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The so-called “War for Talent” has been talked about since the mid-1990s (Michaels, Handfield-Jones, & Axelrod, 2001). In the meantime, the world has seen several economic crises, namely the collapse of the New Economy in the early 2000s, and the worldwide bank crisis a few years later. As I write these very lines, Europe and the world are still battling the effects of the European debt crisis. Each of these crises curbed the previously immense demand for specialists, but were followed by an all-clear. The upswing occurring after these crises also sees an increase in demand for talented, motivated staff. Apart from these rather short-term, cyclical fluctuations, however, there is the question of long-term development on the labour market. What must a country like Germany be prepared for over the next few decades? Short and mid-term developments play less of a role when answering this question, with the focus shifting to more general trends at a macro level.

The digital economy is one of the most important features of the knowledge-based society of the future. Based on information and communications technology (ICT), it grows faster than and eventually overtakes the traditional industrial economy. The fundamental driving forces of the digital economy’s faster economic growth are as follows. First, ICT converges with and improves the efficiency of traditional industries. Second, the production function of the ICT industry shows increasing returns to scale. Third, the development of ICT stimulates not only demand and supply but the entire expansive reproduction system, resulting in faster-accelerating economic growth. This paper investigates the essentials, causes, and patterns of the faster economic growth of the digital economy, and forecasts its future on the basis of real-life examples from the US, Finland, and Ireland. Furthermore, the core of the IT paradox is revisited, so that the potential of the digital economy can be reaffirmed.

This ending chapter summarizes the key takeaways of the nine case studies discussed throughout the book, all of which are listed SMEs from nine different industries. From the collective, we are able to draw some conclusions that may help the readers better understand the Chinese economy from a more micro perspective, and provide the readers with some insights about Chinese industries and companies that can’t be obtained by only taking a macro view and merely looking at the aggregate variables in China’s economy.

In this chapter I show Adam Smith’s great admiration for the new free market economy that is exemplified by his report on the enormous productivity of the pin-factory. Smith attributes this great productivity to the division of labor which allows workers to specialize and which encourages them, out of self-interest, to look for machines to help in their work. On the demand side, the new economy relies on the human tendency to barter where self-interest replaces friendship as the means to get what one wants. This tendency to barter entices the system to produce what people want at the cheapest possible price. This is, according to Smith, the presence of a kind of “invisible hand.” It is not the result of a (government) plan. Next, I show that Smith, provides an argument that the help of the government is needed in the case of the provision of roads thereby prefiguring the modern concept of public goods. I show how Smith anticipates the modern concept of merit good in his discussion of education, monopolies and the need of governmental control of banking. Smith even discusses the danger of lobbying to influence the regulatory power of the state.

We are living in a new economy driven by knowledge. According to Kendrick (1994), the stock of gross real capital in the US from 1929 to 1990 reflects the increase of intangible over tangible capital: 6,075 billion dollars of tangible capital in 1929 and 28,525 in 1990 vs. 3,251 billion dollars of intangible capital in 1929 and 32,819 in 1990. Tangible capital comprises facilities, machinery, stocks and natural resources. Intangible capital comprises education, R&D and services. The importance of knowledge expressed by R&D and innovation also emerges from other data. According to McCloskey (1985), annual productivity in the UK increased by 1.33 % between 1780 and 1860. Only 0.14 % was derived from greater capital intensity, while the remaining 1.19 % was generated by innovations in processes and products. Solow (1971) provides similar data regarding the US from 1909 to 1949: only a 12.5 % increase in productivity was caused by greater capital intensity, while the remaining 87.5 % was generated by process and product innovation.

