This article will argue that the globalization of markets and the rapid technological change that characterizes the New Economy is neither casual nor induced by scientific advances. Firms` resort to internationalization is more the result of the rapid maturing of their traditional domestic markets than the result of technological advances. This fact, more than anything else, has forced firms, not only, to go beyond their national frontiers to place their unsold production, but, to look for new ways to remain competitive at home. As demand in domestic markets shrinks due to excess supply over demand, a new industrial and market paradigm sets in reinforcing consumer sovereignty by shifting the market logic away from a producer towards a consumer economy. This means that quality more than price, determines firms´ competitive advantage in the domestic and international markets.


Technological advances have been the result of guided investment in R&D aimed at supplying firms with the tools and instruments needed to generate the shift from Economies of Scale to Economies of Scope. In this context, firms have sought to attain Flexible Manufacturing Systems (FMS) that would allow them to effectively compete in this new market environment. However, too much hope has been unreasonably placed on technology as the new paradigm of modern industrial capitalism. Technology alone, as revealed itself insufficient to generate the expected changes given that technology is only a means to and end and not the end itself. Although technology can help bring about FMS, the implementation of FMS requires adjustments not only in manufacturing processes, organization of work and the retraining of the labor force, but, more importantly, it requires the adoption of flexible organizational structures capable of integrating effectively man and machines.  This, in substance, implies that the attainment of FMS is not only, a technical, but, a human and cultural change.

This paper will conclude arguing that firms´ future competitive advantage in the New Economy will depend, not so much, on the adoption of technology as an instrument to substitute workers and reduce costs, but on how technology is used by firms to aid workers to increase production. This factor will determine, not only, a change in the organizational structure of firms that operate in the new economy, but, the way ( “a new way”) in which firms compete in this New Economy.

Dr. Mario B. Curátolo

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