Asia pacific journal of information systems

The Korea Society of Management Information Systems (한국경영정보학회)
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A Study of the Increasing Returns to Scale in the Internet Business using Non-parametric Analysis Model

비모수 분석모형을 활용한 인터넷비즈니스의 수확체증법칙에 관한 실증연구

  • Published : 2003.12.31
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Abstract

This article attempts to examine the well-known law that the increasing returns to scale(IRS) is effective in the Internet business. The effect of IRS is one of the hottest issues in the Internet business sector. Many cases and survey studies support the fact that the IRS phenomenon exists in the Internet business. Executives in Internet business generally give a deep trust on this theory. As the Internet business grows, however, the boundary of the business becomes widened and complicated. And each category of Internet business is characterized with a different business style and economic behavior. It may, therefore, be dangerous to accept that the phenomenon of IRS is applied to all areas of Internet business. For this reason, the research for the close look into the IRS phenomenon should provide significant implications for the managers in the Internet business industry. This article divides the internet business into four sub-areas, and analyzes the IRS phenomenon using AHP/DEA-based full ordering technique. Interpretations are given, based upon the research results, for each sub-area of Internet business, as a guideline of setting business strategies for practical managers.

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