In this Information Age, the Internet economy is said to be the next growth engine. The advanced technology of the Internet has brought traditional business activities to a whole new level, which is electronic commerce. Internet is the strong force which fuels the growth of e-commerce. Electronic commerce refers to a wide variety of online business activities for any forms of products and services. Examples of online business activities are the delivery of business information, the transfer of ownership or rights of goods from one to another, and the establishment of business transactions. All these are conducted over the telecommunications networks and the electronic systems such as the Internet. In a similar manner, the parties which are involved in buying and selling interact with each other electronically rather than physical exchange.
Electronic commerce has different definitions and explanations in different perspective. From a communication perspective, e-commerce is the trading of information or settling payments electronically. From a service perspective, e-commerce is a tool which addresses the desire of firms, consumers and management while improving the quality of goods and increasing the speed of delivery. From an online perspective, e-commerce is about the capability of buying and selling products or services. (Kalakota and Whinston 3) In general, e-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals. In this age of Internet, the development of e-commerce cause information asymmetry from an online perspective, on the other hand, information asymmetry is also reduced from a communication perspective. The rapid development of e-commerce affect the job market by destroying certain jobs such as salesman, and create new jobs such as web master. Lastly, e-commerce also leads to globalization in business.
Information asymmetry is defined as a situation where one party has more or better access of information compared to another rival party in making business decisions.From an online perspective, information asymmetry occurs in between the seller and the buyer when the buyer is uncertain of the physical product. When a large infrastructure of a physical shop front is replaced by a “blog shop”, where consumers can only see the products online, this causes the lack of sensory information of the product. The buyer is unsure of what material of the product is made of. For example, the products shown on the Internet may look perfectly fine. However, the physical products may not be as good as it was shown. The seller may use some computer software such as ‘photoshop’ to ‘beautify’ the pictures of the products before posting it on the Internet in order to make it more appealing to attract people’s interest. As such, the buyer will suffer from insufficiency of information in making a business decision. The lack of sensory information and the uncertainty of physical product are the causes of the occurrence of information asymmetry in between the buyer and the seller.Some unethical business man is most likely to take advantage of e-commerce to deceive the people who purchase products online. Without a doubt, this will reduce the levels of trust and confidence of one for e-commerce.
On the other hand, from communication perspective, a reduction in information asymmetry occurs. This is because the Internet is a global system which is consists of a vast of interconnected computer networks. It works just like how the data flows across the Internet, knowledge and information about almost anything are now easily accessible by the people in every corner of the earth. A very good example is online banking. It enables one to access to its account summary information regardless of the location, as long...
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