UNCTAD (2005). Information and communication technology are transforming the global economy and are creating new business linkages and opportunities that cross business sectors, cultures and distances. Access to these technologies remains difficult in many parts of the world especially in the Least Developed Countries (LCD’s) – this inequality is referred to as the “digital divide”. Often the “Digital Divide” is a reflection of social and economic inequity between and within developing countries. Developing countries have a necessity to proactively integrate themselves into the ICT Society in order to avoid remaining on the periphery of the global economy – this is particularly true of the tourism sector. Tourism is an information intensive sector and ICTs are key drivers for developing countries in organising and marketing their tourism products.
No sector has been more affected by the “technology revolution” than Tourism – ICTs have totally changed the historical trading structures of the industry – and of these technologies possibly the commercialisation of the Internet has resulted in the most dramatic changes. Not only have ICTs made it easier for developing countries to market and distribute their products and increase their customer base, but they have also made it easier for stakeholders to access market and management data, to share information and build trading partnerships. Encouraging the development of e-business practices in a developing economy makes it easier for countries to share information and to encourage co-operation among stakeholders. ICTs have become one of the most effective tools for addressing the imbalance between competing destinations in the global market. Indeed for many tourism market sectors and tourism products, marketing and selling via Internet is fast becoming the accepted and preferred method.
In addition to the importance of e-business solutions, the importance of ICTs in times of major natural disasters, acts of terrorism and crime has now become vital. In these circumstances, ICTs have become an essential tool as a means of anticipatory warning and post impact crisis management and in controlling their harmful effects on tourism. Policy makers and tourism enterprises today need to understand the implications of ICT developments and the importance of their role in developing and maintaining a strong sustainable tourism industry.
Making ICT and e-development strategies an integral part of policy planning is now essential in order to support the necessary human and physical infrastructure, to introduce and adopt measures to ensure equitable access and widespread capability, and to make maximum use of ICTs. Developing countries need to adopt ICTs and associated business processes and management skills in order to remain competitive in the constantly changing and increasingly competitive global tourism market. The positive effect of ICTs on the tourism industry in a developing country depends on a national enabling ICT environment that relies on multiple factors including:
• Capacity Building
• Legal Framework
The role of ICT in the globalisation of firms:
The development of global competitive structures implies both a decreasing role of boundaries and an increasing density of global competition. This process causes a global “liquefaction” of competition with an increasing number of autonomous economic actors such as small and medium-sized enterprises (SMEs) or decentralised units of multinational enterprises (MNEs) that both co-operate and compete in the
global context (Welge/Borghoff 2003). The unfolding network competition is marked by an increasing extension and density of economic interactions and interdependencies on global scale. A major driver of globalisation is technological progress. The rise and commercialisation of the Internet and the maturing of information and communication technologies (ICT) are making organisations’ business environments increasingly more international, and as a consequence also their communication and business processes (Bicak 2005:5).
ICT encompasses the full range of the production, distribution, and consumption of information, across all media from radio and television to satellites and the Internet. The information revolution facilitated the shift from analogue to digital technologies; convergence merges computers, telecommunication, television, and the Internet into a single multimedia environment (Wilson III 1998: 6). The radical development of ICT is an essential factor for the continuing globalisation of organisations’ political, social, and economical environments. The most significant factor is the continuous development of the Internet and the WWW as the fundamental infrastructure for e-commerce. The Internet has become known as the “global network of networks” or “global information infrastructure” (Bicak 2005:9 ).
Knowledge and innovation have taken a quantitative jump over the last decade in the wake of the “explosion” of ICT, the globalisation process, and dramatic advances in the life, materials, and energy sciences. These developments have led to new industries and new services, as well as to the renewal of established ones (Aubert/Reiffers 2003: 9). Industry boundaries are easily crossed as value chains are being redefined (Amit/Zott 2001: 495). The knowledge economy develops high-tech industries, particularly in ICT and services (Ibid. 10). The development and diffusion of ICT is a prerequisite and facilitator of globalisation and the transformation into a knowledge-based economy. The most significant advancement in recent times is the emergence of the Internet and the subsequent evolution of electronic commerce (Melewar/Stead 2002: 29). ICT have supported, facilitated, and often provided the impetus for global business development (Nelson/Clark, Jr. 1994: 19).
ICT are both catalysts of globalisation and solution base from which to address international main challenges. IT can provide the strongest link in business chain of partners, products, and suppliers, and is the basis for doing business around the clock and around the world (Deans/Kane 1992: 1). The network-centred phase we are in since the 1990s induces (1) an increase in the transparency of information on global markets and activities, (2) a decrease in the cost of information, facilitating global activities for an increasing number of firms, and (3) an increase in the speed and volume of communication, both internally and externally, making coordination of globally dispersed activities much easier (Samii 2004: 11). On balance, technological change has shifted the fundamental emphasis away from computing towards communication and co-ordination of activities (Sampler 1996:19).
