Technology in Global Markets

Technology in global markets has transformed the way businesses operate, driven by rapid technological advancements and the widespread use of the Internet. This evolution has enabled globalization, allowing for the seamless movement of capital, ideas, and products across national borders. The shift towards a knowledge-based global economy emphasizes the importance of information and communication technologies (ICT), which have reshaped traditional business models and created new opportunities for innovation and growth. High-tech industries have emerged as key players, relying on advanced research and development practices to stay competitive.

Developing countries face unique challenges in integrating into this digital economy, including infrastructure limitations and cultural barriers. However, fostering e-commerce and adopting technology management principles can enhance their participation in global markets. Furthermore, as businesses increasingly rely on online platforms for commerce, the establishment of global distribution networks and technical standards becomes critical for ensuring efficiency and compatibility across markets. Overall, technology serves as a catalyst for economic development and plays a pivotal role in shaping the dynamics of global commerce.

Published in: 2021

By: Flynn, Simone I.

Subject Terms

Technology in Global Markets

This article will focus on technology in global markets. Businesses in global markets have gone through e-transformations as a result of the Internet and its related communication technologies. Areas of description and analysis will include the phenomenon of globalization, the pace of technological development, the knowledge-based global economy, and emerging high-tech businesses. In addition, issues of the relationship between developing countries and e-commerce, technology management, global technical standards, and global-distribution networks will be introduced.

Keywords Commerce; E-Transformation; Global Distribution Networks; Global Markets; Globalization; Internet; Knowledge-Based Global Economy; Technology Management

Business & Public Policy > Technology in Global Markets

Overview

Technology affects the pace and growth of business in global markets. Technological change drives economic development. Historical examples of technologies that changed business practices include the nineteenth-century railroad and twentieth-century mass production manufacturing technologies. In the 1990s, new information and communication technologies began a business revolution with new products, services, business models, and economic markets. Information and knowledge have become both the means and the product of many businesses around the world. Terms such as the information super highway and the information society became popular descriptors of modern life for Westernized countries. The Internet, and its related communication technologies, is a driving force in shaping and operating businesses and global markets.

In an effort to unpack the deep relationship between technology and global markets, this essay will describe and analyze the following topics and issues:

Globalization and the emergence of global economic markets;
Global markets and the pace of technological development;
Global markets and the knowledge-based global economy;
Global markets and emerging high-tech businesses; and
Issues of developing countries and e-commerce, technology management, technical standards, and global-distribution networks.

Globalization & the Emergence of Global Economic Markets

Global markets are characterized by an increasing mobility in capital, research and design process, production facilities, customers, and regulators. Global markets, created through socioeconomic changes, political revolutions, and Internet and communications technology, have no national borders. Modern globalization, and resulting shifts from centralized to market economies in much of the world, has created opportunities for increased trade, investment, business partnerships, and access to once closed global markets.

Economic environments around the world have been changing due to the forces of globalization. Globalization is characterized by the permeability of traditional boundaries of nations, culture, and economic markets. The fundamental economic forces and events influencing globalization around the world include the end of communism in much of the world; the change from an economy based on natural resources to one based on knowledge industries; demographic shifts; the growth of a global economy; increased trade liberalization; advances in communication technology; and increased threat of global terrorism (Thurow, 1995).

Globalization creates a turbulent global sociopolitical environment characterized by competing political actors, shifting power relations, and politically driven changes in national economies around the world. Businesses work to find opportunity and profit in the political and economic changes. The political turbulence and upheaval have resulted in a move from centralized economies to a decentralized global economy and have created numerous emerging markets (even despite the Great Recession of 2007 to 2009). These emerging markets are the capital markets in developing countries that have chosen to promote capital flows and foreign investment by liberalizing their financial systems.

Business opportunities, including international investments and joint ventures, in the global economy have been increasingly tied to trade pacts such as the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico; the Mercosur trade pact between Argentina, Uruguay, Brazil, and Paraguay; and the Asia Pacific Economic Cooperation (APEC) trade zone. In addition, business opportunities have resulted from privatization worldwide. “Countries are privatizing many state-owned industries and allowing foreign investors to purchase pieces of them through joint ventures or local operations to participate in these projects” (Sites, 1995). According to Sites (1995), emerging markets, often occurring in countries experiencing political upheaval, will continue to increase in the expanding global market, and businesses, participating in the new global economy, will continue to seek out new manufacturing and sales opportunities in foreign markets and countries.

