Implementing information systems has economic, organizational, and behavioral effects on firms. Information technology, especial
ly the use of networks, can help firms lower the cost of market participation (transaction costs), making it worthwhile for firms to contract with external suppliers instead of using internal sources. As a result, firms can shrink in size. In this example, information systems have what kind of an impact on an organization?
Explanation: Economic impact can be explained as the effect of a certain action, policy or action on the economy of an organization, country measured in terms of business revenue, gain or profit, impact on manufactory or production cost, inflation, monetary value and so on.
In the scenario above, the economic effect or impact of implementing information technology is highlighted in terms of lower cost of market participation, shrinkage in size of firms due to external participation and so on.
