Trípodos, número 14, Barcelona, 2003

Technology
and economic
development
in the periphery

Glyn Williams
Mai Britt-Kenz

Dr. Glyn Williams is coordi-
nator of TEDIP. Sociologist,
graduate of the University of
Wales and University of
California (Berkeley).
Currently Reader in Sociology
and director research Centre
Wales. Author of ten books
and over eighty academic
papers. Areas of specialisa-
tion, regional development,
language and discourse,
constructivist pedagogy, ICT
and ODL.
Regions remote from the main ICT sector development
of hardware and software development are obliged to
find alternative ways of entering the New Economy.
This partly pertains to path dependency. One such route
involves exploiting the outcomes of convergence to deve-
101
lop a content-based industry by transforming pre-exis-
ting media sector competencies and linking them to the
creation of regional archives of digital cultural assets.
Such developments should involve trans-regional inte-
gration that exploits on-line working using shared
resources.

Maj-Britt Kentz is assistant

researcher on the TEDIP
project at the University of
Joensuu (Finland).

g.williams@bangor.ac.uk
 INTRODUCTION

he current round of economic restructuring realises the

T productivity potential contained in the mature industrial
economy because of the shift toward a technological para-
digm based on IT which has changed the scope and dynamics of
the industrial economy, creating a global economy and fostering a
new wave of competition between existing economic agents
(Kelley, 1998). This new competition has led to technological
change in processes and products that have made some firms,
some sectors, and some areas more productive.
Yet there remains confusion about these changes. The proli-
feration of terms used to describe these developments —Knowledge
Economy, Knowledge-intensive Economy, Network Economy, New
Economy, Digital Economy etc. By reflect an emphasis upon the
organisation of work, the features which are regarded as crucial for
innovation, or the technology that is claimed to drive the change.
Boltanski and Chiapello (1999) refer to the shift in economic orga-
nisation involving organisational innovations, technological
inventions and changes in the mode of enterprise management
102 involves a ‘new spirit of capitalism’—a new general presentation of
the economic world. Similarly, Burton-Jones (1999) refers to
‘Knowledge Captialism’. There is agreement that that the changes
we are witnessing do not constitute a change in the mode of pro-
duction. Yet we are witnessing fundamental changes in the rela-
tions of production, and even of power relationships within pro-
duction.
Our understanding of the social and economic conditions
under which we live, and how these are characterised and assigned
meaning derives from the various meta discourses which we use as
social scientists to categorise and describe that which we study.
These meta discourses are also conditioned by the various histori-
cal conjunctures within which they emerge. It is increasingly
recognised that the linear, equilibrium neo-Classical models
which were adequate for industrial age economy are inadequate
for elaborating an understanding of the current situation. There
are numerous reasons for this. Limitations of space preclude a
thorough analysis, but the following are illustrative:

·Sociology and Economics operated with models of normative

structures based on the regulatory capacity of the state and a con-
cern with universalism. The state is rapidly losing this capacity
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

and the space is opening for a normativity premised upon parti-

cularism and diversity. This creates particular problems for elabo-
rating society as pertaining to a social order related to a state gene-
rated normativity, for discussing culture as similarly pertaining to
this normativity, and for discussing economies as state regulated
processes;
·Orthodox economic models were premised upon stability charac-
terised by negative feedback. The Knowledge Economy, with its
focus on innovativeness, on the other hand, is characterised by
instability generated by feedback systems that induce a return
scale, path dependency and non-linear pricing;
·Where equilibrium models focused upon 'pure exchange' associa-
ted with rationality and the search for optimum allocations of
given resources, with consumer choice and technology taken as
given, within the New Economy rationality is replaced by learning
and reflexivity so that a mathematical formulation of this problem
can only focus upon time, and economic 'progress' becomes one
of knowledge/learning accumulation. NE markets operate on the
basis of given distributions of information and knowledge and
favour product and service profilation as a means of approaching
and satisfying needs. 103

