The Internet as a Global Production Reorganizer: The Old Industry in the New Economy

Globalization of production is breaking up the 200 year industrial knowledge monopoly and backbone of the wealthy Western economies; their engineering industries. Development is moved by a distributed manufacturing technology made possible by the integration of computing and communications (C&C). Previously internal value chains, now distributed over global markets of specialized subcontractors, have made smaller scale production relatively more profitable. As engineering firms are embracing the new technologies to take them into the New Economy, they are destroying the business platforms for laggard incumbent firms. As volume based strategies of the old actors clash in markets with new innovative producers, the dynamic and complex decision environment that characterizes an Experimentally Organized Economy (EOE) raises the business failure rate. The complexity of the situation makes the capturing of the new opportunities genuinely experimental and dependent on entrepreneurial capacities that are not universally available among the industrial economies. While some developing economies are successfully adopting the new technologies, entering onto faster growth paths, mature industrial economies experience difficulties of reorganizing for the same task. Some suffer more from the new competition than they benefit from the new opportunities. For the foreseeable future, however, engineering will continue to serve as the backbone of the rich industrial economies.