The New Competitive Advantage: The Renewal of American Industry

The New Competitive Advantage: The Renewal of American Industry

The New Competitive Advantage: The Renewal of American Industry

The New Competitive Advantage: The Renewal of American Industry

Synopsis

This book addresses the sustained resurgence of American economy, and the firms, regions, and technologies that are driving this growth. Michael Best develops a new model of technology management and regional innovation based on the principle of systems integration. The principle of systemsintegration is manifest in the organizational capability of firms, individually and networked, to foster rapid technological change. Application of the principle of sysyems integration to business organization means integrating an ongoing technology management capability into a production system. The effect is a network or clusterof entrepreneurial firms in which design is decentralized within the enterprise and diffusedanongst networked enterprises. It is a business model ideally suited to product-led strategies and technological innovation. The combination of entreprenurial firms and inter-firm networks is shown to foster a range of dynamic cluster processes which, in turn, underlie the growth of Silicon Valleyand the unexpected resurgence of Boston's Route 128. The general character of the capabilities and innovation perspective is illustrated with applications to regions at different levels of industrial development. The implications for policy making are profound: technology management is a powerful lever for both fostering growth and shapingcompetitive advantage. Moreover, it offers a framework for addressing the challenge of ecologically sustainable growth. Complex product systems, such as energy, transportation, and health, are a consequence of past and present technology RandD choices and corresponding investements in technicaleducation. Thus capability and skill development policies shape what is on offer in the marketplace.

Excerpt

What a difference a decade makes. In the early 1990s many books were being published on the loss of competitiveness of American industry. My book, The New Competition, published in 1990, described the loss of American industrial leadership in terms of the rise of both the Japanese model of business organization and networked groups of small firms represented by the 'third Italy'. The former challenged American high- volume manufacturing industries such as cars and semiconductors and the latter were eroding market share in design-led 'fashion' industries such as apparel, shoes, and furniture. Both business models and associated production systems were able to achieve performance standards in cost, quality, flexibility, and/or design that could not be matched by American Big Business, which was organized according to different principles of production and organization. These models were the New Competition of the 1970s and 1980s that eroded the competitiveness of the American economy.

The State of Massachusetts was particularly hard hit. Between 1986 and 1992, employment in manufacturing dropped by one-third, from 675,000 to 450,000. The Massachusetts Miracle, the term used to describe the economic good times linked to the establishment of America's first high-tech district, was over. Companies like Digital Equipment Corporation, Wang Laboratories, Prime Computer, Data General, and Apollo laid off thousands of workers at a time. The new, high-tech industries such as the minicomputer were but recent examples of a long tradition in the region of declining industries—textiles, shoes, shipbuilding, furniture, and watchmaking. But the pace of the decline this time was much more rapid.

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