The shift from macroeconomics to microeconomics invol-

ves a focus upon the logic and coordination of individual choice,
and on the idealist conception of the market wherein policy is
based upon respecting the rule of play and allowing the economy
to stabilise to the extent that involuntary unemployment is redu-
ced to a minimum (Williams and Morris, 2000). The combination
of telematics and intellectual investment means that most of the
costs of an enterprise occur at the stage where the process of pro-
duction is put in place. Thus the system functions by reference to
fixed global costs, i.e. with unitary costs decreasing in relation to
the volume of production. Within this context, production is no
longer the combined factors of production, but the combination
of integrated structures, capital and work, which are confounded
in such a way that one can no longer distinguish the productivity
of one from the other. The notion of marginal costs on which eco-
nomic calculation is based loses all significance. Information is,
above all, a ‘relation’ which develops structures in the form of net-
works and interdependencies, as much between firms as between
these firms and their distinctive cultural and socio-cultural envi-
ronments (Morin, 1999). Production becomes a feature of collecti-
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

ve activities that attain a particular function which flows over into

the strictly-defined economic field.
Such changes have several consequences:

·The market is no longer able to function as a regulating force that

influences the future enlargement of disequilibrium, with the pro-
ducer expanding production in order to reduce cost, thereby com-
pensating for any price reduction that derives from increased com-
petition.
·When the disappearance of the notion of the specific producti-
vity of a factor is linked with the collective good of the national
product, the question of the distributive field of commutative jus-
tice, i.e. where revenue compensates for the contribution of each
individual to production, is displaced by the idea of a distributive
justice in which the common good is distributed amongst all. This
leads to the definition of new criterion of the relationship betwe-
en economy and society.
·International exchange is less and less an exchange between sta-
tes, but involves trans national companies operating with little
reference to location. Since the same company exists in several sta-
104 tes it means that the same states are both the importers and expor-
ters of the same goods. The old theories of factor emolument, or
of comparative advantage, are in retreat.

Clearly there is room to rethink at least some of the orthodoxies

of Economics.
Non-linear dynamics and complex systems provide a non-
equilibrium perspective of socio-economic evolution. There are
five problems that derive from the NE:

·IT will greatly reduce information cost while threatening inte-

llectual property rights since the marginal cost of copying infor-
mation is close to zero. Mixed economies must solve the problem
of proper competitions and fair distribution;
·The increasing return to scale in the information industry may
increase the gap between developed and developing regions/coun-
tries. Spread of information and image of wealthy
countries/regions will accelerate the trend of cross-country/region
immigration which will change the welfare system of developed
countries.
·The information explosion will create tremendous pressure for
family structure, education system and regulatory mechanisms;
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

·Mainstream economic growth theory implies that output

depends upon labour, capital and technology (or knowledge), and
hence that growth can continue indefinitely without increasing
the consumption of physical resources and energy, i.e. energy con-
sumption is merely a consequence of growth, not a cause of it.
However, growth may be a positive feedback process, i.e. natural
resource and energy consumption are both a cause and a conse-
quence of economic growth. New growth theory reinterprets capi-
tal to include knowledge, with knowledge growth compensating
for physical depreciation.
·ECommerce, telecommunications and the internet together
increase the speed and flow of economic activity. Interaction costs
are almost zero which means that there is little room for the midd-
le man. Market exchanges and markets as we know them become
obsolete because they are too slow, linear and discontinuous for
the new technology.

