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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.)

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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.)

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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
(e.g., electronics, computer, pharmaceutical)
Ld

C
Traditional industries
Capital and labor still largely relevant
Lb K
(e.g., oil & gas, construction, transportation, retail)
Ld

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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

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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 )
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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

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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!

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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

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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

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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)

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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.)

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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

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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)

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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

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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

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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

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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
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 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

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