Global Markets & Technological Development

Technological development, as an integral part of a corporation's research and design process (R & D), is heavily influenced by changes in corporate business practices and development of global markets. Factors in the emerging global markets that influence technological development include increases in the pace of development, labor productivity, and competition. In addition, technological development in global markets is influenced by changes in corporate governance practices (Ahlstrom, 2004).

Increased pace of development: The development of global markets has spurred the development of high-tech businesses. Global markets emphasize fast growth facilitated through new business procedures and new technologies (such as social media via the Internet and other networking technologies). Increased spending in research and design has yielded a wide range of profitable new products and services. The profits from economic growth provide funds for further technological development and investment. Both public and private sector interests have invested and driven the pace and direction of technological development in global markets. High-tech firms, with fast-paced product development tracks, depend on equity funding by venture capitalists, market investors, stock options, brand-building, and corporate reputation to establish themselves as competitors in the global marketplace.

Increased labor productivity: The rate and pace of labor productivity is used by economists as a measure of the economic health of a country. Labor productivity refers to a business's output divided by the number of employees. Increased labor productivity, resulting from expanded global markets and new technologies, increases profits, spending, product development, and the overall economic health of a country.

Increased competition: Economic growth in the marketplace increases competition between local and foreign firms. Trade agreements, such as the North American Free Trade Area (NAFTA) and the single European market in the early 1990s, have created new opportunities and new competitors. The interdependent global economy creates new levels of competition among foreign and multinational corporations. Modern globalization, and resulting shifts from centralized to market economies in much of the world, have created both need and opportunity for economic development in developing countries and regions of the world. Open markets and foreign development aid have created new competitors in business sectors. Corporations around the world have adopted new management practices and have built their brands in an effort to compete in global markets.

Changes in corporate governance practices: Participation in global markets requires corporations to respond to consumer and stakeholder demands, adopt performance and environmental standards, and institute clear corporate governance, accountability, and transparency procedures. The globalization of product and financial markets requires corporations to adopt product and performance standards that have become common to business practices in Western firms.

Global Markets & the Knowledge-Based Global Economy

The relationship between new technologies and emerging global markets has influenced the fundamental organizational structures and principles that define business organizations. A knowledge-based global economy has emerged based on the selling, buying, and trading of information and knowledge. Information as an engine for economic growth, rather than material resources, labor, and capital, creates nearly limitless opportunity for new growth. Traditional brick-and-mortar companies, with focus on production, internal orientation, and asset acquisition, have been outperformed by knowledge-economy companies that focus on knowledge acquisition and production, external orientation, and short time to market capabilities.

The overall ecology of business domains and industries has been changing due to the growing prominence of new information and communication technologies. The knowledge-based sector, including information and communications technologies (ICT), software, computer services, aerospace, pharmaceuticals, and communications equipment, has become the fastest growing industry sector. New modes of production rely on information technologies, telecommunications, robotics, and automation. The manufacturing industry, overall, has been in decline. High-technology manufacturing, such as aerospace, computers, electronics, and pharmaceuticals, maintained its market position while low-technology manufacturing, including chemicals, food products, and textiles, lost most of its market share at the turn of the century. The utilities industry, including electricity, gas, and water, remained stable (Pilat, 1998).

The adoption of new information and communications technologies has changed traditional practices of information sharing and knowledge management. The effects of new technology on businesses include: strengthened supply chain management, mass customization, and improved customer relationships. New Internet- and communications-related technologies are considered to be value-addition technologies. Adoption of these new technologies creates opportunities for increased value and profit.

Chang argues that the infusion and incorporation of information sharing and knowledge management technology creates e-transformation opportunities for businesses. E-transformations refer to the e-business applications and processes that companies incorporate into their business models. E-transformations are viewed as value-added opportunities that benefit stakeholders such as customers, employees, investors, suppliers, and communities in which businesses operate. Examples of value-added opportunities that have existed for companies who embrace e-transformation include the following (Chang, 2005):

Enterprise resource planning (ERP): E-transformation involves tools that lower a company's overhead costs and internal transaction costs.
Supply chain optimization: E-transformation incorporates processes that enhance assets utilization, increase operations margin, and reduce working capital needs.
Utilization of e-markets: E-transformation is a tool that extends established location-based markets.
Outsourcing: E-transformation incorporates practices that minimize company investment, reduce time to market, and enable companies to benefit from skills and talents of partners. Examples of non-core operations that are commonly outsourced include human resources, distribution, customer support, manufacturing, financial accounting, management, and customer service.
Decapitalization of underutilized resources: E-transformation allows companies to divest themselves of non-competitive assets and operations in the interest of flexibility and market responsiveness.
Enhanced customer service: E-transformation is believed to enhance customer service through online tools of order entry, product information, process and track orders, support services, and product customization options.
Application of Web-based technology tools: E-transformation relies on online technology tools for product design and development, project management, and manufacturing and plant information.
New products and technologies: E-transformation is associated with developing influential technologies and technical innovation that give companies competitive advantage in the marketplace.
New ventures based on corporate knowledge: E-transformation involves knowledge portfolios that include information on operations and maintenance of computer systems, software programming and applications, and e-commerce operations.

