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The Virtual Economy Impact on the Small Real Economy Proposal


With the emergence of innovative technologies, opportunities for transferring economic activities to the virtual environment were introduced. As a result, a virtual economy was created. However, the said virtual economy has had a profound effect on real small economies, altering the way in which they operate to a considerable extent. Thus, the necessity to study the identified effects closer appeared. Although negative aspects of the virtual economy such as the lack of control over financial and economic processes occurring within them are often mentioned, the virtual economy may contribute significantly to the evolution of the real small one. The identified change will take place due to the massive chances for enhancing information management and reinforcing risk management strategies, as well as improving approaches for handling financial issues. Thus, it is the cooperation of the two that must be regarded as a priority.


With the creation of the online environment, numerous changes could be observed in a range of domains, the area of the global economy not being an exception. The emergence of virtual economies has affected the development of real and especially small ones to a considerable extent. Despite the fact that the virtual economy used to be considered a threat to real ones, particularly, the economies that could be described as rather small, the relationship between virtual and small real economies is much more intricate than that. Although virtual economies lead to a rapid increase in rivalry levels within a particular industry and, thus, may inhibit the chances of other companies succeeding in the identified realm, they also affect the development of the said economies by encouraging change and providing an impetus for the further improvement of a range of processes within real economies.


The goal of this study is to explore the effects that virtual economies have on real small ones. Particularly, the focus of this research is on the controversy around the subject matter, i.e., the discord regarding the ostensible impact of the virtual economy. Furthermore, this study will seek to explore the strategies for reinforcing positive effects, should any be located, and inhibiting the influence of negative ones, in case they are identified. As a result, opportunities for enhancing the economic growth within the global community will be created.


The purpose of this research is to study the nature of the connection between virtual and small real economies, as well as the reciprocal impact that they have on each other. It is assumed that the analysis of the subject matter will allow reducing the effects of the obstacles that companies operating in the said economies will encounter when encouraging the economic growth. Furthermore, considering the opportunities for the coexistence of virtual and small real economies will be explored in this paper since it is the cooperation between the participants of the two areas that is bound to lead to massive improvements in the global economy realm.

Literature Review

It is remarkable that virtual economies used to be viewed as fake by a range of economists and organizations that were grounded in the environment of real economies (Yining 2017). Combined with the lack of control over crucial economic and financial processes, the absence of a specific setting and tangible assets created the illusion of a fake of which it was not easy to disprove (Mäntymäki & Salo 2015). However, with the emergence of companies operating almost entirely in the realm of virtual economies, opinions concerning the efficacy of virtual economies seem to have become more diverse.

When exploring the impact that virtual economies have had on the development of business, one must mention that they have opened a plethora of opportunities for emergent firms to improve their risk management strategies. There is no secret that the contemporary economic environment implies managing a range of risks and being able to adjust to the ever-changing realm of the global market. Financial and economic fluctuations that often occur suddenly, and the forecast of which requires a detailed, elaborate and expensive analysis, often lead to a rapid and unpredictable downfall of small companies operating in the global market (Nazir & Lui 2016). Therefore, it is crucial to introduce the tools that will allow small firms in the real economy to identify the existing risks and adjust their financial frameworks to the identified alterations in the global economy. The assistance and support of virtual economies, in turn, will create premises for adequate and timely responses to financial and economic challenges for small real economies (Mamounakis et al. 2016).

Finally, the issue of receiving loans from financial institutions can be addressed once cooperation between small yet real economies and larger virtual ones is established and enhanced. Because of the exposure to massive risks and the lack of a solid strategy for reducing the threat of an untimely demise, small real organizations become very unlikely candidates for receiving loans from banks (Chi & Fu 2016). The reasons for the identified types of organizations to receive a negative response are quite understandable; without an appropriate risk management framework and substantial support, they may turn out to be an economic failure. However, once virtual economies start collaborating with small real entrepreneurships, opportunities for receiving a loan and, thus, expand the business so that it could establish a strong presence in a target market will grow consistently (Degryse 2017). Thus, the impact that virtual economies have on small realm ones can be regarded as comparatively positive in a long-term perspective.

The effects that virtual economies have on real ones and especially the ones that are characterized by their comparatively small size have been debated extensively in a range of countries. For example, the fact that virtual economies open a plethora of opportunities for innovations and the active promotion of change in the context of particular markets is often regarded as one of the most important aspects of virtual markets (Yermack 2015). Therefore, virtual economies may serve as the platform for improving the operations carried out in the realm of small real ones. The specified alteration is especially important given the limited opportunities for enhancing supply chain management (SCM) in the small real economy setting (Maciejasz-Świątkiewicz & Musiał 2014). Indeed, because of the limited amount of resources that organizations operating in small real economies have at their disposal, the threat of failing to maintain the operations within a supply chin consistent becomes increasingly tangible. Virtual economies, in turn, may serve as the starting point for introducing the principles of a more efficient use of the available resources, particularly, crucial information, for enhancing corporate operations. As a result, a range of challenges associated with costs can be addressed successfully. For instance, the threat of mismanaging deadlines, failing to deliver essential data, etc., can be addressed once the elements of virtual economies such as innovative communication technologies are incorporated into the realm of small real economies (Diao et al. 2017).

