The changes are dramatic. Take the impact of the Net on distribution and supply systems. That works out to a little more than a one-percentage point improvement in the overall corporate profit share of gross domestic product. Of course, there are additional cost savings besides labor compensation, such as the reduced cost of materials and inventory. Established outfits now have some significant advantages, as the Internet spreads throughout the economy.
Large companies have deep pockets, brand recognition, and a big customer base.
Organizational resistance and bureaucratic barriers to change still hamper the efforts of many corporate leviathans to restructure themselves around the Internet. No matter what companies come out ahead in the battle for market share and profits, the clear winner is the consumer and the economy. Farrell is contributing economics editor for Business Week. The McGraw-Hill Companies Inc. All rights reserved.