BUSINESS

ENVIRONMENT

Rapid technological change

globalization and heightened

competition at the national and
international levels have altered
the landscape for enterprises.
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 Many opportunities now derive from doing
business in fundamentally new ways
 e.g. through developing knowledge-based
services and technology-intensive goods;
 through finding market niches for new
software,
 business services or eco-friendly
products;
 through exploiting the Internet and
electronic commerce;
 and through combining assets with
competitors in global mergers and joint
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 In fast-moving and globalised markets,
supporting specific technologies, sectors
or firms can be particularly counter-
productive.
 Today, sectors based on information and
communications technologies (ICT) are
driving productivity growth across the
OECD.
 Tomorrow, sectors related to
biotechnology or advanced materials may
be the top performers.
 Innovative start-up firms and sectors fast
become sunset enterprises and industries,
eclipsed by other dynamic actors.
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 A subset of strategic business services is
making a significant contribution to
growth. These are firms providing
computer software and information
processing, R&D and technical testing,
advertising and marketing, human
resource development, and organizational
advice.
 Most prominent where industry is
characterized by greater flexibility,
specialization, outsourcing and smaller
production units, such services aid large
firms in efficiently using their resources.
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 This industrial restructuring has been
accompanied by the increased importance of
smaller firms. Under the influence of new
technologies and business structures, economies
of scale tend to be less important to
competitiveness.
 Large firms are becoming more specialized and
focusing on core capabilities, while outsourcing
goods and services production to small and
medium-sized enterprises (SMEs).
 The rise of technology-based services is putting a
premium on traits such as flexibility,
innovativeness and speed
 SMEs now make up over 95% of OECD
enterprises and account for 60-70% of
employment in most countries.
Is entrepreneurship important?
 Productive entrepreneurship is now one of
the main drivers of economic growth.
 It is associated with the ability of
individuals to begin new ventures, the
quantity and quality of start-up firms, and
the ease with which enterprises can enter
and exit the market.
 In a churning process, new
establishments are created, some existing
ones expand, and others dissolve
operations