Digital Economy

The digital economy, driven by rapid advances in digital technology, represents a transformative shift from traditional business models. This new economy centres on data as the key asset, the integration of real-time digital processes, and the automation of transactions and customer interactions. While traditional factors of production (land, labour, and capital) remain significant, digital factors of production (data, algorithm, and computational capacity) become increasingly critical. Let's explore how the digital economy is reshaping business landscapes and the challenges and opportunities it brings, drawing on my recent research insights. 

big data analytics

One of the unique aspects of the digital economy is its high frequency of change. Traditional economic indicators, like quarterly GDP, are too slow to capture the rapidly evolving digital economy. In response, we have developed high-frequency digital economy indices based on big data analysis (Xu, Su, Pan, and Zhou, 2024). These indices leverage real-time data from sources like search engines and social media, allowing for a more accurate representation of economic shifts driven by digital activities.

For example, a high-frequency index in China combines official reports with big data sources, demonstrating that digital indicators can capture regional economic disparities in real-time. This is particularly relevant for policymakers, who can use such indices to make timely, data-driven decisions. The index addresses a key challenge: traditional metrics fail to reflect the agility and data-centric nature of digital enterprises. As the digital economy evolves, tools like these will become indispensable for both monitoring economic activity and informing policy decisions. 

Blockchain Technology

In the realm of finance, one of the most notable shifts is the move towards tokenization—converting assets into digital tokens that can be traded on blockchain networks. Tokenization has enabled assets traditionally considered illiquid, such as real estate or art, to be fractionally owned and traded on digital platforms. This process, highlighted by studies on financial market infrastructures (FMIs), showcases how decentralised technology is revolutionising the traditionally centralised financial ecosystem (Guo and Zhou, 2023).

We emphasise that while digitalisation has historically increased centralisation, tokenization is pushing towards decentralisation. The introduction of blockchain technology offers not only transparency but also a reduction in transaction costs by removing intermediaries. This transition, however, is not without regulatory hurdles, as the shift from traditional models introduces uncertainties regarding security and financial stability. As such, we recommend an eclectic approach where centralised and decentralised mechanisms coexist, ensuring both stability and innovation (Zhang, Gong, and Zhou, 2024).

Despite its promise, blockchain faces barriers to widespread adoption in organisations. Zhang, Tavalaei, Parry, and Zhou (2024) show that adoption is influenced by multiple factors: technological readiness, organisational willingness, and environmental pressures. To understand the slow adoption of blockchain technology by organisations, we conduct a systematic literature review of adoption factors using a mixed-methods approach. Using statistical analysis, the identified factors are dissected into technological (T), organisational (O), and environmental (E) dimensions (the TOE framework). Themes are further classified as barriers (B), enablers (En), and ambiguous (A) to describe a firm's readiness for blockchain adoption (the BEnA framework). Analysis of research trends shows that recent blockchain adoption literature has focused on elaborating upon existing research themes (involution) rather than on developing new themes (evolution). 

Social Media

The digital economy has also transformed consumer engagement, especially through social media platforms. Social Media Marketing (SMM) plays an increasingly influential role, particularly in industries like luxury fashion, where brand perception and consumer interaction are paramount. During the COVID-19 pandemic, the importance of SMM for luxury brands grew, as in-person shopping declined, pushing brands to engage consumers online.

Research comparing social media engagement in China and the UK reveals differences in consumer responsiveness, with Chinese consumers more receptive to digital marketing strategies (Huang and Zhou, 2024). This insight highlights the need for brands to tailor their social media approaches to regional preferences and cultural differences. Notably, the role of social media extends beyond marketing; it provides brands with real-time feedback and enables them to adapt their strategies dynamically, making it an integral part of the digital economy. 

References

• Huang, J. and Zhou, P. 2024. Causes and effects of social media engagement in luxury fashion marketing: a comparative study over the COVID pandemic. Journal of Current Issues and Research in Advertising (10.1080/10641734.2024.2377547)

• Xu, Y., Su, B., Pan, W. and Zhou, P. 2024. A high-frequency digital economy index: text analysis and factor analysis based on big data. Applied Economics Letters (10.1080/13504851.2024.2349128)

• Zhang, Y., Gong, B. and Zhou, P. 2024. Centralized use of decentralized technology: Tokenization of currencies and assets. Structural Change and Economic Dynamics 71, pp. 15-25. (10.1016/j.strueco.2024.06.006)

• Zhang, Y., Tavalaei, M. M., Parry, G. and Zhou, P. 2024. Evolution or involution? A systematic literature review of organisations' blockchain adoption factors. Technological Forecasting and Social Change 208, article number: 123710. (10.1016/j.techfore.2024.123710)