THE BASIC ELEMENTS OF ICTS

The distinctive element characterizing the transition to the new knowledge economy is the provision of new knowledge-based activities that rely heavily on the quality and variety of advanced digital communications.

New information and communication technologies provide clear evidence for the Schumpeterian notion of gales of innovation characterized by the increasing conver­gence between and integration of a variety of infrastructures, applications, tools and innovations each of which is generated in a wide range of industries and firms. In par­ticular, technological convergence³ is driven by the introduction of a number of innova­tions, such as ultra-broadband fiber optics, various generations of digital subscriber line (xDSL) and cable modem broadband, digital TV, mobile broadband (e.g., UMTS, LTE [universal mobile telecommunications system/long-term evolution]), and the Internet, which uses all these technologies. These technological advances open up the possibility of offering a variety of content, services, and applications over the same network infra­structure. Contemporary ICTs are inter-networked and evolving, ranging from complex and integrated enterprise-wide systems to distributed and ubiquitous technologies such as mobile email devices and weblogs (Fransman, 2002, 2006; Edquist, 2003; Jones and Orlikowski, 2009).

As a result, information and communication technologies, and the related technologi­cal knowledge, are both complex and fungible (Antonelli, 2003). On the one hand, new information and communication technologies are the outcome of the recombination of a variety of knowledge modules in electronics, telecommunications, software, microproces­sors and television technologies, each of which cannot be fully controlled internally by one firm and thus requires the coordination of technological complementarities within the broader ICT technological system.

Organizational innovations, ICTs and knowledge governance 321 traditional and emergent sectors. The constant reduction in the price of ICT services, and especially telecommunications, in both nominal and hedonic terms, makes ICT-based products and services available at lower costs for a larger and larger range of users, with considerable effects in terms of improved productivity and profitability.

The integration of the array of interdependent, localized and sequential innovations, characterized by substantial indivisibility, has been shaped by the implementation of three factors: (1) economies of localized learning due to the increasing specialization in specific technological areas, the advantages of network externalities and the gains from knowledge externalities; (2) qualified user-producer and business-academic interactions; and (3) organizational innovations such as standardization committees, technological platforms, system integration, technological clubs and alliances to improve the dynamic coordination of the wide range of actors, products and technologies into a single working system and hence the complementarity, compatibility and interoperability of the variety of new localized technologies (David and Steinmueller, 1994; Shapiro and Varian, 1999; Antonelli, 2001).

Since the early 1990s the new ICT paradigm described above has thus led to a rapid and radical transformation of the context in which firms compete, produce and innovate. ICTs made possible the emergence of global networks based on distributed coordination processes that sell worldwide customized products, manufactured and assembled in a variety of regions through systematic outsourcing of lower-value activities, often to firms abroad, and retaining high-value and skill-intensive activities in home countries.

Firms can now rely heavily on ICTs to organize and coordinate their activity both locally and globally, with important effects on the economic organization of industries.

15.3