March 1998 Insights Issue #25

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Teleworking - configuring the free market in a virtual world

Dominant trends in today's competitive arena are driving the creation of new international political economy: globalisation, the rapid spread of information and communication technologies (ICTs) and the general transition towards a knowledge-intensive economy are conspicuous examples. Along with reforms to the telecommunications infrastructure of almost all countries, these trends have fuelled restructuring of employment and trade relations on a national and international scale.

Teleworking, or information processing work that is located at a distance from the main office site and is performed with the aid of telematics, provides one model. In July 1997, the United Nations University's Institute for New Technologies (UNU/INTECH) launched a major policy research initiative to investigate the current and potential impact of teleworking in the Asian context. The growing significance of information and knowledge to economic growth, and the ease of externalising information processing and knowledge-related work through the use of ICTs, make teleworking commercially attractive and technically feasible. In addition, the declining costs of computer hardware and software have enhanced the cost-effectiveness of teleworking alternatives to traditional work practices.

On a national basis, teleworking can open up a range of possible relationships between employer and employee. Teleworking across national borders, termed teletrade, is capable of reducing the barriers of time and distance in conventional trade relationships. Teletrade enables networked firms quickly and flexibly to create competitive advantage through exploiting the comparative advantages of different countries. Teletrade also allows firms to capitalise on the general trend towards international outsourcing, evident for instance in relation to software development. Here teletrade has enabled the relative surplus of skilled labour in some parts of the world (such as India) to be mobilised so as to buffer the effect of labour and skill shortages elsewhere. Moreover, telematically supported strategic alliances between existing corporations and the development of virtual enterprises can stimulate product and process innovation through the exchange of ideas and expertise.

For developing countries, teleworking represents a major opportunity to participate in the redefinition of world markets, enhance competitiveness and generate wealth. The UNU/INTECH Teleworking project focuses on two contrasting developing economies, India and Malaysia. In both countries, partly because of their rapid development and its associated environmental problems, telework and teletrade are key issues. In view of the notable absence of empirical research into the nature and extent of teleworking in the developing country context, the UNU/INTECH project is employing a range of quantitative and qualitative techniques with a view to:

Jane Millar,
The Open University Business School,
Milton Keynes,
UK
Email: J.Millar@open.ac.uk