The “new” economy: complexity, coordination and a hybrid governance approach

Abstract

The paper starts from the increasing spatial and functional fragmentation of value-added chains, global deregulation and dis-embedding of "markets", and interdependencies among the Net-based digital technologies. It develops a socioeconomic setting with ubiquitous direct interdependencies and interactions, Net-externalities, "strategic" strong uncertainty, and omnipresent collective-good and social-dilemma problems. These entail coordination failures, either in the form of conventional market failure (i.e. collective blockages of action) or of "wrong" or outmoded institutional coordination and, thus, widespread technological "lock-ins" that are indicative of insufficient ability of collective action. This is particularly true for de-regulated, individualistic cultures. In contrast, sustainable innovation, used in a broad, i.e. technological and institutional, sense, requires an effective collective action competence. This, in turn, requires a new and increased coordination. Against this background, the global corporate economy has spontaneously developed private individualist substitute arrangements to cope with the new complexity, such as local clusters and hub-and-spoke networks, which all have severe shortcomings. With reference to what we call the "Linux" paradigm, the paper discusses the possibility of a spontaneous evolutionary, i.e. collectively learned, institutional coordination through emergent collective action and networks with "good" governance. The paper argues that only a hybrid system that consists of "well-governed" networks and a new approach towards more comprehensive and deliberate "interactive" and "institutional" public policy, supporting collective learning and emergent institutional coordination , is capable of solving the complexity and coordination problems of the "new" economy by increasing certainty, stability and more continuous and comprehensive innovation. This new policy approach is outlined at the end.

A theory of software reuse strategies in ideal type stable and turbulent market environments

“…We associate turbulent markets with increasing returns environments (Katz and Shapiro, 1985;Elsner, 2004). A typical player characteristic for this environment is the prospector organization that embraces change and shows a strong concern for product and market innovation (Miles and Snow, 1978).…”

Creative Cities and the Concept of Diversity

“…Forms of trust give stable expectations for future actions among economic agents (Elsner, 2004), and may facilitate innovation processes, i.e. the interdependency of invention, innovation, imitation and diusion, whereupon innovation processes appear as interdependent learning and experimental processes between agents.…”

“…Since Florida (2002;2003;2004; is the main driver behind the concept and idea of creative cities, a short introduction below highlights his theory's insights.…”

“…the interdependency of invention, innovation, imitation and diusion, whereupon innovation processes appear as interdependent learning and experimental processes between agents. Furthermore, trust enhances the eectiveness of coordination and reduces transaction costs and complexity, that is, the overall social interaction of production and innovation, between economic agents (Elsner, 2004;Maskell and Lorenzen, 2004a).…”

“…cities economically driven by the so called creative class, an emerging cohort of economic agents working in the elds of education, health, science and others. According to Florida (2002;2003;2004; diversity of entrepreneurs and population contributes to creative cities' economic growth and competitiveness due to positively impacting knowledge and human capital. Albeit the creative city concept is hard to operationalize and a fuzzy (or missing) theoretical model (Glaeser, 2005;Grimm, 2005;Peck, 2005), creativity will be increasingly crucial for innovation, economic success and development in the future (Falck et al, 2008).…”