Information and communication technologies (ICT) centred on the Internet are today
generally recognised as one of the central forces in the transition toward a new
economic system. During the height of the techno-enthusiasm that underpinned the
dot.com phenomenon this transition tended to be identified with e-business which
mostly meant the ‘transfer’ of existing business processes onto an online environment.
In the meantime there is a growing realisation that such a process oriented e-business
transformation is only one aspect, albeit a central one, of a broader economic
transformation that has important implications for the competitiveness of firms. The
viewpoint of this paper is that e-business is a central component of an emerging
economic system that is powered by ICT, is knowledge-driven, is organised around
electronic and organisational networks that generate knowledge and transform
industries and markets, and is dependent on dynamic and flexible regulatory public
institutions. For new ICT to diffuse throughout the whole economy, business firms,
market conditions, and the culture and institutions of society need to undergo
substantial change. It is the dynamic interdependence of these three conditions that is
the source of innovation and value creation in the new knowledge-driven economy.
This is why the agenda of research on the dynamics of adoption of new economy
practices, innovation, and economic growth needs to be expanded beyond the level of
the firm. It needs to be built around the dynamic interrelationships between
technological transformations, firms’ organisational and knowledge-creating
capabilities, emerging market and industry structures, and public institutions [Castells,
2000; Castells, 2001].