internet is gradually increasing although the size of the order is still small. In the long run, by the time we publish e-books, I think the number of books sold on the internet will be greater than in offline sales.
5.5. The space stage
5.5.1. Purpose
Traditional forms of organization or working practices are no longer significant because the ‘fully working’ cyberspace is coming to us. This may be called the space stage of cyberspace. Likewise, SERI appears to be entering the space stage.
5.5.2. Deployment of ICT
Since April 2000, SERI has signed a number of Memoranda of Understanding with insurance companies, a newspaper, the financial industry, and promising venture companies in South Korea to provide them with its research outcomes. Its strategic partnerships with other companies and institutes can be considered a form of links among networks. For instance, the CIO proudly said:
We made a good deal in our strategic alliance with the Korea Herald (an English daily newspaper in Korea). The deal, which allows us access to all the data kept by The Korea Herald, is possible due to the power of our homepage even though we have a relatively small number of research papers compared to the data of The Korea Herald.
SERI has changed its content-provision method from text-based to multimedia-based. In order to produce multimedia contents, SERI has equipped itself with its own internet broadcasting studio. The target audience for this service is the Chief Executive Officers of the top 100 companies in revenue in South Korea. For the general public, SERI provides customized news and content by letting the clients themselves select their own preferences out of 30 categories. Once a user has decided on his/her preferences, the search robot looks for relevant news items according to these preferences overnight; human searchers then rank the importance of the items in the morning, and send them to the client. This means SERI is utilizing all the networks available as well as its own network in order to create maximum benefit for its clients. It also means good content will be the key success factor in cyberspace in the future regardless of its container or medium.
5.5.3. Impact on organizational performance
The institute has shown its ability to utilize cyberspace. In a sense, it has been competitive enough to declare its entrance to cyberspace in the first place.
Most business activities currently running at SERI, such as strategic alliances, multimedia contents and customized news services, are generating profits. In fact, SERI has applied for a patent for its business model which is related to providing customized news services. Concerning multimedia contents, the manager leading the department of multimedia expects cyberspace to become its new base of revenue generation said:
Multimedia contents, which are only starting operation, have not been spotlighted yet. But I expect them to be a major source of revenue for SERI. Once the fees being paid by customers cover the fixed cost, the rest of the revenue will turn into net income. In other words, this business is really a good example of the knowledge economy in that there is an increasing rate of return.
However, the real value of these services goes beyond revenue generation. As the head of the research planning and coordination department commented:
Obviously, it is important to increase revenue from the internet business. But I believe the more important mission of SERI is to disseminate and propagate our value and vision to the Korean society using the internet. Our main customers are the opinion leaders in the Korean society.
5.6. Benchmark for the stages of cyberspace
We have discussed the existence of four stages of cyberspace development which have evolved according to various rules and principles such as Moore’s Law, Gilder’s Law, Metcalfe’s Law, and the Law of Disruption. We could also identify the differences of each stage in terms of its purpose in using cyberspace, deployment of ICT, and the impact of performance. However, it is not an easy task to distinguish one stage from another although we have used several objective criteria at each stage (see Tables 2–4). We have therefore tried to find another objective way to benchmark the evolution of cyberspace.
While we were investigating the whole evolution process of cyberspace, we noticed a few leaps in the ICT expenditure of SERI when the institute moved from one stage to the next. This is very similar to Nolan and Gibson’s (1974) findings on companies’ computer budgets, which were used as a surrogate measure to differentiate each stage in managing computer resources.
As shown in Figure 5, ICT expenditure on the node went up until one desktop PC per researcher was achieved in 1995. Then, it went up slightly again in 1999 when desktop PCs were being replaced by laptops. ICT expenditure on links rose rapidly since LAN was introduced in 1994. It peaked in 1996 and then gradually diminished. It then increased temporarily in 1999 due to the additional installation of the internet line for the virtual community. After 1999, a large portion of the ICT budget was used to develop the customized software related to the network. The ICT expenditure related to space has increased since the year 2000, along with the development of multimedia content. Therefore, we can clearly tell the differences in ICT expenditure at each stage and propose ICT expenditure as a measure to distinguish the evolutionary stages of cyberspace.