Clearly, an economy where weightless products are signifi-

cant behaves differently from one where they are not, if only
because economic value can be transported instantaneously and
cost free across global infrastructures (Quah, 1999). It can also be 105
ruthlessly organised to fine-slice value-creating activity across
space and time. Geographical location becomes unimportant in
production. First-mover advantage, the establishment of single
standards, and the size of the marketplace intrinsic monopolies
and the economies of superstars in industry competition all assu-
me ever greater importance. So also do lower entry costs and more
intense dynamic competition, levelling the playing field over
time.
To summarise, the New Economy incorporates a funda-
mentally altered industrial and occupational order, unprecedented
levels of innovative dynamism and enhanced competition, and a
dramatic trend towards globalisation, all spurred by advances in
information technology. The net result is the progressive restruc-
turing of regional and state economies within Europe. This runs
parallel to developments outside of Europe, and competition
increasingly focuses upon how continents adapt to these new
developments within a new global order. Different spatial confi-
gurations differ in the degree to which their economies and socie-
ties are structured and operate in accordance with the tenets of the
New Economy.
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

NE ENGAGEMENT IN THE PERIPHERY

This new global economic system is highly exclusionary,

highly dynamic and displays highly unstable boundaries. While
dominant segments of all state economies are linked into the glo-
bal web, elements of countries, regions, economic sectors and
local societies are disconnected from the processes of accumula-
tion and consumption that characterises the informational/global
economy. Of course, it is impossible for these marginal sectors to
lie outside of the system, but their social and economic logic is
based upon mechanisms clearly different from those of the infor-
mational economy. All economic and social processes do relate to
the structurally dominant logic of such an economy. This is the
point of articulation of the Old and the New Economy.
The global economy generates its own, new, international
division of labour. It is characterised by its inter-dependence, its
asymmetry, its regionalisation, heightened diversification within
regions, and specific patterns of inclusion and exclusion. Its
asymmetrical nature, involving a variety of centres and periphe-
ries rather than a simplistic typological distinction between a cen-
106 tre, semi-periphery and a periphery. The association between the
new competitive paradigm based on technological capacity and an
induced interdependency in the new global economy reinforces
dependency in an asymmetrical relationship, thereby reinforcing
existing patterns of domination and dependency. The new pattern
of international division of labour excludes space and population.
On the other hand this is no longer a context wherein everything
is determined by reference to the state. Even marginalised econo-
mies have small segments connected to the high value producer
network, if only to ensure the transfer of whatever capital or infor-
mation is still accumulated in their country or region. Conversely,
the most powerful economies have marginal segments of their
population in a position of devalued labour. The question is one
of whether the technologically driven economic restructuring will
lead to specific elements being decentred (Castells, 1996:260-61).
This view is in contrast to the optimistic claim that the new
technology would resolve the problems of peripheral regions. The
'death of distance' (Cairncross, 199?) derived from how techno-
logy would allow direct access to anywhere, allowing people to
work wherever they wanted to with the result that the relations-
hip between space and wealth would disolve. Recent studies
(Delaurentis and Cooke, 2001) have blown this assumption apart.
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

It is becoming blatantly obvious that the growth locations of

industrial age economy, with some exceptions, also constitute the
core of New Economy activities. This New Economy is very much
an urban, even a metropolitan or ‘primate city’ phenomenon. It is
also a ‘high performance engineering’ phenomenon, related to
high value-added services.
Analysis shows that there are two main developments wit-
hin the ICT sector in Europe, one focusing on hardware manufac-
turing and the other on software development, each of them with
their own spatial concentration. Hardware production focuses on
the ‘Nordic Potatoe’ involving Helsinki and Stockholm, while soft-
ware development is concentrated in the ‘great central banana’ or
the belt which runs from Dublin through Europe to Milan (Koski et
al., 2002). Of course, there are a mixture of these activities within
each of these concentrations and the observation is very much a
generalisation. It is argued that the concentration owes much to
the prior existence of venture capital and finance organisations in
these centres as well as the pool of skills which were easily produ-
ced or transformed. It does beg the question of what is happening
in the rest of Europe, how are the regions geographically remote
from these core developments engaging with the New Economy? 107
Such peripheral regions will not remain isolated from New
Economy developments. They will use the hardware and software
products of the core regions in striving to engage with activities
which allow them to integrate with the New Economy. What
these activities will be will depend upon path dependency or on
the prevailing industrial age economy activities within the region.
Thus they may involve opto electronics, biotechnology or multi-
media activities, or some other focus, or even a mixture of several
of them. Prominent among these activities are the Knowledge
Intensive Business Activities (KIBS), broadly defined as activities
which help customers to solve business problems (Sundbho,
2002). Unlike the orthodox conception (Gallouj, 2002), services
and innovation are brought together resulting in both process and
product innovation. As forces of innovation, especially localised
innovation, they transform firms into learning organisations. One
feature of this relationship is how disparate components of indus-
trial age economy are now brought together within a new confi-
guration (figure 1).
Clearly, new partnerships are required and how these are
forged often depends upon regional development structures and
capacities.
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

