Digital Age

1-10. Discuss the three laws that have shaped the digital age.

In conjunction, with technological advances there are three important laws which have brought the e-global age. They are: (1) Coase's Law: the noted economists, Ronald Coase, advocated vertical integration. To minimize the transaction cost of doing business, a firm would continue growing vertically until functions can be performed more cheaply outside the firm. Now Coase's Law works in reverse: firms will downsize their operations until doing them externally become more expensive than doing them internally. The Internet age has tremendously the opportunities to outsource operations globally. (2) Moore's Law: Gordon Moore, a co-founder of the Intel Corporation, predicted in 1965 that computing power would roughly double every 18 months while the cost would be reduced by about half. This law has been proven true ever since. Thus, for the same cost, computing power increase 10 times in five years, 100 times in ten years, and 1,000 times in fifteen years. The consequence of this law is that organizations must find new business solutions that would replace expensive production inputs with ever cheaper information and communication technologies. (3) Metcalfe's Law: Robert Metcalfe, the inventor of Ethernet and founder of 3Com Corporation, predicted that the value of a network increases with the square of the number of nodes (users). Today, there are millions of computers connected through the high speed Internet. Consequently, these networked computers and users are invaluable in doing global business.