The New Economy – Driven by the Dual Forces of Globalisation and Icts – Has Given Rise to New Forms of International Business That Is Characterised by Decentralisation, a Flattening of Hierarchies, a Growth of Knowledge Work, and Flexibility

Topics: Economy, Industrial Revolution, Knowledge Pages: 5 (1728 words) Published: January 30, 2013
Nowadays many academics argue that we are living in the digital age away from the logic of industrialism. At the same time even the most conservative-oriented parts of the public cannot deny the impacts of Information and Communication Technologies on the economy, business and society. Some experts refer to the “new economy” as being weightless, in which the demise of manufacturing is balanced by growth of professional and knowledge work. Together with the rise of new service industries these are changes towards post-industrial era, facilitated by the global interconnectedness. Furthermore, technologies are seen as effective mechanisms for achieving organizational change and giving birth to new business models that prioritize information flows. The old bureaucracies are replaced by networked organizations which promote enhanced flexibility, mobility and higher employee satisfaction. The “death” of distance in the highly globalized world is fuelling the processes of outsourcing and offshoring in searching for the best possible business outcomes. While this quite pervasive utopian view represents perfect “win-win” situation both at the macro- and microeconomic level, it is based on extremely contested pivotal points - the merits of globalization, technological determinism and the concepts of information and network society, epitomised in the new organizational forms. The most heated debate about the origins of the new reality still remains unsettled – is this the brand new economy, representing an epochal change or continuation of the well-established status-quo in the past. Nevertheless, the glorification of technology disregards the broader socio-economic context and the negative IT impacts upon society.

The world economy has become not only more volatile and complex but also more tightly connected (Dicken 1986, p.3). It could be described as a system in which new trends are being shaped by the processes of globalization and ICTs. Based on laissez-faire, free movement of capital and labour, democracy and deregulation this economy creates businesses without borders in a highly competitive environment where the national is no longer relevant. Companies, commodities and currencies are valued in the global financial markets, where prices are determined by information turbulences (Castells, p.156). Trillions of dollars in transactions from every place in the world are possible today because of the new technologies in place. In the emerging economy innovation constitutes the foundation of competitiveness which creates more innovation in a virtuous circle (Dutton et al. 2005, p.179). Multinationals are emulating for dominance while local factories are improving their business processes under the pressure of the big players. In this game winner is not the bigger but the faster– the most adaptable to implement new technologies and knowledge. Namely human mind is source of wealth, power and economic growth in the modern informational realm. Battle for competitiveness includes battle for highly-skilled employees: not the generic routinised labour of the industrial age that only executes but the self-programmable labour with capacities to adjust itself to the new technological advances (Castells, p.158). Many experts claim that this is the post-industrial age, characterised with marked decline of agriculture and manufacturing and expansion of services, white-collar work and professional occupations. Bell claimed that the new needs of the wealthier will create never-ending supply of job opportunities in services and subsequent movement towards weightless economy (Webster 1995, p.35). This partly reasonable explanation of the services’ boom is clearly based on evolutionary assumptions. Starting point for the increase in services is wealth squeezed out of industry and agriculture. In many developing countries like Taiwan internal land reform, deregulation and global capitalism encouraged services’ boom to secure an established...
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