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The price of intellect in the knowledge economy

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Title: The price of intellect in the knowledge economy


1
The price of intellect in the knowledge economy
EUROPOS SAJUNGA Europos socialinis fondas
  • Dr Lynn Martin
  • Director, Entrepreneurship and Innovation
  • Lynn.martin_at_uce.ac.uk 
  • University of Central England, Galton, Perry
    Barr, Birmingham, B42 2SU, United Kingdom


2
Who am I?
  • My perspective and background
  • Development of work on innovation policy and
    practice
  • Knowledge economy issues related to Asia and
    Europe
  • Innovation in action working with business
  • UK contexts
  • The Knowledge Economy has been a feature of UK
    policy since 1996, with earlier refers to related
    issues
  • the UK is the largest market in Europe for online
    business information, with a 38.9 share.
  • Knowledge based industries employ more people in
    Sweden (54), the UK (51) than the USA (38)
  • Significant differences in integration behavior
    of Anglo-American and European corporates, the UK
    groups are much closer to the US than to
    continental Europe groups, integrating research
    across categories

3
West Midlands
  • Home to 9 total UK population MIxture of rural
    and urban areas
  • Birmingham - highly diverse population.
  • Birthplace of industrial revolution now 18 of
    all jobs in manufacturing, especially innovation
    based knowledge intensive
  • makes 50 of the UK's jewellery 60 of all
    media activity- 60 of craft firms, 40 of
    literature / drama

4
University of Central England
  • Characteristics
  • Strong university-industry linkage the
    Knowledge Exchange
  • Strong international student base especially from
    Asia
  • 30,000 students over 300 courses covering a wide
    range of subject areas in 7 faculties
  • Birmingham Conservatoire
  • Birmingham Institute of Art Design, BIAD
  • Birmingham School Of Acting
  • Faculty of Education
  • Faculty of Health
  • Faculty of Law, Humanities, Development Society
  • School of Business and Computing
  • Technology Innovation Centre

5
Paper and presentation
  • Wide topic / Key themes?
  • Perspectives, social construction, assumptions
  • Historical background
  • Definitions
  • Knowledge Economy and Knowledge Worker
  • Workplace implications
  • Changes in workplace practice
  • Psychological contracts
  • Case studies
  • Lithuania and the Knowledge economy

6
Social construction
  • What is social construction?
  • Views of the world
  • How does it relate to the knowledge economy?
  • Enterprise and self efficacy
  • Innovation and invention
  • Intention and aspiration

7
Assumptions
  • That knowledge has replaced other assets, land,
    capital and physical resources as a source of
    competitive advantage
  • That knowledge gaps impede national /
    organisational economic advantage
  • That knowledge implies intellect plus technology,
    e.g., knowledge applied technology
  • That at the heart of the development of the
    knowledge economy is continuing innovation
  • That innovation will result in a successful
    economy, i.e., increased wealth, employment
    generation, social equality
  • That working practices will change due to the
    rise of the knowledge economy, with more
    temporary jobs for highly skills knowledge
    workers, with more telecommuting

8
What is the knowledge economy?
  • what you get when organisations bring together
    powerful computers and well-educated minds to
    create wealth. .. firms in the knowledge economy
    compete on their ability to exploit scientific,
    technical and creative knowledge bases and
    networks (Workplace Foundation, 2006)
  • Knowledge-based industries are defined as high to
    medium tech manufacturing (e.g. pharmaceuticals,
    aerospace, electrical engineering) financial and
    business services telecommunications and
    education and health (OECD, 1999)
  • Given the pace of globalisation and the
    inter-connectedness of global networks and
    markets, those without a knowledge economy will
    be left behind. Where knowledge is a key
    component of manufacturing and services, then the
    economy will grow without knowledge having this
    role, the economy will falter in this new global
    marketplace (Lithuania, UNECE 2003)

9
Knowledge gaps
  • National drive to meet knowledge gaps
  • Internationally
  • Regionally
  • Socio-economic impacts
  • Impacts of perceived knowledge gaps include drive
    to support education, lifelong learning,
    investment in R D, development of new
    technologies the Lisbon agenda

10
The Lisbon agenda
  • 2000 The Lisbon agenda
  • "the most competitive and dynamic
    knowledge-driven economy by 2010.. the most
    competitive and dynamic knowledge-based economy
    in the world, capable of sustainable economic
    growth with more and better jobs and greater
    social cohesion". 20 m new jobs
  • 2005 Community Lisbon Programme
  • To modernize our economy - securing our unique
    social model in the face of increasingly global
    markets, technological change, environmental
    pressures, and an ageing population meeting
    present needs without compromising future
    generations. The policy measures fall under 3
    main areas
  • Knowledge and innovation for growth,
  • Making Europe a more attractive place to invest
    and work,
  • Creating more and better jobs

11
The Lisbon agenda
  • Historical contexts
  • New pressures
  • Impacts internationally
  • Lifelong learning and the Lisbon agenda
  • The pressure to innovate