Entrepreneurship is recognized as an important opportunity for job growth and economic development. In addition, entrepreneurship can be a way to improve the economic position of immigrants. Thus, immigrant entrepreneurs are driving the new economy. For immigrants from Thailand, the number of Thai restaurants and Thai businesses in New Zealand are increasing steadily. With these phenomena, this study tries to examine the following questions: a) What are the demographical characteristics of the Thai immigrant groups? b) Which factors influence an individual’s decision to become an entrepreneur? c) How is the business performance of the immigrant entrepreneurs? d) Finally, what is the degree of satisfaction of Thai immigrant entrepreneurs in New Zealand? As an exploratory research, 4 immigrant entrepreneurs were interviewed in Wellington. The results show the various characteristics of entrepreneurs; for example, immigrant entrepreneurs are of various ages, from 26 to 62; some are married, some single; they tend to be educated persons, and they practice Buddhism. The important factors influencing immigrants to be entrepreneurs are freedom and time management. The result also shows positive signs regarding their businesses’ performance.

As every other aspect of everyday life and socioeconomic relationships, also tourism is crossed, and sometimes deeply affected, by the evolution of a complex system of phenomena that in the common language can be defined as Internet Revolution, New Economy, Information Technology (IT), Information and Communication Technology (ICT), etc. Without entering in specific topics pertaining to the Economics of Information or to the Science & Technology debate, in this chapter we will simply try to understand if and how the economic problem and rationale of tourism firms, tourists, and destinations are affected by what certainly is a momentous change in the organization of our society

Both the New Economy itself and the lifestyle to which it gives rise are inextricably linked with texts (in the broadest sense of the word): with their production, distribution and consumption. On this basis it is defined as an information economy. A detailed analysis of the New Economy would call for a separate extensive treatise which would only distract us from our topic, so we will restrict ourselves to trying to establish its main distinguishing features.

Taiwanese government has been aggressively promoting culture creative industries in recent years. To achieve the goals of industry transformation and to better the living environment, it further propels the innovative concept of "creative life industry". Demonstrating a new economy model, creative life industry intends to attain experience economy through attracting consumers with life aesthetics. In human life, craft creation comes with multi-values in various aspects. Craft is creative activities humans employ to solve their everyday problems in food, clothing, residing and transportation. It has served two functions in practical objects and art works in human history. In the process of creation, exchange, possession, usage, and appreciation, craft enriches human life and becomes the most valued aesthetic experience for promoting creative life industry. The purpose of this study is to investigate daily crafts, concerning both industry management and product design, and to establish an appropriate model to promote consumers' aesthetic experiences on daily crafts. The methods of data collection are survey questionnaires and in-depth interviews. With literature review, four experience factors of sense, think, act and relate are defined for writing up the survey questions. Results of data collected from the survey responses and interviews could provide concrete suggestions for artists, designers and business managers who plan for experience activities.

Digitisation and globalisation affect the role of brands and branding in the new economy and lead to new challenges such as the need to integrate branding and marketing communications across different channels, customisation and customer relationships. In a world of information overload, brands become extremely important, among others because they contribute to reducing consumers’ search costs. New opportunities derive from recent developments such as viral marketing and brand communities.

In all previous chapters, we have studied the steady-state mean density g(s) given by (3.18) of firm’s asset values and its properties, for a stationary intensity ν of firm’s births. In real life, ν is not constant, with periods of strong growth, such as during “new economy bubbles” (Galbraith, 1997; Kindleberger, 2000; Shefrin, 2000; Shiller, 2000; Shleifer, 2000; Sornette, 2003; White, 1996) or during and after political transitions, and periods of stagnation, for instance during depressions. Over large times, there are even secular variations of firms creations, such as for instance during the transition associated with the political “big bang” of the Soviet Bloc in the 1990s (Nowak et al., 2005). In some countries, (e.g., Poland), not long after the transition, the economy started to grow at a fast rate soon surpassing the level of its economy under socialism, with a large growth of the number of privately owned enterprises during the transition from centrally governed to the market economy (Nowak et al., 2000, 2005; Gur et al., 2008). In this chapter, we first derive some properties resulting from a non-stationary birth intensity ν(t) of the mean density g(s, t) of firm’s asset values given by (3.15). Then, we introduce and study a model in which the intensity of firm’s birth is coupled with the overall firm’s asset value: as the later grows, the former is also assumed to grow correspondingly. This simple model accounts more realistically for the fact that firm’s creation is indeed related to the innovation dynamics and capital availability, both being stronger in periods of firm’s growth.