Figure 1. Toivonen, 2001:75 (modified by Kentz)

108

Figure 2. Infocom Sector

One kind of KIBS is of particular interest for some periphe-

ral regions - the Infocom activities which have been founded on
digital communication and include a content industry which uses
hardware and software to distribute digitised information (figure
2). It derives from the convergence of networks, terminals and ser-
vices, digitisation and deregulation. Again they involve a synthe-
sis of many fields of expertise as boundaries between previously
distinct activities become blurred. IT capabilities are matched with
specialist knowledge in an area of application in order to achieve
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

and maintain competitive advantage. Nonetheless, the emphasis

remains on content and services production.

NE CULTURE INDUSTRIES

The EC has consistently argued that the Knowledge

Economy is such that it transforms the relationship between eco-
nomy and culture. This involves the ‘economisation of culture’
and the ‘culturalisation of economy’, and the transformation of
the production-oriented economy into a consumption-oriented
economy. This means that culture becomes increasingly commer-
cial, while cultural content increasingly shapes commodity pro-
duction. The EC’s argument is that culture has economic value
within the KE, being capable of serving as the basis for a culture
industry. While they have not elaborated on this claim by reflec-
ting upon the relationship between the KE and culture, it does
reflect a shift in thinking about the nature the economy and the
products which are integrated with it.
Within western metaphysics culture and the economy have
tended to remain separate, economics pertaining to reason and
culture to the emotional. Within education this dichotomy has 109
tended to be extended to encompass social actors, with women, in
contrast to men, being encouraged to involve themselves in edu-
cation for the Arts, rather than with the sciences. The same has
been true of minority language groups whose languages have
been entirely excluded from education as an access to labour mar-
ket activity. When such languages do enter the curriculum, their
use is often restricted to the Arts, with the state language encom-
passing the Science subjects. While this is changing, it has been,
and still remains, a struggle to institutionalise this change across
many language groups.
The Commission’s line of argument about the relationship
between culture and the economy is particularly appealing to
peripheral regions if only because the greatest extent of linguistic
and cultural diversity lies in Europe’s peripheral regions (Nelde,
Strubell and Williams, 1996). Several of these regions also have a
developed regional media presence which provide the precondi-
tions for path dependency entry into New Media activites. It is
even more appealing when they claim, optimistically perhaps, that
the content industry could be worth as much as 5% of EC GDP and
responsible for employing 4 million workers. Its growth rate could
be up to 20%, creating up to a million new jobs between 2000 and
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

2005 (EC, 2000). One estimate (MKW, 2001) is that there are
currently 7.2 million workers in the EU, the annual employment
growth between 1995 and 1999 having been 2.1%, mainly where
the demand for content was greatest. There is a suggestion of 50%
growth in the culture industries in Spain by 2005 (Fondacion
Tomillo, 2000:210). Most of the existing workforce is employed in
very small companies and include a disproportionate number of
freelancers. The suggestion is that employment growth is likely to
be more pronounced for content provision than for marketing and
sales. ICT will be the driving force of the labour demand trends
(MJK, 2001:32).
Furthermore, the diversity of cultural contexts where the
information economy emerges and evolves does not preclude the
existence of a common matrix of organisational forms in the pro-
cess of production, consumption and distribution. Without such
organisational arrangements, neither technical change, state poli-
cies, nor the strategies of firms would be able to come together in
new economic systems. While the rise of the informational eco-
nomy is characterised by the development of a new organisational
logic which is related to the current process of technical change,
110 this organisational logic manifests itself under different forms in
various cultural and institutional contexts. In many respects the
problem of corporate governance assumes a different meaning in
high and medium technology sectors (Tylecote and Conesa,
1998). A major feature of any project must address the role of the
region in economic transformation while also mapping the spatial
configuration across regions.
To an extent this EC vision has started to be put in place,
even if the conception of its potential remains limited. The
eEurope directives have resulted in a drive to digitise the various
collections housed in Europe’s memory institutions across all of
the member States. Even if the use of these archives is currently
understood simply by reference to chaing the nature of public ser-
vice delivery rather than commercial exploitation the potential is
there. However, the issue of how to exploit these assets in deve-
loping a regional cultural industry remains unexplored. In our
view it can be assumed that commercial exploitation of cultural
assets will increase once the thorny issues of IPR and inter-opera-
tive meta data standards can be solved. This means that any
region which digitises its cultural resources but which fails to deve-
lop the capacity to commercially exploit them through product
creation is leaving itself open to the kind of dependency rela-
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

tionships which we have witnessed in industrial age economy

whereby its raw materials are exploited by other regions in crea-
ting the value added elements which yield rich profits.

THE DIGITAL VALUE CHAIN AND THE DIGITAL ECONOMY

This reference to digital assets as raw materials brings us to

the notions of a Digital Economy and the Digital Value Chain.
Once analogue materials in the form of images, sound, or text are
digitised they can be indexed, archived, cleared for movement,
and transported anywhere at low cost. They can be regrouped to
create products in the form of content for an audio visual industry
which is desperately short of such materials. This digital value
chain is represented in figure 3.
In thinking of digital assets as raw materials which can be
transported to a site ready for manufacturing into a new product,
which can be sold, or which can constitute a service, we are enga-
ging with the simple understanding of ‘an economy’. It is in this
sense that we refer to the Digital Economy (DE) (Williams, 2000).
It also obliges us to consider the relationship between the
Old Economy, the New Economy and the Digital Economy. While 111
all parts of the system are connected, the relationship between

Figure 3. Customer-focused value net (modified from Bovet ja Martha 2000, 4 Reingold 2001)
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

them is one of articulation. In the absence of a strong hardware or

software sector it may well be that the Digital Economy is the core
from which technology transfer, learning and knowledge develop-
ment and management can facilitate the transformation of regio-
nal Old Economy. If the NE is seen to be the basis for faster and bro-
ader income growth, and if its development relies upon a link to
the DE, then it seems clear that the first step involves a careful over-
view of the centrality of the DE in the transformation of the OE.
Since the process of creation cultural digital archives is already
in progress this option is open to all European regions. However,
these developments must extend to encompass the production end
process of the value chain if real benefit is to derive from it. It is of
course possible, and even probable, that some regions will lack a con-
tent industry which can exploit the assets in a digital regional cultu-
ral archive. We want to argue that it is those regions or trans regio-
nal partnerships which can develop the entire value chain of the DE
within their own regions which are most likely to succeed:

· in entering the information society with a competitive advantage;

· in transforming the OE into the NE quickest, thereby avoiding
112 the danger of becoming the source of displaced labour for the NE;
· in benefiting from the exploitation of its own resources for its
own use, and also from outsourcing them to other regions within
the global market place.

