The Importance of Information Flow for Business Development

The flow of information helps entities integrate operations and services that lead to a more efficient system. It doesn’t matter if we are discussing a single company, a group of companies, or an entire hub of economic activity. The process of encouraging proper information transfer and collaborative problem solving is important for moving an organism to its highest state of existence. 

Imagine for a moment how well your body works if your feet didn’t communicate with your brain and your brain had no way of talking to the hands. You would have a difficult time walking, grabbing items, and otherwise functioning. You would eventually starve and pass away. The same occurs in companies and economic hubs when elements can’t communicate together. 

Glazer in his book Smart vs. Dumb Service Strategies: A Framework for Ebusiness Intensity discusses the importance of information flow in developing an entity for higher levels of performance (2001). He makes three distinctions where information integration can be beneficial: 

Downward flow: The flow of information between companies and customers (i.e. the in and outflow of information). 

Upward Flow: The flow of information between suppliers and the company (i.e. efficient operations by integration of networked operations). 

Internal Flow: The flow of information held internally by a company (i.e. collaboration of internal elements). 

Within any entity there is a need to ensure information to and from stakeholders is being used to improve the overall system.  That information needs to flow includes customer to company, company to supplier, and department to department.  Without that ability the system becomes dysfunctional and non-competitive. Improving the flow of information can make a difference in an organism’s ability to effectively adjust to its environment and succeed. 

How that improvement in information flow occurs depends on the type of organism but generally relates to meetings, positive relationships, egalitarian structure, information postings, open cultures, surveys, collaboration, and promotion. The organization must fully and functionally accept the inherent nature that new information should be encouraged, accepted, and capitalized on. 

Glazer, R. (2001). Smart vs. Dumb Service Strategies: A framework for EBusiness Intensity. New York, Armonk E-Service.

How Knowledge and Technology Improves Small Business?

The Internet has contributed to globalization while small and medium (SME) businesses are finding the ability to connect with worldwide customers and increase revenues. Research by Vanyushyn, et. al. (2011) discussed the implementation of Internet technology for either structural improvements or marketing enhancements. SME adoption of new technology is important for their overall growth and innovative contribution to economic development.

The Internet is reducing borders and spreading new technologies that create shifts in global structure (Kemeny, 2011). As information spreads, cultures change, businesses connect together, and commerce adjusts it develops a wider marketplace. A small business can be located in the U.S. but have customers from nearly any other place on the globe. Such changes were not possible a few decades ago.

New information technology increases interaction between local governments, large corporations, and international organizations while SMEs improve upon their international competitiveness (Ruzzier at. al., 2006).  Because business is less restricted to geography than it was in the past small businesses can find ways of filling gaps and services in an international market while still being grounded in their local communities.

SMEs are also a major catalyst to local and national economic growth. A report by the European Commission (2011) found that “European SMEs are a major source of job creation: More than 50% of new jobs derive from a group of fast growing companies representing 4% of the total number of European SMEs. In addition, almost half of the two million industrial SMEs have recently introduced innovations to the markets.” Such businesses improve upon the employment market and develop new technologies.

To be successful in an ever changing market businesses must innovate and continue to innovate when new challenges present themselves. Innovative behavior is directly related to the performance of innovation by the adaption or creation of new technology, products and/or processes. The adoption and integration process becomes a new source of competitive advantage for both the business and the nation.

Innovation is not only within the realm of technology but also includes the gathering of knowledge to create change. Innovative change comprises proposing new questions, developing new skills, creating technological advantages, or finding new ways of resolving problems (Comison-Zornoza, et. al., 2004). Innovation is a process of learning about new competencies and technologies that enhance performance and then integrating them into processes for higher organizational effectiveness.

The authors studied 1.) the sequence of steps in the adoptive process, and 2.) the evaluation of the contribution of the Internet on international competitiveness. They found that over time new technologies reduce cost, develop skilled specialists and improve productivity. Small firm innovation takes on more of a refinement, production, implementation, and execution of new online channels. SME can integrate new technologies through refinement of process that are realized in more effective production and performance.

Camison-Zornoza, C., et. al. (2004). A Meta-Analysis of Innovation and Organizational Size. Organization Studies, 25, 331–361.

European Commission (2011). Assessing the performance of European SMEs. Enterprise & Industry Online Magazine. http://ec.europa.eu/enterprise/magazine/articles/smesentrepreneurship/article_10581_en.htm

Kemeny, T. (2011). Are International Technology Gaps Growing or Shrinking in the Age of Globalization?. Journal of Economic Geography, 11, 1-35.

Ruzzier, M., et. al. (2006). SME Internationalization Research: Past, Present, and Future. Journal of Small Business and Enterprise Development, 13, 476-497.

Vanyushyn, V. et. al. (2011). New business models for international performance-a longitudinal study of Internet and marketing. ICSB World Conference Proceedings: 1-17. Washington: International Council for Small Business (ICSB).