Knowledge-based global markets are shaped by the Internet and its related communication technologies. The Internet is the primary source of information and knowledge at the individual and organizational level. “The Internet is revolutionizing information and communication technology, with direct impacts on the emergence of a global information society by establishing new concepts for human communication that affect economies and societies worldwide” (Kamel, 2001).

Applications

Global Markets & E-Commerce Technology

The dramatic growth in information and communications technologies in the 1990s produced technology that has changed business practices. Global markets, and multinational corporations, have increasingly relied on and have incorporated new Internet and telecommunications technologies into their business practices. E-commerce refers to the practice of buying and selling products and services through electronic transactions. Online stores and marketplaces, which have rapidly switched from little competition with traditional brick-and-mortar stores to increasingly replacing and putting them out of business, are an example of e-commerce. E-commerce has helped create low-cost and high-efficiency product and service sales. E-commerce has the potential to create employment opportunities in information-based and value-added services (Kamel, 2001).

Business models that incorporate information and communications technology are called e-businesses. The related terms of e-commerce and e-marketplace refer to particular e-business operations. E-business refers to the delivery of information, products, services, or payments via telephone lines, computer networks, or other electronic means. E-business automates business transactions and workflow processes. E-business is intended to simultaneously reduce service costs, increase delivery speed, and increase quality of products and services. E-business has three main parts: business-to-customer (B2C), business-to-business (B2B), and business-to-employee (B2E). E-commerce customers collect information, use support services, and order products through enhanced technology. While e-marketplaces have numerous small domain and industry differences, there are agreed-upon e-marketplace features and components. They include the following:

E-marketplaces are virtual markets that are focused especially on a specific industry or business project.
E-marketplaces are an important link between suppliers and buyers.
E-marketplaces are a business model that facilitates the supply-chain process.
E-marketplaces are considered to be the supply chain of the future (Büyüközkan, 2004).

Advantages of e-marketplaces include increased efficiency, improved customer relations, increased market reach, and reduced costs. While e-marketplaces are increasing in number and purported to be a successful and profit-making business model, there are few agreed-upon ways to measure overall success and viability of the e-marketplace business model. One persuasive metric is Büyüközkan’s e-marketplace success index (e-MSI). The e-MSI is a uniform measure used to take a quantifiable measure of e-market performance. The e-MSI refers to the combined measure of strengths and weaknesses of an e-marketplace, and includes three main steps:

Identifying key success points for e-marketplaces;
Integrating these successful characteristics through an index formula; and
Putting the proposed success index into active operation (Büyüközkan, 2004).

The e-MSI uses the following e-marketplace success factors in its evaluation:

Objective performance,
Economic value,
Electronic transformation level of the process, and
Electronic transformation level of the industry (Büyüközkan, 2004).

The e-MSI is intended to serve as a performance measurement tool for the management of e-business in a wide range of business industries (Büyüközkan, 2004).

Issues

Developing Countries & E-Commerce, Technology Management, Technical Standards & Global Distribution

Developing Countries & E-Commerce

Developing countries around the world have invested in information infrastructure to facilitate participation in global markets. Public-private partnership models have helped countries, such as Egypt and Mexico, build new information infrastructures. There are numerous challenges to the success of e-commerce ventures in developing countries. These challenges include customer awareness, small market size, incomplete e-commerce infrastructure, incomplete telecommunications infrastructure, and social and cultural barriers to adoption (such as mistrust and unfamiliarity with credit cards). Kamel’s strategies for facilitating the adoption of e-commerce business practices in developing countries include the following (2001):

Transparency in policy development and implementation by the government is a necessary element for creating the necessary e-commerce enabling environment.
Collaboration between national and international organizations helps build the infrastructure enabler for e-commerce.
The role of government provides a solid environment for e-commerce to grow, including infrastructure as well as legal and consumer components (Kamel, 2001).
Technology Management

New technologies, which change business practices and processes, require new forms and management approaches and strategies. Technology management in the knowledge-based economy is based on the theory of world-class manufacturing (WCM). World-class manufacturing (WCM) refers to a manufacturing philosophy based on the principle of continuous improvement. WCM organizations pursue occasions for improvement in areas of quality, cost, delivery, flexibility, and innovation. According to Chairat and Swinehart, there are four dominant principles of technology management:

"Just-in-Time (JIT): the elimination of anything other than the minimum amount of equipment, materials, parts, space, and workers' time, that are absolutely essential to add value to the product."
"Total Quality Control (TQC): the all-organization effort to improve the product's quality to meet customer needs."
"Total Preventive Maintenance (TPM): the practice of maintaining machines and equipment so often and so thoroughly that they will not break down or malfunction during production."
"Computer Integrated Manufacturing (CIM): the total integration of a business' design, production, distribution, after-sales service and support operations through the use of computer and information technologies" (Chairat, 2000).

