Which Industry Is Most Significant?
In microeconomics, an industry exists within a market that, for a variety of reasons, either completely substitutes another type of business, or can be characterized as forming a subset of that type of business. For instance, one could argue that the trucking and auto industries are micro industries because of their close relationship to transportation infrastructure, their location at the heart of many metropolitan areas, and their reliance upon a variety of services and products, both personal and non-personal, provided by other businesses. In this sense, trucking and auto insurance are micro industries, as well as the entire trucking and auto insurance market itself. This definition excludes trucking companies and the associated activities they perform, but it does highlight the extreme flexibility of the trucking and auto industries relative to other industries.
The definition of a micro-industry can be extended to other industries, such as the financial sector, or to even smaller companies within the same industry. One might also consider the computer and technology industry, which include not only the different sectors that define computer hardware and software, but also different software development services (for instance, the companies that provide services to start-ups looking for an alternative to proprietary development) and different sectors of the internet such as content creation, search engine optimization, and advertising. Thus, the definition of a micro-industry can also extend to other sectors that include, for instance, the banking sector, which, while being extremely important in the creation of money, does not encompass the entire monetary system of the country and has very different characteristics and practices from the manufacturing or retail banking sector.
The use of micro-industries to describe a relatively narrow sector within an entire larger industry can be a useful analytical tool. However, when describing a more generic term such as the “computer industry”, one should use more inclusive terms such as computer software, computer systems, computer science, and computer engineering to describe a broad industry without having to become overly specific. The problem is that when someone uses industry terms, such as the computer industry, it can often sound as if they are referring to a more specific type of industry rather than the broader term computer services. For instance, when someone is talking about the computer systems industry, they might talk about a set of processes within a company, such as database management, network infrastructure, and so forth, rather than saying something more generic like “management processes within a company.” When doing so, it allows for more descriptive phrases such as “the process of managing information technology investments,” “the process of building customized e-commerce websites,” or “the process of building a digital information network.”