During the late 1990s, the term, "New Economy," began appearing in articles and news reports as analysts sought to describe transactions that were largely Internet-based, or at least transactions which did not require consumers entering a brick and mortar store. Articles were written about the young entrepreneurs who were rewriting business rules and how the New Economy would radically change the entire business landscape. As the old century drew to a close, however, it became obvious that the Old Economy was not going to go away entirely. Many touted "dot com" companies have gone bankrupt as they were unable to produce that most traditional product of the Old Economy: profit. New Economy companies are finding that they must integrate Old Economy factors into their organizations, but Old Economy companies are also recognizing that the New Economy offers strong potential for their businesses, as well. This research considers the New Economy and its strategic implications.
For some analysts, the term, "New Economy," refers to the plethora of "dot com" companies which have come into existence in just the past few years, created new millionaires from young entrepreneurs, and changed retailing as consumers comparison shop and browse from their homes and offices 24 hours a day, seven days a week. However, the ramifications of the New Economy move far beyond just using the Internet to reach catalog customers. Wilfred Corrigan, an executive in the semiconductor industry, notes that a primary difference between the Old Economy and the New Economy is the primary commodity which powers the two. The Old Economy was heavily reliant on oil, according to Corrigan, while the New Economy is heavily reliant on silicon. Oil prices have increased over the past 30 years, driving inflation and limiting productivity growth in the Old Economy, but silicon prices have decreased over the same period, supporting low inflation and high levels of prod...