Introduction
Unsustainable corporations simply do not last when they encounter economic, social, and ecological boundaries that dictate what is acceptable or possible. However, switching or creating the sustainable enterprises is quite difficult. Therefore, it is fascinating to witness how new company policies, unrestrained by old habits and vested interests, perform under the challenging circumstances. The incoherent changes in the society today are termed as the New Economy that has risen since the late 90s. The high employment, low inflation, and high growth introduced by the period have led to flawed business plans and excessively optimistic forecasts. This article structures an impetus that illustrates and explores the values brought by the New Economy.
The words new economy continues to be ambiguous terms since they refer to different things to various people. Some argue that the ideology is linked to the economic transformations that have triggered the diffusion and development of ICT and rise of competition in knowledge-based productivity. They also add that it has enhanced the global chains of value by incorporating the international networks of trade, production, and capital. The prominent factors controlling the new economy are privatization, modern microelectronics, the liberation of investment and commerce, and deregulation. Hence, the theory of the new economy is deeply embedded in the emerging environment that had led to the contradictions at the developmental levels, issues in welfare, and the decline of statism (Collins, 2015, 16).
Main Body
In a prescient article written by John Keynes called The Economic Possibilities of Our Grandchildren, the scholar discussed the struggle for simplicity as the primary economic problem. He anticipated that with the rapid technological variations that make labor more productive, people will perform all the activities in manufacturing, mining, and agriculture with less time compared to what they were accustomed. He said that the economic issue would have been solved by the time the generation of his grandchildren arrives. The prediction has been actualized with the emergence of the new economy (Brooks, 2001, 42). Karl Marx established a resolution for the financial challenge highlighted by Keynes. He introduced a slogan that says that from everyone based on his abilities, to everyone according to his requirements.
Communist and socialist leaderships in the 20th century have attempted to understand the slogan developed by Marx, but they have been less successful than the capitalists. The 21st century has revealed the strains and flaws amongst the capitalists. Most economies tend to serve the wealthy and not the poor. Also, world economies generate wastes that have resulted in catastrophic consequences on the ecosphere. For things to get better, they should change their practices (Twenge and Campbell, 2001, 13). The phrase new economy emanated from the New York Times Magazine that described the rapid transition from an industrialized financial system to a technology-based one.
Economists have identified the ripening benefits of this new age in all the manufacturing sectors. The managers are faced with the tough choice of incorporating the advanced system to ensure that they have leverage over their rivals. An essential element of the new economy perhaps is the mass media. The aspect has introduced many options to the managers that they can utilize to their benefit. The rules of management are consistently changing. The leaders no longer have to conform to the policies of the industrial era that focused on standardizing the production process, targeting the average, using interchangeable people or parts, and attaining the economies of scale (Collins, 2015, 27). The managers now have to transition into a connection economy that thrives on relationships rather than industrialization. In the factory system, people were trained and programmed to follow directives.
The new economy suggests that aiming for average returns or expectations is not adequate for success. The framework develops under four conditions. They include idea exchanges, trust, coordination, and permission. The four factors are fueled using two aspects of humanity: art and generosity. Individuals offer items of values to those who are willing to associate with them. Art brings creativity to ensure that the system is not boring or unremarkable (Thrift, 2001, 28). Creating the connections or trust is not easy. It can only be stimulated through differentiation. Hence, the managers should take risks, perform the duties that matter to the company, and produce the extraordinary. Firms operate and grow in the surroundings that are challenging and dynamic. The new economy presents suitable conditions for the environment since it has made technology more embracing, globalized markets, and changed relationships with the competitors, buyers, and suppliers. A new entrepreneurial model is coming up where the competitive approaches depend on managerial procedures that facilitate flexible and rapid responses to the disparities in the market (Gurau, 2012, 51).
The new business structure also requires the leaders to formulate new capabilities that develop unique connections with their partners. The managers should understand how to use and control the emerging technologies and comprehend the effects of knowledge creation and transmission. The value extracted from the new economy depends solely on the intellectual assets. The term refers to everything that a firm owns that is not touchable. The businesses that adhere to the conditions of the new economy are not constrained by the geography and are highly mobile. Some of the companies include online retailers, mass customization dealers, crowd funding sites, amongst others (Thrift, 2001, 34).
The intangible assets that drive the new economy include organizational and human capital. Their impacts on the market results can be traced through the use of a dynamic panel information model depending on the country or region under study. The paradigm measures both the intangible and tangible resources through a firm-level panel. The estimation method utilizes system processed moments and minimum distances. The technique accounts for the endogenous variables, persistent variables, and unobserved heterogeneity. Ultimate data representations from the model show the intangible assets that influence the market values (Twenge and Campbell, 2001, 25).
People live in a natural surrounding where everything given to them is practically free. The value they receive from the world was not produced rather it emanates from abundance. Even in the domain of technology, intellectual innovation, and discovery, they are those who manufacture the value while others simply extract it. Examples of individuals who created massive returns, but left it for others to construct for free, indicates that capturing value and formulating it are two different factors. The ideology is essential in determining the advantages of the new economy because it heavily relies on the creative skills of organizations and people (Brooks, 2001, 50).
The new financial system originated from the U.S. It is now quickly spreading to Japan, Europe, Asia-Pacific, and other developing nations. The key jurisdictions that it emphasizes are knowledge management, information processing, organizational learning, and digital networking. The global network entrepreneurial theory and e-commerce are the expressions and guidelines of the new economy. It is vital to recall that the development of the new economy has been uneven for different regions. The networking foundation of the system relies on asymmetrical interdependency. It locks the people, nations, companies, and groups that do not possess the intensive capacities and skills required by the new economy (Collins, 2015, 38).