Technology management in global markets requires the adaptation of the management principles described above to the needs and protocols of particular industries (Swinehart, 2000).

Technical Standards

The growth of international commerce in global markets has created the need and call for standardization of technology within specific industries. Technical standard-setting committees have formed to facilitate the compatibility and interoperability of technical systems on an international level. Examples of technical standard-setting committees include the following:

The International Telecommunication Union (ITU): The United Nations' specialized agency in the field of telecommunications.
The Video Electronics Standards Association (VESA): An organization that aims to encourage the development of timely, relevant, open display and display interface standards, guaranteeing interoperability and promoting creativity and market growth.
The American National Standards Institute (ANSI): An organization that accredits standards development organizations.
The JEDEC (Joint Electron Devices Engineering Council) Solid State Technology Association: A standard-setting body for semiconductor and electronics businesses.

The technical standard-setting process is complicated by issues of pending patents, propriety information, disclosure and non-disclosure, and attempts to influence standards in favor of a particular business or technology (Stockley & Belongia, 2001).

Global Distribution

Distribution is a crucial concern for businesses that operate in global markets transformed by new information and communication technologies. Products and services are increasingly developed, produced, and sold in different geographic regions. Companies outsource as many non-core activities to other firms around the world as possible. Thus transportation and distribution networks may influence performance and competitiveness within international markets. It is not uncommon for multinational companies to develop their products in Europe and the USA, manufacture products in Asia and Latin America, and sell worldwide. Traditionally, global-distribution networks have included logistics processes, supply chain processes, and inter-organizational information systems. Challenges to new global sourcing and distribution networks include international and national regulations and policies controlling the use of emerging information and communication technologies (Zeng, 2003).

Conclusion

In the final analysis, technology and new global markets are inexorably connected. New communication technologies have altered business, society, and economy. Globally, private sectors and public sectors are together creating new industrial, science, and technology policies that incorporate new technologies and related business practices. The pace of technological change, globalization, and emerging global markets creates opportunities and challenges in equal measure (Pilat, 1998).

Terms & Concepts

E-Business: The delivery of information, products, services, or payments via telephone lines, computer networks, or other electronic means.

E-Commerce: The practice of buying and selling products and services through electronic transactions.

E-Marketplace: Virtual markets that are focused especially on a specific industry or business and provide increased efficiency, improved customer relations, increased market reach, and reduced costs.

E-MSI: E-marketplace success index. The measure of the combined effects of an e-marketplace's strengths and weaknesses.

E-Transformation: The e-business applications and processes that companies incorporate into their business models.

Emerging Markets: The capital markets in developing countries that have chosen to promote capital flows and foreign investment by liberalizing their financial systems.

Global-Distribution Networks: Logistics processes, supply chain processes, and inter-organizational information systems that distribute products to markets and customers.

Global Markets: The economic markets of countries and regions open to foreign trade and investment.

Globalization: A process of economic and cultural integration around the world caused by changes in technology, commerce, and politics.

High-Tech Businesses: The corporations that trade in computers and electronics.

Internet: An interconnected system of networks and related technologies that connect computers worldwide.

Knowledge-Based Global Economy: A global economy based on information as an engine for economic growth rather than material resources, labor, and capital.

Technology Management: Practices and protocols used by managers in a business organization to oversee technological materials and processes. Examples include technology planning, project management, support, database services, disaster recovery, and network management.

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Technology in Global Markets

On this Page

Subject Terms

Technology in Global Markets

Business & Public Policy > Technology in Global Markets

Overview

Globalization & the Emergence of Global Economic Markets

Global Markets & Technological Development

Global Markets & the Knowledge-Based Global Economy

Applications

Global Markets & E-Commerce Technology

Issues

Developing Countries & E-Commerce, Technology Management, Technical Standards & Global Distribution

Developing Countries & E-Commerce

Technical Standards

Global Distribution

Conclusion

Terms & Concepts

Bibliography

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