Business analysts are being asked to develop increasingly complex and varied business systems that need to cater to the changing and dynamic market conditions of the new economy. This is particularly acute in today’s turbulent business environment where powerful forces such as deregulation, globalisation, mergers, advances in information and telecommunications technologies, and increasing education of people provide opportunities for organising work in ways that have never before been possible. Enterprises attempt to create wealth either by getting better at improving their products and services or by harnessing creativity and human-centred management to create innovative solutions. In these business settings, requirements become critical in bridging system solutions to organisational and societal problems. They intertwine organisational, social, cognitive, and implementation considerations and they can provide unique insights to change in systems and their business context. Such design situations often involve multiple stakeholders from different participating organisations, subcontractors, divisions, etc., who may have a diversity of expertise, come from different organisational cultures and often have competing goals. The success or failure of many projects depends, to a large extent, on understanding the contextual setting of requirements and their interaction amongst a diverse population of stakeholders.

Collaborative Work plays an important role in today’s organizations, especially in areas where decisions must be made. However, any decision that involves a collective or group of decision makers is, by itself complex, but is becoming recurrent in recent years. In this work we present the VirtualECare project, an intelligent multi-agent system able to monitor, interact and serve its customers, which are, normally, in need of care services. In last year’s there has been a substantially increase on the number of people needed of intensive care, especially among the elderly, a phenomenon that is related to population ageing. However, this is becoming not exclusive of the elderly, as diseases like obesity, diabetes and blood pressure have been increasing among young adults. This is a new reality that needs to be dealt by the health sector, particularly by the public one. Given this scenarios, the importance of finding new and cost effective ways for health care delivery are of particular importance, especially when we believe they should not to be removed from their natural “habitat”. Following this line of thinking, the VirtualECare project will be presented, like similar ones that preceded it. Recently we have also assisted to a growing interest in combining the advances in information society - computing, telecommunications and presentation – in order to create Group Decision Support Systems (GDSS). Indeed, the new economy, along with increased competition in today’s complex business environments, takes the companies to seek complementarities in order to increase competitiveness and reduce risks. Under these scenarios, planning takes a major role in a company life. However, effective planning depends on the generation and analysis of ideas (innovative or not) and, as a result, the idea generation and management processes are crucial. Our objective is to apply the above presented GDSS to a new area. We believe that the use of GDSS in the healthcare arena will allow professionals to achieve better results in the analysis of one’s Electronically Clinical Profile (ECP). This achievement is vital, regarding the explosion of knowledge and skills, together with the need to use limited resources and get better results.

We are experiencing a digital revolution that is rapidly changing the way business is conducted. In this new economy, information is shared speedily and many participants are collaborating. Effective and seamless collaboration between distributed supply chain members is therefore crucial. To understand how this may be done, we describe a knowledge based framework for abstracting, enriching, analysing and improving supply chain models. We employ business process modelling as a useful methodology for capturing and analysing supply chain strategies. In addition, we use a meta-interpreter and workflow engine for simulating business processes to help understand business scenarios. Its declarative approach makes business rationale more transparent. Our work is demonstrated by looking at a case study of Dell's supply chain management that depicts its PC supply chain operation logics and strategies.

In this chapter we review the main results of the EMSs approach to macro-economics. For simplicity, we summarize them in ten principles, half of which have a positive nature, in the sense that they describe crucial aspects of the way the economy works, and half of which have a normative nature, in the sense that they provide policy implications. The discussion is going to be largely informal and try to link our theoretical results to the current economic debates on macroeconomic issues and on relevant market structures, in particular of the New Economy.

