In very schematic terms, two different kinds of productive activity are typically to be found in any advanced economic system, each of them corresponding to a fundamentally different type of network structure. On the one hand, certain kinds of production are highly routinized: they rely on forms of knowledge that are relatively well codified and on machines and work processes where repetition is the dominant pattern of action. In economic terms, this means that it is possible to plan this sort of activity with some degree of confidence and to carry it out at very large scales. The necessary materials and inputs used in production can thus often be acquired according to a given schedule, and they can be purchased in large volumes. This means, too, that these materials and inputs can be brought in cheaply over large distances, for the ability to plan and to purchase in large volumes means that their unit costs can be kept low. Under these circumstances, the linkages between functionally related firms are likely to have a rather limited impact on locational decisions, and firms will be relatively free to seek out locations quite distant from one another. In practice, and because production is routinized in this type of system, the chosen locations will often coincide with pools of cheap, unskilled labor, sometimes far from any major urban center.
On the other hand, we find economic sectors where quite different kinds of conditions hold. Vast areas of the contemporary economy involve activities where enormous uncertainty prevails, and where there are strong limits on producers' abilities to routinize or simplify their operations, especially in regard to their mutual interactions. In high-technology industry, for example, producers are frequently faced not only with rapid shifts in basic technologies themselves, but also with demands for their products that vary greatly from one customer to another and from one moment to the next. In high-level business and financial services, the changing project-oriented and client-oriented product means that firms must be organized so as to vary the mix of skills and resources that they bring to each particular job; further, the skills and resources themselves (especially human intellectual assets) are not widely available because they are quite specialized. In industries faced with markets that fluctuate because of constant design changes or fashion effects (more broadly, product differentiation processes), firms must be prepared to change and recombine equipment and labor and to monitor shifts in the market, often on a day-to-day basis.
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