ICT affects the cost and efficiency of the external market place (Blaine/Roche 2000: 4-6). ICTs have the potential to dramatically reduce market imperfections and lower transaction costs and coordination costs (Blaine/Bower 2000: 27). The tremendous advances in ICT are leading to an entirely different type of industrial structure with mutually beneficial co-operations and networking (Roche 2000: 82). In most industries, supply chains become more elastic and flexible. The reconstitution and diffusion of the core activities across a number of global industries (e.g., automotive, financial services) are marked by ICT-induced dynamics. However, ICT will not eliminate the importance of distance and location, and in fact in some cases, makes proximity and clustering even more important (De la Torre/Moxon 2001: 630).
Due to the globalisation of local markets and the emergence of the global electronic markets, worldwide acquisitions and cooperation strategies gain importance (Bicak 2005: 14). ICT allow firms to coordinate and control actions in distant locations, thus expanding the potential reach of the firm. They also lower transaction costs and facilitate networking. The Internet provides the possibility of distributed project teams, pooling of expertise worldwide and communicating electronically, rather than being bound to a single physical location (Gable 2006: iii). ICT increase the information-processing capacity and thus the decision-making capacity. ICT supports both the standardisation of products and the coordination of business processes across border (Schober 1993: 213). Externally, by linking intranets to the Internet, organisations are beginning to integrate their internal operations more closely with their vendors, partners, and customers (Bollier 1998: 2-3). ICT can support vertical quasi-integration, outsourcing, and quasi-diversification (all co-operative modes) (Clemons/Row 1992: 12).
Increasing globalisation, the growth and spread of ICT will continue to dominate the world economic scene for many years and their importance will grow as they are driving each other (Samii/Karush 2004:) From a global perspective, IT implementation and diffusion with emphasis in different cultures and countries has been analysed. The role played by the different national cultures on information systems management has been one of the most important topics in global IT (Del Águila et al. 2002: 18). During the 1990s, a revolution occurred in computer and telecommunication technologies which enabled firms to structure and control their international operations in previously unimaginable ways (Blaine/Roche 2000: 3).
The influence of ICT on the globalisation of firms:
There is a significant gap in the description and explanation of the emergence and development of firms on global scale. Internationalisation theories basically describe the build-up of international activities by SME but neglect the integration and coordination of these activities. Theories of MNEs, on the other hand, focus either on the explanation for the existence of MNEs (economic theories) or on the co-ordination perspective (management approaches) but fall short in describing the process perspective in the development of MNEs. While internationalisation theories illuminate the development of firms from a national to an international level, they generally neglect the network building process which is a central characteristic of globally operating firms and an evolutionary driver of this process.
In an analysis of the research articles published in the Journal of Information Systems Research (ISR) and the books published by the International Federation on Information Processing (IFIP) between 1990 and mid-2001, Sawyer/Chen (2003: 113-114) discovered five, mostly technical core areas in ICT research from a technological perspective. Despite the variety of works done in the IT organisational impact area and in the global IT area, there has been little effort of integration of these research fields (Del Águila et al. 2002: 19). On balance, there are four distinct research areas from the management perspective: (1) ICT as competitive advantage, (2) one- and multidimensional models explaining the influence of ICT on performance, (3) the fit of global strategy and global IS, and (4) the influence of ICT on organisation structure.
ICT as a source of competitive advantage:
From a domestic perspective, strategic ICT have been studied as competitive tools. ICT can help to gain competitive advantage and to re-engineer business processes. Few researchers have attempted to move this research to a global context (Sakaguchi/Dibrell 1998: 380). A large number of studies have related the creation of value by means of IT with the gaining and maintenance of competitive advantage (Bharadwaj 2000, Powell/Dent-Micallef 1997). Several authors discuss the value of ICT as a strategic asset providing competitive advantages or even constituting a competitive advantage itself. The basic question is whether ICT provides a sustainable competitive advantage to a business or if it is a competitive necessity (Manheim 1990: 145) that the study of ICT as a competitive advantage was particularly popular in the beginning of the “information revolution”.
The options for further study in this area consist of the identification of new resources complementary to IT, and the description of the conditions under which ICT serve as a valuable resource. However, the very dynamic nature of ICT works against it being a source of unique, competitive advantage for any single company (Manheim 1990: 147). Any advantage gained from IT appears almost by definition unsustainable but ICT (1) can win market share, (2) can be good for the industry, (3) can provide first mover advantage, and (4) innovations can continue (Yves/Vitale 1996: 107). In one of the few studies linking ICT to International Management from a theoretical perspective, Samii (2004: 11-12) reflects the eclectic paradigm and thus typical competitive advantages in international business on the basis of the advances in ICT, viz:
• the ownership advantage has particularly been challenged by ICT as the Information transparency and speed of information flow has resulted in globalisation of innovation and technological know how. Lifecycles of invention and innovation have become shorter and global process benchmarking and reverse engineering have become more prevalent in the age of ICT.