There is a consensus view that, since the mid-1990s the US has created a ‘New Economy’ based on the rapid deployment and widespread utilization of new information and communications technology (ICT) and by advances in computing and information management that caused a structural acceleration in labor productivity and output growth (Jorgenson and Stiroh 2000, Salvatore 2003).1 The term New Economy is intended to capture the role of this new technology in contributing to the non-inflationary growth and high employment that characterized the period (Jorgenson and Wessner 2002).2 The rapid rate of technological innovation in ICT and the rapid growth of the Internet are seen as underpinning such productivity gains (Jorgenson and Wessner 2002). Gains are derived from greater efficiency in the production of computers and from the expanded use of ICT (Onliner and Sichel, 2000). Structural change has also arisen from the reconfiguration of knowledge networks and business patterns made possible via ICT innovation. For example, business-to-business e-commerce and Internet retailing are altering how firms and individuals interact to enable greater efficiency in purchasing, production processes and inventory management (Jorgenson and Wessner, 2002). Panagariya (2000) claims the transfer of ICT, in particular Internet technology, to developing countries enables the leaping of technological stages and provides a basis to enhance macroeconomic growth. Conversely, unless ICT is widely adopted, developing countries are likely to remain unable to compete in the New Economy where the sources of advantage are high knowledge-intensity and the fast adoption of new technological innovation, not low-cost factor advantage (OECD 2000).

In the past decade, perhaps, the most dramatic evolution, a new agenda, in organization is the dawn of the new economy associated with the value of intellectual assets. The main goal of this paper is to integrate Formal Concept Analysis (FCA) with Protege to build up ontology-based Traditional Chinese Medicine, with Acu-point serving both as an example, and a knowledge-sharing platform. This may make the experts' knowledge visualization and understand with the general public, provide that a patient has the opportunity to participate in, and be totally aware of, the complete symptoms of his/her illness. Moreover, the platform could contribute towards eliminating the phenomenon of information disparity between patients and physicians.

Five problems are addressed: (1) the role of competent actors in the venture capital and exit markets supporting the industrialization of winning technologies in small innovative firms, (2) the competence of the large firm to integrate large-scale operational efficiency with small-scale innovative capability through distributed development work and integrated production and (3) the importance of viable markets for strategic acquisitions, both in making this possible and in allowing a flexible choice for the small firm between growing aggressively on its own through own acquisitions, or being acquired strategically itself. We (4) find that the less developed markets in continental Europe may be a disadvantage compared to the US in ushering in a future New Economy. We finally (5) discuss what becomes of the Coasian theory of the firm when production is constantly outsourced in, or insourced from the market as the relative efficiency of coordination through management and over the market changes. One logical consequence is that the costs of business mistakes will have to be included in transaction costs.

The paper studies the patterns of volatility in firm growth rates and stock prices during the early phase of the life-cycle of an old economy industry, the US automobile industry from 1900-1930, and a new economy industry, the US PC industry from 1974-2000. In both industries, firm growth rates are more volatile in the period in which innovation is the most “radical”. This is also the period in which stock prices are more volatile. The comparison sheds light on the co-evolution of industrial and financial volatility and the relationship between this co-evolution and mechanisms of Schumpetarian creative destruction. Results provide insight into the debate on whether the statistical behavior of firm growth rates is well represented by Gibrat’s Law.

Grid computing is the next wave of distributed computing based on open standards and using commercial-off-the-shelf building blocks. It is becoming the new economy and major forces propelling the IT industry. In the emerging world of the virtual Internet, grids will provide instant global access to innovative services that deliver the power of the entire Internet to mobile users anywhere, any time, via any device, online or offline.

As highlighted by Figure 1, New Economy firms usually run through three typical development stages: development of a business plan, venture capital investment and Initial Public Offering (IPO). Each single development stage typically coincides with a specific phase of the innovation process. During the discovery phase, an entrepreneur finds a new business opportunity and develops a business plan. In the New Economy, this phase is usually not financed by investors. The entrepreneur typically stays self-employed. Investors enter the scene only after a new business plan has been discovered. The first investors are venture capitalists, who verify the economic potential of the business model. Usually, only a small number of business plans passes the verification test and is actually financed by venture capitalists. Of the business plans that have passed the verification test, again only a very limited number reaches the public capital market as an IPO. It typically takes several years until a business plan reaches the capital market and public investors finance the large scale exploitation of this business plan.

