The New Economy (NE)

The objective of this Chapter is to define and characterize the New Economy and present the impact of these new institutional settings on the levels of trust within the companies operating in the New Economy, which has changed substantially the ways of governing relational contracts. Therefore, this Chapter is structured in the following way: Section 3.1 introduces the definition of New Economy; Section 3.2 is focused on the key factor of productivity in the New Economy: knowledge; in Section 3.3 we present the dynamics of the institutional innovations in the New Economy identified as macro technological, political and economic institutional arrangements; Section 3.4 illustrates some paradigmatic differences between the Old Economy and the New Economy; Section 3.5 presents the general effect of these institutional innovations on the organizations operating in the New Economy; Section 3.6 introduces and characterizes the companies operating in the New Economy, especially the New Telecommunications Industry. In Section 3.7 we discuss the main institutional sources of uncertainties under the New Economy, namely technological uncertainty, demand uncertainty and regulation uncertainty. In Section 3.8, we present the impacts of these institutional and organizational uncertainties and instabilities on employment conditions and labor contracts. And finally, in Section 3.9 we present the case of the Brazilian Telecommunications Industry.