The New Business Cycle Comes Round Again
Your article provides valuable information about the significant role that technology plays in the business cycle today ("The new business cycle," Cover Story, Mar. 31). But the analysis of the dangers of technology seems to be a bit lacking. To the extent that information technology increases corporations' productivity and competitiveness, the companies that choose not to invest during a downturn would be vulnerable to companies with strong capital positions that did choose to invest in information technology. Thus, even in down times, companies will be pressured to maintain their technological investment--or risk losing market share to competitors who do.
The article certainly was thought-provoking and could become reality. On the other hand, comparing information technology to the railroads is something of a stretch. For the railroads, the time to market and the heavy capital outlays were much different from the short cycle-response time of the present technology sector. Also, technology's richness comes more from the delivery of "soft" goods rather than hard goods.
Information technology leverages human capital by expanding creativity and facilitating the sharing of knowledge. Witness the explosion which no one even dreamed of four years ago! The global business environment has hardly been touched by the full impact of technology. Even in deteriorating economic times, business will continue to use technology to lift productivity and compete globally.
Dudley P. Cooke
Executive Insight Group
Bryn Mawr, Pa.
Your article states that the cyclical behavior of high technology may affect business investments. High technology serves a variety of growth businesses--from computers, networks, communications, software, and electronics to automotive, industrial, medical, defense, and appliances. High technology has an impact on every segment of the gross national product--from consumers, business, and government to inventories and exports.
American companies dominate many markets internationally, including computers, software, networking, communications, and processors. Increasingly, these high-tech businesses are dependent on upgrades, maintenance, and service of mission-critical systems, not on new product sales. This diversity reduces cyclicality.
Diversity leads to reduced amplitude and frequency of cycles. The market rewards lower risk.
President & CEO