Chapter 14: Network Topology of the New Economy: Organizational Passages From Knowledge to Innovation | Social and Economic Transformation in the Digital Era

Panagiotis Damaskopoulos
INSEAD, France

Abstract

This chapter develops a framework of analysis of the emerging organizational network topology of the new knowledge-driven economy in order to identify critical factors that underpin sustainable processes of innovation. The central argument of the chapter is that in the new economy innovation constitutes the foundation of the competitiveness and value-creating capabilities of economic organizations. Innovation has emerged as a strategic issue because of the disarticulation of established economic and social structures and processes that the new economy and the new society bring in their path. This disarticulation is the product of the interplay of technological, industrial, economic and social transformations. In this context, innovation is not something happening "inside" organizations but rather at the interface of organizations with the business, regulatory and institutional environment within which they operate. The process of innovation is increasingly driven by open-source networks of cooperation and involves dynamic interrelationships between technological transformations, organizational capabilities of firms, and public institutional and regulatory structures supportive of innovation and entrepreneurship. In other words, for new information and communication technologies that power the new economy to be able to spread throughout the whole economy, thus enhancing productivity growth, business firms, the institutions and culture of society, and the factors implicated in the production process need to undergo substantial change.