The implication here is that it is possible to conceive of

what might be termed Regional Digital Innovation Systems. This
means that we should treat the DE and the NE as involving two
different, but related, processes. In other words the DE operates as
an integrator for old and new economies, but it also transforms OE
material to immaterial (new) products or services. Thus NE is a
product of transforming the OE: it involves both the reorganiza-
tion of existing companies and the emergence of new enterprises.
The NE is the consequence of how the OE is transformed, and
involves both the reproduction of existing enterprises and the pro-
duction of new ones.
One complication with the above conception is that no sin-
gle region will have sufficient diversity of digital resources to go
alone in content production of any significant scale. This means
that trans-regional cooperation in imperative. Furthermore, since,
within the New Economy, markets are increasingly structured by
language and culture, rather than by regulation, collaboration will
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

not only target niche markets but will also expand the market
reach for many cultural products. Certainly, trans-regional colla-
boration in content production is an enticing possibility.
The technology which allows such trans-regional working
environments to be put in place are emerging, and technologies
which enable and consolidate trans-regional co-operation are alre-
ady in place. These so called emerging technologies include the
semantic web, XML interface and HLT, and the development of
meta data standards enabling their interoperability. In future
visions, smart technology will support (tacit) knowledge transfer
in various working communities, and the formation of the lear-
ning and teaching Communities of Practice (CoP) which we dis-
cuss below. Indeed, it is hoped that it will incoproate an entire
trans-regional innovation system.
If the work process within the Knowledge Economy relies hea-
vily on the social construction of meaning, its relationship to langua-
ge and culture, and to the development of trust, reciprocity and the
related components of an effective community of practice, these are
not easily operationalised within the virtual context. However, it is evi-
dent that in the future, the role of such CoPs in enterprise and organi-
sational competiveness will expand; and consequently, we need to 113
learn to identify, know and support CoP activity. Within this threefold
task smart, technological interfaces between actors and environments
will have a pivotal role. They will include the human language tech-
nology that allows trans cultural and multilingual collaboration.
Nonetheless at the moment, such KE future work processes or skilled
communities of developers —or even a vague idea of them— is not dri-
ving the technological developments. For example, human language
technology derives from the formal nature of syntactic structures rat-
her than from discourse and ordinary language, thereby limiting infor-
mal transactions. Similarly discussion space structures condition how
things are said and, to an extent, what can be said, while how to resol-
ve the issue of exploiting the tacit knowledge necessary for effective
workflow development is never considered.

REGIONAL DEVELOPMENT AND INNOVATION

Planners within the European periphery are clearly presen-

ted with a particular challenge of how to drive forward their entry
into New Economy activities. In confronting this challenge they
are also obliged to recognise that the nature of regional develop-
ment changes. The regional development instruments and mecha-
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

nics available mainly derive from conceptions and contexts which

are no longer in existence. There are at least five implications for
‘new regional development policy’:

·fluid labour markets are not conditioned merely by occupatio-

nal/sectorial knowledges but rather by a capability for permanent
learning processes and structures/institutions;
·knowledge plays a role which natural resources play in industrial
age economy;
·regional economies are much more open than in the OE;
·enterprise support must be knowledge and not capital-based;
·each region competes on its own competencies and assets, but
ignores integration with other regions at its peril.

The distinctive knowledge and cultural assets of the eco-

nomy need to be commodified on terms favourable to the region,
and in collaboration with other regions which are willing and
capable of reciprocating. Policy has to engage with these condi-
tions so that the transition from the OE to the NE is facilitated,
and must focus on developing structures that will insure the most
114 effective management of firms and organisation within the New
Economy. There is little evidence that this kind of vision is unders-
tood, let alone being implemented.
How these initial developments of the DE converge into
broader economic development depends not merely upon recog-
nising the above conditions, but also on the different ‘National
(sic) Systems of Innovation’. Freeman (1987) describes these as
‘...the network of institutions in the public and private sectors,
whose activities and interactions initiate, import, modify and dif-
fuse new technologies’. In some respects this is the thinking asso-
ciated with the role of the Triple Helix involving the university,
public and private sectors in the regional development process. It
is a conception which has also been extended to the regional level
in the form of Regional Innovation Systems to show the intercon-
nectedness of the elements of the innovation system operates at
the regional level. Porter’s (1990) work often tends to inform this
work, in that it draws attention to the importance of the state level
factors in determining the competitiveness of industrial sectors.
He claims that industries in any particular region have a competi-
tive advantage if they are embedded in a wide and deep network.
The associated cluster of activities and players link to learning,
finance, business services and training and perform better as a
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