• ICTs have created transparencies which have reduced ownership advantages. However, advantage has shifted to web presence and design, IT-trained work force, and the ability to leverage information for competitive advantage. ICTs increase firms' ability to benefit from location advantages due to reduced cost and ease of communication. ICTs also increase the ability to collect information on risk and regulatory environment. Communication technology facilitates the exploitation of
location advantages through communication.
• ICTs facilitate (1) a shorter duration of transactions, the simplification of procurement processes, (2) opportunities for an increase in trading, (3) a prospect for trade in services, and (4) the integration of activities of various affiliates. All these factors diminish internalisation advantages.
In general, IT is lowering the advantage of internalisation. Transaction costs are reduced because of ICT, making internalisation less expensive while at the same time increasing control. It also helps firms to benefit from strategic alliances due to network externalities.
Influence of ICT on efficiency:
Until the early 1990s, most researches on the subject of IT stopped short of looking at impact measures and was often limited to addressing the question of ‘fit’ (Jarvenpaa/Ives 1993). Then, a stream of researches focused on the analysis of the correlation between economic performance/productivity and IT investment (Brynjolfsson/Hitt 1996). There were already mixed or negative results in the 1970s and 1980s regarding the effect of IT expenditures on firm performance. Since the 1990s, studies show a positive impact. However, there are no studies in international comparison (Blaine/Bower 2000: 50). Interdependencies between ICT and other organisational variables are difficult to prove due to problems in their identification, causal relations, and complexity. Case studies are often the only method to discover interdependencies between technical and organisational developments (Ifo 1999: 52, Klein 1996: 137).
Hence, there are no definite empirical results indicating the influence of ICT on the efficiency of organisations. Empirical studies provided evidence for positive, negative, and even neutral relations between the intensity of the use of ICT and increases in the efficiency of firms (Brynjolffsson/ Hitt 1996, Cohen 1995, Lichtenberg 1995, Loveman 1994, Morrison/Berndt 1990). Furthermore, ICT has become a strategic necessity rather than a source of competitive advantage (Clemons/Row 1992). ICT may serve as a basis for the development of strategic success factors by enhancing product utility or organisational innovation and efficiency but does not constitute a competitive advantage per se.
Fit of ICT and strategy:
ICTs are essential ingredients for business expansion, providing strategic competitive advantage in worldwide markets (Ives/Jarvenpaa 1993) and facilitating globalisation (Palvia 1997). They also serve as magnifiers of business competitive strategy and as vehicles for building new strategies and new businesses. ICTs support a competitive strategy and create new strategic options (Earl 1996: 49). ICT can dramatically compress time and distance, facilitate the coordination and movement of worldwide goods and services, allow for the sharing of human expertise and other resources, and provide the infrastructure necessary for operating new services that generate real competitive advantage (Whitworth et al. 2005: 282). The means of introduction and expansion in new markets or the defence strategies against external competitive pressures can be interrelated to IT utilisation and development choices (Del Águila et al. 2002: 22). On a balance, more research is needed to fully understand the relationship between IT utilisation and competitive advantage using knowledge management practices by the same firm in different parts of the world. Strategic positioning becomes all the more important. ICT have long been recognised as a management mechanism integral to a firm’s shift from a national to a global strategy but the focus of concern has been sporadic, uneven, and eclectic (Broadbent/Butler 2000: 156).
The influence of ICT on globalisation capabilities
There is a large variety of definitions of the term “globalisation”. In international management, globalisation is generally conceived as a process of global integration and standardisation. Here, globalisation is a historical process, which leads to the development of a new layer of social systems on a global level and to a potential interdependence of globally dispersed social systems. The basic mechanism of social evolution is the differentiation and integration of social systems (for example: societies, organisations). Through globalisation, social systems worldwide become interdependent and even new social systems with global extension may emerge. Globalisation is the process of differentiation and integration of social systems across national and cultural boundaries. Globalisation processes are constituted by three sub-processes:
1. Internationalisation: changes in the level and dispersion of activities in
different national markets;
2. Global networking: development of internal and external network structures in the global context;
3. Evolutionary dynamics: drive differentiation and integration of social systems on global scale.
Firms are in a co-evolutionary process with their environment. Firms develop respective characteristics and capabilities in their globalisation which reflect these sub-processes of globalisation and thus increase their chances for successful globalisation.