Measuring and mapping the emergence of the digital economy: a comparison of the market capitalization in selected countries
| Published date | 14 August 2017 |
| Date | 14 August 2017 |
| DOI | https://doi.org/10.1108/DPRG-01-2017-0001 |
| Pages | 367-382 |
| Author | Simon C. Mueller,Alex Bakhirev,Markus Böhm,Marina Schröer,Helmut Krcmar,Isabell M. Welpe |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Measuring and mapping the emergence of
the digital economy: a comparison of the
market capitalization in selected countries
Simon C. Mueller, Alex Bakhirev, Markus Böhm, Marina Schröer, Helmut Krcmar and
Isabell M. Welpe
(Information about the
authors can be found at
the end of this article.)
Abstract
Purpose –The purpose of this paper is to develop a method to quantify the digital economy using a
representative measurement approach and use it to analyze the USA, Germany, the Republic of Korea
and Sweden.
Design/methodology/approach –The research approach of this paper is based on a developed
methodology to identify firms of the digital economy by measuring the market capitalization of selected
countries in comparison over time using financial databases.
Findings –Comparing the market capitalization of the digital economy, the USA lead both in absolute
as well as in relative terms. The 11 firms with the largest market capitalization are all American. For
Germany, the results show that policy measures should be undertaken to ameliorate competitiveness in
the field.
Research limitations/implications –This current measurement only includes public firms. An
interesting avenue for future research would be to transfer the approach to investigate private firms.
Originality/value –Previous research has focused on comparing information and communication
technologies adoption and infrastructure as well as innovation hubs between countries. The authors are
not aware of any paper to date which has compared market capitalization in the digital economy
between countries using a representative sample. This paper offers a research approach to measure
and compare the digital economy between countries. The methodology could be applied to other
countries which seek to benchmark their performance and derive policy measures to be able to
compete with jurisdictions leading in the digital economy.
Keywords Innovation, Public policy, Digital economy, Digital business, Internet economy,
Market capitalization
Paper type Research paper
1. Introduction[1]
Mobile devices and digital business models have found far-reaching economic and social
application during the past decade at a pace unparalleled in history. By bringing a full
experience of the internet and all of its use-cases also on mobile devices, the iPhone could
rapidly gain market share (West and Mace, 2010). In July 2005, the small company Android
Inc. was acquired by Google Inc. for an estimated price of just $50mn. Meanwhile, Android
has become the leading operating system for mobile devices, and not even ten years later,
1.6 billion people worldwide use a smartphone with the Android operating system (Statista,
2015). The impact can be seen everywhere around the globe just by the number of people
using their smartphone at a given place and time. Mobile internet and, hence the
opportunity to participate quasi-instantaneously in existing markets, has spread worldwide
at an extremely high speed, which very few observers expected.
© Simon C. Mueller, Alex
Bakhirev, Markus Böhm,
Marina Schröer, Helmut
Krcmar and Isabell M. Welpe.
Published by Emerald
Publishing Limited. This article
is published under the
Creative Commons Attribution
(CC BY 4.0) licence. Anyone
may reproduce, distribute,
translate and create derivative
works of this article (for both
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non-commercial purposes),
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Received 20 January 2017
Revised 13 March 2017
Accepted 14 March 2017
DOI 10.1108/DPRG-01-2017-0001 VOL. 19 NO. 5 2017, pp. 367-382, Emerald Publishing Limited, ISSN 2398-5038 DIGITAL POLICY, REGULATION AND GOVERNANCE PAGE 367
However, Weber et al. (2011) noted a lack of innovations from Europe over the USA and
Asian countries. This notion persists and receives increased awareness by policy-makers.
Angela Merkel, for example, pointed out at the World Economic Forum 2015 in Davos that
“A sober look at the role of Europe in the field of digitization, the role of the USA and the role
of some Asian countries shows however: we rather have to catch up than that we could
claim to be at the top [transl. from German]” (Merkel, 2015). The success, particularly of
Google, has also raised suspicion of a violation of competition regulations. Indeed, the
European Commission has opened an anti-trust case (Europäische Kommission, 2015).
For business-to-customer markets, such as mobile operating systems or smartphones, the
US dominance is rather obvious. However, the overall picture of the digital economy,
including business-to-business firms, is non-obvious and calls for reliable measurement.
Only a precise and reproducible way to measure the digital economy allows researchers
and policy-makers to assess the status quo and identify the need for action. Therefore, the
exact performance remains to be quantified, as policy-makers need reliable studies for
their decision-making. How the evolution of a digital economy of a given country can be
quantified in an international comparison is, therefore, the research question which this
paper seeks to address.
2. Theoretical background
Since Tapscott’s (1996) book, the term “digital economy” has received increasing attention.
The term first diffused during the turn of the millennium along with the spread of the internet.
It has gained further popularity following the introduction and diffusion of smartphones
since 2007. Notably, also the OECD has embraced the issue and accompanying policy
questions. It is publishing a broad variety of reports, among others the “Digital Economy
Papers” as well as the “Digital Economy Outlooks”. The OECD (2014) has also issued a
comprehensive set of indicators for comparisons between countries in their report
“Measuring the digital economy”. These indicators are predominantly about the
infrastructure, societal adoption and investments in information and communication
technologies (ICTs). In fact, research on the adoption of ICT started decades ago, along
with efforts to measure the “digital divide” (Corrocher and Ordanini, 2002;Selwyn, 2004)
within and between nations. Also, Dutta et al. (2015) have measured and compared
ICT-related factors and calculated a “network readiness”, as well as outcome factors such
as the number of ICT-related patents of countries. Dutta et al. (2015, p. 8) rank Sweden at
the 3rd position, the USA 7th, the Republic of Korea 12th and Germany 13th regarding
network readiness. Desruelle and Stanc
ík (2014) compared “Value Added” and “Business
Expenses in R&D (BERD)”, as well as ICT priority patents, between the EU, USA, Japan,
China, Korea and Taiwan and found a leading position by the USA.
Katz and Koutroumpis (2013) have investigated the link between digitization (i.e. the
process of an increased use of digital communication technologies in the society)
and welfare. Katz and Koutroumpis (2013, p. 315) measured digitization using an index
based on “affordability”, “infrastructure reliability”, “network access”, “capacity”, “usage”
and “human capital”. They used descriptive and correlational statistics to investigate and
describe the effect on welfare, as measured by the gross domestic product (GDP) per
capita, the life satisfaction and the Gallup Thriving Index. Nevertheless, the OECD (2014,
p. 15) has identified several areas with a need for future research and noted that
researchers should “Improve the measurement of ICT investment and its link to
macroeconomic performance”.
Macroeconomic performance in ICT has been investigated already before the diffusion of
social, mobile, analytics and cloud (SMAC) technologies as part of the digital revolution.
Already a decade ago, the success of software firms has attracted the interest of
researchers and policy-makers to investigate and implement factors contributing to the
successful establishment of clusters of such companies (Carmel, 2003). The rapid diffusion
PAGE 368 DIGITAL POLICY, REGULATION AND GOVERNANCE VOL. 19 NO. 5 2017
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