The Transformation of Knowledge

Knowledge assumes many forms and behaves in anomalous and unpredictable ways. Unlike the tangible resources of the industrial economy, there is little shared understanding of knowledge as an economic factor despite its immense importance in the global economy. Yet the knowledge-based economy, conventionally measured by the composition of the workforce, is in flux. It is plainly characterized by an explosion of data and codified knowledge, propelled by a revolution in information and communication technologies, but the changes go much deeper.
The generation of knowledge is traditionally conceived as a process internal to single entity. But it is increasingly a product of networked entities, often differently situated yet motivated to find new solutions to specific problems, needs, and circumstances – and, in many cases, to reveal these solutions to others. Enabled by technology, knowledge moves quickly within these networks – across firms, institutions, borders, and distances. While scientific research has long been characterized by unfettered circulation of discoveries and the ability to build instantly on these discoveries, distributed models are gaining importance and becoming essential to the larger fabric of the knowledge-based economy.
There are paradoxical elements in the transformation of knowledge that are difficult to model for policymakers. Knowledge tasks and processes are both accelerating and decentralizing. At the same time, important forms of knowledge are becoming more complex and context-specific, and the span and heterogeneity of knowledge forms is increasing. Complex forms may incorporate both tacit and explicit elements, thereby becoming less like digitally codified information objects and more difficult to replicate outside of the original location.
Furthermore, there are multiple factors behind this transformation, including:

• globalization of communications and commerce;
• commoditization of ICTs (and partial commoditization of codified knowledge);
• the increasing role of scientific research in innovation;
• advanced, integrative information infrastructure;
• modularization, vertical disaggregation, and outsourcing; and
• expanded value chains and clusters with new categories of actors.

An expanding environment for creating and managing knowledge recasts a wide range of policy issues, including public investment priorities, program design, dissemination of research results, technology transfer, and the form and scope of private controls on information and knowledge. Tension arises from the fact that governments, universities, and private companies operate in different ways and under different rules, yet there are compelling reasons to encourage rapid movement of knowledge across sector and institutional borders. The open, global nature of science and the scale and scope economies of cyberinfrastructure argue for international cooperation in support of diverse users in academia, government, and industry. The success of university-industry technology transfer in the U.S., the public funding of large cross-sector teams in Europe, and the seeding of new markets for technology all reflect the importance of moving research and technology across boundaries in order to facilitate commercialization. Moreover, optimal design and exploitation of cyberinfrastructure ultimately depend on a deep, contextual understanding of knowledge and its modalities, and a case can be made that cyberinfrastructure should be explicitly open to interconnection and privatization, as was the case for the federally subsidized Internet.
More generally, a deeper understanding of knowledge is needed to support the vast knowledge-related investments, institutions, and laws throughout the economy. Although there is a practice-oriented literature on knowledge management, the microeconomics of knowledge is poorly understood. Most movements of knowledge between entities do not pass through conventional priced markets – and cannot be counted as transactions. Knowledge does not come in discrete units, and the most valuable knowledge is often the most difficult to capture and evaluate. Knowledge is continually transformed by technology, market conditions, and institutions. Just as businesses and knowledge professionals struggle to understand and manage knowledge as a strategic resource, policymakers are challenged to develop public policies that properly account for the diverse natures and uses of knowledge. Yet the growing scope, scale, and economic importance of knowledge demands an assessment that contributes not only to scientific understanding but to democratic decision-making about the future of knowledge and the policies needed to realize that vision.

Source: Advancing Knowledge and the Knowledge Economy at the National Academies, 21st and Constitution Ave., Washington, DC, 10-11 January 2005