Over the years, e-commerce is a core factor in determining the levels of growth of small and growing businesses. However, the growth and development of a business such as a grocery shop may suffer major setbacks related to the small size of operations, reduced economies of scale, and transaction problems. These problems impede the operations of various business developments that rely on e-commerce. As such, creating effective network externalities, pricing, output, and advertising are critical in restoring the operations of such businesses
Special focus on innovation and technology is critical for emerging markets because the individual capabilities of businesses are quite different. Unlike the developed markets, emerging markets are unique both economically and culturally. Research and development in e-commerce networking assist businesses to understand clients’ demands and even involve them in understanding. However, pricing, output, and advertising capabilities of smaller businesses limit the ability to reach well-established markets.
Besides, lower prices of products affect their ability to compete favorably. Improving network externalities and forming mergers are among the best solutions that can enable smaller firms to acquire adequate resources for competing with other market rivals.
Network externalities can also affect a firm’s operating strategies when mergers and acquisitions take place. Mergers transfer management capabilities. Nonetheless, analysts argue (based on thick frontier method) that there is little cost-saving advantage on network externalities especially when strategies used are not effective. It is also crucial to mention that demand heavily relies on network externalities adopted by a firm. For example, the type of advertising methods adopted by an organization depends on the desired demand level for its goods and services.