The Internet's Effects on Global Production Networks: Challenges and Opportunities for Managing in Developing Asia

Dieter Ernst

No 33, Economics Study Area Working Papers from East-West Center, Economics Study Area

Abstract: Placing global production networks (GPN) on the Internet poses a fundamental challenge, but also creates new opportunities for managing in Developing Asia. Network flagships can now select best-performing suppliers on a global scale, increasing the pressure on Asian suppliers. But the transition form EDI to the Internet may also provide new opportunities for Asian suppliers, by reducing barriers to network entry, and by enhancing knowledge diffusion. A conceptual framework is introduced to assess how the Internet reshapes business organization and GPN. That framework is applied to one of the role models of managing in Asia, Taiwan's Acer Group. The paper highlights a vicious circle that must be broken to reap the benefits of the Internet: Asian firms must reduce a huge efficiency gap between manufacturing and the management of supporting digital information systems (DIS). The challenge is to embrace the Internet as flexible infrastructures that support not only information exchange, but also knowledge sharing, creation and utilization. The Internet facilities this task: it provides new opportunities for the outsourcing of mission-critical support services.

Pages: 22 pages
Date: 2001-08
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