Journal of Knowledge Management Volume 6, Number 4, 2002
ISSN 1367-3270
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Knowledge-based development Guest Editor: Francisco Javier Carrillo
Contents 310 Access to Journal of Knowledge Management online 311 Abstracts & keywords 313 Awards for Excellence 314 Introduction 317 Constructing the knowledge base for knowledge-driven development Robin Mansell 330 An analysis of co-operative agreements from a knowledge-based perspective: an integrative conceptual framework Alejandro Escriba´-Esteve and Jose´ Anastasio Urra-Urbieta 347 Basque Country: the knowledge cluster Angel Luis Arbonı´es and Mo´nica Moso
356 Knowledge clusters of technological innovation systems Carlos Scheel 368 Knowledge partnerships for a sustainable, equitable and stable society Thomas F. Malone and Gary W. Yohe 379 Capital systems: implications for a global knowledge agenda Francisco J. Carrillo 400 Evolving knowledge for development: the role of knowledge management in a changing world Kathia Castro Laszlo and Alexander Laszlo
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complexity, have generated a progressive interest in the study of this phenomenon, which has materialised in a vast but fragmented literature concerning it. As a response to the demands which these conditions pose, we have endeavoured to develop a conceptual framework which, from a knowledge-based and learning perspective, integrates an extensive series of contributions and concepts for the study of the processes of cooperation between companies. As distinctive features, our conceptual framework proposal sets up a bridge between formulation and implementation in alliance processes and goes into the alliance micro-level processes, both in the framework of the co-operative agreement and in the setting of the partners’ organisations. Additionally, our proposal also considers the different ontological levels where knowledge develops and the links existing between them.
Abstracts & keywords
Constructing the knowledge base for knowledge-driven development
Basque Country: the knowledge cluster Angel Luis Arbonı´es and Mo´nica Moso
Robin Mansell
Keywords Knowledge workers, Clusters, Innovation
Keywords Information technology, Communications technology, Economic growth, Developing countries Information and communication technologies (ICTs) represent a major opportunity for world development. However, the ‘‘digital divide’’ is increasing rather than diminishing existing inequalities. This paper suggests several ways in which experiences with ICTs can be shared and in which more resources could be mobilised to support local ICT projects and locally-defined goals. The activities of the Commonwealth’s agencies in this area are used to provide illustrations of a variety of initiatives. It is argued that strategic action on the part of agencies within their own organisations and in co-operation with others is likely to help to facilitate the process of constructing a stronger knowledge base for knowledge-driven development, but that there is no room for complacency. In addition to improved co-ordination and co-operation, effort is needed to focus on the purposes and goals of knowledgedriven development, rather than on the short-term interests of individual stakeholder organisations. An analysis of co-operative agreements from a knowledge-based perspective: an integrative conceptual framework Alejandro Escriba´-Esteve and Jose´ Anastasio Urra-Urbieta Keywords Co-operation, Knowledge workers, Organizational learning The last decade has been witness to an unprecedented growth in the number of alliances between companies. This growing importance of interfirm co-operation, together with its inherent Journal of Knowledge Management Volume 6 . Number 4 . 2002 . Abstracts & keywords # MCB UP Limited . ISSN 1367-3270
Clusters have basically been conceptualised as a concentration of firms that prosper on the basis of their interaction. However, the classical cluster concept is developing in a more cultural perspective. The so-called Knowledge Society and the development of information and telecommunications technologies have opened the playing field. New countries and regions can thus meaningfully reduce their distance with respect to other leading regions, provided they create a structure to acquire and disseminate knowledge. This emerging concept also offers more possibilities to be used by all the types of regions in different circumstances, including developing countries. The basic tool for beginning this learning capability will be the creation of a co-operation structure such as a cluster, including all actors of the innovation system in a country or region. They can be called knowledge clusters: the knowledge cluster in the Basque Country is one of these experiences. Knowledge clusters of technological innovation systems Carlos Scheel Keywords Technological innovation, Knowledge workers, Industry, Clusters, Leverage, Networks One of the main producers of wealth and prosperity of industrialized countries is the existence of sustainable systems, capable of converting technological innovation assets into substantial levels of industrial productivity, wealth and global competitiveness. However, very little has been capitalized from these cases for less developed regions. A framework is proposed (5Ls model), capable of empowering firms from industrial sectors of developing countries, to: reach competitive Leverages; to Link and ALign these
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industrial clusters to their empowerment external drivers (academia, banking, complementary industries and government); to benchmark the cluster performance, against the best practices and Learn from the gaps; and, finally, to Lead and integrate the well performing clusters into world class value systems. To achieve these performances, a knowledge system architecture is proposed, which includes the 5Ls model supported by an effective structure of technological innovation systems (TIS), designed to administrate the collaboration network of diverse organizations, aligned to a common goal: the economic, social, political and cultural development of developing regions.
fields. It begins by establishing a continuity between personal-, organizational- and social-level KM. Social-level KBD is referred to economic growth theory in search of a complete, consistent, systematic and inclusive framework for global development. Enter capital systems, a KM framework aiming to satisfy those criteria at the organizational level. The capital systems approach, originally developed as a solution to some methodological concerns in intellectual capital valuation, is described as the operationalization of a generic value structure. Such a structure is applied to the analysis of the production or valueenhancing dynamics underlying major economic eras throughout human history until the present day. Structural constraints in current financing for development practices are identified. New knowledge-based development strategies are explored and, finally, examples of current KBD policies are examined in the light of this analysis and alternative strategies to systematically identify and develop individual, organizational and capital systems are suggested.
Knowledge partnerships for a sustainable, equitable and stable society Thomas F. Malone and Gary W. Yohe Keywords Knowledge workers, Partnering, Sustainable development, Productivity Continued exponential and asymmetrical growth in both population and individual economic productivity would propel world society along a path that is environmentally unsustainable, economically inequitable, and hence socially unstable. Terrorist activity in September 2001 may be vivid evidence of that instability. Revolutionary developments in communications technologies can, however, enable partnerships among scholarly disciplines and among societal institutions to harness rapidly expanding human knowledge (broadly construed) to pursue goals in both population and individual economic productivity that would lead to a sustainable, equitable, and stable world society. Such a knowledge-based strategy could enable us to pursue the vision of a global society in which all of the basic human needs and an equitable share of human wants can be met by successive generations while maintaining a healthy, physically attractive, and biologically productive environment. Several scenarios are presented to illustrate the promise of cooperative efforts to pursue this vision, and to highlight some obstacles to that pursuit. Capital systems: implications for a global knowledge agenda Francisco J. Carrillo Keywords Knowledge-based systems, Economic growth, Capital This paper explores ways in which knowledge management (KM) can enrich and be enriched by practices associated with social-level knowledgebased development (KBD), thus bridging both
Evolving knowledge for development: the role of knowledge management in a changing world Kathia Castro Laszlo and Alexander Laszlo Keywords Knowledge workers, Corporate culture, Sustainable development, Learning In today’s changing world, knowledge, and the processes to generate it and manage it, have become key factors in creating competitive business advantage. However, the challenges facing contemporary global societies, from human conflicts to environmental degradation, call for an expanded research agenda in the field of knowledge management. Issues such as improvement of the role of corporate citizenship to promote socially and ecologically responsible operations and development of human and social capital should become part of a purposeful strategy for creating a better future. ‘‘Knowledge is power’’ – and it is up to those with access to knowledge to decide if that power will continue to be used over others to increase the gap between rich and poor or if it will be a power to empower visions and realities based on an inclusive planetary ethic. From an evolutionary systems perspective, this paper explores some of the implications and key contributions that knowledge management can make for the transition toward sustainable forms of social organization. The heuristic of evolutionary learning community (ELC) is presented as a participatory strategy for promoting learning and knowledge creation for evolutionary development.
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Literati Club
Awards for Excellence Charlotte Linde NASA Ames Research Center, Moffett Field, California, USA
is the recipient of the journal’s Outstanding Paper Award for Excellence for her paper
‘‘Narrative and social tacit knowledge’’ which appeared in Journal of Knowledge Management, Vol. 5 No. 2, 2001 Charlotte Linde is a Researcher Scientist at NASA Ames Research Center. She has used her training in sociolinguistics and anthropology to study the use of language in a variety of work, school and recreational settings. Her current research examines the ways in which institutions use narrative to remember their identity and history, and to induct new members into these ongoing stores. Such institutional narrations can be viewed as knowledge management in its natural habitat: hardly noticed, ubiquitous, and effective. Overall, her research has focused on how people use language to accomplish their work and use narrative to establish and negotiate identity. This has included studies of the factors of effective and ineffective communication in commercial aviation accidents, the negotiation of authority in police helicopter crews, the social structure of the learning of new technologies and its implications for technology design, the structure of on-line communities, and the evaluation of effective on-line outreach programs. She is currently researching issues of knowledge management at NASA. She is the author of a book on the use of narrative in the social negotiation of the self, Life Stories: The Creation of Coherence (Oxford University Press), and is in the process of finishing a book on institutional memory Working the Past: How Institutions Use Narrative to Remember. She is a consulting professor in the Stanford University Department of Linguistics.
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It is a pleasure to introduce this special issue on knowledge-based development. I would like to congratulate the Guest Editor – Professor Francisco Javier Carrillo, Director for Knowledge Systems, ITESM, Mexico – for suggesting the topic, commissioning the papers, and seeing the project through to completion. Resources on knowledge-based development – creating and sustaining national and international knowledge and its affects on societies and the global economy – are scattered throughout the literature, and in many cases directed towards the needs of academic specialists. This special issue on knowledge-based development is an holistic attempt to provide both academics and practitioners with a global view of the subject. The papers in this issue cover a spectrum of topics – ranging from frameworks and systems for knowledgebased development to regional knowledge clusters and networks to global wealth creation. In the first paper, ‘‘Constructing the knowledge-base for knowledge-driven development,’’ Robin Mansell states that information and communication technologies (ICTs) represent a major opportunity for world development. However, she contends that the ‘‘digital divide’’ between countries and regions is increasing. In this paper the author suggests several ways in which ICT experiences could be shared and more Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 314–316 # MCB UP Limited . ISSN 1367-3270
resources mobilized to support local ICT projects and locally-defined goals. The author believes that effort is also needed to focus on the purpose and goals of long-term knowledge-driven development – rather than on the short-term interests of individual stakeholder organizations. In their paper, Alejandro Escriba´-Esteve and Jose´ Anastasio Urra-Urbieta explore cooperative agreements from a knowledgebased perspective. The last decade has been witness to an unprecedented growth in the number of alliances between companies. The authors have developed a conceptual framework which, from a knowledge-based and learning perspective, integrates an extensive series of contributions and concepts involving cooperation processes between companies. Their conceptual framework establishes a bridge between formulation and implementation in alliance processes, and includes alliance micro-level processes. The authors’ proposal also considers the different ontological levels where knowledge is created, and the links existing between them. Clusters have basically been conceptualized as a concentration of firms that prosper on the basis of their interaction. This concept, notes Angel Luis Arbonı´es and Mo´nica Moso, has been widely used for describing different realities, from industrial districts to more sophisticated cooperation networks. The most popular clusters are those which focus on the attraction and development of knowledge-based organizations and firms with an intensive dedication to R&D, skilled labor, etc. The Silicon Valley is the paradigm in this category. However, according to the authors, the classic cluster concept is now developing into a more cultural entity. The so-called Knowledge Society and the development of information and telecommunications technologies have provided a new, level playing field. Countries and regions can now meaningfully reduce the gap with other leading regions, provided they create a structure to acquire and disseminate knowledge. This emerging concept also offers more possibilities for use by all the types of regions in different circumstances, including developing countries. The basic tool for beginning this learning process will be the creation of a cooperation
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Journal of Knowledge Management Volume 6 . Number 4 . 2002 . 314–316
structure, such as a cluster, which includes all of the major innovation players and systems within a country or region. The authors call this a knowledge cluster, and examine one such knowledge cluster in the Basque Country. One of the main producers of wealth and prosperity in industrialized countries is the existence of sustainable systems, capable of converting technological innovation assets into substantial levels of industrial productivity, wealth and global competitiveness. However, less developed regions have gained very little from these cases. In his paper ‘‘Knowledge clusters of technological innovation systems,’’ Carlos Scheel proposes a framework (5Ls Model) which will empower the industrial sectors of developing countries. The 5Ls model involves Leverages which Link and aLign these industrial clusters to external drivers (academia, banking, complementary industries and government), benchmarking the cluster’s performance against best practices and Learning from the gaps; and Leading and integrating these clusters into world-class value systems. To achieve this level of performance, a knowledge system architecture is proposed. It includes the 5Ls model supported by an effective structure of technological innovation systems (TIS). Thomas Malone and Gary Yohe believe that continued exponential and asymmetrical growth in both population and individual economic productivity will propel world society along a path that is environmentally unsustainable, economically inequitable, and hence socially unstable. The authors state that the terrorist activity of September 2001 provides vivid evidence of that instability. However, Malone and Yohe contend that revolutionary developments in communications technologies can enable partnerships among scholarly disciplines and among societal institutions to harness rapidly expanding human knowledge (broadly construed) to pursue goals in both population and individual economic productivity that could lead to a sustainable, equitable, and stable world society. Such a knowledge-based strategy could enable us to pursue the vision of a global society in which all of the basic human needs
and an equitable share of human wants can be met by successive generations while maintaining a healthy, physically attractive and biologically productive environment. In their paper ‘‘Knowledge partnerships for a sustainable, equitable and stable society,’’ the authors present several scenarios to illustrate the promise of cooperative efforts in pursuit of this vision, and highlight some obstacles to its achievement. In his paper ‘‘Capital systems: implications for a global knowledge agenda,’’ Guest Editor Francisco J. Carrillo explores ways in which knowledge management (KM) can enrich and be enriched by practices associated with social-level knowledge-based development (KBD), thus bridging both fields. It begins by establishing continuity between personal, organizational and social level KM. Sociallevel KBD is referred to as economic growth theory in search of a complete, consistent, systematic and inclusive framework for global development. Capital systems, a KM framework, aims at satisfying the criteria at the organizational level. The capital systems approach, originally developed as a solution to some methodological concerns in intellectual capital valuation, is described as the operationalization of a generic value structure. Such a structure is subjected to the analysis of the production or value-enhancing dynamics underlying major economic eras throughout human history. Structural constraints in current financing for development practices are identified. Untapped knowledge capital dimensions are then introduced to explore new knowledgebased development strategies. Finally, examples of current KBD policies are examined and alternative strategies to systematically identify and develop individual, organizational and capital systems are suggested. In today’s changing world, knowledge and the processes to generate and manage it have become key factors in creating competitive business advantage. However, the challenges facing contemporary global societies, from human conflicts to environmental degradation, call for an expanded research agenda in the field of knowledge management. According to Kathia Castro Laszlo and Alexander Laszlo in ‘‘Evolving knowledge for development,’’ issues such as improvement of the role of corporate
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Journal of Knowledge Management Volume 6 . Number 4 . 2002 . 314–316
citizenship to promote socially and ecologically responsible operations and development of human and social capital should become part of a purposeful strategy for creating a better future. ‘‘Knowledge is power’’ is the conventional wisdom. Therefore, it is up to those with access to knowledge to decide if that power will continue to be used over others to increase the gap between rich and poor or if it will be a power to empower visions and realities based on an inclusive planetary
ethic. From an evolutionary systems perspective, the authors’ paper explores some of the implications and key contributions that knowledge management can make to the transition towards sustainable forms of social organization. The heuristic of the evolutionary learning community (ELC) is presented as a participatory strategy for promoting learning and knowledge creation for evolutionary development. Rory L. Chase
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Constructing the knowledge base for knowledge-driven development Robin Mansell
The author Robin Mansell holds the Dixons Chair in New Media and the Internet, in the Interdepartmental Programme in Media and Communications (Media@lse), London School of Economics and Political Science, London, UK. Keywords Information technology, Communications technology, Economic growth, Developing countries Abstract Information and communication technologies (ICTs) represent a major opportunity for world development. However, the ‘‘digital divide’’ is increasing rather than diminishing existing inequalities. This paper suggests several ways in which experiences with ICTs can be shared and in which more resources could be mobilised to support local ICT projects and locally-defined goals. The activities of the Commonwealth’s agencies in this area are used to provide illustrations of a variety of initiatives. It is argued that strategic action on the part of agencies within their own organisations and in co-operation with others is likely to help to facilitate the process of constructing a stronger knowledge base for knowledge-driven development, but that there is no room for complacency. In addition to improved co-ordination and co-operation, effort is needed to focus on the purposes and goals of knowledge-driven development, rather than on the shortterm interests of individual stakeholder organisations. Electronic access The research register for this journal is available at http://www.emeraldinsight.com/1367-3270.htm
Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 317–329 # MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440839
The accelerated development of information and communication technologies (ICTs) in the decades of the 1980s and 1990s and in the early part of the twenty-first century is one of the principal factors affecting economic, social, and political processes across the globe. The massive increase in computer processing power that is becoming available to hundreds of millions of users, the development of powerful networks for linking individual computers, and the digital convergence of information and image flows are transforming the knowledge and social and economic environment in many countries and, potentially, in all. ICTs represent a major opportunity for world development. However, this is an opportunity that must be promoted in full awareness of the risk that the benefits will be unevenly shared. This risk has come to be known as the ‘‘digital divide’’. If the opportunities offered by digital technologies are harnessed, however, they can help to achieve sustainable development and contribute to the deepening of democracy through the empowerment of individuals and improved governance. The development and use of ICTs can empower individuals in the sense that there are new opportunities for people to do the things that they choose to do through, for example, the use of the Internet and mobile communications. Many purposes for information exchanges and communication have yet to be imagined by private sector developers or by governments and members of civil society. Although there are risks of negative consequences, the positive opportunities have barely been tapped. The ‘‘digital divide’’ manifests itself on many levels, both within countries (dividing one business, region, or social group from another) and between countries (affecting the ability of some countries to participate in the development and market growth that others This article highlights some of the views presented in Commonwealth Secretariat (2001), a report which was prepared in part by the author under contract to the Secretariat. The views expressed in the present article are entirely those of the author and do not reflect those of the Secretariat or any other organisation. The introduction to the article is based in part on a contribution by Dr Nick Couldry, LSE, to the earlier report.
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enjoy). But however it manifests itself, there is a risk that various aspects of ‘‘digital divides’’ will increase rather than diminish existing inequalities. Within the widest sense of the digital opportunities for knowledge-driven development, this concern is being addressed through numerous initiatives that aim to construct a strengthened knowledge base for knowledge-driven development processes. By facilitating international networks through which experiences with ICTs can be shared, it may be feasible to mobilise more resources to support local ICT projects that assist in improving the knowledge management process in support of locallydefined goals. This article highlights the way in which one group of agencies, the Commonwealth group of agencies, is seeking to make a contribution in this area (see Commonwealth Secretariat, 2001; Commonwealth Telecommunication Organisation, 2001a).
The scale of the global ‘‘digital divide’’ is becoming familiar even to those who do not wish to give a very high priority to ICTs as compared to other important claims on investment for social and economic development. The magnitude of the gap in investment in the information infrastructures of the wealthy as compared to the lower income countries is suggested by the following. The OECD countries are estimated to be investing an average of about $US116 per person in their information infrastructures, while the rest of the world is investing an average of only about $US19 per person (OECD, 2001). Digital technologies including wireless (satellite and radio) offer the means for lower income countries to overcome barriers created by the lack of an adequate telecommunication infrastructure. In the light of the large variations between countries and within regions, the TeleCommons Development Group (2000) argues that: . . . the division between what are and what are not appropriate ICTs for developing nations results in a distinction between those technologies advanced enough to transmit voice, data and video and those capable of voice-only transmissions . . . each telecom environment is unique, and that the choice of technical components must take into consideration the specific infrastructure, demographic conditions, organizational capacities, and policy contexts of the region [emphasis added].
Global networks and the digital divide ICTs are enabling and potentially empowering. When ICTs are accessible and affordable, and designed to support specific needs for analysing, storing and exchanging information, they can enable people to accomplish tasks that otherwise would be too costly or impossible without them. The wealthy countries are rapidly devising ways of reaping the benefits of digital technologies and the expansion of global networks. Investment in ICTs can create opportunities for promoting sustainable development and for deepening democratic practices. These opportunities arise as a result of the increasing convergence between telecommunication, broadcasting, and information technologies (including computer hardware and software). Unfortunately, however, the ‘‘digital divide’’ means there is a very substantial risk that those without the capacities to access ICTs or to use them effectively will be further marginalised. The risks and opportunities associated with ICTs co-exist as a consequence of a ‘‘revolution’’ in networking. Many argue that both social and technical networks need to be given greater priority in the development effort in order to facilitate information exchanges and knowledge sharing (Mansell and Steinmueller, 2002; Mansell, 2002; Primo-Braga et al., 2000).
Acknowledging difference and distinctions is essential for the process of constructing a stronger knowledge base for knowledgedriven development (see Mansell and Wehn 1998). The constraints to infrastructure development are not only related to ICTs. The lack of generally available and reliable electricity supply, especially in the villages of lower income countries is also a major problem in establishing network connectivity. Although cost savings associated with the use of new digital technologies can often be achieved, as the UN Human Development Report (UNDP, 1999) notes, it should not be assumed that the presence of a network and computers means that ICTs are accessible for the majority of potential users. Cultural, gender, and institutional issues present barriers to access. In addition, the prices paid by businesses and citizens for Internet access are prohibitively high in many lower income countries as shown in Table I.