12
Definitions
  • Of the knowledge economy
  • Of knowledge workers

13
Characterising the knowledge economy
  • Advances in scientific and technical knowledge
    enable an ICT revolution, plus the engineering of
    materials at the molecular level, and new life
    forms via biotechnology.
  • Rapid reduction in transportation and
    telecommunications costs
  • Integration of previously disparate economies via
    ICts, trade etc.
  • Digitization and informatization reduce
    transaction costs and increase productivity.
  • Development of a service-based economy, pervasive
    activities needing intellectual content
  • Increased emphasis on HE and life-long learning
    to use the rapidly expanding knowledge base.
  • Massive investments in R D, training,
    education, software, branding, marketing,
    logistics, and similar services.
  • Intensified competition between enterprises and
    nations via new product design, marketing
    methods, and organizational forms.
  • Continual restructuring of economies to cope with
    constant change.

14
Knowledge workers- who are they?
  • Would you recognise one if you saw one?
  • Knowledge workers work in specific sectors/
    knowledge workers have particular capabilities,
    e.g., a knowledge worker has the capacity to
  • act autonomously and reflectively
  • to use tools effectively and interactively
  • to join and function in socially heterogeneous
    groups (OECD, 2003)

15
How does intellect relate to knowledge economy
issues?
  • What is intellect?
  • Higher education, connectedness, reflexivity,
    opportunity recognition, knowledge
  • Knowledge v information
  • Tacit v explicit (Nonaka and Taguechi)
  • Contexts in knowledge, collective v
    individualistic
  • Intangible assets
  • Patents,
  • trademarks,
  • recorded and unrecorded design

16
Valuing intellectual assets
  • Statutes and regs
  • WTO, WIPO etc
  • IAS ref IAs 38
  • Valuing a knowledge worker
  • Knowledge
  • Context and competition
  • International contrasts
  • India and China
  • US, Nordic, Japan

17
Historical perspectives
  • How has the Knowledge Economy concept developed?

18
The KE Concept
  • Historical contexts
  • The industrial revolution of the 19th century and
    the scientific revolution of the 20th century
    supported the rise of the knowledge-based
    economy.
  • 1880s - 1960s, a European middle class emerged
    based on knowledge embedded in professional
    functions in industrial society, e.g., engineers,
    chemists, doctors and teachers.
  • In this type of knowledge society professional
    status was based on learning, training and the
    recognition and accreditation of expertise
    (Darenty, 2003 Collins, 1979).
  • knowledge was held within a protected group and
    performed useful functions.

19
  Post-industrial society in the 1960s and 1970s
  • 1960s-80s shift in working practice from
    manufacturing to services New Class emerged,
    broader than the earlier professional and
    including all parties in society, transformed by
    developments in ICTs during 1990s.
  • Knowledge and hence the knowledge society -
    transcends national boundaries and hence
    represents a global phenomenon (Castells, 1996).
  • A new kind of politics increasingly about the
    risks from science and technology, contemporary
    society is more and more organised around
    democratically shaped kinds of knowledge
    cultures (Darenty, 2003, citing Beck, 1992
    Giddens, 1994).
  • Knowledge is central to the social functioning
    and fabric society (Nowotny et al, 2001).

20
Post-modern perspectives on the knowledge society
  • emphasises context in the expression of meaning.
    Hence knowledge without context is meaningless
    interpretation and individual world view supply
    meaning and value to knowledge.
  • Darenty also suggests that this ideology is
    countered by neo-liberalism and has led to the
    evolution of higher education as McUniversity.
  • While neo-liberalism seeks to reconstruct society
    in the image of a political doctrine, higher
    education has been restructured to meet the needs
    of efficiency and control through accountability.
  • Where postmodernism rejects the idea of society
    for a notion of culture, neo-liberalism rejects
    society for the ubiquity of the market. -major
    impacts on higher education.

21
Higher education and the knowledge economy
  • In Mrs. Thatchers words, there is no such thing
    as society, only markets and individual
    consumers (Guardian, 1985).
  • In responding to this, universities have
    developed new bureaucracies that have reduced
    individual academic autonomy to enable the mass
    production of higher education (Parker Jary,
    1995).
  • The results of this are seen in higher student
    numbers, rationalistic approaches to management,
    increased centralization, with efficiency and
    accountability as watchwords
  • Oxford University
  • current changes to introduce managerially
  • what are universities for?

22
Working practices
  • Anticipated and reality

23
Working practices
  • Reduction of those in permanent long term
    employment relationships
  • Increase in home/teleworking (Sharkie 2005)
  • Employees move from relational to transactional
    psychological contracts
  • Psychological contracts non legal part of work
    relationship based on implied promises, and their
    effects on mutual reciprocity

24
Psychological contract
  • Tacit and implicit factors impact on the formal
    agreement, i.e., the employer and employee
    expectations of the employment relationship
    (Cornelius, 2001).
  • Based on individual views of the world, informed
    by previous experience and by current
    perceptions hence people in the same roles may
    have different psychological contracts (Rousseau,
    2001a). This is further compounded by other
    factors such as gender, age, lifestyle etc (Guest
    and Conway, 1998).
  • Relational contracts based on trust, loyalty, job
    security and long-term relationships
  • Transactional contracts based on instrumental
    constructs, long hours or extra work are
    exchanged for high pay and for training and
    development to aid their further employability
    elsewhere (Smithson and Lewis, 2006 71).

