The New Economy Business Model and Sustainable Prosperity

Abstract

With its startup firms, vertical specialists, venture capital, and highly mobile labor, the New Economy business model (NEBM) is one that remains dominant in the United States, and it is one that many national policy-makers and corporate executives around the world seek to emulate. At the same time, within the United States, it is a business model that has been associated with volatile stock markets, unequal incomes, and unstable employment, including the insecurity associated with the offshoring of high-skill ICT jobs. Gone is the collective security that the corporatist Old Economy business model once offered its employees. In its place is a far more individualized relation between employer and employee. The employment and incomes of even the most highly educated members of the US labor force are now much more susceptible to the pressures and vagaries of “market forces” than they were a few decades ago. In particular, global labor markets and national financial markets now exert preponderant influences on the conditions of high-tech employment in the United States. If we define “sustainable prosperity” as a state of economic affairs in which growth results in stable employment and an equitable distribution of income, then the prosperity of the US economy would appear to be unsustainable. There is a need to understand the organizational and industrial dynamics of NEBM if only to determine how the tapping of its innovative capability might be rendered compatible with more socially desirable outcomes.