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Table I Monthly Internet access prices in selected OECD and African countries
OECD Mexico Turkey Japan Finland United States Australia Africa Uganda Guinea Sierra Leone Ethiopia Mozambique Senegal
US$
As % of GDP per capita
94 65 50 33 29 24
14.8 12.8 2.6 2.2 1.2 1.5
92 65 50 32 29 24
107.0 45.3 118.0 76.8 69.6 17.6
Note: These comparisons need to be interpreted with caution due to data reliability problems and variations over time Source: Commonwealth Working Group on Electronic Commerce (2000)
The benefits of greater connectivity are often associated with increases in the supply of information and its circulation within social and business networks. But an unambiguous relationship between the scale of ICT investment within a country and its strengthened macro-economic performance is difficult to demonstrate. Examinations of this relationship mainly focus on aggregate statistical indicators and there is little consensus on how to construct a ‘‘knowledge’’ indicator for development (Mansell and Wehn, 1998; Rodriquez and Wilson, 2000). Considerable attention is being given to creating new models for providing improved access to ICT applications and services in ways that have the potential to reduce the impact of the ‘‘digital divide’’. Tele-centre initiatives are offering new models for private and public investment as well as for public and private partnerships. When they are successful, they can contribute substantially to development goals by supporting community information sharing, citizen access to local and global communities, education delivery, business entrepreneurship, and specialised ICT training and training. The results of surveys of the viability of tele-centre initiatives in lower income countries are providing insights into the reasons for their success or failure (Espitia, 2001). The success of these centres
appears to depend upon their ability to provide services that are responsive to local demand, on the availability of external support, and on whether they are supported by associations involving local users. Benjamin (2001) found that in South Africa, for example, a major issue is whether sustainable commercial viability can be established. When it cannot be established, there is a need to consider what measures can be taken to offer public access at the lowest possible cost. Human capabilities are as important, if not more important, than the ICTs. Strengthened capabilities are needed to establish policy and related institutions, to mobilise resources locally and globally through partnerships, to define information and communication needs, to develop ICT solutions that are relevant to those needs, and to incorporate new information into business and social practices in productive and socially beneficial ways. These capabilities are scarce resources worldwide and they are especially so in lower income countries. There are numerous examples at the local, national and global levels of efforts to use ICTs to provide improved content and access to general education and ICT-specific skills training. Some initiatives are aimed at strengthening the education attainment levels of those who are marginalised and excluded from formal education and training institutions. Others are tailored to building a highly skilled workforce in areas that have been targeted by policy makers for economic development. There are many models for developing ICT-supported education and training (see Butcher, 2000; Commonwealth of Learning, 1999, 2001). Although ICTs offer new opportunities for human resource development, there are constraints to the scale and scope of such initiatives. Copyright restrictions on the use of instructional products and materials can restrict information sharing. There are high upfront costs of implementing distance education and training programmes. The initial hardware, operating software, and instructional material often require funding that exceeds the resources of most institutions. Systems of support for learners are often not consistent with the demands of learning in virtual environments (Farrell et al., 1999). Teachers may be reticent to embrace ICTs, educational philosophies may not be
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consistent with interactive media, and there may be a preference for face-to-face learning when teachers and learners are given a choice. The major challenge is to select learning environments where the skills base can be enhanced throughout the population and this generally means an emphasis on the community context for learning. The effective use of ICTs is also expected to offer opportunities for improved governance within knowledge-driven development contexts. There are many examples of the use of ICTs to develop e-government services and to support improved governance. For instance, in India an e-government or ‘‘Kerala’’ model is being developed using open source software (Parthapan, 2000). The Panchayat Level Information Network Project is using Linux as the operating system to support integrated information systems for agriculture, veterinary, school, and health information. Through automation and software applications using some proprietary systems, ICT use can help to reduce administration costs, reduce the cost of service provision, and open government to greater public oversight and accountability. For example, Andhra Pradesh was the first state in India to design a state-wide computerisation programme linking the largest and smallest government offices (Government of Andhra Pradesh, 2000). In Singapore, the government is spending some $US100 million annually on ICTs for the civil service to enhance decision making and public administration. For every dollar spent on this programme, it is estimated to have generated $US2.70 in return due to increased productivity and reduced operational costs. Over 1,500 jobs are said to have been eliminated from the public payrolls, but an additional 3,500 jobs have been reoriented towards more productive outputs (Grace et al., 2001). Canada is also playing a major role in stimulating the development of egovernment by seeking to become a ‘‘model user’’ of ICTs (Canadian Information Highway Advisory Council, 1997). However, the full potential of ICT to support e-government services remains unexploited. The consultancy firm, Accenture’s (2001) survey of 22 mainly wealthy countries shows that the public sector lags behind the private sector in its use of the new technologies. The tendency for governments to lag behind the private sector
in making effective use of the potential of digital technology is only one of the constraints to effective use. E-government services may be under-utilised because they are technology-led. For instance, the introduction of an intranet system providing information on property ownership to staff and clients of the Johannesburg Metropolitan Council in South Africa was unused because it was not ‘‘needs focused’’ and training was inadequate (Grace et al., 2001). Nevertheless, e-services are being successfully developed for automated customs clearance and electronic filing of export documentation, for instance, with the support of UNCTAD’s Global Trade Point Network (Grace et al., 2001). As Heeks (1998) argues, ‘‘IT on its own does not do anything useful; in order to do anything, it must become part of an information system; information systems do not necessarily involve computers and telecommunication equipment; even when they do, information systems are much more than just IT because they involve people and their actions’’.
Knowledge networking – mobilising investment and partnerships Digital technologies provide unprecedented means for aggregating, delivering and using information. Knowledge-driven development initiatives that make increasing use of digital technologies may create opportunities to develop knowledge networks to address a range of development-related problems. Software applications can provide information targeted to specific users. They can support the creation of profiles of user activities and interests, and they can facilitate searching for relevant content. They can be applied to create directories of people with similar interests and problem-solving experiences. ICT applications such as groupware, e-mail, document management, and search and retrieval systems can support individual and organisational activities and networks to foster strengthened communities of practice. They can enable mentoring and apprenticeship programmes and support the creative development of solutions to a variety of problems. Knowledge networking systems offer opportunities to reuse information, to share best practices, to support skills development and training, and to assist in problem-solving. Despite the opportunities in this area, there are constraints. Information must not be
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confused with knowledge. The management of digital sources of information must be linked to the development of communities of practice and embedded within distinctive organisational styles and politics. Software applications can provide sources of digital information, but such information must be applied in the context of users’ experiences if it is to contribute relevant knowledge. In the light of the potential of using ICTs to construct an enhanced knowledge base for development, and in the face of a ‘‘digital divide’’ that seems unlikely to be diminished as a result of purely market-led investment, there are numerous initiatives to mobilise investment and partnerships between all the stakeholders in the development process. For example, the G-8 Kyushu-Okinawa Summit in July 2000 issued the Okinawa Charter on the Global Information Society and established a Digital Opportunity Task Force (DOT Force) which reported to the G-8 countries in Genoa in July 2001 and an action programme is underway (DOT Force, 2001). The DOT Force is attempting to mobilise action that will contribute to bridging the digital divide, securing participation by nonmembers of the G-8 countries; and integrating ICT initiatives more firmly within development initiatives. The DOT Force stresses that there are ‘‘no one size fits all’’ policies and that simply knowing about best practices is insufficient to promote measures to address both the ‘‘digital opportunities’’ and the ‘‘digital divide’’. The United Nations agencies, including the International Labour Organisation (ILO), the International Telecommunication Union (ITU), the UN Economic and Social Council (UNESC), the United Nations Development Programme (UNDP), the UN Economic Commission for Africa (UNECA), and the UN Educational, Scientific and Cultural Organisation (UNESCO), are emphasising the importance of ICTs for development and they are taking steps to address the ‘‘digital divide’’. The Organisation for Economic Co-operation and Development (OECD) is seeking improved means of establishing dialogues with developing countries on policy frameworks for ICT use in areas such as e-commerce and e-government. The World Trade Organisation (WTO) and the World Intellectual Property Organisation (WIPO) are also focusing on the implications of the global spread of ICTs.
At the regional, national, and local levels, there are numerous initiatives as well. The Global Knowledge Partnership has initiated capacity building measures, information sharing and project co-ordination in the ICT area. The Global Information Infrastructure Commission is playing a role in fostering policies to advance the development of a global information infrastructure. The World Bank has put knowledge management at the centre of its strategies aimed at poverty reduction. There is a host of nationally-based government initiatives aimed at encouraging greater ICT development and use within countries and at enabling lower income countries to introduce initiatives. A selection of initiatives that aim to support countries in building effective knowledgedriven strategies by taking advantage of the potential of digital technologies is listed below. In many of these initiatives a core issue is capacity building (Girardet, 2001b): . Africa Connection – www.africaconnection. org . Asia-Pacific Development Information Programme (APDIP) – www.apdip.net . Association for Progressive Communications – www.apc.org . British Council www.britishcouncil.org/ index.htm . Canadian International Development Agency (CIDA) – www.acdi-cida.gc.ca/ INDEX-E.HTM . Canadian International Development Research Centre (IDRC) Acacia Programme, – www.idrc.ca/acacia . CISCO Networking Academy Program – www.cisco.com/warp/public/779/edu/ academy/ . Department for International Development (DFID) UK – www.dfid. gov.uk . Digital Partners – www.digitaldivide.org/ home.html . DOT Force ‘‘Digital Opportunity Task Force – www.dotforce.org . Hewlett-Packard World e-inclusion program – www.hp.com/e-inclusion . International Institute for Communication and Development – www.iicd.org . International Labour Organization (ILO) – www.ilo.org/ . International Telecommunication Union (ITU) – www.itu.int/ti; www.itu.int/ ITU-D-TREG
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Markle Foundation – www.markle.org/ index.stm Netaid.org – www.netaid.org OneWorld – www.oneworld.net/ campaigns/digitaldivide/index.html Organisation for Economic Co-operation and Development (OECD) – www.oecd.org The Global Knowledge Partnership (GKP) – www.globalknowledge.org; gkaims.globalknowledge.org UN Educational, Cultural and Scientific Organization (UNESCO) – www.unesco.org/webworld/index.shtml United Nations Development Programme (UNDP) – www.sdnp.undp.org/it4dev/ United Nations Economic Commission for Africa – Bridging the Information Gap in Africa – www.uneca.org/ programmes_home.htm USAID Leland Initiative – www.usaid.gov/regions/afr/leland World Bank Development Gateway – www.development.gateway.org World Bank Global Development Learning Network – www.worldbank.org/ gdln/ World Bank infoDev – www.infodev.org World Intellectual Property Organization – ecommerce.wipo.int/index-eng.htm
divide and its members have many successful examples of the adaptation of ICTs to meet development objectives. As part of its work, the Expert Group drew on the results of a survey conducted by the Commonwealth Telecommunication Organisation (2001b) which elicited information about the priorities of Commonwealth governments in the ICT area and their views of priorities for the Commonwealth agencies. Table II lists some of the areas in which it was reported that Commonwealth governments have a role to play in addressing the ‘‘digital divide’’ and the areas where government respondents suggested that Commonwealth agencies can play a helpful role. The lists in Table II are not ranked by order of importance because the priorities for countries and the Commonwealth agencies vary depending on their already existing strengths and the issues that they believe must be addressed most urgently. Nevertheless, the lists indicate that there are a large number of issues that could benefit from policy initiatives and the strategic consideration of measures to support the construction of a stronger knowledge base through the use of ICTs.
The Commonwealth constellation of agencies is involved in a substantial number of initiatives that complement those shown in the above list (see Commonwealth Secretariat, 2001). In order to extend the scale and scope of the Commonwealth’s contribution to constructing a stronger knowledge base for knowledge-driven development, in September 2000, the Commonwealth High Level Review Group (HLG) constituted an Expert Group on Information Technology. The group drew upon evidence on the opportunities and constraints associated with the development and application of ICTs as tools for development. Its members were concerned to identify practical and deliverable targets for Commonwealth action. The Commonwealth agencies all have a commitment to democracy, good governance and sustainable development and many of these agencies have a capacity to share their experience and expertise. The Commonwealth agencies’ membership cuts across the ‘‘North-South’’
The development of policies and strategies to encourage ICT deployment must be embedded in and co-ordinated with social and economic development strategies. When ICT strategies are formulated without achieving this they generally become technology-driven and detached from the reality of the way people organise their social and economic lives. Policies and strategies must be connected with appropriate institutions and organisations if they are to have widespread support. There is also a very great need to achieve sustained investment in targeted areas. Many of the ICT pilot projects and experiments that are initiated raise user expectations. When these are not fulfilled, the result is resistance to the view that investment in ICTs should be given priority given competing demands for resources. Unused or poorly maintained information and communication systems create more – not fewer – problems for their users. The work of the Commonwealth’s Expert Group highlighted several essential issue areas
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Table II Commonwealth selected key ICT priorities for Governments and Commonwealth agencies Country ICT key priorities
Commonwealth ICT key priorities
Co-ordination, strategic planning and management Develop human resources Develop infrastructure Diversification of supply of new technologies, radio E-government applications Encourage competition Facilitate private investment Frame legal issues Freedom of information Growth in local enterprises (SME), and services Increase employment Increase IT awareness Increase tele-centres and access to rural areas Liberalise telecom market and encourage competition Link scattered outer-islands Literacy campaign Promote e-business Regulation Review on tariff and customer services Training and skills
Assist member nations in management of structural adjustment Distance learning Encourage R&D in ICT Facilitate policy dialogue Formation of group to monitor IT and suggest measures for least developed countries, including affordable access Free Internet in schools Generic framework on good practice Human resource development ICT for sectoral sustainable human development Increase employment Information infrastructure Liberalisation of telecom, promote open markets Policies and legislation Policy, legal and regulatory provisions Public awareness Regional co-operation Regulation Sharing developments Technology and knowledge transfer Training and skills
Source: Adapted from Commonwealth Telecommunication Organisation (2001b)
that need to be addressed if efforts to implement ICT-related action plans are to provide a foundation for reaping the benefits of investment in ICTs. Visions for knowledge-driven development A vision of a ‘‘global knowledge’’ or a ‘‘global information’’ society is being discussed in many forums around the world. This vision often refers to a society in which ICTs play a major role in enabling people to improve their social and economic circumstances. To mobilise efforts to build more inclusive knowledge societies, the goals and values of sustainable development and improved governance need to be at the core of any vision. However, it is also essential to recognise that people in different countries and regions of the world have multiple visions of their futures depending on their histories and present conditions. Visions of knowledge societies are needed that incorporate and respect the expectations of people in their communities. Plurality, as well as common goals, must be incorporated within the visions that guide ICT policy and related strategic actions. It is essential to recognise that, even in the most ICT-intensive environments, the use of new technologies will not substitute for all
conventional activities and practices. Everyone will not want to access information or to communicate using these technologies. Visions of the future must take account of the need for investment in opportunities for strengthening face-to-face social networks and the potential of the full range of older and newer ICTs. Such visions should also be grounded in a realisation that learning how to design and use ICT applications proceeds very rapidly in some cases and very slowly in others. The speed of transformation depends on levels of awareness, how new applications are integrated with existing organisational and individual practices, and the emphasis that is given to education and training as well as to on-going support of all kinds. It should not simply be assumed that a given ICT application will provide a solution to particular development problems. Evaluations of the outcomes of ICT initiatives need to accommodate variations in the speed of the learning process and to acknowledge that considerable time is often necessary for beneficial outcomes to become apparent. Shortterm thinking is a recipe for disappointment in constructing a stronger knowledge base. Frameworks for the development of ICTs The resources of donor organisations and other public institutions are only a tiny
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fraction of the investment needed to construct knowledge societies that rely intensively on ICTs. The private sector will need to invest heavily if the ‘‘digital divide’’ is to be narrowed. Since the private sector operates through markets that work effectively only if the appropriate legal and regulatory framework is in place, developing the legal and regulatory institutions is very important. To encourage e-commerce and e-government services to develop, there is also a need to stimulate some degree of competitive telecommunication supply and markets for the provision of Internet Service Provider (ISP) services as well as those for the supply of information technologies such as computers, servers and software (Commonwealth Secretariat, 2000). Increasingly, the policy framework must address Internet-related issues. For instance, there are many issues surrounding the development of Internet Exchange Points (IXPs) that need to be addressed. IXPs are the physical installations created to facilitate interconnection between independent ISPs. IXPs are intended to provide a neutral ground for traffic exchange in contrast to private Internet peering that facilitates the owners’ interconnection with second parties. Developments in this area affect the costs and routing of Internet traffic and create a need for policies that will benefit lower income countries. Strategies for human resource development The urgency of capacity building for constructing a stronger knowledge base cannot be over-emphasised because the range of skills (general and ICT-related) that is needed to participate in more informationintensive societies as citizens or consumers, or as producers, is enormous. Skills issues include literacy (and computer literacy) and access to education at all levels by both men and women. The costs of developing ICTbased education and training programmes for distance or open learning should not be underestimated. Farrell et al. (1999) argue that ‘‘while it is clear that the application of ICTs to the practice of open and distance learning is growing rapidly, . . . the concept of truly virtual education is still more rhetorical than real’’. The World Wide Web is often used simply as a publishing medium without addressing the interactive potential of the
technology and there is as yet little valid and reliable data on questions of cost. While distance learning using the Internet can bring new information to hospitals and schools, these organisations may be poorly connected to social networks. Education and training require more than information delivered at a distance. Effective learning also requires institutions, skills and good management. Development of the technical infrastructure Policy to promote the development of the technical infrastructure has often been focused narrowly on universal access to telephone services. However, there is a strong case for promoting collective forms of public access to ICTs, especially where the cost of private Internet access is too high for the majority of users (Girardet, 2001a). Such initiatives, especially those for rural areas, depend on a telecommunication infrastructure of some kind being in place. It must be possible to pay the high costs of maintenance, solve problems of finding local technicians, overcome the low earning capacity of the rural population, and to provide services that are attractive to nonliterate users who may have little formal education or familiarity with ICT. The purposes of infrastructure development vary enormously and initiatives must be guided by whether proposed ICT applications are responsive to problems, not by the practice of implementing technology simply because the technological potential exists to do so. E-government and improved governance Trends such as globalisation and the diffusion of ICTs are affecting traditional governance structures and there are new areas of governance which embrace e-commerce, the governance of knowledge, and the Internet. Globalisation often means the transfer of power from the state to global markets and sub-national groups. The enabling conditions for improved governance must be put in place, such as freedom of association and laws and regulations that create possibilities for citizen participation. ICT applications can play roles in all these areas if they are developed appropriately. Strategic initiatives require a high level of commitment and leadership as well as innovative and effective policy (W’O Okot-Uma, 2001). Creating conditions for the empowerment of
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communities and the members of civil society also requires an infrastructure for participation and measures to foster a sense of citizenship and cultural identity. It is one step towards enabling measures to address the ‘‘digital opportunities’’ and the ‘‘digital divide’’ to set out the issues that should guide such initiatives. A further and much more difficult step is required to implement new initiatives. Measures are needed to strengthen co-ordination between the various parties with an interest in the initiatives and to enable co-operation between them.
Strengthening co-ordination and co-operation Co-ordination and co-operation within and across the areas outlined above are essential to ensure that available resources are maximised and deployed in an effective way. Measures to take advantage of ‘‘digital opportunities’’ and to reduce the ‘‘digital divide’’ require action at many levels of government and within the private sector as well as by members of civil society organisations and citizens. As indicated, one major role for government is to create a positive ICT environment through telecommunication reform and other ICT policies and by creating frameworks to protect investment. But governments can also provide incentives for e-service suppliers and users; promote education policies that increase literacy and general management and specialist ICT skills; and encourage effective institutions for developing, implementing and co-ordinating policies and strategies. Governments can play a role in expanding facilities for providing seed money (including micro-lending) for local research and development on low cost technologies and applications. They can encourage the establishment of business incubators and entrepreneurial networks. Co-operative inter-governmental partnerships can assist governments to create enabling national environments by sharing information, technical knowledge and expertise, by supporting ICT assistance programmes, and by encouraging crossnational ICT business networks and inward investment. Governments can also play a role in formulating national objectives and strategies for ICT within the wider
development context. Governments can champion ICT use by promoting e-government services and facilitating links between government and businesses, and between government and consumers and citizens. By establishing an enabling economic environment, governments can promote private enterprise, help to attract foreign direct investment and encourage domestic investment in the ICT industry. Constructing a stronger knowledge base also means a growing role for entrepreneurial investors. It is difficult to estimate demand for ICTs (whether telecommunication or other e-services and applications) when the users have little or no experience of the potential benefits. This creates risks for investors who may apply models to calculate their returns on investment using assumptions that have been employed in the wealthier countries. Nevertheless, there is demand for telecommunication and other ICT services among people with very low incomes. An important source of change is entrepreneurial activity and investment. Entrepreneurs have initiative, ideas and expertise and they are introducing and developing ICT systems and applications in many lower income countries. They play an important role in e-commerce start-up firms and in providing education and technical training through local organisations and through their access to global co-operative networks. Entrepreneurs cannot succeed alone, however, because they often find it difficult to scale up their activities without other kinds of support. They need to be able to access a local research and development base and external networks of scientific and technical expertise. They also must be able manage contractual obligations and the ongoing costs of their services. Financing, and often micro-financing, is critical to their success as is the feasibility of payment by their customers. There is a role as well for large businesses in partnership with other agencies to develop relevant ICTs for development. The members of civil society are increasingly supported in their development activities by non-governmental organisations (NGOs) that seek to link micro-level experience with macro-level policy. In this area, institutional linkages need to be strengthened and there is a need for better information flows. NGOs are making use of information systems in order to improve the
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flow of ideas, experiences and information across national frontiers between all actors from the grass roots level outwards. Many NGOs have information officers who collect, analyse and disseminate information. In some cases, NGOs can provide a way for policy makers to access the views of members of civil society. In addition, they can help to ensure that vulnerable people, including those on low incomes, lone parents, the elderly, people without qualifications or with low levels of literacy, the unemployed or underemployed, people in areas which lack infrastructure, women and girls, and people with disabilities, can make inputs into policy-making and the development of ICT applications. Achieving synergies between the activities of governments, the private sector including entrepreneurs, civil society organisations and citizens is likely to augment efforts to construct an enhanced foundation for knowledge-driven development. The following section highlights some of the activities of the Commonwealth group of agencies to indicate how already existing efforts to develop ICTs for development can be clustered in order to achieve an even greater effect.
The Commonwealth agencies’ role In the light of the numerous global initiatives that are underway to address the ‘‘digital divide’’, the Commonwealth agencies have sought to add value in areas that build on their existing strengths. The Commonwealth is an association of 54 countries covering 1.7 billion people. More than half of the Commonwealth countries are small, often island, states and several are among the least developed countries. These countries face difficult constraints in developing their ICT capacities. The Commonwealth is playing a major role in disseminating information about ICT initiatives that have proven to be successful and in helping to tailor those experiences to local conditions. The Commonwealth has an existing institutional infrastructure that can be deployed to facilitate the use of ICTs in developing countries. Commonwealth governments with expertise and human and financial resources in the ICT area are working with those with limited ICT capacity to construct a stronger
knowledge base. Many of the Commonwealth’s own agencies have programmes to develop partnerships to create an enabling environment for ICT applications. The similarity of the Commonwealth institutions and legal frameworks provides considerable scope for advancing ICT initiatives through assistance programmes. Among the Commonwealth initiatives that are using ICTs to support social and economic development initiatives are those shown in Table III. Among these Commonwealth initiatives, there is scope to further support the construction of an enhanced knowledge base. Several ways of promoting an extension of existing effort include the development of: . Knowledge ‘‘shops’’. Commonwealth agencies are involved in the development of innovative models and strategies for establishing tele-centres in partnership with other agencies, providing public points for accessing information and for mobilising support for ICT use. The Commonwealth of Learning (COL) and the Commonwealth Youth programme (CYP) tele-centres, for instance, are seeking to empower individuals through their ability to access information and through support for educational and literacy programmes. . Policy resource centres. Commonwealth agencies have considerable experience in developing replicable sectoral policies and strategies. The Commonwealth Telecommunication Organisation (CTO), Commonwealth Network for Information Technology for Development (COMNET-IT) and the Commonwealth Business Council (CBC), for instance, have programmes targeted at audiences including government officials, industry and e-commerce institutions and entrepreneurs. These agencies provide technical support in developing ICT policies and application strategies and they have various means of facilitating their exchange and adapted replication. . Skills for ICT development and use. The Commonwealth Telecommunication Organisation (CTO) has a major training programme to build a skills base that can support sustainable ICT development and applications which is delivered through workshops and seminars for
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Table III Commonwealth capabilities for ICT Agency
Areas of activity
Commonwealth Telecommunication Organisation
ICT policy and resource centres Skills for ICT development and use Tele-centres as knowledge shops E-Government Skills for ICT development and use Tele-centres as knowledge shops Knowledge networking Skills for ICT development and use E-government ICT policy and resource centres Skills for ICT development and use E-government Knowledge networking Tele-centres as knowledge shops All areas Skills for ICT development and use
Commonwealth of Learning
COMNET-IT Commonwealth Secretariat
Commonwealth Business Council Commonwealth Association of Public Administration and Management
Knowledge networking E-government
Commonwealth Centre for Electronic Governance Source: Commonwealth Secretariat (2001)
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policy makers and service providers. COMNET-IT provides a training programme for policy makers. The Commonwealth Association of Public Administration and Management (CAPAM) and the Commonwealth Secretariat deliver an informatics programme through which public service workers are trained to use ICT as an information, management and administrative tool. e-government. The Commonwealth Centre for Electronic Governance (CCEG) assists governments to develop knowledge management systems for the public service to enhance public administration and service delivery. It also focuses on ICT applications for data protection and privacy and record management practices. COMNET-IT provides skills training to government officials for setting up and managing e-government services, and it develops products for sharing good practices in this field. The Commonwealth Telecommunication Organisation (CTO) is providing skills training for e-governance to government officials as part of its services. The Commonwealth Secretariat has a comprehensive training programme for officials in the area of e-governance.
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Information, innovation and professional development. The Commonwealth Science Council (CSC) is supporting a Commonwealth Knowledge Network (CKN) in the area of science and technology and it is contributing to the national development of databanks. It is encouraging innovative solutions to development problems through access to information. It is using ICTs to enhance innovative capacity, facilitate technology brokering, and establish the ownership of traditional knowledge so that disputes on intellectual property rights can be resolved.
Conclusion The ‘‘digital divide’’ is multi-faceted. It is a phenomenon that exists at many levels – between socio-economic groups within countries, between companies with different capacities and resources, between geographical areas, and between countries with different resources and cultures. An enabling environment and the championing of ICT development and usage are essential to reduce the ‘‘digital divide’’ and to take advantage of ICT opportunities. But, without action to scale up existing initiatives it is unlikely that the visions of the benefits of
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ICTs as effective tools for development will be fulfilled, at least not for the majority of those who are already marginalized by the effects of poverty. The networks that can be supported by the use of ICTs hold much potential for strengthening democratic values and institutions and for promoting sustainable development. But the continuing uneven levels of access to technology, applications and skills is limiting the realisation of the potential benefits. The Commonwealth agencies’ efforts to scale up their interventions are examples of the kinds of actions that are likely to mobilise investment. In these initiatives, as in the case of others that are underway, a very high priority must be given to ensuring that projects are responsive to local needs in the countries where they are implemented. Strategic action on the part of agencies within their own organisations and in co-operation with other organisations is likely to help to facilitate the overall process of constructing a stronger knowledge base for knowledge-driven development, but there is no room for complacency. Initiatives designed to achieve more effective networking of knowledge often fail to become sustainable even when they are welcomed by those involved in their use. This may be the result of a failure to create imaginative solutions to resolve resource constraints and to a lack of co-ordination and co-operation. It may also signify the politics and struggles between those who find themselves promoting the particular interests of their own organisations rather than the interests of those citizens who may benefit from enhanced knowledge management using the new technologies. In all three of these instances, considerable effort is needed to focus on the purposes and goals of knowledge-driven development, rather than on the short-term interests of individual stakeholder organisations.
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Grace, J. et al. (2001), ‘‘Information and communication technologies and broad-based development: a partial review of the evidence’’, prepared for the World Bank, draft report, 14 February, available at: http://wbln0018.worldbank.org/ict/resources.nsf/ search ‘‘Grace’’ (accessed 19 April 2002). Heeks, R. (1998), ‘‘Information age reform of the public sector: the potential and problems of IT for India’’, Information Systems for Public Sector Management Working Paper 6, published with support of COMNET-IT, available at: www.man.ac.uk/idpm/ idpm_dp.htm#isps_wp (accessed 19 April 2002). Mansell, R. (Ed.) (2002), Inside the Communication Revolution: Evolving Patterns of Social and Technical Interaction, Oxford University Press, Oxford. Mansell, R. and Steinmueller, W.E. (2002), Mobilising the Information Society: Strategies for Growth and Opportunity, Oxford University Press, Oxford. Mansell, R. and Wehn, U. (Eds) (1998), Knowledge Societies: Information Technology for Sustainable Development, published for the United Nations Commission on Science and Technology for Development by Oxford University Press, Oxford, available at: www.sussex.ac.uk/spru/ink (accessed 19 April 2002). OECD (2001), ‘‘Understanding the digital divide’’, Paris, available at: www.oecd.org/pdf/M00002000/ M00002444.pdf (accessed 19 April 2002).
Parthapan, B. (2000), ‘‘Kerala evolving new vistas in e-governance’’, The Hindu, 26 May. Primo-Braga, C. et al. (2000), ‘‘The networking revolution: opportunities and challenges for developing countries’’, infoDev Working Paper, Global Information and Communication Technologies Department, The World Bank Group, Washington, DC, June. Rodriguez, F. and Wilson III, E.J. (2000), ‘‘Are poor countries losing the information revolution?’’, Global Information and Communication Technologies Department, infoDev Working Paper, The World Bank Group, Washington, DC, May, available at: www.infodev.org/library/working.htm (accessed 19 April 2002). TeleCommons Development Group (2000), Rural Access to Information and Communication Technologies: the Challenge for Africa, 2000, IBRD/World Bank report prepared for the African Connection Secretariat. UNDP (1999), ‘‘New technologies and the global race for knowledge’’, UN Human Development Report 1999, chapter 2. W’O Okot-Uma, R. (2001), ‘‘Electronic governance: reinventing good governance’’, Commonwealth Secretariat, available at: www.cddc.vt.edu/ digitalgov/gov-publications.html (accessed 19 April 2002).
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Introduction
An analysis of co-operative agreements from a knowledge-based perspective: an integrative conceptual framework Alejandro Escriba´-Esteve and Jose´ Anastasio Urra-Urbieta The authors Alejandro Escriba´-Esteve is Associate Professor of Strategic Management and Jose´ Anastasio UrraUrbieta is Assistant Professor of Management, both at the University of Valencia, Valencia, Spain. Keywords Co-operation, Knowledge workers, Organizational learning Abstract The last decade has been witness to an unprecedented growth in the number of alliances between companies. This growing importance of interfirm co-operation, together with its inherent complexity, have generated a progressive interest in the study of this phenomenon, which has materialised in a vast but fragmented literature concerning it. As a response to the demands which these conditions pose, we have endeavoured to develop a conceptual framework which, from a knowledge-based and learning perspective, integrates an extensive series of contributions and concepts for the study of the processes of co-operation between companies. As distinctive features, our conceptual framework proposal sets up a bridge between formulation and implementation in alliance processes and goes into the alliance micro-level processes, both in the framework of the co-operative agreement and in the setting of the partners’ organisations. Additionally, our proposal also considers the different ontological levels where knowledge develops and the links existing between them. Electronic access The research register for this journal is available at http://www.emeraldinsight.com/1367-3270.htm Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 330–346 # MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440848
The rise and logic of co-operative agreements have been explained from various theoretical approaches, such as resource dependency, population ecology, institutional theory, transaction costs theory or strategic approach, among others. Nevertheless, despite their contributions, all the approaches adopt a partial perspective, which significantly restricts their explanatory capacity (Osborn and Hagedoorn, 1997). One of the more important issues on this topic is the study of the alliance performance and its effects over the partners’ performance. The study of this aspect constitutes the greatest differential point among the various explanatory approaches. However, no matter which perspective may be adopted, a key aspect that remains unexplored is that related to ‘‘how’’ these agreements can provide the participants with certain improvements in their capabilities and, hence, establish the basis for some potential competitive advantage. That is, the link between the establishment and development of the agreements in a correct and satisfactory manner (performance of the agreement) and its effects over the performance of the participating companies. On the other hand, a recent new perspective of organisation and competitive advantage has been gaining importance. This perspective mainly focuses on the role of creation, storage and application of knowledge in firms, considers knowledge as a key resource in terms of its contribution to the added value and its strategic significance (Winter, 1987), and so contemplates it as a main source of competitive advantage (Grant, 1996). As we will argue, such a ‘‘knowledge-based This study is part of the research project entitled ‘‘Explanatory analysis of intercompany cooperation: proposal of models for its evaluation and management’’ (SEC98-0948), funded by the Spanish Science and Technology Interministerial Commission (CICYT), and directed by Martina Menguzzato-Boulard. The authors gratefully acknowledge the ideas and insights of Louis He´bert (PhD) and Pierre Dussauge (PhD) because an important part of this work was carried out during ´ cole research stays of the authors at the Grand E des Hautes Etudes Commerciales (HEC) in Montre´al and Paris, respectively. The authors would also like to acknowledge the constructive suggestions from the anonymous JKM reviewers. The authors have contributed equally.
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perspective’’ can be used, also, to analyse cooperative agreements as a means of knowledge creation and absorption by a partner company to improve its own performance, its competitiveness, and, consequently, its competitive advantage (Grant and Baden-Fuller, 1995). Nevertheless, this new perspective is characterised by a lack of consistency in the theoretical framework, especially in its application to the study of co-operative agreements, both because of the diversity of contributions from a great variety of conceptual approaches[1] and because of the fragmented empirical evidence. Thus, the object of this work is that of trying to put order in the theoretical jungle, which revolves around this perspective. With this aim, we propose a theoretical framework, which integrates the different contributions from both empirical and conceptual works. From a knowledge-based perspective, this integrative theoretical framework will be useful to explain why firms use strategic alliances instead of other strategic options. At the same time, it will be helpful to provide a context for, and to understand, the different learning and knowledge creation processes that take place in alliances. As we will show, the main contribution of our proposal lies in its usefulness to focus the analysis of the alliance phenomenon from a wider and more consistent theoretical ground perspective. In this sense, it provides a link between formulation and implementation in alliance processes and goes into the alliance micro-level processes, both in the framework of the co-operative agreement and in the setting of the partners’ organisations, that is, it considers both inter- and intraorganisational units of analysis. Additionally, our proposal also considers the different ontological levels where knowledge develops as well as the links between them.
A knowledge-based explanation of co-operative agreement establishment As soon as the first studies analysed the reasons for the use of inter-firm co-operative agreements some authors alluded to their learning logic and therefore to the search and integration of some kind of knowledge through this kind of agreement (Kogut, 1988; Menguzzato, 1995). Nevertheless, one of the
first main works that considers co-operative agreements from a ‘‘knowledge-based perspective’’ is that of Grant and BadenFuller (1995), who propose a series of circumstances under which inter-firm cooperative agreements constitute a channel of transference and integration of knowledge superior to markets and hierarchies. The superiority of co-operative agreements against the market stems from the fact that the former allow the exchange of explicit knowledge on a continuity and reciprocity basis so that the problems of appropriation in its transmission are limited and, especially, they facilitate the integration of that expression of knowledge (Hennart, 1988; Kogut, 1988; Grant and Baden-Fuller, 1995). This argument is still stronger in cases in which the relationship between the companies requires the transfer of some explicit knowledge that is not perfectly incorporated in the products, as occurs, for example, in the automobile industry, where, in order to optimise their respective processes, component suppliers need access to manufacturers’ technical and design knowledge and the later, in turn, need access to technical and productive knowledge of the former. Furthermore, co-operation also beats the market in the transfer of tacit knowledge since it allows an interaction between the parties similar to that of the integrated organisation, so that such kinds of knowledge can be understood, shared and transferred through this continuous and reciprocal interaction (Hennart, 1988; Kogut, 1988). On the other hand, as regards the transfer and integration of knowledge, co-operative agreements can be superior to internal organisation when the range of required knowledge for some products is different from the knowledge domain of the company. In so much as the required capabilities and knowledge can be changeable in time, as pointed out by the perspective of dynamic capabilities (Hamel, 1991; Teece et al., 1997), and due to the time compression diseconomies problem (Dierickx and Cool, 1989), more and more frequent is the existence of an imbalance between the company product domain and the knowledge needed for those products, which such a company controls. In these cases, cooperative agreements will allow one company to gain access and to integrate the necessary
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knowledge held by another companies, and at the same time to hand over part of its own knowledge for better use by such other organisations. Furthermore, co-operative agreements are a recommended strategic option when there is a great uncertainty about the future knowledge requirements (as in industries of rapid technological change), as they facilitate a faster and more flexible access to new knowledge and capabilities that will allow increasing future competitiveness. On the other hand, co-operative agreements can help to avoid the time compression diseconomies existing in the development, transfer and internal integration of the necessary knowledge. And finally, it is worth pointing out that innovations in an emergent industry usually involve the transfer of technology and knowledge from other more mature industries; co-operation with companies of the ‘‘source’’ industries may enormously reduce the necessary time to gain access and integrate the required knowledge. After this brief discussion, we can conclude that a knowledge-based perspective can explain the use of alliances in so much as there exist certain circumstances under which co-operative agreements can be a more efficient and effective organisational and strategic configuration than markets or hierarchies in the creation, transfer and integration of knowledge. Nevertheless, our interest goes beyond the mere justification of alliance use. We endeavour to know how and to what extent alliances can constitute an organisational and strategic tool for the performance improvement of the companies that take part in them and for the creation of their competitive advantages.
Micro-level processes in alliances: the link with the competitive advantage The consideration of knowledge as a firms’ key resource, in terms of its contribution to the added value and of its strategic significance (Winter, 1987; Grant, 1996), means assuming that firms’ ability to create, transfer, integrate and protect knowledge constitutes a key source of competitive advantages (Kogut and Zander, 1992, 1993;
Nonaka, 1994; Nonaka and Takeuchi, 1995; Grant, 1996). When the individual knowledge is integrated into a collective base of knowledge or organisational memory (Nelson and Winter, 1982; Walsh and Ungson, 1991), the stored information can be recovered and translated into action. This transformation of knowledge in action establishes the basis for the creation of new capabilities that could support the competitive advantage. Therefore, as an organisation learns, it will be able to strengthen and/or renew its core competencies, which in turn can be considered the output of the organisational learning (Prahalad and Hamel, 1990). However, in the context of alliances, previous research in organisational learning processes is fragmented and has usually addressed the analysis of this phenomenon from a partial perspective. Such partiality arises from the fact that the main focus of analysis, both in empirical and theoretical works, has been the study of the transfer of knowledge from the alliance to the parent organisations. It is usually taken for granted that the alliance will produce new knowledge, so the unit of analysis is the parent organisation and the focus is on the transfer of such knowledge, obtained from the alliance, to the partners (see Table I). Nevertheless, some empirical works have also studied the barriers to organisational learning (e.g. Crossan and Inkpen, 1994; Inkpen and Crossan, 1995; Szulanski, 1996; Doz, 1996) and one of them has adopted a dyadic unit of analysis (Doz, 1996). With regard to research fragmentation, it is especially manifest in the methods and results of empirical works (see Table I). In this sense, the research methods applied are both qualitative and quantitative, but the presence of a great deal of qualitative studies suggests that there is still a lack of an integrative conceptual framework in organisational learning in an alliances context. Further, the fragmentation of the results shows that organisational learning is a complex phenomenon, with a multilevel and multifaceted nature. Therefore, using co-operative agreements as a learning tool is a very complex task (see Figure 1). First, because alliances shape a mixed context in which both co-operation and competition take place, that is, a context of ‘‘coopetition’’; second, because organisational learning is complex by itself (Argyris and
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Table I Major empirical contributions on organisational learning analysis Research method
References
Unit of analysis
Focus
Lyles (1987) Lyles (1988)
Organisation-dyad Organisation-dyad
Cohen and Levinthal (1990) Hamel (1991)
Organisation
Organisational learning in JV processes The issue of what organisational learning takes place, and how it occurs, in JV processes The link between the firm’s innovative capabilities and its organisational learning process The issue of interpartner learning (and its determinants) within international strategic alliances Analysis of the ‘‘Japanese’s alliance mode’’ and its lessons The issue of learning processes in alliances and impediments and barriers to learning in such contexts To understand and measure the effect of strategic technology partnering on the performance of companies engaged in such joint efforts The development of a conceptual framework of organisation learning and its application to learning in JVs The issue of the internal stickiness of knowledge (best practices) transfer The issue of the interfirm knowledge transfers within strategic alliances The issue of knowledge transfer and learning within co-operative arrangements The issue of how the learning, along several dimensions, that takes place in strategic alliances between firms mediates between the initial conditions and the outcomes of these alliances The issue of the learning capability of organisations The issue of knowledge management in international joint ventures (IJVs) The issue of how firms learn from their strategic alliances The issue of ‘‘absorptive capacity’’ and its role in organisational learning The issue of the outcomes of learning in alliances between competing firms
Sasaki (1993) Crossan and Inkpen (1994)
Organisation-dyad
Nation-industryorganisation Organisation
Hagedoorn and Schakenraad (1994)
Organisation
Inkpen and Crossan (1995)
Organisation
Szulanski (1996)
Organisation
Mowery et al. (1996) Organisation Wathne et al. (1996)
Organisation-dyad
Doz (1996)
Dyad
Goh and Richards (1997) Inkpen (1997)
Organisation Organisation-dyad
Simonin (1997)
Organisation
Lane and Organisation-dyad Lubatkin (1998) Dussauge et al. (2000) Organisation
Scho¨n, 1978; Hedberg, 1981; Fiol and Lyles, 1985; Levitt and March, 1988; March, 1991; Levinthal and March, 1993; Nonaka, 1994); third, because alliances are relationships characterised by instability (Gomes-Casseres, 1987; Inkpen and Beamish, 1997) and because they are difficult to manage (Geringer and He´bert, 1989; Doz, 1996; Arin˜o and De la Torre, 1998); and finally, because participating companies must be able to effectively transfer the knowledge accessed or generated in the alliance context to their own
Qualitative Qualitative Quantitative Qualitative
Both quantitative and qualitative Qualitative
Quantitative
Qualitative
Quantitative Quantitative Quantitative Qualitative
Quantitative Qualitative Quantitative Quantitative Quantitative
organisations (Cohen and Levinthal, 1990; Hamel, 1991; Inkpen and Crossan, 1995; Szulanski, 1996; Teece et al., 1997). These aforementioned statements reinforce the idea, theoretically proposed by Argyris and Scho¨n (1978) and Fiol and Lyles (1985), that, in relation to the competitive advantage, learning is so important as learning to learn (see Figure 1). It is worthy to point out that this idea has also been empirically showed by Inkpen and Crossan (1995), Doz (1996) and Simonin (1997), among others.
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Figure 1 Alliance-induced advantages: generation of a ‘‘co-opetition’’ context
So, the use of co-operative agreements as a means for learning implies that the learning processes are developed within the framework of an agreement, which has its own identity and whose development and results (the agreement’s performance) play a very important role in the generation and transfer of knowledge among the partners. Moreover, partners must be able to transfer, integrate and take advantage of the new knowledge or capabilities in their respective organisations. Therefore, this section is structured in two complementary parts. The first one clarifies the study of the co-operative strategy, distinguishing, on the one hand, the context of the agreement itself and its performance and, on the other hand, the use of the agreements as a means for the attainment of a superior performance by the participating companies. Next, we deal with the learning processes that take place within the framework of interfirm agreements and their influence over the performance of the co-operative agreement itself. Finally, we also deal with the learning processes and internalisation of abilities that affect the knowledge base of the partners and their potential for generating competitive advantages. The issue of performance in strategic alliances With the aim of identifying the different contexts under which different processes of learning can take place, we consider it necessary to go briefly into the clarification of
two aspects closely connected with the study of co-operative agreements. These aspects will have a determinant influence over the achievement of the potential advantages of this strategic option by the partners participating in such agreements. The agreement’s performance It is usually considered that co-operative agreements are established with a philosophy of mutual gain (Hamel et al., 1989; Lado and Kedia, 1992). For its establishment and development the partners must make certain contributions to the relationship, such as resources, skills or knowledge, as well as effort and dedication, and consequently they expect to be rewarded by the results of the agreement according to prior contributions. Such philosophy of mutual gain implies that the agreement’s performance should be valued as low if one of the partners considers the alliance as a failure, even if the other partner(s) has/have a positive evaluation of the agreement (Escriba´, 1999). Although we can state that there is a certain consensus with regard to the nature or meaning of the agreement’s performance, this is not true for its measure (Anderson, 1990). However, when an agreement is achieving a high performance (assessed either by objective or subjective measures) it provides a solid base for the maintenance and continuity of the agreement. In turn, high quality relationship among the participating firms offers a more appropriate context for the development of knowledge internalisation
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processes on the part of the partners, so that they may improve their base of knowledge and skills and to lay the foundations for new competitive advantages. Such agreement’s performance will be influenced by the agreement’s initial conditions (Doz, 1996), by the characteristics and fit of the partners (Parkhe, 1991), and by the chosen relationship structure (Borys and Jemison, 1989; Hagedoorn, 1993; Parkhe, 1993; Morasch, 1995), among other aspects. Moreover, the agreements’ performance will be a result of the dynamic processes of interaction between the partners, which develop throughout the relationship. The characteristics of the interaction among the partners can change as partial results start being achieved, as trust between the partners is generated or destroyed, as they learn to work together, and/or as readjustments are produced in the agreement’s objectives or in the structures of interaction. The performance of the participating companies Another aspect of great relevance is the consideration of the effects of co-operative agreements over the performance of the partner companies participating in them. Although some studies have analysed the effects of the alliances over the partners’ economic results, a great part of the research related to the alliances’ influence over the performance of the participating companies has been done from a resource-based view or from a learning perspective, under the premise that resources, capabilities, skills and/ or knowledge make up the basis of competitive advantages of the companies and, consequently, of their economic-financial performance. Generally, these studies have focused on the study of technological agreements, analysing their influence over the participating companies’ innovation capability. For example, Hagedoorn and Schakenraad (1994) observe that the establishment of technological agreements can have a long term repercussion on the companies’ economic performance, through the improvement of their innovative capability and their capability to adapt to the technological requirements of their environment. The studies of Cohen and Levinthal (1990), Wardas et al. (1996), Mowery et al. (1996), and Lane and Lubatkin (1998), among others, point at the same direction although with different complementary contributions, such as the
concept and role of a company’s ‘‘absorptive capacity’’ (Cohen and Levinthal, 1990; Mowery et al., 1996; Lane and Lubatkin, 1998) or the limits to the number of agreements that a company is able to efficiently manage (Wardas et al., 1996). Apart from the innovation capability, other authors have argued that alliances can provide improvements in other types of capabilities, such as the capability of managing successfully the co-operative agreements (Lyles, 1987, 1988; Kanter, 1994; Simonin, 1997); or have pointed out, from a more theoretic perspective, their potential as a strategic tool for the learning of skills and competencies specific to the partners (Kogut, 1988; Hamel, 1991; Parkhe, 1991). So, from these theoretic and empirical studies, there seems to be a high consensus about the role of co-operation as a learning tool and about its potential for the generation of capabilities, aspects that, undoubtedly, can have significant repercussions over the performance of the participating companies. Nevertheless, we believe it necessary to go even deeper into the knowledge and understanding of how the necessary knowledge for the improvement of the partners’ capabilities is generated, transmitted and absorbed. So, we are keen on going deeply into the question of which is the role of learning processes in the framework of co-operative agreements, in the development of the alliance as well as in the generation and improvement of partners’ capabilities. In this sense, as we will see, learning or acquisition of knowledge about the management of co-operative agreements constitutes a key element in the carrying out of the necessary adjustments for the exploitation and/or exploration (March, 1991; Levinthal and March, 1993) of the potential synergy of long term co-operative agreements. Nevertheless, it is also possible that any such adjustments and changes (of behaviour, routines . . .) may have a short term negative influence on the achievement of other objectives of the agreement and therefore on the managers’ evaluations with respect to the agreement’s performance, basically if it is evaluated by means of indicators of an economic character (Crossan and Inkpen, 1995). However, if we consider that the current environment requires a more and more strategic attitude, we can state that the view
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must focus on the long term, considering the benefits of what has been learnt, but being aware of the temporary gap between the knowledge acquired and the benefits derived from it (Crossan and Inkpen, 1995). So, the knowledge acquired may or may not be considered among the aspects valued by the managers and researchers in their evaluations of the performance of the agreements, but there is no doubt about its critical role, as much in the development of the co-operation agreement itself, as in its influence over the companies taking part in it. Learning processes in co-operative agreements To this point we have discussed co-operative agreements as the ‘‘exoskeleton’’ of the processes of creation, transfer and integration of knowledge between companies that interact. But, what happens inside co-operative agreements? It may be said that alliances are organizational learning processes in two senses: (1) learning of the necessary knowledge for the design and management of the co-operation itself as a strategic option (Lyles, 1988; Simonin, 1997); and (2) learning, by means of a process of de facto internalisation of the know how, the skills and/or the competencies of another company in order to improve its own strategy and its own competitive advantage (Hamel, 1991). In any case, both learning processes contribute to the sustainability of the company in the face of changes in the environment[2]. Although some authors have highlighted alliances’ dynamics (Ring and Van de Ven, 1994; Nooteboom et al., 1997; Arin˜o and De la Torre, 1998; Escriba´ and Menguzzato, 1999), the study by Doz (1996) can be considered as one of the key studies for the understanding of alliances as a dynamic process in whose bosom various types of learning take place. Doz (1996) contends how, from the initial conditions of the agreement, the partners interact, giving rise to a cognitive learning on the part of the managers and people assigned to the agreement. This means that learning takes place through a dynamic and evolutionary process, through which the managers gradually understand the strategic and organisational characteristics of the other
company, comparing them to those of their own company and understanding how all these characteristics affect to the relationship’s management. This gradual understanding can lead to a behavioural learning, that is, learning about the behaviour that should be developed by the partners in order to achieve a better management of the agreement. According to Doz (1996), learning about the capabilities and characteristics of the partners and their potential, as well as learning about the characteristics of the relationship which determine the management and the behaviour that should be developed, allows the partners to delimit and adjust their initial expectations with respect to three dimensions: (1) the agreement’s potential with regard to its likelihood of success and its value creation; (2) the other party’s degree of honesty and degree of trustworthy behaviour; and (3) the amount of effort that the partners must make for the necessary mutual adaptation. In other words, such learning feeds a process of evaluation in terms of efficiency, equity and adaptability. Thus, from the modification of the initial conditions or from the conditions previous to each evaluation, a process of continuous re-evaluation leads to the re-adjustment of the characteristics of the relationship. In this framework, Doz (1996) proposes that successful agreements evolve in positive cyclical sequences of ‘‘learning/re-evaluation/ re-adjustment’’ through which the initial conditions are gradually modified by means of incremental improvements. On the other hand, failed agreements, according to Doz, suffer from a lack of learning; or also, according to Arin˜o and De la Torre (1988), the necessary learning having been undertaken, failure may be due to the incapacity, impossibility or lack of interest of the partners to re-adjust the initial conditions. Hence, it seems that the relation between learning and re-adjustment is not a direct one. In this sense, Doz (1996) admits that the relationship between learning and ‘‘correcting actions’’ over the initial conditions is not automatic. Although the cognitive learning is always produced, it may happen that its reflection on the behaviours is not observed; that is, the partners may know what is
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required for the agreement’s success but not how to carry it out, or even knowing the former, they may not be interested enough to carry out the required efforts to be able to reduce the differences which hinder the work in harmony. Hence, we may induce that learning will not necessarily always strengthen the relationship. However, certain aspects still remain unexplored. Doz (1996) argues that the cognitive learning allows the participants to modify the initial conditions for an improvement of the agreement and, with time and with this bridge of action, these processes turn cognitive learning into organisational learning. We believe that this relationship turns out incomplete because it suggests a certain degree of automation over how such transformation is produced. Furthermore, if, according to the author, the behavioural learning already makes up an organisational learning, how is the organisational learning that develops in the bosom of the agreement translated into new organisational learning, but this time, inside the companies participating in such agreement? Let us attempt to open these two ‘‘black boxes’’. From individual knowledge to organisational knowledge Organisational learning alludes to ‘‘. . . the development of insights, knowledge and associations between past actions, the effectiveness of those actions, and future actions . . .’’ (Fiol and Lyles, 1985, p. 811) in an organisational context. That is, the development of knowledge on the part of an organisation, by means of a process of learning, involves the interpretation of past experiences and strategic choices as grounds for present and future actions (Inkpen and Crossan, 1995). In this sense, Mintzberg (1998a, 1998b) suggests that the companies’ different strategic initiatives generate experiences and actions that provide the basis for learning. According to these arguments, the formation and development of an inter-firm co-operative agreement, insofar as it may be considered a specific type of strategic initiative, will provide a new stimulus which will unleash a learning process on the part of the organisation, since it forces changes in that organisation’s frames or shared mental maps. But, how is organisational learning carried out? Organisational knowledge is generated when individual knowledge is elevated to an
organisational level, being adopted by the organisation in its processes, routines and behavioural patterns (Nonaka and Takeuchi, 1995). This process is dynamic and involves various organisational levels and actors, different learning processes being carried out at each level. So, at the individual level, knowledge is acquired by means of a cognitive learning process, which depends on the individual’s system of beliefs and values, and where, basically, an interpretation process comes into play at the group level, knowledge is acquired by means of integration processes through which the individuals who make up such group come to share certain beliefs; finally, in the organisational field, knowledge is acquired through processes of learning based on integration and institutionalisation (Inkpen and Crossan, 1995). With the intention of explaining the knowledge dynamic through these levels, Nonaka (1994) develops the concept of knowledge spirals. In these spirals, knowledge rises inside the organisation from the individual level to the organisational level, passing through group levels. In such ascent, knowledge is enriched and amplified by means of individuals’ interaction, among themselves and with the organisation (see Figure 2). The underlying idea of these spirals consists of the fact that tacit and explicit knowledge are converted (from one to the other type of knowledge) and transferred among individuals through their interaction, so that individuals come to share certain beliefs or systems of values at individual level (schemata), at group level (frames), and even at organisational level (routines). That conversion and transfer of knowledge is produced through a series of socialisation processes (the transfer of tacit knowledge by means of shared experiences without need to use formal systems or language), of combination processes (the transfer of explicit knowledge through formal systems), of internalisation processes (the transformation of explicit knowledge into tacit knowledge through ‘‘learning by doing’’), and of externalisation (articulation of tacit knowledge in explicit concepts by means of models, metaphors and/or analogies). This perspective implies that organisational learning is different from the aggregate individual learning of the organisation’s members. In this sense, Nelson and Winter (1982) pointed out that reducing
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Figure 2 Organisational knowledge spirals
organisational memory to individual memories undervalues the relationships between such individual memories generated by shared experiences in the past. Although organisations create knowledge from their individuals, if individual knowledge is not shared with other individuals and groups it will have a limited impact over organisational learning and organisational action. In this way, organisational knowledge creation (organisational learning) must be considered as a process by which the knowledge enjoyed by the individuals is amplified and internalised as part of the organisation’s base of knowledge (Nonaka, 1994). The process of organisational learning takes place, insofar as the different organisational members accept the knowledge and they use it, generating routines and organisational processes so that such knowledge is extended beyond the individuals’ perspective (Inkpen, 1997). So, the creation of knowledge in cooperative agreements can be regarded, following Nonaka (1994) and contemplating Doz’s (1996) dynamic model, as a sequential and iterative process that take place both in various levels and in different settings (see Figure 3). Individual level. After the establishment of the co-operative agreement, the participating individuals (in representation of the companies to which they belong) are exposed to the
knowledge of other individuals belonging to another organisation (in Figure 3, the individuals from company A interact with those from partner B). Such individuals interpret this outside knowledge from their own values and systems of beliefs (one part of these being particular, and another shared in their respective organisations), identifying and recognising the differences in processes and skills of the other individuals and organisations with respect to their own and those of their organisation. These processes of exposure and interpretation lead, therefore, to an individual cognitive learning (Crossan and Inkpen, 1994; Inkpen and Crossan, 1995). Subsequently, once the knowledge has been individually absorbed, it will be used by those individuals in their relationships and interactions with their colleagues in their original organisation, giving rise again to an effect of exposure and interpretation which transfers organisation B’s knowledge to persons from another organisation with which it co-operates (in Figure 3, the A individuals interact with their colleagues from the parent company A). Group level. From this individual cognitive learning and the subsequent behavioural adjustment of such individuals, both the original and the new knowledge are shared among the individuals of the group, who modify their own cognitive maps by means of socialisation, combination, externalisation
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Figure 3 Interaction between the spirals of knowledge creation within the alliance framework and the spirals of knowledge creation within the parner’s framework
and internalisation processes (Nonaka, 1994). This transmission of knowledge by various tracks constitutes a process of knowledge integration in groups of individuals which leads to a system of shared beliefs and expectations to a unifier frame. It is worth noting that these processes of integration at group level can coexist in two differentiated but parallel fields: (1) the interaction with other individuals who are involved in the established agreement (and who may be assigned to their own company or to the other participating company); and (2) the interaction with other individuals belonging to their own company but who are not directly involved in the established alliance. The knowledge generated at group level will provide, in the setting of the agreement, the basis to manage the agreement and improve its performance. On the other hand, in the framework of the participating companies, the knowledge generated at group level will provide the basis to combine the newly
acquired knowledge with that enjoyed previously, and, from there, strengthen the existing capabilities or generate new capabilities in each of the parent companies. Nevertheless, these processes of integration in the two mentioned settings are not exempt from limiting barriers of cognitive learning and of behavioural learning of the individuals and groups involved. We will dedicate more attention to such barriers below. Organisational level. Finally, as learning generated at group level and processes of interaction among individuals and groups lead to a change in organisational routines, as a consequence of changes in the organisations’ systems of beliefs and values (agreement or parent company), and therefore in their structures and/or strategies, we can say that organisational knowledge has been institutionalised, culminating the cycle of organisational learning process. When this organisational learning is produced in the setting of the co-operative agreement, it establishes the basis of certain organisational routines, which guide the
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agreement management and the interrelationship among the partners. Such routines are, therefore, the combined result of the understanding among the partners and of the behavioural learning process which are required for the continuity and for the achievement of the objectives of the agreement; and, at the same time, such routines generate the possibility of a well-balanced agreement which allows the parties involved to take a greater profit from its potential benefits. On the other hand, when this organisational learning is produced in the setting of the partners’ organisation, it constitutes the final stage of a process of internalisation of knowledge and competencies, to which the partners have access through their relationship during the agreement. The new knowledge and competencies can be a source for new organisational capabilities and potential competitive and cooperative advantages. Conditions for the creation of new organisational knowledge from a co-operative agreement The discussion up to here allows us to argue that the consideration of co-operative agreements as a means to new organisational knowledge generation is only possible if there exist organisational learning processes in the two aforementioned settings: (1) the one of the co-operative agreement; and (2) the other of the partner organisation (see Figure 3). Within the framework of the agreement it is required, at least, that the partners learn to manage the process and the relationship, creating the appropriate climate for the interaction and the transfer of knowledge between the partners. In the framework of the companies taking part, the creation of new organisational knowledge will be influenced by the company’s absorptive capacity (Cohen and Levinthal, 1990; Lane and Lubatkin, 1998) and by a whole series of cultural and organisational factors already pointed out in the literature[3]. So, at this point, it is necessary to turn attention to the factors that may facilitate or inhibit the knowledge generation processes at an organisational level, both in the framework of the co-operative agreement and in the setting of the partners’ organisations. The alliance framework. It seems evident that for any kind of learning to take place in an
inter-organisational relationship there must be an interaction among the individuals of the various organisations involved, for a longer or shorter period of time, depending on the type of knowledge (tacit or explicit) which is going to be transferred. Such interaction will permit the exposure to and interpretation of knowledge and, in its case, subsequently, its integration and institutionalisation. Therefore, any factor that may have an influence on the duration and continuity of the agreements can aggregate an obstacle to the organisational learning process. The existing literature about co-operative agreements has dedicated considerable attention to the study of the factors which have an influence, both direct or indirect, over the performance of the agreements, as well as over the continuity and stability of the relationship (Figure 4 synthesises this set of contributions). Although, given the objectives and characteristics of this work, we will not go further into the influence of these factors over the continuity of the co-operative agreement, we consider that they constitute a fundamental element in the learning processes (cognitive and behavioural) needed for the subsistence of the alliance and the continuity of the interaction among the partners and, therefore, they are configured as the basis for the success of the co-operative agreement, for the accomplishment of the set objectives (joint and unilateral) and for the generation of a context which will facilitate learning and which will allow tacit and/or explicit knowledge sharing and the potential learning of capabilities. It is also true that in co-operative agreements there can occur situations of unbalanced learning among the partners, which may provoke the emergence of distrust, the perceptions of opportunistic behaviour, and/or a premature rupture of the relationship. Nevertheless, strategic alliances are dynamic relationships in nature, in which each partner achieves their objectives and learns from their partners at a different rhythm. Solely the existence of a mutual trust based relationship, in which the partners behave in a co-operative manner, will allow the temporary unbalances to re-establish its balance in the long term (Escriba´, 1999; Escriba´ and Menguzzato, 1999), granting all partners the possibility to achieve the desired learning.
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Figure 4 Main factors with influence over the continuity of the co-operative relationship
For a company to be able to learn from an alliance with another company it must, in addition, have the intention of doing it, that is, it must have learning objectives (Hamel, 1991). Since the learning originates among the people who are in touch during the relationship, whoever designs the alliance should transmit such learning intention to the people that will be involved in the agreement implementation. In this sense, the rotation of the personnel dedicated to the agreement may facilitate the contact of a greater number of people with those from the co-operating partner, thus supplying a greater learning potential (Pucik, 1988a, b); nevertheless, such rotation should be carried out without affecting the trust generated between the partners, nor the continuity and equilibrium of the relationship. Furthermore, most of the barriers for learning which are typically pointed out for the generation of organisational knowledge can also occur in the setting of the cooperative agreement. Although we will point out some of these factors below, it is worth mentioning that, to the extent that they may limit the cognitive and/or behavioural learning required for the right management of the agreement, they will constitute an important barrier for the use of alliances as a means of learning and generation of new sources of competitive advantages.
Transfer of knowledge from the alliance to the parent company. Some of the barriers that may limit the exploitation, on the part of the participating companies, of the knowledge generated in the setting of the alliance lie in certain individuals’ attitudes who may feel themselves as threatened by the innovations potentially arising from this relationship or who do not consider the alliance as a legitimate source of learning (Westney, 1988; Inkpen and Crossan, 1995). For learning to take place there needs to be an intention, an open attitude to improvement and novelty, and even leaders with a committed outlook towards learning (Hamel, 1991; Kofman and Senge, 1993). If it is not so, as a consequence of a myopia of the learning opportunity or because the characteristics of managers’ beliefs and values, it will be very difficult for the company to be able to use the knowledge acquired and generated in the relationship to improve its competitive competencies (Crossan and Inkpen, 1995). On the other hand, the characteristics of the company with which one co-operates may also facilitate or inhibit the transfer of knowledge (Cohen and Levinthal, 1990; Mowery et al., 1996; Lane and Lubatkin, 1998). Its degree of competence in the accomplishment of certain activities or in the control of certain information determines the potential of what may be learned throughout
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the relationship (Crossan and Inkpen, 1995). In addition, its degree of transparency and its behaviour, more or less open, will have an influence over the ease in the interpretation and integration of the knowledge of such company (Hamel, 1991). Occasionally, excessive differences among the partners may give rise to a high degree of ambiguity with respect to the potential of the competitive advantages which could be obtained from the co-operative relationship, which generates misunderstandings and to a great extent hinders the agreement development and continuity (Parkhe, 1991; Doz, 1996). In the setting of the participating companies. It is possible that part or even the totality of the individual knowledge, which the members of a company have learnt through the interaction with the members from the other organisation, may not be transmitted at an organisational level, or not even at a group level. Among other factors, the use that the company may make of the knowledge to which it has access to will depend on the company’s absorptive capacity (Cohen and Levinthal, 1990). In turn, such capacity for absorption will be determined by the company’s skills in developing correct knowledge managing policies, involving and combining human resource practices, communication systems, organisational structures, etc. Hence, recapitulating, we may consider that for organisational learning to be produced, there must be a double learning process, in the framework of the alliance and in that of each of the participating companies. The first of these processes is essential for the continuity and stability of the agreement, as well as for its success potential. The second is necessary so that the parent companies may integrate the knowledge acquired through the alliance and use it as a basis for the generation of new strategic capacities and, therefore, take advantage of it through the quest for or strengthening of competitive advantages.
Conclusions and future research lines The last two decades have witnessed the unprecedented world-wide increase in the number of strategic alliances between companies. This growing importance of interfirm co-operation, together with its inherent complexity, has generated a progressive
interest in the study of this phenomena, which has materialised in an extensive but fragmented literature (Osborn and Hagedoorn, 1997). There has been considerable progress in the study of certain aspects relating to co-operative agreements: the motives that justify their use, the characteristics of the different more extended forms and structures, etc. We can only start to unravel other aspects: the importance of dynamic processes of co-operation (Ring and Van de Ven, 1994; Doz, 1996; Nooteboom et al., 1997), the interaction processes and their effects over the agreement performance and over trust among the partners (Gulati, 1995a, b; Escriba´ and Menguzzato, 1999), the link between initial conditions and performance and final results (Doz, 1996), the difficulty in measuring the results of the co-operation (Crossan and Inkpen, 1995; Arin˜o, 1996), etc. Ahead is a long and uncertain, but always encouraging, path. Given that knowledge and learning may help to explain the motives for which companies co-operate, as well as the dynamics and results of inter-firm agreements, we believe it necessary to begin to observe and try to understand this phenomenon from an integrating perspective centred on organisational knowledge. As an unpretentious answer to the demands posed by the preceding confirmation, with this study we have endeavoured to develop a conceptual framework that, based on knowledge and learning processes, integrates a considerable series of currents, contributions and concepts for the study of processes of co-operation between companies. Our conceptual framework proposal considers a knowledge-based explanation for the use of co-operative agreements, and also offers an integrative perspective of the different levels and settings where organisational learning processes take place in the context of this kind of strategic option. So, in our proposal, we consider as a fundamental aspect to understand that looking for new capabilities through co-operation is determined by the necessary coexistence of two organisational learning processes; one of them taking place in the scope of the alliance and the other one occurring in the parent companies’ setting. For a company to be able to take the greatest advantage from the potential of acquisition
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and generation of knowledge, useful for the creation of competitive advantages, it must be able to correctly manage the agreements in which it takes part, that is, it should be able generate co-operative capabilities. At the same time, it must have the necessary absorptive capacity to integrate the new knowledge with that previously enjoyed, a key aspect in the generation of new nuclear capabilities to achieve both co-operative and competitive advantages. In the study of this phenomenon it is therefore fundamental to consider the factors that may facilitate or inhibit learning in the two settings outlined. The complexity of the analysis is greater, if possible, in the setting of the alliance, since the agreement’s performance depends on learning processes developed by each of the participating partners, so that the factors not controllable by each of the organisations are many more. The recent research current, named as ‘‘knowledge management’’ must, therefore, consider the alliances’ peculiarities – the ambiguities of shared management, the dangers and inconveniences of co-operation, the factors and processes which propitiate the success or failure of agreements, etc. – when proposing this strategic option as a useful device for the generation of organisational learning. On the other hand, the different ontological levels entrenched in learning processes taking place in the development of the agreements and in the generation of new co-operative and competitive capabilities demand the expansion of our perspectives of analysis. So, for example, the application of institutional approaches (DiMaggio and Powell, 1983; Scott, 1987; Zucker, 1987) derived from sociology (Berger and Luckmann, 1967) would permit the study and analysis of institutionalisation processes at organisational level; which will be useful to explain the interpretations of the reality of the phenomena shared among different actors in the organisation. This analysis promises to be the link with the contributions in the area of individual and collective cognition (Weick, 1979; Schwenk, 1984, 1988; Sims and Gioia, 1986; Meindl et al., 1996; Eden and Spender, 1998), as well as with those from the social psychology (Langer, 1975; Nisbett and Ross, 1980) and from the behavioural decision theory (Tversky and Kahneman, 1974; Kahnemen and Tversky, 1984); we are
convinced that these contributions will allow setting bounds and studying numerous factors which facilitate and inhibit learning, as much at an individual analysis level, as at an organisational level, going through the group level.
Notes
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1 This emerging perspective results from the confluence of different research currents as the epistemology (Von Krogh et al., 1994), the organisational learning (Argyris and Scho¨n; 1978; Hedberg, 1981; Friedlander, 1983; Fiol and Lyles, 1985; Levitt and March, 1988; Huber, 1991; March, 1991; Dodgson, 1993; Levinthal and March, 1993; Nonaka, 1994), the resource-based view (Wernerfelt, 1984, 1989, 1995; Barney, 1986, 1991; Dierickx and Cool, 1989; Prahalad and Hamel, 1990; Grant, 1991, 1996; Amit and Schoemaker, 1993) and the dynamic capabilities approach (Hamel, 1991; Teece et al., 1997; Teece, 1998), among others. 2 It is worth pointing out that in some co-operative agreements, the companies seek access to the know how, skills or competencies of their partners, but without the desire to internalise them. As stated by Hamel (1991, p. 84): ‘‘. . . This distinction is crucial. As long as a partner’s skills are embodied only in the specific outputs of the venture, they have no value outside the narrow terms of the agreement. Once internalized, however, they can be applied to new geographic markets, new products, and new businesses . . .’’. In spite of this distinction, and recognising its much valued contribution, we consider that in this kind of agreement there will always occur, at least, the first aspect of learning (that of the management of the co-operative agreement itself). 3 In this sense, for effective organisational learning to take place, and in relation to the necessary absorptive capacity (Cohen and Levinthal, 1990; Lane and Lubatkin, 1998) already referred to, it is necessary that the partner’s learned capabilities be truly internalised in the company so that they may be applied in the generation of value in different contexts from those in the co-operative agreement (Westney, 1988; Crossan and Inkpen, 1994; Inkpen and Crossan, 1995; Simonin, 1997). Nevertheless, this transfer, which encourages the organisational learning process, is neither immediate nor uncomplicated. Contrary to the most optimistic stances which, from a perspective of organisational learning, as a result (Mowery et al., 1996; Simonin, 1997; Lane and Lubatkin, 1998; Dussauge et al., 2000) emphasise the direct relationship between organisational learning and success, there are others which, from the perspective of organisational learning as a process, point out its difficulties and question its relationship with organisational results (Levitt and March, 1988; Westney, 1988; March, 1991; Levinthal and March, 1993; Inkpen and Crossan, 1995).
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Sasaki, T. (1993), ‘‘What the Japanese have learned from strategic alliances’’, Long Range Planning, Vol. 26 No. 6, pp. 41-53. Scott, R. (1987), ‘‘The adolescence of institutional theory’’, Administrative Science Quarterly, Vol. 32, pp. 493-511. Schwenk, C.R. (1984), ‘‘Cognitive simplification processes in strategic decision-making’’, Strategic Management Journal, Vol. 5, pp. 111-28. Schwenk, C.R. (1988), ‘‘The cognitive perspective on strategic decision making’’, Journal of Management Studies, Vol. 25 No. 1, January, pp. 41-55. Simonin, B.L. (1997), ‘‘The importance of collaborative know-how: an empirical rest of the learning organization’’, Academy of Management Journal, Vol. 40 No. 5, October, pp. 1150-74. Sims, H.P. Jr and Gioia, D.A. (1986), The Thinking Organization, Jossey-Bass, San Francisco, CA. Szulanski, G. (1996), ‘‘Exploring internal stickiness: impediments to the transfer of best practice within the firm’’, Strategic Management Journal, Vol. 17, Winter Special Issue, pp. 27-43. Teece, J.D. (1998), ‘‘Capturing value from knowledge assets’’, California Management Review, Vol. 40 No. 3, pp. 55-80. Teece, J.D., Pisano, G. and Shuen, A. (1997), ‘‘Dynamic capabilities and strategic management’’, Strategic Management Journal, Vol. 18 No. 7, pp. 509-33. Tversky, A. and Kahneman, D. (1974), ‘‘Judgment under uncertainty: heuristics and biases’’, Science, Vol. 185 No. 27, September, pp. 1124-31. Von Krogh, G., Roos, J. and Slocum, K. (1994), ‘‘An essay on corporate epistemology’’, Strategic Management Journal, Vol. 15, pp. 53-71. Walsh, J.P. and Ungson, G.R. (1991), ‘‘Organizational memory’’, Academy of Management Review, Vol. 16 No. 1, pp. 57-91. Wardas, M., Budek, L., Rybicka, E.H., Deeds, D.L. and Hill, C.W.L. (1996), ‘‘Strategic alliances and the rate of new product development’’, Journal of Business Venturing, Vol. 11 No. 1, pp. 41-55. Wathne, K., Roos, J. and von Krogh, G. (1996), ‘‘Towards a theory of knowledge transfer in a cooperative context’’, in Von Krogh, G. and Roos, J. (Eds), Managing Knowledge. Perspectives on Cooperation and Competition, Sage, London, pp. 55-81. Weick, K. (1979), The Social Psychology of Organizing, 2nd ed., Random House, New York, NY. Wernerfelt, B. (1984), ‘‘A resource-based view of the firm’’, Strategic Management Journal, Vol. 5, pp. 171-80.
Wernerfelt, B. (1989), ‘‘From critical resources to corporate strategy’’, Journal of General Management, Vol. 14 No. 3, Spring, pp. 4-12. Wernerfelt, B. (1995), ‘‘The resource-based view of the firm: ten years after’’, Strategic Management Journal, Vol. 16, pp. 171-4. Westney, D.E. (1988), ‘‘Domestic and foreign learning curves in managing international cooperative strategies’’, in Contractor, F.J. and Lorange, P. (Eds), Cooperative Strategies in International Business, Lexington Books, New York, NY, pp. 339-46. Winter, S.G. (1987), ‘‘Knowledge and competence as strategic assets’’, in Teece, D.J. (Ed.), The Competitive Challenge, Harper & Row, New York, NY, pp. 159-84. Zucker, L.G. (1987), ‘‘Institutional theories of organization’’, Annual Review of Sociology, Vol. 13, pp. 443-64.
Further reading Auster, E.R. (1994), ‘‘Macro and strategic perspectives on interorganizational linkages: a comparative analysis and review with suggestions for reorientation’’, in Shrivastava, P., Huff, A. and Dutton, J. (Eds), Advances in Strategic Management, Vol. 10B, JAI Press, Greenwich, CT, pp. 3-40. Grandori, A. and Soda, G. (1995), ‘‘Inter-firm networks: antecedents, mechanisms and forms’’, Organization Studies, Vol. 16 No. 2, pp. 183-214. Harrigan, K.R. (1988), ‘‘Strategic alliances and partner asymmetries’’, in Contractor, F.J. and Lorange, P. (Eds), Cooperative Strategies in International Business, Lexington Books, New York, NY, pp. 205-26. Oliver, C. (1990), ‘‘Determinants of interorganizational relationships: integration and future directions’’, Academy of Management Review, Vol. 15 No. 2, pp. 241-65. Sanchis, J.R. and Urra, J.A. (1994), ‘‘Las alianzas estrate´gicas globales. Un estudio empı´rico’’, Revista Europea de Direccio´n y Economı´a de la Empresa, Vol. 3 No. 2, pp. 83-102. Urra, J.A. (1998), ‘‘Una evidencia empı´rica de los factores subyacentes en la cooperacio´n empresarial’’, Revista Europea de Direccio´n y Economı´a de la Empresa, Vol. 7 No. 1, pp. 77-94. Urra, J.A. (1999), ‘‘Cooperacio´n empresarial: revisio´n y tendencias’’, Revista de Estudios Financieros, Vol. 200, November, pp. 275-396.
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Introduction
Basque Country: the knowledge cluster Angel Luis Arbonı´es and Mo´nica Moso
The authors Angel Luis Arbonı´es is Director of MIK S. Coop., Arrasate, Spain. Mo´nica Moso is Director of Cluster del Conocimiento, Zamudio, Spain. Keywords Knowledge workers, Clusters, Innovation Abstract Clusters have basically been conceptualised as a concentration of firms that prosper on the basis of their interaction. However, the classical cluster concept is developing in a more cultural perspective. The so-called Knowledge Society and the development of information and telecommunications technologies have opened the playing field. New countries and regions can thus meaningfully reduce their distance with respect to other leading regions, provided they create a structure to acquire and disseminate knowledge. This emerging concept also offers more possibilities to be used by all the types of regions in different circumstances, including developing countries. The basic tool for beginning this learning capability will be the creation of a co-operation structure such as a cluster, including all actors of the innovation system in a country or region. They can be called knowledge clusters: the knowledge cluster in the Basque Country is one of these experiences. Electronic access The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1367-3270.htm
Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 347–355 # MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440857
What firms are trying to do internally, a region can afford collectively. Just like in firms the key resides in the consciousness of knowledge sharing to gain advantage. The knowledge cluster in the Basque Country (Spain) is an experience trying to follow the path of learning regions. Learning regions are those composed of an extensive network of public and private institutions involved in the improvement of a region (Florida, 1995). The density of these networks is a sign of vibrancy on a regional economy (Cooke and Morgan, 1993). For regions, the challenges are those of firms: market intelligence, training, rapid mechanisms of diffusion, and inter-firm networking. The traditional dynamism of Basque firms is fostered by challenging them with questions about the future. The influence of the knowledge cluster is multi-faceted, affecting first the agents of the system, individuals, organisations and the process of transference to firms. But at the end of the day the most important question is how firms adopt new knowledge. The regional competitiveness should be promoted by continuous learning, attracting qualified professionals, having in mind multicultural integration, and solidarity (Azua, 1999). The drivers of competitiveness in a regional system will be: knowledge, intelligent infrastructures, connectivity, productivity and social cohesion.
New innovation models The importance given to connections, rather than nodes in a system, comes from several years ago. For instance, Ziman (1991) suggested some ‘‘unpacking’’ of the discovery model. A neural net innovation model based on connections and exchange was seen as probably the best approach. Some authors mention complex theories as the ideal for achieving the theoretical basis of local/ regional/national innovation systems. These need to be explored as complex systems as well as focusing on interactions between institutions. Guastello (1995), Kelly (1994), Kiel and Elliot (1996), Merry (1995) have been working on the operating rules of real life interactions which are themselves chaotic.
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The seed for a new innovation model is in the work of Dodgson and Rothwell (1994). Their fourth generation model of innovation produced the basis for new innovation methods. In the same line of thought, the chain link model proposed by Kline and Rossemberg is an important conceptual advance, because it recognises the multidimensional nature of innovation processes and the multiple feedback links. It is cited as the basis of the new Oslo Manual on measuring innovation produced by the OECD (1996). This connectivity between people is not confined to the company alone. Connections on a regional scale are the focus of important and relevant work. Increasing attention is being paid to the dynamics of the subnational innovation system. Academics’ obsession with national science and technology systems and over emphasis on comparable figures does not explain some recent innovation clusters around the world. Recent work by Lundvall (1992), Ohmae (1995) and Saxenian (1994), among others, is building some foundations for geographical and regional science. The work is still not integrated and there is a lack of data. However, a range of experiences and case studies provide a field of study on which to formulate the dynamics of innovation within a given location. There is some paradox and irony in relation to globalisation and the advance of information technologies because the importance of regional and local aspects is accentuated. If truth and tacit knowledge are important, then cultural and geographical proximity join them as vital factors for progress. Storper (1995) uses the term ‘‘territorialisation’’ to describe a regional system including institutions, culture, industrial structure and the dominant internal organisation of companies. For Ohmae (1995), the States has become an unnatural, even dysfunctional unit for organising human activity and managing economic endeavour. Regions are natural economic zones. The broad features which emerge are: . the importance of process over the setting; . the importance of connections between agents; . the importance of the cultural context; and . the important role of government.
Regions are becoming focal points for knowledge creation and learning within the global shift (Florida, 1995). The new system of knowledge-intensive capitalism will be based on a mixture of physical and intellectual labour and innovation will be the result of R&D work but also the result of workers on the factory floor. Knowledge management brings to the surface the importance of the adopter who is often forgotten in the theory and practice of scientific and technological policies. The concept of transference in classical theory of innovation, which in fact implies a subordinated role of the adopter, should be transformed into learning. A new mental model arises. A change of focus, from technology to innovation, and moreover, from innovation to innovativeness, given the fact that what we are facing is more than a transition and structural transformation in the way we create and use knowledge. The change is a fundamental one for companies that have to maintain a balance between cutting-edge innovation and highquality and efficient production. This change is influenced by the human beings, the manufacturing infrastructures and the management styles required to support knowledge-intensive forms of innovation and production. Regions will be called upon to support and supply these requisites. Saxenian (1998) talks about the blurred company. The blurring of organisational boundaries benefits individual companies and also contributes to the health of the regional economy. Saxenian suggests that it is the region and its relationships, rather than the company, that defines collective advance. In fact, Saxenian argues that company performance is mainly explained by differences in organisation and that the openness of companies, in particular, is one of the main organisational factors of success. Insularity, on the other hand, is an obstacle for innovation. Networks are of a social and technical nature and are embedded in a rich fabric of relationships within a learning region. Hence, a monolithic system based on the idea of knowledge created from basic science, then converted into something applicable through applied research, and finally converted into a commercial product or process is simply unrealistic.
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High technology clusters Following this local and regional view of progress there are possibly 200 or so knowledge-based industrial clusters around the world vying for investment. These clusters are concentrations of knowledge-based companies alongside outstanding research and academic institutions. There are some explanations for the concentration of knowledge in particular areas (Acs et al., 1996). One is related with universities’ R&D activity. Researchers create new companies and innovations through personal contacts and company sponsorship. Furthermore, companies locate near to universities. This is obviously the case mainly in the USA. Another explanation resides in the availability of trained people. There are a variety of famous examples of territorial development. The most popular phenomenon is the emergence of some outstanding areas and corridors with a high degree of prosperity. In fact some areas of the world have gained tremendous prestige as knowledge creators. Among these areas/ clusters we could cite Silicon Valley, Route 128 in Boston, Cambridge (UK), Austin (Texas), the information technology corridors in New Jersey and other popular areas in which there are important industries with an intensive dedication to R&D and highly qualified human resources. These areas are working mainly in two areas: (1) attraction and development of knowledge-based organisations and companies (including academic institutions, research centres, etc.), with an intensive dedication to R&D, skilled labour, etc.; and (2) promotion of information and telecommunication technologies sector, demand and use development. Through investigation, Acs et al. (1996) confirm the popular view of academic research causing high technology spillover at a local level. This research, he says, provides support and lessons but there is still room for more research on the nature of the transmission process. In the USA many universities have created industry consortia to help fund research. Companies pay membership fees to join these consortia and they expect benefits in terms of access to research.
Most researchers and research are concentrated in this kind of cluster. The outstanding results and the popularity of these new ‘‘renaissance’’ clusters have left the study of transfer and knowledge diffusion in less developed regions behind. But again, if we look close, in the background there is the dominant, top-down model, which concentrates resources on basic research and following a hidden gravity-based mechanism some spillover will be produced. Thus, the conventional image of innovation is related with sophisticated settings, instruments, scientific surroundings and ‘‘difficult to understand’’ subjects. This high tech environment features in the imagination of many people including specialist journalists. Yet progress is based more on day-to-day innovations rather than on inventions. Managers insist on talking about innovative behaviour rather than innovations, in other words talking about ‘‘innovativeness’’. The relationship of innovation and technology, not surprisingly, is not as strong as it was previously thought to be (Holbrook and Hughes, 1998).
Knowledge clusters for every region For many regions in the world, even in the most advanced countries, the challenge is how to make progress without compromising culture, solidarity and social cohesion (Azua, 1999). Cooke and Morgan (1993) raise an important aspect of innovation. They point out that regional development is inseparable from cultural, social and institutional accomplishments. Few regions in the world have the capacity of US universities and the funds required for outstanding high technology clusters. Replicating high technology clusters is very difficult. In regions with different cultures, social institutions and availability of funds this scheme does not work so well. On the contrary, the scarcity of funds and the lack of competitive mechanisms for research lead to inefficiency in the innovation system. The clearest sign of inefficiency is that money is concentrated on infrastructure, thus creating many institutions to promote innovation but achieving a poor return on the investment. The system is somewhat corrupted in the sense that money remains in the system but without any output (Arbonı´es, 2001).
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It is obvious that certain regions are predominant in certain types of activity. In this sense, there are cases of regional or local co-operative clusters being created in all kinds of sectors around the world, many of them including traditional economic sectors such as textiles, tourism or food production and processing. Even in these examples, the focus is changing from content to process and from infrastructure to connections. It is more about cluster thinking than physical realities. Storper (1995) talks about no traded interdependencies and argues that relationships do not fit into the traditional industrial district transaction cost models. Learning, not technology, is the new key. However, learning is an issue with political, economic, and social components and it is spatially constructed. Some authors, demonstrate that common knowledge sets can be created at a regional level through sector specialisation, strategically-oriented technical research and a better understanding of local institutions and relationships (Storper, 1995; Morgan, 1997; Amin and Thrift, 1995; Asheim, 1996). The latter is probably the most important. Knowledge sets are developed through collective learning and ‘‘unthreaded interdependencies’’ and result in efficient local production networks. If we also consider that small and medium sized companies drive a wide range of business sectors in many European regions, then we have another vision of innovation. The strengthening of R&D activities is not the solution. Driven knowledge creation and its application in the form of processes and products are so important for small companies that the critical point for small companies is the capacity to gain knowledge from information (Lundvall, 1992). From this point of view a new kind of management is needed for small companies. Flexible forms of work organisation, advanced human resources management and continuous learning should be on the agenda of small and medium sized companies.
The knowledge cluster in the Basque Country The Basque Country is the most autonomous of Spain’s 17 autonomous regions. Its geographic area is only 7,300sq.km and its
2.3 million inhabitants represent 5.57 percent of total Spanish population. The autonomous status means authority over healthcare, education and trade and industry policies. The region has its own tax collection and allocation authority. The economic structure is one of a highly industrialised country with consolidated industrial services. Industry accounts for 42 percent of GDP and services 56 percent, of which 22 percent belongs to industry-related services. The degree of specialisation is reflected in the proportions of the Spanish totals some of the key industries account for: machine tools (80 percent), capital goods (72 percent), specialised steel (45 percent), domestic appliances (50 percent), automotive components (40 percent) and electronics and computers (10 percent). It is also an open economy with high levels of exports in all the above-mentioned sectors. Its industrialised economy suffered a deep crisis in 1992/1993 with negative GDP growth. Since 1994 the economy has been recovering at a steady rate of more than 3 percent above the average Spanish GDP growth. In 1990 Michael Porter carried out a cluster analysis in the Basque Country. The study was the beginning of the initial cluster structures in the following sectors: automotive suppliers, domestic appliances, specialised steel, paper and Bilbao harbour-related services. The first clusters originated from Porter’s analysis and then the cluster approach was used to promote co-operation on other strategic industries such as environmental services and industries, the aeronautical sector, energy and power, electronics and communication. The Basque Country is known for its dynamism although it is always difficult to measure this concept. Qualitatively speaking there is a large number of initiatives in terms of inter-company organisation, a regional commitment of large companies, important experiences of co-operative approaches and a general consensus about the relative importance of continuous upgrading of skills and continuous improvement. Social capital is an indicator of collaborative capacities: it reflects the strength of the ‘‘civic community’’ and the propensity of people to collaborate (Fukuyama, 1995). Social capital manifests itself as local culture, formal and informal institutions and in the surrounding
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community of market-based organisations, companies and public bodies, which help to promote the competitiveness of the area (Saxenian, 1994). The knowledge cluster originated on the basis of demands from other clusters. These clusters claimed that many of their weaknesses were concentrated in approaches to management and organisation. As a result, the Basque Government carried out a diagnosis of the situation and then fostered a cluster of universities, consultancies, advanced service organisations, industrial associations, agencies and companies. The knowledge cluster was initially an experiment and constituted the exciting phenomena of a new institution in the knowledge economy. The uncertainty of the experience was reflected in the founding statute that set out a general review of the mission statement and the necessity of such an institution. Even today, it is an experiment looking for a theory rather than a test of a sound theoretical model. This paper tries to establish connections with ongoing theoretical research on innovation, networking, and knowledge management on a regional scale. Five years after the creation of the knowledge cluster, the experiment is facing a phase of diffusion and conceptualisation. Yet still much more research is needed in terms of measuring the influence of the cluster.
Knowledge clusters as a network of knowledge agents The knowledge cluster falls under a kind of empirical model of a network of actors. The knowledge cluster is a network of universities, business schools, management consultants, and other service providers including agencies, public bodies promoting economic development and, lastly, companies and their associations. The rationale behind such a heterogeneous range of members is one of the key points and distinctive features of the knowledge cluster. These actors represent knowledge management agents. Universities, business schools, consultants, service providers and public bodies are more on the supply side of knowledge, whereas companies are on the demand side. In this context, the knowledge cluster follows the diamond scheme set out
by Porter in 1995. According to this scheme, we have providers, intermediaries, users and supporting institutions within a knowledge industry. Obviously, there is not a knowledge industry in the strict sense of the word. It cannot be classified as either an industry or a service. It is precisely this form of conceptualisation that helps us to visualise the knowledge agents and their clients. A cluster is focused on the actors involved, namely the knowledge agents. This is because knowledge generating infrastructures and the way companies adopt and acquire new knowledge are crucial. The knowledge generators are universities, colleges, research centres, and in the knowledge cluster we have also included also consultancies, advanced service providers, technology providers and government bodies. These local institutions are key to a region’s economic competitiveness (Porter, 1990). The cluster also includes companies because its activities include the significant absorptive capacity of companies. In the middle, there is an increasing number of institutions trying to spread information and knowledge. The knowledge cluster has made an arduous effort in attracting and interconnecting companies in its desire to integrate all the actors involved in the management value chain, from its creation to its dissemination. This effort has been the strategic axis of the cluster throughout its existence. The knowledge cluster considers that in order to bring a network of agents together in a management sense, it is first, necessary to attract them and second, motivate them to participate and cooperate together. Last, they need to be propelled forward as agents of dissemination and collective learning, beyond the action remit of the cluster itself. In Figure 1 we can see the development in membership in the first five years; that is to say from 1996 to the year 2000. As we can see in Figure 1, the number of members has tripled in five years, from 51 members in 1996 to 162 in the year 2000. It is important to point out the aim of a heterogeneous set of members, coming from different socio-economic backgrounds that are at the same time interconnected in relation to the configuration of knowledge demand and supply processes. The members
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Figure 1 Membership development
come from universities and business schools, from consultancies and engineering firms, management support/consultancy and other business service organisations (public administration, technological parks, other such nodes, etc.). Figure 2 shows the biggest group is the consultancies and engineering firms, with a 45 percent share, followed by companies (20 percent), other business services (20 percent) and the academic world – universities, business schools etc. (7 percent). The knowledge cluster is an association of institutions paying membership fees according to size. Members are supposed to be active in working groups because the real benefit is sharing knowledge. The board represents equally academia, consultancies, advanced service providers, government institutions and companies. The management of the knowledge cluster is almost virtual because members in the sharing and working groups do most of its work. These groups are really the operational structure of the knowledge cluster activity. Neutrality is a very important characteristic of the cluster as it allows members to concentrate on the issues raised. The board represents the four main groups of members: academia, consultants, business and government and agencies. Figure 2 Membership classification by activity – year 2000
Scope of the knowledge cluster The scope of the cluster is new management techniques that aim to increase the capacity of companies to learn. To this end, the knowledge cluster is a meeting point to search for new knowledge through collective learning and then leveraging this knowledge for companies to exploit. While experience is probably the most important source of managerial knowledge, managers are always looking for more knowledge that can be translated into action. In this sense, the social production of knowledge in management is a vast institutional apparatus: an entire social system is in place in every region or country devoted to producing, spreading and applying knowledge in management. Clustering the actors of this system is a first step towards promoting change in the companies of the region. This is particularly important today because we are witnessing a tectonic movement in the sense that there is deep and wide trend of change in organisations. This notion of a knowledge society is by no means a fad, as it means that we are changing the way we see work and organisation for efficiency. The ability to survive is on the management agenda and innovation concerns all companies. The process of exploring new products and processes should be embedded in every organisation. Never has innovation been more related to discovery and never more will innovation be left to a marginal number of people within the companies. Only a symbiosis of technical and management skills can produce innovation. Small and medium sized companies in a region like the Basque Country need to learn this new way of operating. One of the first steps in constructing the knowledge cluster was to diagnose the situation in the Basque Country with regard to the way the system was creating, acquiring, spreading and applying knowledge. The diagnosis was carried out following a knowledge management value chain scheme involving 100 relevant leaders in the Basque Country. The questions were posed in four multidisciplinary groups. The groups examined the reality of the Basque Country in terms of management research, government support, consulting activity, training, awareness programmes and managers’ opinions. The results presented a wide range of possible actions to fill gaps, including research and training activities involving consultancies
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and government in determining the attitude of managers towards new organisational and management techniques. It was clear that there was neither a programme nor a budget that could undertake such number of activities and the knowledge cluster decided to work in a rather different manner to similar institutions. The initial activities were aimed at creating a sense of belonging through creating the knowledge cluster as an association of companies. Second, some ‘‘easy to visualise’’ actions were chosen and, finally and most importantly, working groups were set up for creating, sharing and applying knowledge using knowledge management principles. At first sight, this is nothing new. Many associations and institutions are rooted in working groups based on common interests but few follow knowledge principles like autonomy and self-organisation. Working groups involve themselves in learning processes using a variety of sources and once the result is reached and individuals go back to their organisations, a process of ‘‘contamination’’ begins. Knowledge cluster actions All knowledge cluster actions are aimed at improving and developing collective learning processes dealing with business management through the participation of members. In this sense, the actions carried out by the cluster are structured along three independent and non-sequential lines holistically gathering together interconnected learning processes. The first action line is collecting and disseminating business management knowledge, the objectives of which are acting as an international broadcaster, developing the knowledge society and sensitising the fabric of the Basque economy. The knowledge learning processes are as much international as national which are then spread and circulated around the socioeconomic environment through seminars, conferences, etc. The second line of action is the exchange of knowledge between the members of our network, from an understanding that the collective exchange of our knowledge is a very rich source of collective learning. Thus, our multidisciplinary work groups are set up in participative processes of individual, organisational and inter-organisational learning. In these groups, leading edge
management issues are considered and various currents, methodologies and tools are adapted to the reality of Basque companies. New management agendas are drawn up for directors and managers etc. Given their relevance, these actions are described in greater detail later on. We could argue that the special point of the custer resides in the exchange of knowledge and its adaptation to the peculiarities of the Basque Country through reliance on the aforementioned multidisciplinary workgroups. Finally, the third action line is internationalising both the learning and exchange of business management knowledge. It is worth pointing out that 100 percent of the activities are in cooperation with the members (work groups, missions, committees) or actions derived from cooperative projects (dissemination conferences and seminars). Working groups as the principal axis of the knowledge cluster The knowledge cluster calls for collaboration of all members in working groups without any distinction. The aim is that the group is composed of people interested in a particular subject. The subject is a broad and general issue relevant to the competitiveness of small and medium size companies. These subjects are futuristic, uncertain and risky in the sense that they are no proven theories or models to implement. Therefore people representing different disciplines and different institutions come to the groups to learn and to contribute by highlighting relevant questions. The knowledge cluster is a learning experience designed to overcome many problems in our regional system of management, i.e. connectivity and cooperation, lack of research, improvement in dissemination and rapid implementation. Working groups change the linear perspective of learning and sharing knowledge into a circular holistic approach. Joint knowledge creation and adapting multidisciplinary teams convert the process from tacit to explicit, from explicit to tacit and from practice to theory, feeding a spiral of knowledge conversion. This conversion is produced between individuals who interact and dialogue and once they are working in their organisations, they act as a seed for change. Working groups are informal inter-institutional meeting points promoting the translation of knowledge from individuals to groups and from groups to
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companies. It is a process of contamination that inoculates new knowledge in organisations. The knowledge cluster is acting as a major vehicle to implement new management models. As a conversion ‘‘device’’, it can be seen as an engine of adaptation on a regional basis. One of the main concerns of companies and managers is the knowledge to face change. As individuals and as company representatives, managers need to legitimate ideas to achieve flexibility and to transform old organisational structures. The knowledge cluster has increased the perception that new organisational models are needed and provides the forum for collective learning. In total, there have been 18 groups between 1997 and 2000 with a total number of 208 participating organisations. In the year 2000, the distribution of participants according to their organisation types is as shown in Figure 3.
Conclusion: knowledge management at a regional scale The cluster is a collective knowledge management approach within the Basque Country. Companies learn more from their external relationships than from within the internal structure. This is through a network of individuals engaged in reciprocal and mutually supportive actions (Powel, 1990). Small companies need to be part of the innovation system and for that purpose one of the requirements of the system is to promote the absorptive capacity of small companies. However, learning is a combination of access to external sources, networking and sharing within the company. It is much more than training. Training is a planned activity. Learning is an incidental process that includes learning by doing, by using and by sharing. This is why knowledge management is a central concern for the knowledge cluster. Figure 3 New groups and number of members per year
The way companies manage information and knowledge and the organisational framework of the company determines its absorptive capacity. This capacity of internalising and using externally generated knowledge depends on flexible structures. Flexibility goes far beyond flat structures as opposed to hierarchical. Yet how flexibility can be achieved is a central concern in management that is still poorly understood. Organisational knowledge should not be concentrated only in the upper levels. Team-based organisations and team working are the root of knowledge creation To date, knowledge management has been introduced into the company in terms of production and quality management. Organisational know-how has been given and not studied from the point of view of the company. Me-too organisational settings have been the rule and work has been organised many times along design and manufacturing process lines. Nowadays companies need to establish their own organisational form to create and share knowledge. Companies need to actively encourage attitudes to work that involve workers in the decision process. This worker centred company produces benefits in terms of productivity, quality and also in working conditions. However, for this to occur, there needs to be a complete change in management for many companies. For many companies the problem is not accepting these premises but how to change from an old and deeply rooted culture of division of labour and hierarchies. Within knowledge management there is a promise to overcome these barriers, yet still many companies have entered into knowledge management principles with myopia (Arbonı´es, 2001; Nonaka and Takeuchi, 1995; Carrillo, 2000).
References Acs, Z., de la Mothe, J. and Paquet, G. (1996), ‘‘Local systems of innovation: in search of an enabling strategy’’, in Hower, P., The Implications of Knowledge Based Growth for Micro-economic Policies, University of Calgary Press, Calgary, pp. 339-60. Amin, A. and Thrift, N. (1995), ‘‘The globalisation of the economy: an erosion of regional networks?’’, in Grabher, G. (Ed.), The Embedded Firm, Routledge, London/New York, NY.
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Arbonı´es, A. (2001), Como Evitar la Miopı´a en la Gestio´n del Conocimiento, Ediciones Dı´az de Santos, Madrid. Asheim, B.T. (1996), ‘‘Industrial districts as learning regions: a condition for prosperity’’, European Planning Studies, Vol. 4, pp. 379-400. Azua, S. (1999), Panel Presentation, Strategic Management Society, Orlando, FL. Carrillo, F.J. (2000), Conference at Cluster Conocimiento, November, Bilbao. Cooke, P. and Morgan, K. (1993), ‘‘The network paradigm: new departures in corporate and regional development’’, Environment and Planning D: Society and Space, Vol. 11, pp. 543-64. Dodgson, M. and Rothwell, R. (Eds) (1994), The Handbook of Industrial Innovation, Edward Elgar, Brookfield, CA. Florida, R. (1995), ‘‘The learning region’’, Futures, Vol. 27 No. 5, pp. 527-36. Fukuyama, F. (1995), Trust: The Social Virtues and the Creation of Prosperity, The Free Press, New York, NY. Guastello, S.J. (1995), Chaos, Catastrophe, and Human Affairs: Applications of Nonlinear Dynamics to Work, Organization, and Social Evolution, Lawrence Erlbaum Associates, Mahwah, NJ. Holbrook, J.A.D. and Hughes, L.P. (1998), ‘‘Innovation in enterprises in British Columbia’’, in de la Mothe, J. and Paquet, G. (Eds), Local and Regional Systems of Innovation, Kluwer Academic Publishers, Dordrecht. Kelly, K. (1994), Out of Control: The New Biology of Machines, Social Systems, and the Economics World, Addison Wesley, Reading, MA. Kiel, L.D. and Elliott, E. (Eds) (1996), Chaos Theory in the Social Sciences, University of Michigan Press, Ann Arbor, MI.
Lundvall, B. (Ed.) (1992), National Innovation Systems: Toward a Theory of Innovation Interactive Learning, Pinter, London. Merry, U. (1995), Coping with Uncertainty: Insights from the New Science of Chaos, Self-Organization and Complexity, Praeger, Westport, CT. Morgan, K. (1997), ‘‘The learning regions: institutions, innovations, and regional renewal’’, Regional Studies, Vol. 35. Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company, Oxford University Press, New York, NY. OECD (1996), Innovation, Patents and Technological Strategies, OECD, Paris. Ohmae, K. (1995), The End of the Nation State, Harper Collins, New York, NY. Porter, M. (1990), The Competitive Advantage of Nations, Free Press, New York, NY. Powel, W.W. (1990), ‘‘Neither market, nor hierarchy: network forms of organization’’, in Staw, B.M. and Cummings, L.L. (Eds), Research in Organization Behaviour, Vol. 12, JAI Press, Greenwich, CT. Saxenian, A. (1994), Regional Advantage: Culture and Competition in Silicon Valley and Route 128, Harvard University Press, Cambridge, MA. Saxenian, A. (1998), ‘‘Regional system of innovation and the blurred firm’’, in de la Mothe, J. and Paquet, G. (Eds), Local and Regional Systems of Innovation, Kluwer Academic Publishers, Dordrecht. Storper, M. (1995), ‘‘The resurgence of regional economies, ten years later’’, European Urban and Regional Studies, Vol. 2. Ziman (1991), ‘‘A neural net model of innovation’’, Science and Public Policy, Vol. 18 No. 1, pp. 65-75.
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Introduction
Knowledge clusters of technological innovation systems Carlos Scheel
The author Carlos Scheel is a Professor at EGADE-Instituto Tecnolo´gico de Monterrey (ITESM), Monterrey, Mexico. Keywords Technological innovation, Knowldge workers, Industry, Clusters, Leverage, Networks Abstract One of the main producers of wealth and prosperity of industrialized countries is the existence of sustainable systems, capable of converting technological innovation assets into substantial levels of industrial productivity, wealth and global competitiveness. However, very little has been capitalized from these cases for less developed regions. A framework is proposed (5Ls model), capable of empowering firms from industrial sectors of developing countries to: reach competitive Leverages; to Link and aLign these industrial clusters to their empowerment external drivers (academia, banking, complementary industries and government); to benchmark the cluster performance, against the best practices and Learn from the gaps; and, finally, to Lead and integrate the well performing clusters into world class value systems. To achieve these performances, a knowledge system architecture is proposed, which includes the 5Ls model supported by an effective structure of technological innovation systems (TIS), designed to administrate the collaboration network of diverse organizations, aligned to a common goal: the economic, social, political and cultural development of developing regions. Electronic access The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1367-3270.htm Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 356–367 # MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440866
Some worldwide organizations and individuals dedicated to industrial development agree that one of the main producers of wealth and prosperity of industrialized countries has been the existence of well coordinated and sustainable systems, capable of converting technological innovation assets into substantial levels of local industrial productivity and global competitiveness. However, for developing regions large barriers to growth exist, and it is necessary to build new structures, due to current poor or non-existent resources that must be replaced or enhanced by new and more efficient organizational architectures. This is an urgent requirement in order to satisfy some of the multiple needs that affect the global competitiveness of these areas, such as (UNIDO, 2001): . New emerging skills, mainly networking and collaborative skills, for closing the linkages between untrained suppliers, demanding producers and buyers. . New infrastructures, mainly telecommunications, information technology and logistics, needed to support supply chain management and value systems. . New rules, such as government intervention as facilitator of technological change and leveraging; as regulator; or as industrial policy ruler. New rules to handle competitors, hypercompetitive environments, unknown newcomers. New rules imposed by new technology enablers, such as the Web-based systems (Mandel, 2000). . New organizational models (Best, 2001), more flexible and adaptable to the new disruptive and uncertain competitive forces. . Modern production systems, effective and aligned to regional core competencies and to global best practices. . New strategic thinking practices, needed to be competent with the new hypercompetitive environments, competition rules, and collaboration networks (Scheel, 2000), etc. Most of these needs have been satisfied (in industrialized countries) by a proper collaboration and sharing of technology, innovation and a diversity of empowerment
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organizations. This induces one to think that a collaborative network architecture must be adopted, and new tools and enablers must be built, such that newcomer industries into global arenas (mainly from less developed regions) can convert technological innovation structures into outstanding levels of industrial productivity and competitiveness, creating wealth and prosperity for their regions. The proposed enabler architecture should be capable of: . empowering firms belonging to industrial sectors of developing countries (DCs) to reach high competitive leverages; . building with them high performance industrial clusters, linking local firms to complementary industries; . aligning these industrial clusters to their complementing external drivers, such as academia, banking, other industries and government; . benchmarking the cluster performances against the best practices and learning from the gaps; and, finally, . leading these clusters and integrating them into world class value systems. To achieve these performances, a collaborative network of technological innovation systems (TIS) is proposed, designed to administrate the collaboration of diverse organizations, aligned to a common goal: the economic, social, political and cultural development of the regions. This TIS framework is the result of a study of several innovation systems in Latin America, and was developed to identify and validate the critical success factors and their conditions required for linking and leveraging firms, industries and intra-sectorial clusters, until achieving high competitive performances and global positionings. In order to manage the proper functioning of the TISs, a knowledge system framework is proposed: the 5Ls model, capable of empowering firms from industrial sectors of developing countries to reach competitive leverages; to build with them high performance clusters of local and complementary industries; to link and align these industrial clusters to their empowerment external drivers (academia, banking and government); to benchmark the cluster performances against the best practices and learn from the gaps; and, finally, to lead and integrate these well performing clusters into world class value systems.
The purpose of this work is to formulate a systemic knowledge cluster, which will coordinate and integrate the 5Ls: (linking, leverage, learning, aligning and leadership) with a network of technological innovation empowerment drivers, achieving high performance competitiveness, and leveraging local (regional) clusters into world class value systems.
Structure of the 5Ls model In the search of innovative resources and viable frameworks, significant efforts were found in diverse worldwide regions. One of them is the work done by the United Nations for Industrial Development Organization (UNIDO) that dedicated its 2001 World Industrial Development Report to introduce a methodology oriented to achieve high levels of competitiveness through linking, learning and innovation of well structured practices (UNIDO, 2001). This organization, together with a group of consultants, during 2001, arrived at a model based on a LLLs (linking, leverage, and learning) structure, capable of empowering the development of industrial sectors (UNIDO, 2001; Mathews, 2001; Cooke, 2001) in an effective way. Besides the effort of UNIDO, the IC2 (Innovation, Creativity and Capital) Institute of the University of Texas has developed a methodological approach for creating wealth and prosperity, throughout the implementation of technological innovation poles and Technopolis (Gibson et al., 1998; Gibson and Stiles, 1999), with several cases implemented in Latin America and Asia (Scheel, 2001b). From the experience of working with these two organizations in different countries (Scheel, 2001a, b), a modification to the original three Ls was made. Two essential activities were added: leadership and alignment, building up a new (5Ls) model, more dynamic and focused on a technological innovation cycle to gain and sustain competitive leverage, mainly for developing countries’ (DCs) environments. This enhanced approach offers the capability of reaching invaluable leadership, achieving alignment of the technological strategies, to the production strategies, to the business strategies, to the industrial strategies, all supported by information and telecom
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technologies (ITTs), upgrading the firms into new repositioned value chain networks. Figure 1 shows the interaction of all elements of the 5Ls and of the technological innovation cycle cluster. Components of the 5Ls model Following are the components of the 5Ls framework described in Figure 1. The first component of the 5Ls consists of linking the firms (may be through virtual networks) capable of coordinating the effort of all players: enterprises, main external drivers (academy, banking, government, industry), and complementary enterprises. All linked for incubating, launching, and sustaining competitive industrial clusters of firms into one single system, with one main goal: to be inserted into world class value systems. Once linked, the framework will provide the knowledge infrastructure (in fact, a cluster of
knowledge that will integrate training institutes and universities, technology developing institutions, venture capital institutions, industrial associations, business incubators, economic protected zones, technology parks, virtual clusters, etc.) required for the leverage of the competencies of the most important players, as well as of the competencies of the industrial clusters, aligned to world class trends. In order to sustain high competitive edges, the enterprises must be part of an industrial cluster embedded into learning and benchmarking cycles, capable eliminating the shortages, such as absence of skills and information, missing markets, weak institutions, lack of cooperation, weak capabilities and inability to compete and benefit from emerging technologies, all of which are situations quite common in enterprises of DCs. Once the participants have been linked, leveraged and learned; a core component of
Figure 1 The 5Ls model and the technological innovation system
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the framework is added – the technology cycle that cannot be separated from the innovation concept itself which allows the cluster to lead to a more robust and sustainable world class position, achieving (Smilor et al., 1988): . technological and scientific prominence; . development and maintenance of new technologies for emerging industries; . attraction of major technology companies; . creation of homegrown technology based companies; . connection of local firms into world class value systems.
Key success factors of technological innovation systems
In general, enterprises from DCs (considered latecomer players into global arenas) it can effectively exploit their potential advantages only if the country (or region) in which they are located can offer the proper growing environment, capable of producing the conditions needed to insert the local clusters into world class value systems (WCVS) (UNIDO, 2001; Porter, 1998a, b). Based on how industrialized regions have been able to achieve great successes, we selected and grouped the key success factors (KSFs), of worldwide unique cases into several categories. Furthermore, these KSFs were applied to organizations dedicated to promote, operate and sustain innovation in several countries in Latin America (survey performed during 2000-2001 (Scheel, 2001a)). As result of this study, a group of common KSFs were identified, considering the interactions (linkage) that may occur between different organizations, as well as the conditions that they should satisfy in order to achieve a common goal: an effective regional industrial development. The factors were categorized in seven extended groups: (1) Infrastructure: . Financial programs. . Government supporting programs. . Research and technology programs. . Training and educational programs in innovation. . Technological entrepreneurship and management of technology programs. . Consulting supporting programs. . Physical infrastructure programs. (2) Innovation programs. (3) Technological modernization programs. (4) Incubators of technology based enterprises. (5) Industrial clusters and value chain systems. (6) Technology parks and technopolis. (7) National industrial policy programs.
To achieve these objectives, we are defining a framework capable of ‘‘grouping’’ all potentially competitive organizations of a region into a systemic enabler and coordinator cluster of technological innovation systems (TIS’s), capable of activating the linking, leverage, learning, alignment and leadership of the participants, toward world class positions.
Explanation of key success factors Infrastructure This factor deploys the infrastructure that a region may offer in order to support public and private projects regarding research and development, innovation and technology modernization and entrepreneurship. Infrastructure is a quite sensitive concept, split here into eight issues:
In parallel, this technology cycle will support the alignment of the industrial cluster with the technological innovation drivers, which will leverage the firms to achieve global leading positions (see Figure 1). This alignment will provide: . the conditions that a region needs to accomplish, in order to support the effective development of potential industrial clusters; . the empowerment of local industrial clusters for their inclusion into world class value systems; . the leverage of competitive attractiveness of local clusters in order to acquire substantial visibility for world class value chains. With these objectives in mind, the proposed 5Ls model, integrates the configuration of the empowerment drivers into the industrial cluster’s firms, which may defeat the challenge of inserting latecomer firms of developing regions into world class chains, and achieve great value added networks of industrial business ecosystems (Scheel, 2002).
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(1) Financial supporting programs (this is a key factor for developing new economic structures in industrialized countries). (2) Government supporting programs. (3) Research and technology developing programs. (4) Training and educational programs in innovation. (5) Technology development, entrepreneurship and management of technology programs. (6) Consulting programs. (7) Physical infrastructure supporting programs. (8) Knowledge infrastructure and management, innovation networks and virtual knowledge programs and libraries. Innovation programs This factor shows how technology and innovation projects (public and/or private) impact the region, such as research and/or technology programs developed at centers, universities, private companies or government institutions. It has two options: (1) Public supported initiatives. (2) Private funded initiatives. Technological modernization programs This factor provides information on programs dedicated to the modernization and upgrading of manufacturing firms, mainly to support the development of small and medium size enterprises (SMEs), through the development of an effective technological innovation cycle. These programs include: . Programs dedicated to improve productivity performances. . Knowledge systems of best practices (traditional and technology based practices), together with benchmarking programs. . Domestic supply response to backward linkages (i.e. exporting substitution programs). . Upgrading programs for resource based SME industries and high tech industries. Incubators of technology based enterprises This factor is concentrated on the process of pre-incubation, incubation and spinout of technology based enterprises, and the entire infrastructure required to support and to sustain the incubators and associated technology parks. Programs include: . The creation of technology based incubators.
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The creation of new enterprises. Venture capital and shared risk joint programs with the financial sector, public and/or private. The promotion of successful incubators, and the impact of spinouts and complementary industries.
Enterprise innovation systems, industrial clusters and value added chains This factor is dedicated to the physical formation, training, support, startup and sustainability of industrial clusters of enterprises, as well as formal in-company innovation programs and integration of production chains of processes, such as: . Industrial cluster development programs for production (mainly manufacturing) companies, including complementary industries and their industrial ecosystems. . Supply chain integration programs, and activities covering local and global demands in a value system format. . Corporate innovation network systems. Technology parks and technology poles This factor shows established programs and/ or projects created specifically for the development and operation of technology parks and/or technology poles; such as: . Technology parks development programs. . Technopolis (social-technology poles) development programs. Policy making programs This factor shows well established (or in-progress) national innovation systems programs, dedicated to generate industrial, technological and innovation national policies, which promote the formation of industrial business ecosystems, such as: . Development of regional and national policy programs and/or systems to support innovation technology activities at regional levels. . International technological cooperation programs (including bi-national agreements, such as NAFTA, EU, and SOUTH CONE). . Government incentives for R&D. . Centralized and decentralized government policies to support local and regional innovation programs.
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Finding the conditions in Latin America Once the key success factors were determined, a search was developed in Latin American institutions to find a common pattern of how they can be organized and constitute national systems, oriented to produce a competitive leverage in local industries and achieve world class levels. Included is a brief description of some findings from the survey and comments from the UNIDO group (UNIDO, 2001) regarding the Latin America region: . The countries surveyed: Brazil (BR), Colombia (CO), Chile (CH), Costa Rica (CR), El Salvador (ES), Guatemala (GU), Honduras (HO), Mexico (MX), Panama (PA), and Venezuela (VE). . The number of organizations interviewed: 15; and the total number of electronic surveys: 137. . The methodology used was: personal interviews, electronic surveys, Web-based information. . Validation procedures: most of the information was validated through electronic means or by personal communications. . Dates of intervention: January-February 2001. The findings were divided into the seven categories explained earlier. Included are general results and some of the organizations that are currently working on the specific issues. Infrastructure Infrastructure is a common issue that shows great shortages, such as: absence of skills and information, missing markets, weak institutions, lack of cooperation, etc. All this leads to weak capabilities and the inability to compete and benefit from new technologies and innovation practices. Also, a lack of strategic and systemic thinking was found, cornerstones of an effective leverage. Some specific findings follow: (1) Financial programs (i.e. seed capital, and new venture funding: IDB-LA branch of the WB, IDB-FINEP-BR, FAPESP-BR, CONTEC-BR, SEBRAE-BR, NAFIN-CONACyT-MX, FIDETECMX, FONACYT-GU, CORFO-CH, SNIC-CO, FUNDES). This is a key issue for the development of a sustainable infrastructure:
There is a general inability to attract foreign investors and gain access to technology and global markets. . There is a limited existence of: institutions for the promotion and negotiation of financial funds; technology development investment promotion agencies; technology centers; offices for the private financing of infrastructure; new venture capitals and angels; well organized industry associations; professional organizations; regional development agencies; national chambers of commerce and industry; etc. . Although this is a key issue, in general, there is not infrastructure to support new ventures; neither, highrisk projects. (2) Government support programs to built infrastructures, as well as incentives for the private sector, such as tax incentives and special start up programs (i.e.: Colciencias-CO, Programas Nacionales de Ciencia y Tecnologia-CO, CORFO-CH, CONACYT-SECOFI (now Sec. of Economy) for SMEs in MX, CONICIT-VE, CYTED, The Iberoeka Program). Some findings reveal that: . New roles of governments in supporting learning, innovation and building competitiveness have been found. Also found (but insignificant), government as facilitator of technical change and leveraging, working in collaboration with other stakeholders rather than dictating policies from above. . Main elements of national extended government policies, to deal with industrial learning systems, fail. There is no alignment in most cases. Many are state or city non-coherent and disperse efforts. . Programs are still concentrated on low profile scientific developments, with scarce resources not enough to achieve scientific critical masses; instead of investing in technological development and application support to private industries. (3) Research and technology development institutes. Most of them dedicated to transfering (linkage) R&D to industry (i.e. CNPq-BR, ADETEC-BR,
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CETCO-CO, CINVESTAV-MX, innovation and competitiveness centers of ITESM-MX, CICESE-MX, INAOE, MX, CONACyT:SIRs-MX). For instance, in this critical success factor, the case of Mexico is pathetic. The percentage of the GDP (2000-2001) dedicate to research and development in Mexico was only 0.4 percent, in Brazil 0.9 percent, vs 2.6 percent in Korea. The total investment in R&D infrastructure in Mexico was only $5.8 billion, $14.3 billion in Brazil and $22.2 billion in Korea, and out of 25,000 researchers in Mexico (2000), only 29 percent were concentrated on technological areas, the rest in scientific low profile fields (in the USA 61 percent are dedicated to technology based developments, the rest to scientific matters) all data are from 2000-2001, unless otherwise is written: Conacyt, INEGI, Mexico). All these figures cause great disappointment among the scientific and technological communities and a complete discouraging to invest in these activities. (4) Training programs in: innovation technology, knowledge management; competitive strategies for SMEs and entrepreneurial formation for management of technological innovation. (i.e. ABIPTI-BR, EMPRETEC-BR, FAUEL-BR, ICESI-CO, ITCR-CR, COLCIENCIAS-CO, CONACyT-MX, CASTM-MX, IIIE-MX, CENIDT-MX, ITESM-IC2 UT-AUSTIN, MX and USA, FUNDES, IDEA-IDB, K4D program of the WB): . Need greater skill levels in general and specialized managerial and technical (ITT) skills in particular. . Also, a large need for networking and collaborative skills. Rising the role of industry specific and enterprise financed training. Need for closer linkages between training providers and enterprises. . Most countries do not have a critical mass of managers, professionals, local promoters and technology based entrepreneurs able to make effective business plans, and viable investment projects to attract foreign investments.
(5) Formation of technology based entrepreneurial programs (Master programs, continuing education programs, i.e. IC2-ITESM-MX program in Latin America, CENIDET-MX, PUC-RIO-BR, and P2IT-BR): . Lacking entrepreneurial development calls for specific public and private institutions. Included are service providers for the promotion of women entrepreneurs; institutional arrangements to ensure that official SMEs policies are finally implemented and well coordinated. . There is a lack of business centers; business incubators; industry associations; networks of SMEs; industrial clusters; outsourcers involving vertical cooperation with large industries and supply chain development. . Inadequate human resource upgrading requires establishing and leveraging universities, joint university-industry programs, training centers and other forms of knowledge infrastructures. . There is a great shortage of capacities: to develop specific skills like engineering, innovation, managerial and financial competencies; to be able to learn new management techniques, and entrepreneurial skills; to use emerging technologies and to apply new quality management methods; to introduce new organizational structures; and to use new financial mechanisms. (6) Competitiveness strategies and management consulting support practices for SMEs (FUNDES, ADETEC-BR, ATENA-BR, Sebrae-BR, FIESP/ CIESP-BR, CORFO-CHI, FORCCYTEC-MX, PAIDEC-MX, CIMO-MX, RCCT-MX, CICATA-IPN-MX): . Most consulting relies on foreign firms that come to DCs to diagnose quite ambitious national or regional programs; however, most of them are not viable and do not complete the implementation and follow up tasks. . Other consulting projects are more concentrated on quality and productivity issues, but not on strategic high value programs.
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(7) Physical infrastructure support programs (offered by local governments such as subsides, tax exemptions on physical infrastructure, telecom facilities, and institutions such as: TECPAR-BR, CEI/II-UFRGS-BR, PCT-MX, CONACyT-MX, etc.): . Modernization of the physical infrastructure is required, mainly in telecommunications, transportation and logistics to support supply chains. Broadband is a typical infrastructure issue still in its more native stage. . Most LA countries have privatized their telecommunication companies, and new providers of ITT technologies are offering new connectivity services (utility firms are now multinational); however, the conditions for newcomers are always under uncertain decisions from monopolistic government bodies. . But one of the main issue in most countries is the shortage of electrical generation and distribution. At least in Mexico, if foreign investment is not allowed in this sector, and a modernization of the current plants is not developed as a current practice, the country will not grow at the rates that government has promised. Currently, this is a strong barrier to growth. (8) Knowledge infrastructure and management (KM), innovation networks, knowledge and innovation networks of virtual centers are scarce institutions (some of them are just information management institutions, i.e. ICNET-BR, ABIPTI-BR, ANPROTEC-BR, EIS-ONLINE-CO, Retec-BR, CSC-ITESM-MX, INEGI-MX, Zeri-BR, CTCAP-OEA-HO, LANIC-USA (Austin, TX)): . In general KM is a new idea in the region and not fully exploited; therefore, very poor knowledge infrastructures exist. Including knowledge capital mechanisms, industry associations, and any kind of knowledge clusters. Most of these institutions belong to the public sector, while others are private initiatives.
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Patenting processes are long to achieve and quite discouraging. Low commercialization of innovation from public and corporate R&D organizations. Poor information services and libraries to support R&D centers. Just started in some countries (Mexico, Brazil, Argentina, and Chile) is the digital sharing of libraries. Capability drivers, like ‘‘performance measures’’ and organized best practices libraries, that are highly successfully at global levels, are mostly absent in the Latin American region.
Innovation programs Few programs were found that truly achieve joint ventures between research centers and industry. There are some technological innovation and technology development programs/centers (i.e. P2IT-BR, PITE-FAPESP-BR, ConSITec-BR, PIT-CH, ICIPC, CEINNOVA, CCI, CINTEL-COL, INTEC-CH, CIATEQ-MX, CIATEJ-MX, CIMAV-MX, CENAM-MX, CIDESI-MX, PAIDEC.MX, PROVINC-MX, regional program of MOT-HO, MINNOVACION-VE, CNTI-VE): . Most of the centers deployed here are dedicated to technology transfer and measurement procedures. . Very few institutions have facilitated the diffusion of technologies to firms. Most of them are private efforts. . The e-environment or Web-based application is quite a controversial topic. Some industrial sectors in Mexico and Brazil are fully convinced that e-business and e-commerce are the key elements to success for SMEs. The reality is that the economic value of these tools impacts only large transnational corporations and a few individuals, but not the local SMEs, groups of industries. Technological modernization There are some programs, at national levels, dedicated to improve productivity performances for specific industrial sectors, such as: PIPE-BR, ANPROTEC-BR, ITCR-CR, CIDETEXCO, PRODUCARIBE, etc-COL, CORFO-CH, CONACYT, DAMT-MX; however, this issue has been left to private industries, where financial deficits diminish the head to head race to world class technological edges.
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In general, technological modernization is very slow, and difficult to achieve due to: . The absence of best practices (technology based) and benchmarking programs. . The slow domestic supply response to backward linkages (export substitution programs). Although Mexico and Chile have well-structured programs in certain states. . Few upgrading programs for SMEs in resource based industries and high tech industries exist. Improvements in the relationships with their buyers and suppliers are mainly for high competitive companies, due to the inclusion of eenvironments (e-business, e-commerce, e-procurement, etc.). . Besides all of this, if modern approaches and large investments are not provided to the electrical sector, all plans for industrial growth are just promises in the mouths of politicians. Incubation of technology based enterprises Very few regions are giving real support to this concept (technology based firms), Curitiba Brazil, Medellin Colombia, and Guadalajara Mexico are maybe some poor samples of the effort that is being done in this direction. Most small incubators are dedicated to commercialize activities, not to support technology or research based drivers (some of these centers are: CIETEC-BR, INTEC-BR, SEBRAE-BR, SOFTEX-CNPq-BR, INCUBAR DEL CARIBE-CO, INCUBAR-FUTURO-CO, IEBTA in Medellin, CBE-CO, CEI-CO, IETEC-ITESM- Cuernavaca-MX, AMIEPAT-MX, INCUBADORA VIRTUAL-ITESM-MX, THE INCUBATOR NETWORK-BR-HO): . Although a large number of initiatives have been pushed by governments, most of them are concentrated on searching for financial support for production and commercialization of manufactured products, and not for a complete and sustainable program. Few programs exist for the creation of new technology based enterprises or for their incubators. . Few venture capital joint programs exist with the banking sector, public and/or private. Most of them are concentrated in Internet based projects (i.e. Sierra Madre Investments – Monterrey, MX).
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Again, the financial infrastructure is not built to support new ventures of any kind.
Industrial clusters, value chains and knowledge networks In general, this factor is not fully present as a developed concept yet. Some regions, such as the Parana State in Brazil are doing excellent work with their technology parks, but they need more time and effort to achieve integration into world class chains. The same behavior occurs with the most competitive sector in Mexico, the auto industry, where the suppliers are fully integrated to global assemblers and final producers, but not as systemic clusters, or global value chains. However, this supplier chain works very well for the NAFTA region. (Other institutions are: SOFTEXGENESIS-BR, ICIPC-CO, CENPAPEL-CO, CIAL-CO, CIDETEXCO-CO, CIDET-CO, CORPOICA-CO, CINTEL-CO, CTVV-CH, VITRO-MX, DELPHI-MX, PETROPOD-MX, MEXICAN AUTO-CHAIN-SUPPLY, SHOE-CLUSTER, ELECTRONIC-CLUSTE all in MX). The challenge for the cluster of a developing country is to be able to insert high performance industries into wider networks, producing ‘‘value added networks’’ and ‘‘value added partnerships’’ (UNIDO, 2001). The following findings were observed: . Enterprises very often do not share effective support from complementary institutions to assist in: identifying business opportunities and financing resources; developing cooperation and investment projects; assessing technology options; and negotiating partnerships. Enterprises are seen as isolated islands, with no collaboration at all. . Most of the cases are supply chain integration programs or activities to cover isolated local and global demands (auto parts industry of MX, the electronic industry sector of Jalisco, and shoe industry of Guanajuato, MX). . Few virtual knowledge programs (FINEP-BR, IDRC/CRDI-UR) exist. Library support for patents and processes sharing support networks is scarce. . The countries searched are not yet linked to global value chains, they are facing serious linking problems and broadband
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difficulties. Their problems include nonexisting incentives; lack of entrepreneurial initiative; lack of capacity to learn, etc. The firms require more to form consortia, or industry associations, to help them deal with these problems. Several key problems firms/industries face in pursuing a linking model are associated with the lack of capability to identify where and with whom to link, due to the shortage of strategic information on the competitive position of a firm in the respective industry, the competitive position of that industry in the global market, and the competitive position of the local firm/industry in the global value chain. In general, it is a lack of competitive intelligence.
Technology parks and technology poles Strong efforts are made in the Parana State in Brazil (technopolis development programs like Tecpar in Curitiba). Some low profile cases in Colombia, Brazil and Mexico are scarcely working. Some just started as national technology programs like the CITY OF KNOWLEDGE in Panama. (Some others are: PADETEC-BR, PETROPOLIS-BR, NUTEC-BR, CORPLAN-CO, CIUDAD DEL CONOCIMIENTO-MEDELLIN-CO, ITP-PA.) A difference is considered here between the technology park concept and the suppliers’ chains, which are not considered in this group. . Although many efforts are been made, the analysts considered that in general, this issue is still developing and needs more maturity in order to be real developers of industrial growth. . For instance, in Mexico, the ‘‘maquiladoras’’ (kind of in-bond parks) are growing enormously, most of them at the northern border. Although they bring a large number of jobs, the economic development of the regions has not grown at the same pace, due to the large incentives the regions must offer to the developers. Also, excepting the electronic industry of Jalisco and of some maquiladoras in the northeast, the rest do not belong to the technological innovation segment. Policy making and national programs In general effective national policies dedicated to technological innovation are working only
in low profile levels in Brazil, Mexico, Chile and Colombia. Few are dedicated to the development of regional or national policy programs and/or systems to support technological innovation (i.e. SNI-CO, SENA-CO, ADIAT-MX, COLUMBUS-VE). Others are working at some levels supported by government incentives for R&D (i.e. CONACyT in MX). Some findings follow: . The relations between the private and public sectors, although not static, are evolving very slowly, changing in a dynamic sequence with industry. The co-evolution of the public sector institutions (agencies, R&D institutes and laboratories, universities, banks, etc.), private firms and intermediate institutions between them (industry associations, federations, chambers, development consortia, innovation alliances, business incubators, venture capital firms, etc.) are of particular interest for building successful institutional settings. However, they depend very much on political forces, missing continuity and sustainability. . In general, the role of the state is changing from direct intervention to an interactive mode of intervention (most of it through e-government practices), mainly for international trade and promotional activities. However, outstanding results at national levels and massive industrial sectors were not found. Can a common technological innovation system be inferred from these findings? The purpose of this Latin American study was to identify the key success dactors and the conditions these factors must achieve in order to attain world class performances. Once identified, we are now in the process of validating them in high performing environments, such as the cluster of knowledge of the technological parks of the Basque region in Spain (Arbonies, 2001; Azua, 2000) and some others around the globe. With these indicators, we will be able to produce the conditions necessary to provide the enablers and competencies that a region must offer to achieve world class competitive industrial sectors. The proposed technological innovation cluster integrates the critical success factors with the drivers (ABIG: academic, banking,
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industry, government configuration) within a learning cycle, coordinated by the 5Ls model, spinning out the empowered clusters into world class value systems, as shown in Figure 1.
Conclusions A framework is proposed, based on the linking, leverage, learning, leadership and aligning (5Ls) model, capable of coordinating the actions of the four main industrial development drivers (academy, bank, industry, government), forming a valuable ‘‘cluster of technological innovation systems (TIS)’’ which will: . provide the conditions that a region needs to accomplish, in order to support the effective development of potential industrial clusters; . empower local industrial clusters for their inclusion into world class value systems; . increase the competitive attractiveness of local clusters in order to acquire substantial visibility for world class value chains. The framework will work through linking local firms forming potential clusters, which can tap their links with world class industries, to acquire and share knowledge, technology, and market accesses; activities that would otherwise be beyond isolated firms with limited resources. Once the firms are linked, and the conditions are identified and benchmarked to match world class levels, the firms acquire the capacity to achieve high performance competition and sustainable leverages, by means of formulating strategic management plans, that determine how the cluster of firms can make the best use of its own capabilities and resources, achieving insuperable leading positionings. The cycle formed by the cluster of TIS will provide the firms with a strategic knowledge infrastructure, that stimulates entrepreneurial initiatives and risk taking involved in the process of innovation and learning, by helping firms/industries/clusters to mobilize information, skills, technology, knowledge, business models, and production systems, as well as the coordination of industrial activities with the other main drivers of industrial development (academy, government and banking), in a effective and sustainable way.
In summary, the cluster of TISs, and the 5Ls model will provide most of the required conditions for an effective strategy plan; such as: . Effective metrics for competitiveness assessment, capable of identifying opportunity areas within the industrial sectors of the regions. . Mechanisms for the incubation of industrial clusters with outstanding collaborative capacities, capable of achieving world class competitive levels. . Appropriate financial instruments to support new ventures with high risk performances. This is a priority key success factor, indispensable to support industrial development of regions. . Specialized human resources, as well as technology based entrepreneurs. . High performing mechanisms for the diffusion of information and complete connectivity, through the efficient use of telecom technologies (ITT). . An effective competitive intelligence that can be shared among all organizations of the system. . Well structured knowledge and managing systems. . Effective use of extended process innovation mechanisms. . Effective strategic thinking planning, management and implementation of technological innovation, considering global players, competitors and external threats. . Public and private support institutions designed to establish quality, health and environmental standards. This systemic and well balanced collaborative network will allow local industries to inject new ways of producing goods and services, and to compete against world class players, opening opportunities for combating marginalization and isolation of potential high performance, productive regions. This assumes a new commitment of the roles of government, academia and financial institutions: to achieve the goal of improving industrial infrastructure, to provide support and incentives for firms to learn, innovate and lead to world class competitiveness. The proposed framework, formed by the cluster of technological innovation systems and the 5L s (linking, leverage, learning, leadership and alignment) model, may defeat
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the challenges of inserting latecomer firms of developing regions into world class networks, and achieve ‘‘value added networks’’ of industrial business ecosystems, capable of generating wealth and prosperity in developing regions.
References Arbonies, A. (2001), Gestion del Conocimiento, Diaz de Santos Editores, Madrid. Azua, J. (2000), Alianza Coopetitiva para la Nueva Economia, McGraw-Hill, Madrid. Best, M. (2001), The New Competitive Advantage, Oxford University Press, New York, NY. Cooke, P. (2001), ‘‘Strategy for regional innovation systems: learning transfer and applications’’, Centre for Advanced Studies Cardiff University, Cardiff. Gibson, D. and Stiles, C. (1999), ‘‘Global networked entrepreneurship: linking the world’s technoparks for shared prosperity at home and abroad’’, Working Paper, IC2 Institute, Austin, TX. Gibson, D., Nordskog, J. and Conceicao, P. (1998), ‘‘Incubating and Networking technology commercialization centers among emerging,
developing, and mature Technopolis worldwide’’, Working Paper, IC2 Institute, Austin, TX. Mandel, M. J. (2000), The Internet Depression, Basic Books, New York, NY. Mathews, J.A. (2001), ‘‘Catching up strategies in technology development’’, Working Paper. Macquarie University, Sydney. Porter, M. (1998a), On Competition, Harvard Business School Press, Boston, MA. Porter, M. (1998b), ‘‘New Zealand clusters’’, Lecture communication, Cluster Navigators, Wellington. Scheel, C. (2000), Competencia en Arenas Globales, Trillas. Scheel, C. (2001a), ‘‘Latin America innovation systems survey’’, study sponsored by UNIDO, Vienna. Scheel, C. (2001b), ‘‘Republic of Armenia information technology master strategic plan’’, Working Paper, IC2 Institute of the University of Texas, Austin, TX. Scheel, C. (2002), ‘‘e-BES: electronic business ecosystems: a technology supported environment for incubating industrial clusters’’, ITESM, Working Paper, Monterrey. Smilor, R.W., Gibson, D. and Kosmetsky (1988), ‘‘Creating the technopolis: high-technology development in Austin’’, Texas Journal of Business Venturing, Austin, TX. UNIDO (2001), World Industrial Development Report, WIDR-2001, Vienna.
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Introduction
Knowledge partnerships for a sustainable, equitable and stable society
As the twentieth century drew to a close, scholars reflected on the problems and possible responses in an increasingly interdependent world society as it embarked on the first century of the Third Millennium. Economic historian David Landes, for example, summarized his view of the central problems in The Wealth and Poverty of Nations:
Thomas F. Malone and Gary W. Yohe
. . . the greatest single problem and danger facing the world of the Third Millennium . . . is the gap in wealth and health that separates rich and poor. . . . The only other worry that comes close is environmental deterioration, and the two are intimately connected, indeed are one (Landes, 1998).
The authors Thomas F. Malone is University Distinguished Scholar Emeritus at North Carolina State University, West Hartford, Connecticut, USA. Gary W. Yohe is John E. Andrus Professor of Economics at Wesleyan University, Middletown, Connecticut, USA.
Harvard’s Edward O. Wilson succinctly focused on an appropriate response in Consilience – The Unity of Knowledge: . . . unified learning, universally shared, makes accurate foresight and wise choices possible. In the course of it all we are learning the fundamental principle that ethics is everything (Wilson, 1998).
Keywords Knowledge workers, Partnering, Sustainable development, Productivity Abstract Continued exponential and asymmetrical growth in both population and individual economic productivity would propel world society along a path that is environmentally unsustainable, economically inequitable, and hence socially unstable. Terrorist activity in September 2001 may be vivid evidence of that instability. Revolutionary developments in communications technologies can, however, enable partnerships among scholarly disciplines and among societal institutions to harness rapidly expanding human knowledge (broadly construed) to pursue goals in both population and individual economic productivity that would lead to a sustainable, equitable, and stable world society. Such a knowledge-based strategy could enable us to pursue the vision of a global society in which all of the basic human needs and an equitable share of human wants can be met by successive generations while maintaining a healthy, physically attractive, and biologically productive environment. Several scenarios are presented to illustrate the promise of cooperative efforts to pursue this vision, and to highlight some obstacles to that pursuit. Electronic access The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1367-3270.htm Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 368–378 # MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440875
The dimensions of Landes’s economic ‘‘gap’’ have been evident for a long time, and they are still the dominant lesson to be drawn from data reported by the United Nations Development Program (UNDP) in Human Development Report 2001 (UNDP, 2001). Their most recent data show that the value of the average daily consumption of goods and services (adjusted for purchasing power parity) by each of more than 800 million individuals in the 23 high-income countries in the Organization for Economic Co-operation and Development (OECD) in 1999 was about $70. In contrast, the corresponding figure for each of the more than 600 million people in the 40 least-developed countries (LDCs) was about $3 per day. The inequity inherent in these international comparisons is, of course, staggering; but it is equally important to recognize that they mask comparable inequities within rich and poor countries, alike. Indeed, the richest 10 per cent of the people in most countries receive 20-30 per cent of the income while the poorest 10 per cent receive only 2-4 per cent (also see Galbraith (2002) and related articles in that issue of Daedalus). What can be said about the future? That is an impossible question to answer with any precision, but some glimpses of notimplausibility can be drawn from a few simple
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thought experiments. Panel II A of Table I shows the results of the simplest such experiment – projecting decade-long averages for current rates of demographic and economic growth forward to the year 2050 for 23 high-income OECD countries and 40 least developed countries (LDCs). The average production and consumption per day by individuals would climb from $60 in 1999 to $90 in 2050 in the OECD countries, but it would increase by only $2 per day (from $3 to $5) in the LDCs. The inequity would grow from 23-fold to 34-fold. The nearly $40 trillion increase in the economy of the OECD countries would be roughly equivalent to the size of the global economy in 1999. Moreover, the population in the LDCs would increase by nearly 1,500 million people – more than seven times the growth of about 200 million in the OECD countries. The differences of population growth and gains in individual economic productivity between the two groups of nations would jeopardize environmental sustainability and exacerbate economic equability. The respected World Resources Institute (WRI) and several UN agencies have meanwhile analyzed the capacity of global
ecosystems to support a continuation of expanding levels of economic activity; and their work has identified ‘‘. . . an almost certain decline in the ability of ecosystems to yield their broad spectrum of benefits’’ (WRI, 2000). This sobering prospect is the consequence of the 22-fold growth in world population and the 13-fold growth in the economic productivity of individuals that produced a 300-fold expansion in the global economy during the Second Millennium (Maddison, 2001). There was, of course, almost no corresponding growth in the sunlight, air, water, and living organisms in global ecosystems during that millennium. The prospect of adding a four- to five-fold growth in the global economy by 2,050 on top of this historical explosion underscores the gravity of the problem and the urgency of an appropriate response. Homer-Dixon has added more urgency to the mix by warning that ‘‘Environmental scarcity . . . caused by the degradation and depletion of renewable resources . . . has often spurred violence in the past . . .’’ that ‘‘will probably increase’’ in coming decades as the pressure on these resources grows (Homer-Dixon, 1999). At the Nobel Peace Prize Centennial in Oslo in
Table I Scenarios comparing the 23 high-income OECD countries with the 40 least-developed countries (LDCs) OECD
I. Characteristics of 1999a Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
848 71 22,026
LDCs 609 3.1 694
II. Scenarios for 2050 A. Economies proceeding at current rates of growth Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
1,040 (+ 0.4%/yr)b 161 (+1.6%/yr)c 60,949
B. Economies directed at sustainable, prosperous and equitable development Population (106) GDP/cap (ppp$/day) GDP (109ppp$) C. An alternative scenario directed at sustainable, prosperous and equitable development Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
939 (+0.2%/yr)d 119 (+1.0%/yr)e 40,735
939 119 40,735
2,071 (+ 2.4%/yr)b 4.7 (+0.8%/yr)c 3,638
1,123 (+1.2%/yr)d 37 (+4.8%/yr)f 15,196
827 (+0.6%/yr)g 84 (+6.4%/yr)h 25,306
Notes: aSource: UNDP (2001); bUNDP estimated growth rate, 1999-2015; cActual growth rate, 1990-1999; dOne-half the UNDP estimated growth rate, 1999-2015; eTwo-thirds the actual growth rate, 1990-1999; fThree times the actual growth rate in hi-inc OECD, 1990-1999; gOne-fourth the UNDP estimated growth rate, 1999-2015; hFour times the actual growth rate in hi-inc OECD, 1990-1999
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December 2001, 100 Nobel laureates warned that ‘‘The most profound danger to world peace in the coming years will stem not from the irrational acts of states or individuals but from the legitimate demands of the world’s dispossessed.’’ The tragic and diabolically clever attack on the USA by terrorists on 11 September 2001 was but one manifestation of the threat to the social stability to which the issues of economic equity and environmental sustainability contribute. Wilson’s prescription for addressing these threats challenges us to discover, integrate, disseminate and apply wisely the expanding storehouse of human knowledge in the manner urged by Boyer in his seminal paper Scholarship Reconsidered (Boyer, 1990). A knowledge-based society can seek a future path that is equitable, sustainable, and stable. This path points toward the vision of a global society in which all of the basic human needs and an equitable share of human wants can be met by successive generations while maintaining a healthy, physically attractive, and biologically productive environment (Malone, 1995). The strategy for a knowledge-based society calls for new kinds of knowledge partnerships among disciplines as well as among the major sectors of society. A knowledge-based society The storehouse of human knowledge about the physical characteristics of the world we inhabit and the universe within which that world is embedded has been steadily expanding. The accumulation of knowledge about the social characteristics of civilization is also accelerating. An explosion of understanding is under way in biology and in health care. Revolutionary communications technologies are becoming available for distributing widely this expanding knowledge. Our message, here, is simple. These are extraordinary tools that can and must be applied to accomplishing a more equitable and sustainable future. The role of humans in this strategy follows from the dependencies that link human systems to global ecosystems: air, water, land, sunlight, living organisms, nonrenewable resources, and so on. The resulting interactions between human and natural systems are, of course, complicated. They are ‘‘site-specific’’ and ‘‘path dependent’’; and so they display enormous diversity across the
globe that perhaps rivals the diversity of its natural systems. Nonetheless, an aggregate portrait of the fundamental stresses created by these interactions can be expressed in terms of metrics that characterize the evolution of civilization. These metrics include changes in the number of people in the human system and changes in the average capacity of individuals in that system to draw upon the renewable and nonrenewable resources of the natural system to produce goods and services to meet human needs and to satisfy human wants. Changes in the ways by which individuals’ actions reflect their valuation of those natural resources and the implications of those valuations must also be reflected. Aggregate indices of economic activity like the gross domestic product per person can, for example, offer some insight into how the future might unfold, but care also needs to be taken to monitor the distribution of income within countries and across the globe and the degree to which long-term sustainability is reflected in human systems. Equity metrics designed to serve the former purpose exist, but metrics for the latter are more difficult to define. Economists offer price indices for natural resources as one option, but stronger standards of sustainability offered by ecologists would focus attention on stocks of ‘‘natural capital.’’ Both views need to be accommodated if progress is to be made toward understanding how a vision of an environmentally sustainable, economically equitable, and stable world society is to be achieved. The power that knowledge vests in individuals to choose demographic and economic paths into the future can be the key to beginning to understand how a new vision of world society compatible with the lifesupport capabilities of global ecosystems might be pursued. This pursuit will highlight critical questions concerning aggregate metrics. Are the stock and/or price signals of limited sustainability strong enough to spawn sufficient substitution away from scarce natural resources and sufficient conservation of natural systems? Are these signals sufficiently widespread to ensure the future of our environment and the diversity of its natural systems? If not, how much intervention will be required to ensure our long-term future more completely, and to determine when to apply this intervention?
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But will this intervention inhibit our ability to achieve equitably distributed levels of adequate prosperity? A few landmarks on the path towards a knowledge-based society can already be identified. In his inaugural address on 20 January 1949, President Truman spoke of the distribution of knowledge as an ‘‘imponderable resource’’ more powerful than money in assisting the ‘‘peoples of the world’’ to overcome ‘‘hunger, misery, and despair’’ (McCollough, 1992). Then, in 1987, the Report of the World Commission on Environment and Development (WCED) urged a commitment to the concept of sustainability that would meet the needs of the present generation without jeopardizing being able to meet the needs of future generations (Brundtland, 1987). The report called for the development of ‘‘. . . a new charter . . . setting out the sovereign rights and reciprocal responsibilities of all states on environmental protection and sustainable development . . .’’. In response, a United Nations conference on environment and development was planned as an ‘‘Earth Summit’’ to frame a global agenda that would reconcile economic development and environmental quality in the twenty-first century. In preparation for that Earth Summit, Sigma Xi, The Scientific Research Society, convened representatives from several disciplines drawn from public and private institutions to reflect on Global Change and the Human Prospect: Issues in Population, Science, Technology, and Equity (Sigma Xi, 1992). In summary, participants endorsed Truman’s emphasis on knowledge and accepted Ernest Boyers’ interpretation of scholarship by observing: The overarching need is to bring to bear on these [issues] the expanding storehouse of knowledge about the world in which we live and our role in that world. This requires a balance among the tasks of extending, integrating, disseminating and applying this knowledge. . . . The world has not yet addressed the potential of knowledge . . . as a vital contributor to enhancement of the human prospect.
conference in Seoul, Korea (Malone, 1998). He proposed a global knowledge strategy to realize the potential of ‘‘the storehouse of human knowledge’’ to address the set of global issues discussed at the 1991 Sigma Xi Forum. In 1997, the American Geophysical Union organized a subsequent conference to explore initiatives in the twenty-first century that would build on the global collaboration fostered by the International Geophysical Year in the twentieth century (Malone, 1997). The conference concluded that An overarching challenge of the next few decades will be to make the transition from an unsustainable, inequitable, and unstable society to one that is sustainable, equitable, and stable. Our expanding knowledge . . . offers an opportunity to meet this and other challenges.
Still later that year, the World Bank convened a conference in Toronto on ‘‘Knowledge for Development in the Information Age’’ that called for ‘‘a partnership of public and private organizations . . . to mobilize knowledge capital . . . to achieve sustainable and equitable growth’’ (World Bank, 1998). This conference stimulated the organization of a series of meetings and led to plans for an ambitious worldwide information network. Innovations that flow from mobilization of knowledge capital are gaining momentum (Amidon, 2001; Ruttan, 2001). The early formulation of the charter urged by the WCED in 1987 did not gain the endorsement of governments at the 1992 Earth Summit in Rio, but it did rise Phoenixlike in subsequent discussions among nongovernmental organizations. The Charter that finally emerged in March 2000 was the culmination of more than a decade of extensive discussions at the grass roots among thousands of individuals from 78 countries, students from 300 universities, and dozens of nongovernmental institutions (see www.earthcharter.org). In brief, it noted:
In 1994, Polytechnic University Chancellor George Bugliarello (at that time, President of Sigma Xi) argued that knowledge is becoming an organizing principle for society (Bugliarello, 1995). This theme was independently advocated by Sigma Xi’s chief scientist in an address to an international 371
We stand at a critical moment in Earth’s history, a time when humanity must choose its future. . . . The choice is ours: form a global partnership to care for Earth and one another or risk the destruction of ourselves and the diversity of life. Fundamental changes are needed in our values, institutions, and ways of living. We must realize that when basic needs have been met, human development is primarily about being more, not having more. We have the knowledge and technology to provide for all and to reduce our impacts on the environment. . . . This requires a change of mind and heart. . . .
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The Earth Charter enunciated 16 principles that would underlie a just, sustainable and peaceful world. These principles suggest that ethical values are an integral part of the knowledge base that brings within reach an attractive vision for society. The Charter calls on ‘‘. . . the arts, sciences, religions, educational institutions, media, businesses, nongovernmental organizations, and governments to offer creative leadership – locally, nationally, regionally, and globally.’’ It is to be presented as a ‘‘peoples’ treaty’’ to the UN World Summit on Sustainable Development in Johannesburg, South Africa in 2002. The message in the Earth Charter was supported in a completely independent statement, ‘‘Transition to Sustainability in the Twenty-first Century’’, adopted in Tokyo on May 2000 by more than 50 national and international academies of science (www.sustainabilityscience.org). Their interpretation offered society a challenge for the next century: During the twenty-first century, human society faces the daunting yet inspiring task of forging a new relationship with the natural world. This new relationship is captured by ‘‘sustainability,’’ a concept that . . . implies meeting current human needs while preserving the environment and natural resources needed by future generations. A successful transition to sustainability requires more effective use of existing scientific knowledge and technology, generation of further scientific knowledge, greater integration of science into society as a whole, and the wisdom to avoid the destructive uses of technological advances. . . . if current trends in population growth, consumption of energy and materials, and environmental degradation persist, many human needs will not be met and the numbers of hungry and poor will increase.
This statement took, as its foundation, the seminal report Our Common Journey: A Transition Toward Sustainability published by the National Research Council (NRC) of the United States that urged ‘‘Integrating knowledge and action’’ (NRC, 1999a). A formal structure that includes an InterAcademy Council, an Inter-Academy Medical Panel, and an Inter-Academy Panel on International Issues was established at Tokyo to bring together scientists, engineers, and medical experts to provide advice to governments on critical international issues. Finally, a session on intergenerational equity at the Sigma Xi Forum on New Ethical
Challenges in Science and Technology, on 910 November 2000 in Albuquerque, NM was a venue for the proposal to create Western Hemisphere Knowledge Partnerships (Gibbons and Malone, 2001). Dubbed WHKP, these partnerships are intended to test the hypothesis that knowledge, broadly construed, could be a critical factor in the pursuit of a society that is environmentally sustainable, economically prosperous and equitable, and therefore likely to be socially and politically stable. WHKP could become a model for other regional initiatives.
Some scenarios that illustrate the problems and the opportunities Data on population and individual economic productivity, and their trends, are prepared and published annually in the series Human Development Report by the United Nations Development Programme. These data provide the basis for illustrative scenarios that starkly display the contrast between futures that would be simple continuations of current trends and alternatives that would pursue the vision of an equitable and sustainable future. Table I compares 23 high-income countries in the Organization for Economic Cooperation and Development (OECD) with the world’s 40 least-developed countries (LDCs). Panel II A of Table I portrays the future that would emerge if current rates of growth were sustained over the next 50 years. As noted above, the ‘‘gap’’ in the average daily production and consumption of goods and services by individuals between the two groups of countries would increase from 23-fold to 34-fold even as the increase in the economy of the high-income OECD countries between 1999 and 2050 began to approach the size of the global economy in 1999 (~$40 trillion). Panel II B of Table I portrays the results of a different, hypothetical, and ‘‘notimplausible’’ scenario designed to reflect a vision of equitable and sustainable development. It stipulates a 50 per cent reduction in the rate of population growth in both groups of countries accompanied by: . an increase in the annual rate of growth in LDC productivity to levels that are three times larger than the current rate in OECD countries; and
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a contraction in future productivity gains in the OECD countries to two-thirds of the current levels.
In this illustrative scenario, the gap in average individual production and consumption between the OECD and the LDCs in 2050 would be reduced to a three-fold difference from the 34-fold difference in Panel II A, while the growth in the combined economies of both regions would be significantly less. Panel II C illustrates how that gap could be reduced to less than two-fold, by annual gains of 6.4 per cent, but at the expense of an increase in the combined economies. Is a gain of 6.4 per cent really ‘‘not-implausible’’? Perhaps not, but it is modest in comparison with the record of long-term annual gains of more than 8 per cent in China over the past several decades. Scenarios presented in Table II compare China and India in like manner. China has maintained an annual increase in individual economic productivity of more than 8 per cent for the past quarter of a century while annual increases in population averaged only 1.3 per cent. If current growth rates were to continue to 2050, the economy of China
would then be 20 times larger than the global economy in 1999. The average Chinese would be producing and consuming goods and services valued in local currency at the astronomical figure of more than 1,000 dollars per day! Other combinations of population growth and gains in economic productivity could reduce this multiple by a factor of ten. India, on the other hand, appears to be poised to move along a more sustainable path, with an eight-fold gain in the economic productivity of individuals by 2050 if current growth rates can be maintained. However, an associated near doubling in population would generate a 16-fold increase in India’s economy. The associated demands on the life-supporting capacity of ecosystems could be diminished to 11-fold by reducing the rate of population growth by one-half. Alternatively, a scenario with smaller gains in productivity (e.g. 3.2 per cent per year) would reduce this 11-fold increase to seven-fold, but at a reduction in the living standards of individuals from one supported by individual economic productivity of $50 per day to one supported by only $31 per day. Still another comparison of scenarios is presented in Table III where the declining
Table II Scenarios comparing China with India China
I. Characteristics of 1999 Population (106) GDP/cap (ppp$/day) GDP (109$)
India
a
1,265 10 4,535
993 6 2,242
II. Scenarios for 2050 A. Economies proceeding at current rates of growth Population (106) GDP/cap (ppp$/day) GDP (109$)
1,808 (+0.7%/yr)b 1,260 (+9.5%/yr)c 831,208
1,927 (+1.3%/yr)b 50 (+4.1%/yr)c 35,058
B. Economies directed at sustainable, prosperous and equitable development Population (106) GDP/cap (ppp$/day) GDP (109$)
1,512 (+0.35%/yr)d 112 (+4.75%/yr)e 61,658
1,383 (+0.65%/yr)d 50 (+4.1%/yr)f 25,161
C. An alternative scenario directed at sustainable, prosperous and equitable development Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
1,512 (+0.35%/yr)d 51 (+3.2%/yr)g 28,224
1,383 (+0.65%/yr)d 31 (+3.2%/yr)g 15,489
Notes: aSource: UNDP (2001); bUNDP estimated growth rate, 1999-2015; cActual growth rate, 1990-1999; dOne-half the UNDP estimated growth rate, 1999-2015; eOne-half the actual growth rate, 1990-1999; fActual growth rate, 1990-1999; gAn example: twice the actual growth rate of 1.6 per cent in the high-income OECD, 1990-1999
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Table III Scenarios comparing the Russian Federation with Ireland Russian Federation
I. Characteristics of 1998a Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
146 20 1,093
Ireland <4 71 97
II. Scenarios for 2050 A. Economies proceeding at current rates of growth Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
108 (+0.6%/yr)b 1 (–5.9%/yr)c 40
B. Economies directed at sustainable, prosperous and equitable development Population (106). GDP/cap (ppp$/day) GDP (109$)
146 (+0.0%/yr)d 55 (+2.0%/yr)d 2,931
4.9 (+0.5%/yr)e 336 (+3.05%/yr)e 602
C. An alternative scenario directed at sustainable, prosperous and equitable development Population (106) GDP/cap (ppp$/day) GDP (109$)
146 (+0.0%/yr)d 92 (+3.0%/yr)f 4,926
4.9 (+0.5%/yr)e 336 602
>6 (+1.0%/yr)b 1,593 (+6.1%/yr)c 3664
Notes: aSource: UNDP (2001); bUNDP estimated growth rate, 1999-2015; cActual growth rate, 1990-1999; dFor example; eOne-half the UNDP estimated growth rate, 1999-2015; fAnother example
population and individual economic productivity in the Russian Federation is compared with the exuberant expansion of both in Ireland. A reversal in the trend of productivity in the Russian Federation while holding population constant would have the potential of creating a path into the future that would be consistent with global trends. The stage is set for substantial gains in productivity in the Federation. Clearly, a moderation in productivity increases in Ireland is in order. A final set of scenarios for the Western hemisphere is presented in Table IV. Canada and the USA represent industrial countries. The 34 nations in Latin America and the Caribbean portray countries in various stages of development. Under current rates of demographic and economic growth, the ‘‘gap’’ in the daily production of goods and services between these two groups would increase from $67 to $193 while economic activity in the Western hemisphere would increase by more than four-fold to support 50 per cent more people living in Canada and the USA and nearly 100 per cent more people living in Latin America and the Caribbean. Cutting the rate of population growth in both groups by 50 per cent, increasing individual
economic productivity rates two and a half times in Latin America, and curtailing productivity growth by one-fourth in Canada and the USA, would reduce the economic gap in the daily production and consumption of goods and services to $19 per day from the $193 per day in the business-as-usual scenario. Living standards in Canada and the USA would still increase by more than 100 per cent. They would improve more than eight-fold in the other countries. Equity of this kind would be the goal that could be achieved in the Western hemisphere, but steps would be required to reduce the impact of concomitant economic expansion on the carrying capacity of life-supporting ecosystems. In Panel II B of Table IV, the population of the Americas would increase by one-third and economic activity would have expanded nearly five-fold. Economic equity would be pursued, but formidable challenges in sustainability remain to be resolved. These scenarios are representative of many that might be constructed to pursue the vision of a sustainable, equitable, and stable society. Growth rates of population and individual economic productivity that would simultaneously pursue environmental sustainability would have to be compatible
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Table IV Scenarios for the Americas Canada and USA
I. Characteristics of 1999 Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
34 nations in Latin America and Caribbean
a
311 86 9,668
494 19 3,391
II. Scenarios for 2050 A. Economies proceeding at current rates of growth Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
468 (+0.8%/yr)b 238 (+2.0%/yr)c 40,622
959 (+1.3%/yr)b 45 (+1.7%/yr)c 15,702
B. Economies directed at sustainable, prosperous and equitable development Population (106) GDP/cap (ppp$/day) GDP (109ppp$)
381 (+0.4%/yr)d 185 (+1.5%/yr)e 23,142
688 (+0.65%/yr)d 166 (+4.25%/yr)f 41,253
Notes: aSource: UNDP (2001); bUNDP estimated growth rate, 1999-2015; cActual growth rate, 1990-1999; dOne-half the UNDP estimated growth rate, 1999-2015; eThree-quarters of the actual growth rate, 1990-1999; fTwo and a half times the actual growth rate, 1990-1999
with emerging knowledge on the carrying capacity of global ecosystems (Goldemberg, 2001). Do they teach us anything new? Again, perhaps not. The fundamental lesson of these scenarios was revealed centuries ago in Sir Thomas More’s Utopia: ‘‘pursuit of an ideal society requires that restraint be exercised in accumulating material luxuries’’ (More, 1516). And it was reconfirmed at the end of the twentieth century by Kates (2000). But how can that restraint be distributed without doing harm to goals of improved equity? Yohe and Van Engel (2001) have conducted a visioning exercise calibrated to the storylines underlying the scenarios that have been described in Special Report on Emissions Scenarios of the Intergovernmental Panel on Climate Change (IPCC) to explore just that question (IPCC, 2000a). Their economic visioning exercise targets equity and sustainability goals explicitly, but in a very aggregate context; their results must therefore be interpreted with extraordinary care. Nonetheless, the results show that the economic paradigm can offer insight into how and when certain visioning targets might be relatively more or less difficult to achieve (Yohe and Van Engel, 2001). Specifically, Yohe and Van Engel show that it might be possible to achieve ambitious combinations of equity and sustainability over the next 50 years, but it will not be easy. They suggest that bringing per capita income in
low-income countries above 33 per cent of levels observed in high-income countries could be infeasible if those efforts were coupled with modest sustainability targets under even the most optimistic of scenarios. That point notwithstanding, the severity of the trade-off between sustainability and equity could be overstated even if specific sustainability targets turned out to be quite expensive to achieve. Transfers of international capital and the knowledge that it embodies on the production side of the economy would improve relative equity between low-income and high-income countries. And the same transfers would also spread the incidence of achieving any sustainability target more evenly across international boundaries. Casting these insights into the present context, we can claim with some confidence that: . transferring technology and knowledge from high-income countries to low-income countries through direct investment could significantly reduce global inequality measured in terms of per capita income over the next 50 years; and that . effecting these transfers before the middle of this century could ultimately lead to a situation where the cost of reflecting sustainability targets in the prices of scarce and depleting resources could be shared in equal proportion.
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Recognition that it will take time for this situation to materialize was, of course, the reason why the United Nations Framework Convention on Climate Change divided the world into Annex I and non-Annex I countries, but the failure of the Kyoto Protocol shows that global leaders have not yet committed themselves to the requisite first steps in confronting the equity issue. The international institutions and mechanisms that will be required to initiate and sustain effective technology and knowledge transfers simply do not exist, and they will not be created without a concerted and persistent global commitment to do so. The more than 100 regimes of Multilateral Environmental Agreements need to be reviewed and strengthened.
Elements of a strategy Armed with visions like these, the next step is to fashion a strategy to pursue that vision, we propose a strategy that is human-centered and knowledge-based: a partnership among . disciplines that embrace the physical, biological, health, and social sciences, technology, the humanities, and the learned professions; . societal sectors that include academia, business, industry, labor, government, and nongovernmental institutions; and . industrial and developing nations. The partnership would be along eight topical areas ranked by importance and urgency in the following order: (1) Education – development of human capital is the sine qua non of a knowledge- and ethical values-based economy (there are 880 million illiterate adults in the world and 113 million youngsters without access to primary education (UNDP, 2001)). But education should be interpreted in terms of life-long learning. Potentially powerful new communications technologies are opening the way to act on this interpretation (Hanna and Latchem, 2001). More than deployment of a new technology will be required. Integration across disciplines and an understanding of the role of knowledge in social and economic development will be necessary (Dorf, 2001; Rhodes, 2001; Carrillo, 2001).
(2) Exploration of environmentally benign sources of energy to power economic growth (Goldemberg, 2001). The accumulation of greenhouse gases in the atmosphere is emerging as a regional and global issue (IPCC, 2000b). (3) Eco-efficiency in the production and consumption of goods and services in order to alleviate the impact of further economic growth on US ecosystems. The literature is extensive (NRC, 1999b and www.innovaworld.net). (4) Health and resilience of natural ecosystems – described as ‘‘enormously challenging’’, this topic will require developments of indicators of the pressures, extent, and output of agricultural, coastal, forest, freshwater, and grassland ecosystems and the analysis of natural disasters (NRC, 1999c) and www.milleniumassessment.org). (5) Extension of national income accounts to include environmental impacts and to be consistent with other measures of social health (NRC, 1999c as well as Miringoff and Miringoff, 1999). (6) Local community networks need to be fostered to ensure a societal response in rural and rapidly growing urban areas (www.vcn.bc.ca and www.globalideasbank.org/BOV/BV612.HTML). (7) Intellectual property rights demand attention in a knowledge-based economy (NRC, 2000). (8) Delivery of health care is entering an era of profound change in which integration with the sciences and sharing of new knowledge and practices are increasingly important (NRC, 2001 and www.intrah.org). In each topical area, interaction will be cultivated intensively and extensively with organizations and programs through networks and communications technologies (distance learning for education (Hanna and Latchem, 2001) and collaboratories for research (NRC, 1993)).
Conclusions Visions of knowledge-based societies have dotted the landscape for nearly a decade. We have offered a few simple quantitative
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exercises that were designed to make it clear that distributing expanding knowledge and shared ethical values through emerging communications technologies could be the key to unlocking the sort of environmentally sustainable, economically prosperous and equitable future that is likely to be socially and politically stable. The formidable challenge of the next few decades is to marshal that knowledge and those values with the aid of the new communications technologies and pursue the societal vision now within reach. To respond to that challenge, the empowerment that expanding knowledge and new communications technologies vested in individuals to create their future must be embedded in partnerships of disciplines and institutions. These new communications technologies open new vistas for knowledge management. As noted in a major assessment released in 2002, ‘‘. . . information and communication technologies (ICTs) remain a powerful and important force for positive change in the world. . . . (this) report addresses the major opportunities and obstacles that global leaders face as they try to more fully participate in the Networked World’’ (Harvard Center for International Development and World Economic Forum, 2002). The diverse leadership identified in the Earth Charter must be closely linked with individuals for knowledge management to be effective. Our discussion of scenarios for human development underscored three overarching conclusions. First of all, a comprehensive agenda must be addressed with vigor and a keen sense of urgency by an array of knowledge partnerships involving all disciplines and all sectors of society in both industrialized and developing nations. Wilson’s (1998) prescriptions of ‘‘unified learning, universally shared’’ and ‘‘the fundamental principle that ethics is everything’’ are central to the activities of those partnerships. Coordinated regional programs, such as the proposed Western Hemisphere Knowledge Partnerships and similar initiatives in other parts of the world, offer attractive opportunities for creating pilot projects in an endeavor that ultimately must be global in scope. To accomplish a global scale, however, imaginative innovations and institutional restructuring will be essential. Second, a new paradigm that frames the interactions between human and natural
systems on planet Earth and within human systems is equally imperative. The principles included in the Earth Charter provide the bases for this paradigm by making it clear that a sustainable, prosperous and equitable future will not be the product of business as usual. A fractious world is poised on the brink of an era of terrorism, so we have no time to lose. The Charter closes with a challenge: Let ours be a time remembered for the awakening of a new reverence for life, the firm resolve to achieve sustainability, the quickening of the struggle for justice and peace, and the joyful celebration of life.
We urge early adoption of these principles by the United Nations as the basis for developing legally binding instruments by all nations. Finally, further development of the conceptual framework for knowledge management and its application to social innovation will be required. New instruments based simply on legal constructions will not effect change if social innovations do not promote ‘‘win-win’’ opportunities and thereby convince decision-makers around the world that we are not confined to the payoff matrix of the conventional zero-sum game.
References Amidon, D. (2001), ‘‘The innovation superhighway’’, Effective Executive, June, Hyderabad, pp. 39-42, available at: www.entovation.com Boyer, E.L. (1990), Scholarship Reconsidered, Princeton University Press, Lawrenceville, NJ, p. 146. Brundtland, G.H. (chair) (1987), Our Common Future, World Commission on Environment and Development, Oxford University Press, New York, NY, p. 147. Bugliarello, G. (1995), ‘‘The global generation, transmission and diffusion of knowledge: how can the developing countries benefit?’’, in Marshaling Technology for Development, Proceedings of a National Research Council Symposium, 28-30 November 1994, National Academy Press, Washington, DC, pp. 61-81, p. 150. Carrillo, F.J. (2001), ‘‘MetaKM: a program and a plea’’, Knowledge and Innovation, Vol. 1 No. 3 , pp. 27-54. Dorf, R.C. (2001), Technology, Humanity, and Society – Toward a Sustainable World, Academic Press, San Diego, CA, p. 500. Galbraith, J.K. (2002), ‘‘A perfect crime: global inequality’’, Daedalus, Winter, pp. 11-25. Gibbons, J.H. and Malone, T.F. (2001), ‘‘Intergenerational ethics’’, in Ahearne, J.F. (chair), New Ethical Challenges in Science and Technology, Proceedings of a Sigma Xi Forum in Albuquerque NM, 9-10 November 2000, Sigma Xi, Research Triangle Park, NC, pp. 149-161, p. 180.
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Goldemberg, J. (2001), World Energy Assessment. Energy and the Challenge of Sustainability, United Nations Development Program, New York, NY, p. 582. Hanna, D. and Latchem, C. (2001), Leadership for the 21st Century Learning: Global Perspectives from Educational Innovators (Open and Distance Learning), Kogan-Page Publishers, New York, NY, p. 267. Harvard Center for International Development and World Economic Forum (2002), Technology Report 20012002: Readiness for the Networked World, Oxford University Press, New York, NY, available at: www.cid.harvard.edu/cr/gitrr_030202.html Homer-Dixon, T.F. (1999), Environment, Scarcity, and Violence, Princeton University Press, Princeton, NJ, p. 253. Intergovernmental Panel on Climate Change (2000a), Special Report on Emission Scenarios, Cambridge University Press, Cambridge, p. 219. Intergovernmental Panel on Climate Change (2000b), Climate Change 2001 (three volumes of the Third Assessment Report), Cambridge University Press, Cambridge, p. 2500. Kates, R.W. (2000), ‘‘Population and consumption: what we know. What we need to know’’, Environment, Vol. 42 No. 5, pp. 45-62. Landes, D.S. (1998), The Wealth and Poverty of Nations, W.W. Norton, New York, NY, p. 650. McCollough, D. (1992), Truman, Simon & Schuster, New York, 1116 pp. Maddison, A. (1995), Monitoring the World Economy, 1820 to 1992, Organization for Economic Co-operation and Development, Paris, p. 255. Maddison, A. (2001), The World Economy: A Millennial Perspective, Organization for Economic Co-operation and Development, Paris, p. 383. