Search results

Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.

This paper explores the impact of the Internet on the business transactions of organisations. Three main impacts – globalisation, customisation, and customer demands solutions are examined. It is argued that the medium and large old economy companies will be most affected by transactions within the new economy, and this leads to both problems and possibilities. The paper has identified three major ways in which these old economy companies are attempting to integrate the new economy as a development of their current business – treating the net as an extension of their normal service, using the net to expand and improve their current co‐makership relationship with suppliers, and a step‐back‐and‐reflect approach to assess how the Internet might affect their business.

In their well-known contribution to the “varieties of capitalism” debate, Peter Hall and David Soskice (2001, Ch. 1) highlight the distinction between a “coordinated market economy” as exemplified by Germany and a “liberal market economy” as exemplified by the United States. Under the heading, “Liberal Market Economies: The American Case”, Hall and Soskice (2001, p. 27), argue:Liberal market economies can secure levels of overall economic performance as high as those of coordinated market economies, but they do so quite differently. In LMEs, firms rely more heavily on market relations to resolve the coordination problems that firms in CMEs address more often via forms of non-market coordination that entail collaboration and strategic interaction. In each of the major spheres of firm endeavor, competitive markets are more robust and there is less institutional support for non-market forms of coordination.

The purpose of this paper is to provide a selective bibliography and examine the potential of the digital technologies, using an inter‐disciplinary literature survey that will contribute to academic and practical knowledge with regard to the understanding of the emerging forms of doing business and competition together with their developmental implications.

The paper examines a survey of a collection of papers that have been published before and after the new economy bubble. These writings then are classified under two main headings: the views of the (new) digital economy proponents and the sceptics. These two opposing approaches are compared and contrasted through the use of five sub‐sections: conceptualisation, driving force, spatial/developmental implications, industrial impacts of the digital economy, epistemological/methodological foundations.

The paper finds that claims about the world economy entering into a new phase of a virtuous capitalism or a new international division of labour are over‐exaggerated. A more balanced approach should take into consideration both the dynamics of change and continuity without underestimating the future potential of digital technologies.

This paper offers a critical assessment of the digital economy, based on an inter‐disciplinary literature survey that brings together pieces of work that have previously been analysed largely in a separate manner.

The burgeoning literature about the knowledge economy has marginalised its most important dimension – people. The development of human capital and its role in the competitive advantage of business is discussed in relation to the changed nature of the employment relationship. In particular Drucker's concerns about the threat to business of attenuated relationships between workers and their organisations are examined. Contextual factors such as the dynamic nature of labour markets, the centrality of profit making and the definitional difficulties inherent in the new and old economy dichotomy are acknowledged. A transitional model of human capital in the new economy is suggested as a way of modernising traditional thinking. An analysis of the capabilities required by new economy workers leads to a discussion of the corresponding competencies necessary for managers. The paper concludes that changed employment relationships do not spell death to people development. Rather it makes managing talent different and more challenging.

The dog days for strategists are coming to an end. The rule of reengineering as the main tool for improving corporate performance and competitiveness is in its final death agony. It is becoming clear to most companies that the redesign of business processes to control costs is an insufficient approach to success. Companies need to move beyond business processes and change their business models. Similarly, companies need to move beyond cost control to address the more significant issue of how to create value.

In its Preface, the author, Professor Emeritus Erich Egner of the University of Göttingen, situated just south of Hanover in the Federal Republic of Germany, confesses that his work stands at the end of a long road whose destination was at first unknown to him. For a long time he had hesitated about the particular field of economics to which he should devote himself. He was certain that it would not be a matter of pure economic theory. It had to be a Problemkreis with social and sociological implications. After a stint in the thirties, when he had devoted himself to regional problems, he discovered that his interests lay elsewhere. This was the beginning of the consumption movement as it was then being observed in the United States.

This paper aims to examine the relation between executive compensation, firm size and firm performance on a panel of the so‐called “new economy” firms in the USA over the period 1996‐2002.

The authors use two measures of performance, total shareholder return and return on assets, and concentrate on total CEO compensation, which includes stock option compensation, as equity‐based compensation practices have been prevalent in new economy firms. The estimation process uses both the feasible generalized least squares method of Parks and Kmenta and the panel corrected standard error method of Beck and Katz. These methodologies investigate error structures that do not conform to the classical ordinary least squares assumptions.

The econometric results indicate that estimates on firm size are robust to alternative specifications of the error structures. There is evidence however that the effect of firm size on CEO compensation is more significant after the stock market crash of 2000. The opposite holds true for the estimates on firm performance. In addition, estimates on firm performance are more sensitive to the estimation method and the specification of the error structures.

The research presented in this paper is a first step in the direction of understanding the pay to performance relation in the “new economy” industries in the USA. Additional research is warranted, which should extend both the time series and the cross section aspects of the data.

The paper fills an important gap in the existing literature by providing rigorous econometric evidence on the pay to performance relation in the so‐called “new economy” industries. The evidence provided in this paper is relevant as it complements the findings in the literature on executive compensation in the so‐called “old economy” industries, which typically make up the samples of most previous studies.

Conversations create the wealth of knowledge organizations. This conversation with Jim Botkin explores a variety of issues on how knowledge is changing how organizations create value as knowledge‐based enterprises. Jim Botkin argues that the knowledge framework is actually the larger context for organizations and that e‐business is actually a subset of its operations. Botkin also shares how knowledge has come to be a new factor of production in organizations. This is true for both “new economy” organizations and “old economy” legacy organizations. Even so, the acceptance of the knowledge movement is still tentative. The very name “knowledge management” still often implies information technology “applications” to key organizational visionaries and is not always well received. The controversies over nurturing knowledge communities within the framework of knowledge initiatives are also examined in the dialogue.

One aspect of agglomeration economies is economies of scale. When automobile production centered in Detroit in the early part of the twentieth century, this allowed more efficient production methods, which lowered the per-unit cost of output. Arrow (2000) emphasizes the tension between increasing returns to scale and equilibrium models, and as Young (1928) noted, increasing returns to scale is at the foundation of economic progress. Kaldor (1972), building on Young's insights, noted that static neoclassical economic models did not do a good job of depicting the economic progress that results from increasing returns to scale in production. This insight goes at least as far back as Adam Smith (1776), however, who noted the increased productivity that comes with an increased division of labor. Smith's example of the pin factory, where individuals specializing in one small part of a larger manufacturing operation increase productivity by, perhaps, hundreds of times, shows the benefits of agglomeration economies. The division of labor is limited by the extent of the market, Smith argued, so enlarging the extent of the market allows for a greater division of labor, which increases productivity and generates prosperity. By concentrating automobile production in Detroit rather than having automobiles locally built, the extent of the market is increased from one locality to an entire nation, and in some cases an entire world. The resulting agglomeration economies increase productivity and produce prosperity.