JAIST - Japan Advanced Institute of Science and Technology

Graduate School of Knowledge Science

The Knowledge Economy

and the Knowledge Society

K 612
Next-Generation Knowledge Management
Prof. Katsuhiro Umemoto

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?

The knowledge economy and society - Andre Saito 2

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.)

The knowledge economy and society - Andre Saito 4

 What is the knowledge economy?
Capital

Labor Knowledge

Agricultural age
Industrial age
Land Knowledge age

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.)

The knowledge economy and society - Andre Saito 5

 Growth of K in the economy
C
Knowledge industries
Lb K
Knowledge itself is the product/service
Ld (e.g., software, media, entertainment, consulting)

Pace of change
C
Knowledge-intensive industries
Lb K
High level of K embedded in products/services
Ld (e.g., electronics, computer, pharmaceutical)
C
Traditional industries
Lb K
Capital and labor still largely relevant
Ld (e.g., oil & gas, construction, transportation, retail)

The knowledge economy and society - Andre Saito 6

 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
Todays innovations feed tomorrows

In other words
Knowledge is an infinite resource
Knowledge tends to spread
The knowledge economy and society - Andre Saito 7
 The dynamics of K industries

Knowledge has positive externalities:

Spillovers (one persons 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 8
 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

The knowledge economy and society - Andre Saito 9

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!

The knowledge economy and society - Andre Saito 11

 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 12

 A network-view of the K society

Two basic conditions

Societys 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 13

 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 14

 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 15

 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

The knowledge economy and society - Andre Saito 16

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)

The knowledge economy and society - Andre Saito 18

 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 19

 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 20

 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

The knowledge economy and society - Andre Saito 21

 Types of knowledge work
Groups Integration Collaboration
Systematic work Improvisational work
Level of interdependence

Methodologies and Deep expertise across

standards functions
Integration across Fluid deployment of
functional boundaries flexible teams

Transaction Expert
Routine work Judgment-oriented work
Rules and procedures Individual expertise and
Low-discretion experience
workforce or information Star performance
Individuals

Routine Judgment
Complexity of work
Source: Adapted from Davenport (2005), Thinking for a Living
An emerging relationship through blogs
Andrea accesses
past entries from
Lilias blog

Lilia posts answers

to Andrea in her
own blog

A new surge in
reciprocal posts and
comments after
some time

Direct exchanges Source: Adapted from Efimova, Lilia

through email and (October 03, 2006), Artefacts of a
weblog-mediated relationship: a
skype visualisation, retrieved 2006-10-11
<http://blog.mathemagenic.com/
2006/10/03.html#a1839>
 Protecting the commons

Three layers in the commons infrastructure

Informational Creative commons

(content)

Logical Open software

(software)

Physical Network neutrality

(network)

Forms of control Potential responses

Source: Inspired by Benkler (2006), Wealth of Networks