ABSTRACT
Introduction Firms and the industries in which they create and appropriate value do not function in a vacuum. They are influenced by their macroenvironments-the technological, political-legal, demographic, sociocultural, economic, and natural environments (PESTN) in which firms and industries operate (Figure 10.1). Macroenvironments are often the source of opportunities and threats to firms and their industries. For example, regulation and deregulation both increase or decrease barriers to entry and therefore influence industry dynamics and opportunities to make money. Witness deregulation of the airline industry in the European Union which gave rise to many low-cost startup airlines. Also witness the deregulation and privatization of phone services in developing countries such as Cameroon and Kenya that have allowed wireless phone service businesses to thrive in these countries. National and international economic factors such as interest rates, exchange rates, employment, income, and productivity also impact industry competitiveness and therefore the types of new game activities that can be performed. For example, income growth may increase some customers’ willingness to pay for certain products, making these customers more precious to firms that are able to offer them the type of value that they want. As globalization increases, the opportunities to pursue new game strategies and the threat to existing business models increase. In this chapter, we explore the role of macroenvironments as sources of opportunity and threats for new games, and examine the role that governments can play to help firms create and appropriate value. We start the chapter with a description of macroenvironments and their role as a source of opportunities and threats to
new games. We then explore those characteristics of some environments that make them more conducive to innovation than others. Next, we explore the rationale for why governments have a role to play, and examine what that role is in the face of new games.
