Question:
The Internet boom of the late 1990s was hailed as the 4 advent of a "new economy: that would radically alter the face of business firms. By 2002, however, it was clear that the new economy had not arrived on schedule. With the advent of the Internet, digitization, and related innovations, what fundamental aspects of the economy have changed? Which aspects have remained the same? Why has the "new economy" been so slow to arrive?
During the 1980s, firms in the Silicon Valley of northern California experienced high rates of turnover as top employees moved from one firm to another. What effect do you think this turnover had on learning-by-doing at individual firms? What effect do you think it had on learning by the industry as a whole?
In many modern U.S. industries the following patterns seem to hold:
a) Small firms are more likely to outsource production of inputs than are large firms.
b) "Standard" inputs (such as a simple transistor that could be used by several electronics manufacturers) are more likely to be outsourced than "tailor-made" inputs (such as a circuit board designed for a single manufacturer's specific needs.
What factors might explain these patterns?