That being said, virtual economies may also have a detrimental impact on the performance of organizations operating in real small ones. For instance, the lack of governmental control over the activities carried out in the environment of virtual economies may lead to abusing legal standards. Consequently, virtual; economies may disrupt economic processes within real ones (Chvanova et al..2016). The absence of supervision over the specified processes in the realm of virtual economies may also lead to the impossibility for the firms operating in either of the areas to cooperate with the representatives of the opposing area. With the absence of concord regarding the subject matter, especially as far as legal issues are concerned, a range of processes may be brought to a halt, which will lead to an inevitable downfall of the companies involved in the said processes (Yamamoto & McArthur 2015). The issue associated with competition should also be mentioned as one of the primary areas of concern. Unless cooperation is introduced as the foundation for the coexistence of virtual and real economies, there is a possibility of the latter experiencing significant pressure from virtual markets.

Nevertheless, there has been a propensity toward viewing real and virtual economies not as the opposite sides of the argument but, instead, the components of the economic philosophy that might lead to a massive positive outcome. The specified idea is especially popular in the realm of finances and banking, where the opportunities for using flexible financial regulations provide the foundation for a significant increase in companies’ profit margins, as well as open chances for rapid economic growth. Indeed, seeing that, in the realm of real economy, financial organizations are supported extensively with the policy aimed at price stabilization, the support of virtual financial organizations and the creation of depositary institutions will contribute to the enhancement of real companies’ performance (Gao 2017). It should be borne in mind, however, that the identified step will require introducing minor control over the processes occurring in the environment of virtual economies (Xiao 2017).

The controversy regarding competition can be addressed by focusing on the benefits of collaboration between the members of virtual and real economies. While removing the competitive element from the relationships between the stakeholders involved does not seem a possibility, the focus on the strategy that will lead to the success of both may help. Furthermore, the issue of control may be managed successfully once the philosophy of collaboration becomes the foundation for the relationships between the said types of organizations. By using the principles of collaboration and the promotion of uniform strategies as the pathway to enhancing the economic processes and reducing the threats associated with instances of corporate fraud, one will be able to create the standards that will ensure safety and at the same time will not limit the opportunities of companies operating in either real or virtual economy. As long as the tools used to control the key financial operations give enough room for all parties to shape their risk management strategies, operations, and decision-making processes based on the needs of the stakeholders involved, chances for making the impact of virtual economies on real small ones distinctively positive, at the same time preventing any factors that will inhibit the development of either, will become an opportunity.


The impact that virtual economies have had on real small ones so far has been open for debate. While some evidence points to the impressively positive changes that virtual economies have on real ones, especially as far as financial issues and risk management frameworks are concerned, others point to the lack of control over financial processes and the threat of increased competition rates. Therefore, detailed introspect into the nature of the relationships between the two is needed.

Reference List

Chvanova, MS, Hramov, AE, Khramova, MV & Pitsik, EN 2016, ‘Organization of virtual environment for interaction of university and high-tech sector of the economy’, in MS Chvanova, AE Hramov, MV Khramova & EN Pitsik (eds), Quality Management, Transport and Information Security, Information Technologies (IT&MQ&IS), IEEE, New York, NY, pp. 39-43.

Chi, Q & Fu, S 2016, ‘The impact of the interest rate liberalization on both banks and small firms: evidence from China’, Research in World Economy, vol. 7, no. 2, pp. 26-33.

Degryse, C 2017, Shaping the world of work in the digital economy, ETUI, Brussels.

Diao, J, Xu, C, Jia, A, Liu, Y, Diao, J, Xu, C & Xu, C 2017, ‘Virtual reality and simulation technology application in 3D urban landscape environment design’, Boletin Tecnico/technical Bulletin, vol. 55, no. 4, pp. 72-79.

Gao, J 2017, ‘Research and application of virtual reality technology in industrial design’, Revista de la Facultad de Ingeniería U.C.V., vol. 32, no. 11, pp. 228-234.

Mamounakis, I, Vergados, DJ, Makris, P & Varvarigos, E 2016, , Web.

Maciejasz-Świątkiewicz, M & Musiał, M 2014, ‘Inflation in a virtual economy – a real or virtual threat?’, Nauki O Finansach Financial Sciences, vol. 4, no. 21, pp. 42-51.

Mäntymäki, M, & Salo, J 2015, ‘Why do teens spend real money in virtual worlds? A consumption values and developmental psychology perspective on virtual consumption’, International Journal of Information Management, vol. 35, no. 1, pp. 124-134.

Nazir, M, & Lui, CSM 2016, ‘A brief history of virtual economy’, Journal for Virtual Worlds Research, vol. 9, no. 1, pp. 1-22.

Xiao, L 2017, New supply side economics: the structural reform on supply side and sustainable growth, Springer, New York, NY.

Yamamoto, KI & McArthur, V 2015, ‘Digital economies and trading in counter strike global offensive: how virtual items are valued to real world currencies in an online barter-free market’, In KI Yamamoto & V McArthur, Games Entertainment Media Conference (GEM), IEEE, New York, NY, pp. 1-6.

Yermack, D 2015, Is bitcoin a real currency? An economic appraisal, Web.

Yining, L 2017, The Chinese path to economic dual transformation, Routledge, New York, NY.

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