Internet firms: what strategic changes have to be managed?

Abstract

Abstract Considerable faith has been placed by investors in the economic wealth to be created by the application of Internet technology. The scramble for a place on the Internet bandwagon has diverted risk capital from other types of industry and seduced key staff to leave old economy jobs in droves to join dot.com start ups at lower salary levels. This article seeks to demonstrate that quoted Internet firms are for the most part seriously overvalued and that this will impose the need for large‐scale change early in a firm's life. It explores the strength and robustness of the strategies that underpin Internet valuations and what major areas of change are likely to be faced. The article should be seen as work in progress. Research into Internet firms is still in its infancy. Few Internet firms have gone through their whole life cycle, so evaluating success and failure is inevitably tentative. However, some patterns are emerging which indicate areas worthy of future exploration. This paper seeks to signpost some of those areas. Copyright © 2001 John Wiley & Sons, Ltd.