Over the last decade we have witnessed the rise and fall of the so-called new economy stocks. One central question is to what extent these new firms differ from traditional firms. Empirical evidence suggests that stock returns are not normally distributed. In this article we investigate whether this also holds for portfolios of stocks from a growth industry. Furthermore, we will compare this type of portfolios with portfolios of stocks from a more traditional industry. Usually, only value weighted and equally weighted portfolios are used to describe and compare portfolio return characteristics. Instead, in our analysis, we use a novel approach in which we use an infinite number of portfolios that together represent the set of all feasible portfolio opportunities.

Definitions of the “New Economy” frequently refer to particular industries — such as the bio-technology, computer, and ICT industries — in which technological innovations spark off the foundation of new firms. However, there also exists an organizational economics perspective concerning the structural similarities of such New Economy firms. This view emphasizes two common features. First, within these industries production appears to be characterized by positive externalities between specialized tasks. Second, employees are exposed to incentive schemes which induce ownership-like income claims. Thus, in corporate firms employees are typically motivated by offering stock or stock option plans.

At the core of the new economy are enterprises which create or sell information technology and applications or use them intensively to provide services (Anstotz 2002). Typically, they are young and small, but nonetheless fast-growing. Although they differ from traditional enterprises primarily by a more intensive use of and a higher dependency on information technology (Klodt 2001), it is the skills and the motivation of the employees that ultimately determine a company’s success or failure, even more so in new economy enterprises than in traditional companies. These employees with their innovative ability, service orientation and flexibility are the decisive competitive factor (Marschlich/Pendt 2001).

Drawing upon lessons learned from the biggest failure of knowledge management in recent world history and the debacle of the ‘new economy’ enterprises, this chapter explains why knowledge management systems (KMS) fail and how risk of such failures may be minimized. The key thesis is that enablers of KMS designed for the ‘knowledge factory’ engineering paradigm often unravel and become constraints in adapting and evolving such systems for business environments characterized by high uncertainty. Design of KMS should ensure that adaptation and innovation of business performance outcomes occurs in alignment with changing dynamics of the business environment. Simultaneously, conceiving multiple future trajectories of the information technology and human inputs embedded in the KMS can diminish the risk of rapid obsolescence of such systems. Envisioning business models not only in terms of knowledge harvesting processes for seeking optimization and efficiencies, but in combination with ongoing knowledge creation processes would ensure that organizations not only succeed in doing the thing right in the short term but also in doing the right thing in the long term? Integrating both these aspects in enterprise business models as simultaneous and parallel sets of knowledge processes instead of treating them in isolation would facilitate ongoing innovation of business value propositions and customer value propositions.

Cash is king. This quote from Copeland, Koller and Murrin also applies to the valuation of young enterprises with high growth opportunities. From this perspective there is no difference as far valuation issues are concerned in comparison to the old economy. From this perspective I will look at special problems in valuing enterprises in the new economy. Three years ago my perspective would have been old-fashioned, but today it seems that the market has now remembered this fundamental business rule.

The paper considers the issues of transition, economic growth and the role of the new economy in economic growth for transition countries with a special focus on Russia. The authors are particularly interested in the developments which took place in the second half of the 1990s. Considering the success of transition countries in transition, the authors distinguish between more advanced transition economies such as Estonia, Poland, the Czech Republic, Hungary and Slovenia and less advanced countries such as Russia and Ukraine in which the economic growth decline was deeper and the recovery more prolonged. For political, geopolitical and economic reasons, the success of Russia in market reforms is especially important for its neighboring transition countries and Europe as a whole.

Production in the New Economy is very often production of services and informational products. This is especially true for that sector of the New Economy that is focused on e-business. Several elements or domains of production management (eg. utilization of Internet technology, virtual network organization,) are shaped according to the generic features of the New Economy. Figure 1 illustrates that the New Economy differs from the traditional Old Economy (only) by degree, not principally. Entrepreneurial orientation for example exists in both economies. Still, there is a difference in degree, both quantitative (incidence of entrepreneurs) and qualitative (variants of entrepreneurship such as “netpreneurs”, “intrapreneurs”, etc).