6. Discussion and conclusion
In this paper, we have articulated the evolutionary stage model of cyberspace. Through our longitudinal study on SERI, we have tried to focus on the evolutionary process of cyberspace – rather than the cross-sectional aspect of it – in terms of the purpose of using cyberspace, the deployment of ICT, and the impact on performance. This study results in the following four points.
First, this research supports the proposition that cyberspace goes through four evolutionary stages – node, link, network and space – based on Moore’s Law, Gilder’s Law, Metcalfe’s Law and the Law of Disruption, respectively, which are derived from the New Economy and appear to be the driving forces of the various stages.
Second, the purposes of using cyberspace at the stages of node and link are generally to enhance the productivity of research activities, the facilitation of communication, and the sharing of information and knowledge among researchers. As cyberspace evolves further, the purpose is extended outside the institute: to exchange and share information and knowledge with outsiders, to publicize research results, and to build expert communities among the institute’s researchers and outside experts.
Third, different ICTs are deployed in different evolutionary stages. In most cases, information technology such as a computer is mainly used at the early stage of node while communication technology such as LAN is actively used at the stage of link. In-house customized software such as the internet homepage employed at the nearly final stage of link becomes the core technology in the stages of network and space. We could also observe not only more sophisticated technology such as robots used at the stage of space, but also the emergence of chemistry between old technology and new technology, such as multimedia broadcasting.
Finally, this study has aimed at providing a more objective benchmark to distinguish each stage. Based on the ICT cost analysis of SERI, we have proposed that changes in ICT expenditure be used as a surrogate measure to distinguish each evolutionary stage. In the case of SERI, the cost spent on the utilization of ICT showed three sudden jumps, confirming the existence of the four stages that the jumps demarcate.
As far as our review of the literature on cyberspace research shows, ours is the first attempt to propose an evolutionary model. Because most previous studies on cyberspace dealt with a cross-sectional aspect of cyberspace at a certain point of time, they could not show the dynamics of cyberspace evolving over time. To help bridge the gap, we have conducted a longitudinal study on cyberspace and attempted to provide some insights on its evolution. Moreover, our research identifies four rules or principles that can explain the rationale behind the evolution of cyberspace. The driving forces which we have highlighted are well suited to explain the New Economy that has been spreading with the advent of the digital age. Moreover, this study proposes ICT expenditure as a surrogate measure to distinguish each stage in the evolutionary model. Even though there can be disagreements about this criterion, it is worth suggesting an objective criterion for the first time that is similar to Nolan’s data processing expenditure. Empirical study on using ICT expenditure as a surrogate measure should be exploited further in future research.
This paper also highlights a number of managerial implications that can be usefully applied to the utilization of cyberspace in business organizations. First, our findings suggest that managerial tasks are distinguished among stages as elaborated in Table 1. Therefore, the management should carefully articulate and implement the plan for the utilization of cyberspace step-by-step with an understanding of the driving forces and objectives of each stage. Second, evidence from our ICT expenditure analysis suggests that ICT costs should be carefully planned and managed in advance to progress from one stage to another. Otherwise, the organization may not gain full advantage from the utilization of cyberspace. Third, organizations should pay more attention to content rather than containers in the future. Even though we only have a vague idea about the final stage, it is clear that content will become more and more important in the future, once the driving forces behind cyberspace are understood.
Despite its interesting results and implications, there are several limitations to this study. Among these, the biggest limitation is that it carries the drawback of a single-case study with regard to potential vulnerability and difficulty of generalization [3, 29]. Moreover, this study is exploratory in nature. Therefore, further research should be done to support the propositions made.
In future research, it might be interesting to investigate the relationship between the evolution of cyberspace and knowledge management. Because our study has been carried out in a knowledge-intensive firm, we have had a chance to observe the promotion of knowledge management through the utilization of cyberspace. If we define cyberspace as a place within which knowledge is created, exchanged and realized, more meaningful implications can be drawn.
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