consequence. In regions with a high degree of political autonomy

such as Catalunya or Wales, there is a greater scope for regional
institutions and socio-political contexts to play a role in innova-
tion. The neo liberal discourse would argue that this places the sys-
tem closer to the people who will benefit from it. In other states
decision making remains centralised. The consequence is evident
in how the eEurope initiative re cultural archives is developing
across Europe, with the more centralised systems seemingly being
unaware of the relevance of such systems for the region, while the
more decentralised regions merely take the state level initiative as
a carte blanche for developing specifically regional interests.
A trans regional innovation system focusing on the content
industry is a considerable challenge. It involves linking the regions
with the greatest potential. This linking involves several related
components which would have to be linked within each region
before it could operate trans-regionally. It includes creating intra-
nets for all of the producing companies; an interoperable digital
cultural archive; a multilingual digital asset management system;
operational, multilingual on-line working environments; an asso-
ciated marketing componentn; and a form of trans regional dee-
lopment system premised on KE principles. 115
One of the unfortunate consequences of Porter’s emphasis
on clustering and its relevance for innovation is that planners
have seen this in spatial terms. It has led to the creation of Science
Parks, Tecnium's and similar conceptions where key players are
brought together into single location in the expectation that
innovation is stimulated through heigtened interaction and pro-
cess innovation. This may well work well by reference to some
contexts. The heavy reliance on sharing resources within collabo-
ration makes it less relevant for the creative sector where product
innovation relies upon the uniqueness of the idea. This is not to
deny its relevance for process innovation. However, the point we
wish to make is that the new technology must discover a system
whereby whatever the benefits of clustering are seen to be, they
must be capable of generation without recourse to spatial proxi-
mity. That is, they must beable to operate within a trans-regional
context. The technology that facilitates on-line working and the
creation of vritual communities of interest provide the basis for
this, it is the understanding and ingenuity that is lacking.
Since within the NE knowledge assumes the role played by
natural resources in industrial age economy, learning is central to
development. For the moment, formal education has become far
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

too stagnant to answer the needs of business life or new profes-

sions. In the future, such a state may pose a threat. The educatio-
nal sector must become proactive by reference to, not only the
representation and implementation of learning, but also its con-
tent. Current developments have systematically failed to provide
the necessary official, accredited training courses (MKW, 2001:46).
Even when they provide on-line learning the courses often appear
to be designed for direct contact or face to face classroom contexts,
and lack awareness of the relationship between pedagogy and
practice.
However, there is a positive side to such developments. The
lack of flexibility within formal education has resulted in working
communities developing systems of collaborative and communal,
problem-based, that involve ‘learning by doing’. Such develop-
ments may lead to the formation of a collective resource of exper-
tise, shared knowledge and competence capital, and, at its best, to
the formation of Communities of Practice (e.g. Wenger,
McDermott, Snyder, 2002) In practice, CoPs require far more than
a single factor such as the lack of capability in formal education
referred to above if they are going to evolve. Above all, community
116 formation dependends on a the environemnt which gives a com-
pany advantage, and involves, among other things, adequate fle-
xibility and autonomy, support, real experts, good collegial rela-
tions, trust, and innovative capacity.
Communities of Practice are potentially one way forward in
developing competence and knowledge. Moreover, since CoPs are
capable of diffusing accross organisations/enterprises and sectors,
they are able to transfer value into other collaborative structures
such as the Triple Helix. The question remains of how to develop
the tools, platforms and environments which can facilitate their
on-line creation and existence.

