What a networked society means for businesses

As connecting to everyone becomes easier, big companies will get bigger, even as they’re confronted by a proliferation of small, specialized firms

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Does the growth of networks that make it easy for everyone to connect to everyone else encourage greater concentration of business enterprises (i.e., the big get bigger) or greater fragmentation (the proliferation of many small, specialized firms)? The answer to this question, it turns out, is “yes.”

On one hand, ubiquitous broadband networks are enabling organizations to grow by expanding the scope of their operations — sourcing inputs from everywhere, collaborating with partners anywhere, and selling goods or services globally. On the other hand, the evolution of computing and communications technologies is dramatically lowering the barriers to entry for new competitors, leading to disruption in almost every business sector.

But which way is the wind blowing? What determines whether more networking favors more concentration or more fragmentation? Way back in 1987, at the dawn of the networked age, three scholars — Tom Malone, Joanne Yates and Robert Benjamin — published a study that explored this question. 

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