Knowledge economy and society

The Knowledge Economy and the Knowledge Society K 612 Next-Generation Knowledge Management Prof. Katsuhiro Umemoto JAIST - Japan Advanced Institute of Science and Technology Graduate School of Knowledge Science Ver 1.13 – 2006-10-15

Have you ever thought about it?
What is the knowledge economy?
What is the knowledge society?
Why should we care about them?

Knowledge economy
Proposed definition
Economic properties of knowledge
New economic dynamics

Economy is about…
… production , distribution and consumption of goods and services
… markets and firms (in the case of capitalism)
… efficient allocation of resources
Land (raw materials, natural resources)
Labor (workers’ time and effort, expertise)
Capital (equipments, plants, wealth, etc.)

What is the knowledge economy?
Knowledge has become the main resource
The pace of innovation is accelerating (not only in products and services, but also in processes, markets, sourcing, business models, etc.)

Growth of K in the economy
Knowledge industries
Knowledge itself is the product/service (e.g., software, media, entertainment, consulting)
Knowledge-intensive industries
High level of K embedded in products/services (e.g., electronics, computer, pharmaceutical)
Traditional industries
Capital and labor still largely relevant (e.g., oil & gas, construction, transportation, retail)
Pace of change

Knowledge has different properties
Low rivalry (usually said non-rivalry )
Use by one person does not diminish it
Low excludability (usually said partial excludability )
It is difficult to prevent others from using it
Knowledge is both input and output
Today’s innovations feed tomorrow’s
In other words…
Knowledge is an infinite resource
Knowledge tends to spread

The dynamics of K industries
Knowledge has positive externalities:
Spillovers (one person’s investment benefits others)
Investment in research/education benefits many
Increasing returns (positive feedback)
In costs : high upfront costs, low marginal costs
In supply : the more you know, the easier to acquire
In utilization : the more you use, the easier to use
In demand : the more you sell, the easier to sell
Network externalities (adopters   value  )

Summary
Economic value comes mainly from knowledge
The pace of innovation accelerates
The economy evolves at different paces, with different levels of knowledge intensity
Knowledge has different properties
Low rivalry and excludability: tends to a public good
Multiplicative effect: “shoulders of giants” effect
A new competitive dynamics, with new rules
Increasing returns

Knowledge society
Alternative views
Network-based knowledge society
New social dynamics
Ethical challenges

Society is about…
… social relations (social interactions regulated by social norms , involving social positions and social roles )
… culture (patterns of social practice , norms of behavior, value systems, traditions , beliefs , etc.)
… institutions (social structures and mechanisms of social order and cooperation )
E.g., family, government, media, money, property, labor, etc.
Analysis of the K society is more complex!

Alternative views on the K society
Primacy of scientific knowledge (Bell 1973; Stehr 1994)
K as source of authority and basis of social stratification
Scientific research as the ultimate source of knowledge
Rise of knowledge work (Drucker 1969; Reich 1991)
Fastest growing section of the workforce
Knowledge workers own their knowledge
Networked society (Castells 2000; Benkler 2006)
Networked economy, work and social relations
Enabled by information and communication technology

A network-view of the K society
Two basic conditions
Society’s material needs are fulfilled, so there is greater space for non-market behavior
Tools for knowledge creation, utilization and sharing become widely available
Knowledge production, distribution and consumption becomes decentralized
Exponential growth in knowledge availability
Growth and expansion of social networks

Networked dynamics
Open culture
Content is made publicly available (e.g., the whole Web, creative commons, WiFi)
The Blogosphere and social networking
Persistent, distributed, open conversation
Leads to unmediated communication, collective thinking and social mobilization
Peer production
Radically decentralized cooperative production (e.g., GNU/Linux, Wikipedia, Slashdot, Everquest)

The ugly side…
The network can be used for both good and bad
Questionable content
Worthless (e.g., spam, ads, porn)
Strongly biased (e.g., propaganda, prejudice)
About unethical procedures (e.g., hacking, terror)
Questionable actions
Identity cheating, spyware, etc.
Bullying, defaming, etc.
Crime (e.g., phishing, hacking, theft, etc.)

Summary
Three perspectives on the knowledge society
Primacy of scientific knowledge
Rise of knowledge work
Networked society
Networked-view of the knowledge society
Decentralization of knowledge production, distribution and consumption
More open, democratic social relations
Non-market behavior becomes salient
Conflict along the transition is expected

Implications
Levels of analysis:
Societal
Organizational
Individual

Societal level
Development of public policies on:
Scientific and technological research
Industrial development (K-intensive industries)
ICT infrastructure (access rights, digital inclusion)
Intellectual property (patents, copyright, commons)
Education (knowledge work and citizenship)

Organizational level
External issues
Scan the environment (e.g., public policies, S&T development, competitors’ behavior, etc.
Improve knowledge creation and transfer through collaborative arrangements and acquisitions
Open channels with customers and society
Internal issues
Develop absorptive and innovative capacity
Manage knowledge work and workers
Explore contracting and outsourcing alternatives

Individual level
Learn continuously (knowledge  value)
Formal and informal education
Challenging assignments
Manage own career (value  reputation)
Market oneself and manage opportunities
Cultivate professional and personal networks
Engage in knowledge networks
Develop ethical sense

Summary
Knowledge economy and knowledge society follow distinct paths of analysis
Both have been extensively discussed, but there is much ground for work
Both bring about important practical implications at societal, organizational and individual levels

Types of knowledge work Complexity of work Level of interdependence Judgment Routine Groups Individuals Source : Adapted from Davenport (2005), Thinking for a Living
Integration
Systematic work
Methodologies and standards
Integration across functional boundaries
Transaction
Routine work
Rules and procedures
Low-discretion workforce or information
Expert
Judgment-oriented work
Individual expertise and experience
Star performance
Collaboration
Improvisational work
Deep expertise across functions
Fluid deployment of flexible teams

An emerging relationship through blogs Andrea accesses past entries from Lilia’s blog Lilia posts answers to Andrea in her own blog A new surge in reciprocal posts and comments after some time Direct exchanges through email and skype Source : Adapted from Efimova, Lilia (October 03, 2006), Artefacts of a weblog-mediated relationship: a visualisation , retrieved 2006-10-11 <http://blog.mathemagenic.com/ 2006/10/03.html#a1839>

Protecting the commons
Three layers in the commons infrastructure
Informational (content) Logical (software) Physical (network) Creative commons Open software Network neutrality Forms of control Potential responses Source : Inspired by Benkler (2006), Wealth of Networks

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Knowledge economy and society

by Andre Saito on Oct 15, 2006

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