25
Counter views
  • Work changes Anticipated
  • Increased home working, flexibility and job
    tenure, gold collars
  • Work practices reported
  • As least 92 per cent with permanent employment
    contracts in 2000, up from 88 per cent in 1992.
  • 5.5 per cent on a temporary work contract of less
    than twelve months in 2000, compared with 7.2 per
    cent in 1992.
  • Proportion of employees working on fixed term
    contracts (i.e,1-3 years) down to 2.8 per cent
    from 5 per cent in 1992.
  • The permanent job remains very much the
    overwhelming UK norm across occupational
    categories. (Taylor 2002 12)
  • More people travel from home to a place of work,
    not home/ teleworking
  • Biotechnology fails to make money (Harvard
    Business Review, 2006)

26
Cases to illustrate KE concepts
  • Bizbrother
  • Advantage Creative
  • Individual firms

27
Case study Biz Brother
Purpose to engage those not connecting with
enterprise form different societal groups Story
board 4 characters in the Enterprise House, all
competing as in Big Brother, with Bizbrother
voice etc Tasks find Role models, finance as
tasks Happy ending all win! Screened on TVs in
Bizcom events and in faculties, followed up
online IPR characters and story LM/UCE context
Endermol, Netherlands
28
Case study Advantage Creative
  • Purpose of the fund / Reasons for its existence
  • information asymmetry and moral hazard
  • Impacts on the creative sector
  • 10m for equity gaps in company start up or growth
  • Typical company, Heath IT application
  • Assets based on intellectual capacity of owner
    and technological expertise and on new technology
    being developed no physical assets
  • No track record and idea hard for lenders to
    understand
  • 250,000 initial loan ROI 45 in 18 months

29
Small firm examples
  • Hannah Reynolds Mischievous Marketing
  • 6 years running web design business, now runs
    company designing and carrying out marketing
    strategy for middle sized firms
  • Deborah Leary Forensic Pathways
  • 5 years as CSI equipment firm, now developing iT
    based tools for crime agencies to aid detection,
    managing knowledge

30
Case study Lithuania
  • Prospects for the Knowledge economy
  • Policy emphases national and EU
  • Potential developments
  • Issues
  • re IT and innovation
  • Re enterprise
  • How is the intellect related to KE devt?

31
Lithuania
  • KE perspectives

32
Lithuania implementing the knowledge-based
economy
  • a quick integration of the enormous intellectual
    resources of economies in transition into the
    European intellectual pool, stimulating the
    development of the former Soviet countries
    (UNECE, 2003).
  • Priority sectors biotechnology,
    pharmaceuticals ICTs, laser technologies and
    electronic components and mechatronics.
  • Targets
  • increase GDP by 2-2.5 times
  • to reach 50 of the average level EU GDP per
    capita by 2015
  • increase the labour market by 10.
  • Education a key component, i.e, improvements in
    systems and in professional skills and
    re-training, supported by measures for IT and
    trade.
  • The need to boost trade in intellectual products
    and services, both internally and externally,
    making them priorities in the State investment
    program.

33
Lithuania KE trends
  • Fundamental shift from traditional industries but
    some firms with core competitive strengths, rapid
    growth and increased exports, e.g., wood
    processing and furniture making transport sector
    (services in the W-E, N-S directions) food
    manufacture (dairy / meat products) and
    construction.
  • In 2001, ICT market, the largest of Baltic
    States, valued at 806 Eu m, up from 723 Eur m in
    2000, a growth of 11.5 . Lithuanian ICT market
    grew by 11.5 in 2001 (European IT Observatory
    2002), or 30 (INFOBALT)
  • Despite positive GDP growth and strong export
    performance, employment stagnant, 1995/ 2000
  • jobless growth - typical of most transition
    economies in Central and Eastern Europe. Due to
    productivity improvements are associated with
    intensive restructuring.
  • Higher - Public spending on education, primary
    and secondary education enrolments, adult
    literacy
  • Lower employment, maths and science scores for
    8th graders lower, tertiary enrolment,
    availability of management training, and adult
    continuing education

34
World Bank studies - Lithuania
35
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36
Final comments
  • The knowledge economy is firmly established in
    the psyche of policymakers as a real concept
    based on innovation and particular types of
    knowledge
  • To support the development of a KE, education ,
    technology and application are needed
  • To be a knowledge worker requires non-technical
    assets
  • Intellect remains a key asset in this society
    but which type of intellect?
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