Organization versus Space: The Paradoxical Geographies of the Digital Economy

Abstract

AbstractDigital technology has permeated most sectors of the economy, a result of continuous improvement and convergence in computers and telecommunications, and the Internet revolution. Unprecedented tradability of digitized information and information‐intensiveness of business are driving the collapsing of value chains’ organizational and spatial dimensions. We are witnessing a trend of vertical disintegration followed by complex re‐arrangements that mix horizontal reintegration and spatial agglomeration with various patterns of dispersion. With the support of two empirical examples, this article endeavors to show that the territories of the digital economy are built under a permanent tension between these centripetal and centrifugal forces. Economic geography thinking should – in part – reject the traditional Christallerian hierarchy of scales, and consider instead the ability of contemporary business organizations and dynamics to squeeze out intermediary scales and places. The agglomeration theory, although still valid, is challenged by technological improvement and the evolution of the information society.