The new economy does not involve smooth landing and soft growth; rather it is a structural shift to the international financial system that heralds disruption, risk, and transformation of the developing areas. Managers have sought to implement similar corporate changes in their firms such as continuous improvement, business procedure reengineering, directing attention to the core capabilities and competencies, outsourcing, downsizing, and holistic quality management. The corporation may observe these changes but still fail to differentiate the essence of the business. The manager may install new software and program, but they may not understand the context that the tools fit (Bruckner, 2010, 52).
One aspect is certain that the new economy is the hope for the future. If the world seeks to change its bad practices related to production, waste removal, and the relationships with essential parties, it requires the help of the financial system. The waves of the phenomena have eased the operations of the markets, improved customer relations managements, and communication. The new economy has improved various areas. One is the manufacturing patterns that induce the economies of scale. The essence of labor in most computerized firms has declined to cut the production expenses. The companies practice the economies of scales have natural monopolistic traits. They tend to control the markets to extract monopolistic returns (Twenge and Campbell, 2001, 30).
The second aspect that the new economy has introduced is teleworking. It no longer matters where a company or an individual is located. The practices presented by the technology are cost-effective and enable to firms to perform their activities virtually. Under the new circumstances, nobody can predict the price of an office in the future. Price and product differentiation is the third factor. The goods and services have been adjusted to cater for the needs of the buyers. With technologies that collect data from people efficiently, businesses can anticipate the usefulness of their products and design them based on the responses. Differentiation of price and goods is also necessary for competition purposes (Thrift, 2001, 46).
The fourth and last adjustment of the new economy is the protection of intellectual property. Without it, most of the existing items would not have emerged. In the new financial system, the valuation of goods has changed drastically unlike the classical economy where scarcity and the attributes of the commodities were the primary determinants of value. The agenda of the new era is to distribute power to the users, reverse the conditions that introduce the disparities in wealth, encourage hoarding, and circulate the wealth locally. The society microlending, crowd resourcing and funding are finding new strategies for new players the in business to get financial help without resorting to the large institutions (Gurau, 2012, 85).
New economy agriculture and food enterprises prioritize on fair wages, biodiversity, holistic designs, pesticide or organic free practices, and healthy soils. The financial system signals the importance of knowledge as stated by Boulding and Hayek. The key driver in this particular case of information acquisition is the computing technologies. The new economy presents both challenges and opportunities for those who aim to get economic democracy. Since the word is still being defined, an individual can lose sight of the essential political concepts under the term. The only hope is that those who use the name new economy will provide vivid values and principles that will enable the rest to comprehend the vision of the statement (Collins, 2015, 49).
The dramatic and innovative changes in technology over the decade especially those associated with the internet advent have introduced a new regime of organizational theory and management. From now onwards, literature that is practitioner or scholar oriented will focus on the new economy. Hence, managers need to understand all the underlying concepts of the term and incorporate it in their companies. The implications of the system on the old economy have yet to be published to remedy the organizational and managerial models. More conceptualization and study should be directed towards understanding the disparities between the new and old economy to assess the relevance of the existing managerial tools (Bruckner, 2007).
Conclusion
According to Bruckner (2010, 63), the new economy is here to stay; therefore, people and leaders should aim to comprehend all its dimensions. It value is based on the intangible assets of a firm that cannot be measured easily. Nevertheless, it is still an important sector of management. Innovation is the main guideline for adopting and developing the benefits of the new economy. The system has resulted in improvements in the production, distribution, marketing operations, etc. Managers need to keep tracks of such developments so that they can continuously update their business activities to stay ahead of the competition. The new economy still has its fair share of disadvantages ranging from the monopolistic tendencies of the developed countries and industries to the lack of intellectual property security on the internet. The financial system should be utilized to improve sectors of production and wealth maximization (Brooks, 2001, 71). Managers should ensure that they do not just bring in new technologies and software without equipping people to handle the changes. Conclusively, the predictions of early scholars have come to pass with the new inventions that have made life easy for human beings. However, people should use the changes responsibly to grow themselves and their countries.
References
Brooks, D., 2001. Bobos in Paradise: The New Upper Class and How They Got There. New York: Simon and Schuster. (available on Moodle).
Bruckner, P., 2010. Perpetual euphoria: on the duty to be happy. Princeton, N.J.: Princeton University Press– Part III. (electronic in the Library)
Bruckner, P., 2007. The Temptation Of Innocence: Living in the Age of Entitlement. New York: Algora Publishing– Part I. (electronic in the Library)
Collins, J., 2015. ‘Built to Flip: A Battle Is under Way for the New Economy. Which Side Are You On?’, in Fast Company, http://www.fastcompany.com/38659/built-flip [accessed 10 February 2015].
Gurau, C., 2012. ‘A Life-Stage Analysis of Consumer Loyalty Profile: Comparing Generation X and Millennial Consumers’, in The Journal of Consumer Marketing, 29, 103–13. (available on Moodle).
Thrift, N., 2001. ‘“It’s the Romance, Not the Finance, That Makes the Business Worth Pursuing’: Disclosing a New Market Culture’, Economy and Society, 30, 412–32. (available on Moodle).
Thrift, N. 2002. “Performing Cultures in the New Economy”, in Du Gay, P. and Pryke, M. (eds.), Cultural Economy, Sage, London, pp. 201-233. (available on Moodle).
Twenge, J. M. and Campbell K. W., 2001. The Narcissism Epidemic: Living in the Age of Entitlement. New York: Free Press (available on Moodle).
