Knowledge Economy for Innovating Organizations

The Knowledge Economy

In general, economists are agreed that the world has experienced three distinct ages – the Agrarian Age, the Industrial Age, and now the Information Age (Persaud, 2001; Woodall, 2000). The hallmark of the Information Age, is the rapid adoption and diffusion of ICT (information communication technologies) which has had a dramatic effect on the way business is conducted as well as on the life styles of people. An important consequence of globalization and rapid technological change has been the generation of vast amounts of raw data and information, and the concomitant growth of the capabilities to process them into pertinent information and knowledge applicable to the solutions of business problems. Knowledge then has become a major organizational tool in gaining and sustaining competitive advantage.

Traditionally, economists have emphasized land and the associated natural resources, labor, and capital as the essential primary ingredients for the economic enterprise. However, in the Information Age, knowledge is now being considered to be as important as the three original prerequisites. Hence, the new term Knowledge Economy has emerged and managing knowledge has became one of the primary skills organizations need to acquire in order to survive and prosper. Table 1 contrasts the critical components of the knowledge economy with the traditional economy