FROM VALUE CHAINS TO BUSINESS NETS

Many of these ideas are beginning to structure the role of

planners and the thinking which guide their practices. Central to
them is the idea of a shift away from Fordist management and
work organisation within the New Economy. Yet there is a sense
in which the Digital Value Chain represents a continuation of this
mode of thinking. Porter (1985) introduced the value chain con-
cept as an elaboration of the more general principles of Value
Added Partnerships in order to focus upon business activities rat-
 TECHNOLOGY AND ECONOMIC DEVELOPMENT IN THE PERIPHERY

her than on its functional structure. His focus was on the indivi-
dual company but included the supply chain within which the
firm operated. The exercise was simple in seeking to measure the
value a company creates against the costs associated with creating
that value. It remains very much a linear conception
The global digital economy structure makes it self-evident
that New Economy Business Plans and Models must be signifi-
cantly different from those of industrial age economy. Knowledge-
intensive new economy is competence sensitive. Thus companies
exploit one another’s resources and competences —i.e. they search
for the best possible partner for a given situation. Work becomes
project based and the idea of cooptition comes into operation.
Bovet and Martha (2000:18) argue that associated with the chan-
ge from the value chain to the value net conception are more
demanding customers, globalisation, growing competitive pressu-
res and the Internet and digital technology. Of these, it is the
Internet and digital technology that create the business, seen as
the interface for value aggregation.
Consequently, value chain networks have evolved into a
digital economy business web (b-web), within which a large net-
work of actors, whose traditional roles as primary and support acti- 117
vities become diffused, operate and compete. Partnership know-
how and support activities are based on specialisation, and on a
high level of expertise. In other words, primary actors are more
than ever dependent on support actors, and certain support actors
(subcontractors) may actually guide the process, especially where
the necessary competence is scarce, and substitutes for them do
not exist. Such conditions are particularly prominent in periphe-
ral labour markets. An ideal value net is customer-focused, open to
co-operation, agile and scalable, sensitive to changes in customer
and rival markets, digital and fast flowing (cf. Ojala, 2001). Figure
4 presents a simplified value net structure.
A value net (e.g. Tapscott, Ticoll & Lowy, 2000), in which the
traditional roles of customers and regions are changing, gives perip-
heral regions new competitiveness and the oportunity to participate
in the global economy. A business web is a distinctive system of sup-
pliers, distributors, commercial service providers, infrastructure pro-
viders, and customers that use the Internet for their primary business
communications and transactions (Tapscott et al., 2000:17).
However, the role of these players differs singificantly from how they
are understood in industrial age economic systems. There is far more
intergation of roles and some role redefinition. In other words, while
 GLYN WILLIAMS & MAI BRITT-KENZ TRÍPODOS

the value chain model supports the exclusiveness of the global eco-
nomic system, a value net offers peripheral regions new kinds of
opportunities for participation. Furthermore, the value net model is
well suited to CoP-activities which drive company innovation in
peripheral enterprises and organisations, through their own learning
and the transfer of competence. A systematic value net that exploits
regional competence resources is able to compete with other agglo-
merations and value nets outside the region.
Value production models —chains, nets and infrastructures—
demand a new way of thinking, new ways of regional political deci-
sion-making and financial resource allocation within regions. They
also demand renovation of the educational sector to meet the needs
of the regional value net. However, it is clear that, simultaneosuly,
regional companies and workers must have the courage to organize
themselves around new tasks and partnerships.

CONCLUSION

The preceding discussion has highlightes sufficient issues to

indicate what is now required to move forward. It should be clear
118 that there is considerable scope to integrate what has been said
about business nets with the argument in favour of on-line colla-
boration that is supported by veritable trans-regional regional
development initiatives. On the surface the solution appears easy.
Certainly the technology already exists in rudimentary form to
make it practical. The most difficult taks involves transforming the
human component. Among the regional stakeholders there is a
vast gulf between the rhetoric of the KE and an understanding of
exactly what it involves. There are vested interests in continuing
institutional structres and ways of operation which hinder flexibi-
lity and partnership formation. There are even greater difficulties
associated with trans-regional collaborations across state bounda-
ries. These are furtehr compunded by issues of language and cul-
ture. We can see the future, getting there is much more difficult.

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