The valuation of quickly growing start-ups in New Economy industries like E-commerce, mobile commerce, biotechnology, medical technology and others has always been a challenge. In particular, it has turned out to be difficult to apply traditional valuation techniques, e.g. asset valuation, discounted cash flow valuations or discounted revenue valuations. Market valuations — if they were available at all — have not been overly reliable either as stock prices of New Economy firms have fluctuated strongly in the last years.1

The term New Economy was coined by the business press grasping two broad trends in world economy (Shephard 1997, cited in Pohjola 2002a, p. 134): First, globalization of business and second, revolution in information and communication technology (ICT). A more specific definition is given by the US Department of Commerce: The New Economy is „an economy in which IT and related investments drive higher rates of productivity growth“ (Temple 2002, p. 242).

The customer and his needs are the origin of all value creation. From people no longer producing and consuming in one act arises the division of labor and, thereafter, the requirement of combination of those many single activities undertaken by many different people or organizations. The economy’s stage of development, the creation and distribution of knowledge within the economy, as well as cultural and other historical factors influence the processes of value creation, capture and protection. The transformation from the assumed old economy towards the assumed new economy is a typical example of that.

The paper highlights some international differences in fields relevant for growth in selected transition economies, in particular eastern European countries and in Russia. Initial problems of transition were natural in a sense that systemic transition to a market economy has effectively destroyed part of the existing capital stock that was no longer profitable under the new relative prices imported from world markets; and there was a transitory inflationary push as low state-administered prices were replaced by higher market equilibrium prices. The papers focuses in particular on the role of structural change, financial services and the New Economy, analyses how those factors affect economic growth. The paper discusses theoretical aspects of growth in transition countries, presents policy conclusions and some historical data.

It is often criticised that certain stars — e.g. opera singers and actors, soccer players, CEOs, lawyers and medical doctors and ‘stars’ at internet and software companies — are not worth their pay. This paper shows within an incentive contract that payments exceeding incremental contributions are not necessarily an anomaly. A necessary condition is that the agents have some intrinsic motive to perform well even in the absence of incentives. This in turn explains that rewards are often very high particular in those fields (e.g. arts, sports and also in the new economy), where one expects that incentives are less important due to an agent’s intrinsic motive to perform well anyway. In fact, a positive incremental profit contribution of a particular type is in general neither necessary nor sufficient.

A superficial look at the development and destiny of many e-economy start-ups might lead one to the impression that this area of the economy's self-and other-evaluation has fallen prey to a fundamental confusion: new, optimized methods of doing business have been mistaken for new ends; the realization of new strategies for developing, producing, distributing, and using goods, processes and services — methods which have been made possible by implementing innovative information technology — are still considered part of the old economic system of ends. That is why it appears to be consequential when the New Economy falls back into the Old Economy, modernized as it may be by the New. From a philosophical point of view, one is quickly led to the conclusion that instrumental reason has failed; further questions inquire, if at all, as to how business ethics can justify the newly utilized instruments within the context of the general strategy of economization. This would bring us to a new subject matter, one requiring an examination under the old axiologies and criteria. The internet thus seems like a system which makes a universalization in the sense of making communication, tools, machines etc. more flexible but which should be assessed by the old values and criteria.

In the “old economy,” business success depended primarily on strategic investment in capital goods—properties, manufacturing equipment, inventories, and so forth. Today, a company’s performance is more a result of its investment in a new set of assets: customers and employees (Siegert 2000). The ability to find, retain, and develop the best of these assets has suddenly become the leading indicator of success.

Along with the New Economy boom until 2000, the concept of content syndication has become extremely popular. Thanks to new developments in the media industry it is now possible to use content from the same working environment for different platforms. At the same time, more and more platforms are emerging such as the Internet and mobile applications. Once produced, content can be used for a variety of platforms, promising considerable synergy potential. However — whether this promise really holds true remains to be clarified.

