Transcript Then Danish Innovation System

The Socio-Economics of Knowledge and the
learning economy
Globelics Academy
May 2004
Bengt-Åke Lundvall
Different perspectives on the production and
use of knowledge.
 Marx on Machinery producing Machinery - to
systematically use knowledge to produce
knowledge we need to develop (interdisciplinary)
theory and data.
 From information to competence to wisdom.
 Key issues: codification and the transferability of
knowledge.
Knowledge and learning - important
distinctions

Knowledge and learning
• Information versus skills
• Learning by listening and reading versus learning by
doing, using and interacting.
• Individual versus organisational knowledge and
learning
Information as a commodity (Simon part
I)
 Market failure
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Buyer uncertainty about the value of information
Seller keeps it when selling it
Buyer can sell it to others after he has bought it
Easy to reproduce once it has been produced
 Policy issues
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Intellectual property rights
Public production or subsidies
Broadening the perspective: Information
versus skills
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Too much information! - Takes skills to select, interpret
and use information.
Skills are always partially tacit and they have to be
learnt through experience.
Artisans/Skilled workers but also Managers and
Scientists get well paid because of their skills not
because of the information they have.
Learning skills is an interactive and social process - it
has an ethical dimension - trust (social capital) is of key
importance for this kind of learning.
The economics of skills and competence
– market failures
 Skills are partially tacit and embodied in people and
organisations - cannot be sold or bought separately.
 Access to skills through hiring, through mergers and takeovers and through networking.
 Labour market dynamics affect skill formation.
 Competition clause, employee share holding (c.f. IPRs)
 Knowledge management and the codification issue
 Underinvestment in skill formation within firms - people
move on from one firm to the next.
Perspectives on the economy
Decision
making
Allocation Neoclassical
Learning
Austrian
economics
Innovation Innovation Compet.
managem. building
Knowledge taxonomy
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Know what
Know why
Know how
Know who
Information technology and its impact on the
different kinds of knowledge
 Know-what in data bases - limits of search
machines
 Know-why in global science networks - on the
need to have absorptive capacity
 Know-how in expert systems - on the limits of
skill codification
 Know-who in registers of firms - on the
importance of trust and the social dimension
Why codification matters
It affects transferability between people,
organisations and sites

Mode of transfer (knowledge as a resource
• Information may be communicated through telecommunication
• Competence transfer is a process of interactive learning – or
moving people

Commodification (creating assets)
• Information may be sold (CD, Soft-ware) as a commodity.
• Transforming competence into expert systems involves a loss
of content and it can only be done when the competence is
simple and works in a stable environment. People and
organisation embodied!
Tacit versus codified knowledge
 Know how (biking, swimming but also
management and research) has always elements of
tacit knowledge
 Codification of know-how is always incomplete lack of distinction between more or less complete
codification in Cohen etc.
 Codification as an economically determined
activity - a crucial element of knowledge
management
Transformation of tacit into codified
knowledge - costs and benefits
 Advantages
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Memory (mobility of people, multiequlibria)
Commodification
Transfer
Cumulativeness in innovation
 Disadvantages
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Time-consuming
Lock-in
Vulnerability for imitation
Distribution of power
Loss of competence
The Learning Economy
Globelics Academy
May 2004
Bengt-Åke Lundvall
Structure of the presentation

The learning economy - a new perspective on economic
dynamics
• Change and learning
• Selection, transformation and speed-up of change
• Social and economic exclusion in the learning economy
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Competence building at the firm level
• Hiring, training and networking
• Implications for knowledge management
• Implications for policy making
Characterising the learning economy
 More rapid transformation
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shorter product life cycles
shorter life time for competences (halving time = 1 year for computer
engineers?)
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more frequent shifts in working tasks
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 New kind of competition
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Learning based rather than knowledge based
Success of people, firms and regions reflect capability to learn
 Inherent polarisation in the Learning Economy
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Exciting but stressful for the rapid learners - exclusion of slow learners
End of European regional convergence
Cumulative circular processes in the
learning economy
 Selection, transformation and speed-up of change and
learning
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Intensified competition selects firms that are rapid learners and
firms select workers who are rapid learners.
Rapid learners innovate and impose change on the rest of the
economy.
As a result there is a speed-up of change with positive impact on
competitiveness but with high social costs.
Transformation pressure is increasingly determined at the Global
and European level.
Need to slow-down change in some areas (hi tech global
industries) and to speed it up in others (construction and
agriculture)? TOBIN- and BIT-taxes?
Basic mechanisms in the learning economy
and the impact of different policies
 Transformation pressure
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Macro economic policies
 Competition policies
 Trade policies
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 Capability to innovate and to adapt to change
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Human resource development policies
 Labour market policies
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Innovation policies
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 Redistribution of Costs and benefits of change
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Tax and other income transfer policies
 Social policy
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Regional policy
On the need to integrate and co-ordinate three
sources of competence for the firm
Diagram: Knowledge Management in the Learning Organisation
Co-ordinating and calibrating three sources of competence
Hiring and Firing
Internal Competence Building
Netvorking and Alliances
Labour market and education environment
R&D, in house-training and building a learning organisation
Customers, suppliers, knowledge institutions, partners and competitors
An important source of competence
building is the learning organisation
 Learning organisations and networking
organisations (in Denmark)
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Create more and more stable jobs
Are more productive
Are more active in terms of product innovation
 But they constitute only 10-15% of all firms
 Shop stewards and middle management are
strategic agents of change
Learning organisations
 We define learning organisations as those that:
 Are flatter and allow more horizontal communication
inside and outside the organisational borders
 Establish cross-departmental and cross-functional
teams and promote job-circulation between functions.
 Delegate responsibility to workers and invest in their
skills
 Establish closer co-operation with suppliers, customers
and knowledge institutions.
(In DK such firms also tend to engage in both indirect and
direct forms of employee participation.)
What firms can do when exposed to
stronger competition
 Reallocate and increase efficiency in utilising
resources
 Enhance the capability to respond to change
 Move into new geographical markets
 Introduce new products and enter/establish new
product markets
 Build learning organisations aiming at new
competences in order to create long term
capability to respond to intensified competition
Employment in dynamic firms (introduced at least one
product innovation 1993-95 and used advanced
management techniques) and static firms (did neither)
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Dynamic firms
Static firms
Entire DISKO subset
Nov. 92
70.227=100
24.983=100
137.445=100
Nov. 94
103.5
99.7
103.0
Nov. 96
103.5
96.0
101.4
Nov. 97
106.6
93.4
102.5
Employment for unskilled workers in static
and dynamic firms 1992-97
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Strongly increased competition
Dynamic firms
Static firms
16.500=100 100.3
4.218=100 92.3
96.9
81.9
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Somewhat increased or milder competition
Dynamic firms
11.262=100 101.5
Static firms
5.862=100 99.3
98.5
97.0
Nov. 92
Nov. 94 Nov. 96 Nov. 97
102.1
75.0
102.0
93.5