Business strategies for small firms in the new economy

The development of the new economy through the advent of the Internet and the World Wide Web has created many threats and opportunities for firms in general and small businesses in particular. There appears to be an inextricable linkage among the new economy, new enterprise, and the new technology, which may have a potential effect on the way small businesses formulate their business strategies. This paper provides a theoretical approach that looks at the advantages of the digitisation of the economy and strategy formulation of small businesses taking three specific themes into account – virtualisation, molecularisation, and disintermediation. The strengths and weaknesses of various e‐commerce strategies in the context of these dimensions are discussed. Some strategies that are suitable for small companies are recommended and four principles are stated in order to assist these firms to formulate strategy in the new economy.