The New Economy is a characteristic feature of the modern information society. It is the combination of new information and communications technologies, eruptive product innovations in the information and communication (ICT)-sector, new media and service applications for information dissemination and knowledge exchange, and sharply declining communications costs which make up for ICTdriven dynamics within firms and between them. The New Economies’ drive stems from its focus on information and knowledge which came to be seen as the main engines of economic growth, enticing the process of structural change towards knowledge-based goods and services which are said to increasingly substitute traditional industrial commodities as a base of future growth. The positive impacts of the New Economy are directed towards an increase in the dynamics of innovational activity, technological and organizational progress, enhanced aggregate productivity, and, hence, a permanently higher growth path in the future (cf. Siebert, 2000; Siebert and Klodt, 1999).

The world’s industries are moving into the ‘new economy’ of electronic market. The success of this move depends on efficient and reliable management of the business processes that will drive the e-Market’s value-chain. Efficiency can only be achieved through automation. Reliability will be achieved by reliable and dependable process management systems. These electronic trans-corporate processes cover the range from basic business transactions, workflows to sophisticated business processes that rely on a high level of personalisation. Management of these processes requires safety critical computer systems that can survive local catastrophes. Multi-agent systems have this level of dependability and personalisation. An analysis of the full range of processes is followed by an implementation framework for their management using a powerful multiagent architecture.

Cities, regions and nations all over the world face turbulent developments in our world economy. The shelter model where cities, regions and nations could protect themselves against fierce competition from outside and where economic prosperity could be controlled—or at least be managed—by public authorities has vanished. There is no protected place left on our earth. The internationalization of our economies has created an unprecedented openness of the space-economy, in which after the world-wide liberalization of trade and the emergence of new economic power blocks (such as the EU) all places on our earth are part of a global economic network system (cf. Castells 1998). This network system has both a physical side, viz. an interconnectivity of modes of production, consumption and transportation based on a radical restructuring of logistic and communicative processes towards neo-Fordist types of production with a blend of economies of scale and scope (e.g., Lagendijk 1993, and Nijkamp 1999), and a virtual side, viz. a worldwide interconnected information system spurring the new economy.

There is an interesting debate over whether OECD countries are on the eve of a New Economy, an era of higher non-inflationary growth. According to some analysts, the adoption of information and communications technology (ICT), combined with increased economic integration among countries, is transforming economic systems, much like the “electricity revolution” in earlier episodes of economic history (see HELPMAN, 1998). This view does not preclude business cycles, but it does imply that GDP growth rates would be higher over the medium to longer-run.

The “New Economy” has come to an end. In its place, established companies have placed themselves at the forefront of the Internet transformation. They are focused on return on investment and creating shareholder value using new technologies. The Internet will infiltrate most customer relationships in the future.

One of our first and probably one of our most interesting and challenging CCR projects was with an international IT product and service company in the US. From the very beginning we were aware that a successful project with this client, one of the godfathers of the New Economy, would give us enormous momentum for the future evolution of our methodology.

Like Cage, economists are inclined to attribute the failure to embrace new ideas to irrational fear. Standard approaches to growth and change assume that given new ideas, it is indeed the old ideas that should be the most frightening. To be sure, new ideas present uncertainty and risk — we might invest in the wrong idea at the wrong time, apply it in the wrong way, or fail to successfully implement a new idea. But with rational expectations, cash flows properly discounted, and investment suitably rewarded, risk should not present an obstacle to progress. As Schumpeter observed, the status quo is a false friend that lulls us into complacency and stagnation. It is only through the “creative destruction” of old ideas and the entrepreneurial implementation of new ideas that economies grow and societies prosper (SCHUMPETER, 1947).

The concept of strategic relationship marketing is an innovative approach to marketing in the new economy. This book organises these concepts into basic analytical and managerial tools. The narrow focus on strategic positioning and tactical marketing planning has become obsolete. Similarly outdated is the categorical idea of supplier superiority and dominance over consumers. The underlying assumption that the buyer and the seller shall never meet is gone forever.

The experience of recent decades in the European Union shows that the development of a regional productive system depends in a crucial way not only on the endogenous resources and abilities, but also on relationships with the international economy and the intensity of the integration with other regional production systems in terms of the flow of goods, production investments, financial investments or acquisitions of enterprises, the transfer of organizational abilities, the transmission of technological know-how and tourist flows.