Impacts of the Digital Economy: The Shift to Consumer-Driven Competition and Life-Span Products

Abstract

This chapter examines changes in innovation and competition made possible in two traditional industries by the adoption of integrated information and communication technologies. Using empirical interview-based research the chapter highlights the importance of consumer-driven innovation. The development of complex innovation networks to supply consumer needs is demonstrated using two example sectors, the UK magazine publishing and grocery retailing industries. The innovation process is outlined in detail and the importance of linkages to the end-consumer and market experts is acknowledged. In addition, this chapter offers the concept of “life-span” goods as those developed from the outset as having a short life dependent on changing consumer tastes and fashions. Within this environment firms act more as project orchestrators, using core skills in developing innovation teams based on a deep knowledge of consumer activities. Finally the chapter concludes by examining the challenge to economic analysis and to the theory of the firm provided by shifting and temporary alliances.