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The Knowledge Economy and the Knowledge Society
K 612Next-Generation Knowledge Management
Prof. Katsuhiro Umemoto
JAIST - Japan Advanced Institute of Science and TechnologyGraduate School of Knowledge Science
Ver 1.13 – 2006-10-15
The knowledge economy and society - Andre Saito 2
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
The knowledge economy and society - Andre Saito 4
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.)
The knowledge economy and society - Andre Saito 5
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.)
Capital
Knowledge
Land
Labor
Agricultural age
Industrial age
Knowledge age
The knowledge economy and society - Andre Saito 6
C
K
Ld
Lb
Growth of K in the economy
Knowledge industriesKnowledge itself is the product/service (e.g., software, media, entertainment, consulting)
Knowledge-intensive industriesHigh level of K embedded in products/services (e.g., electronics, computer, pharmaceutical)
Traditional industriesCapital and labor still largely relevant (e.g., oil & gas, construction, transportation, retail)
Pac
e of
cha
nge
C
K
Ld
Lb
C
K
Ld
Lb
The knowledge economy and society - Andre Saito 7
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 outputToday’s innovations feed tomorrow’s
In other words… Knowledge is an infinite resource Knowledge tends to spread
The knowledge economy and society - Andre Saito 8
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 )
The knowledge economy and society - Andre Saito 9
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
The knowledge economy and society - Andre Saito 11
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!
The knowledge economy and society - Andre Saito 12
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
The knowledge economy and society - Andre Saito 13
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
The knowledge economy and society - Andre Saito 14
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 knowledge economy and society - Andre Saito 15
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.)
The knowledge economy and society - Andre Saito 16
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
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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)
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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
The knowledge economy and society - Andre Saito 20
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
The knowledge economy and society - Andre Saito 21
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
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
Complexity of work
Lev
el o
f in
terd
epe
nde
nce
JudgmentRoutine
Groups
Individuals
Source: Adapted from Davenport (2005), Thinking for a Living
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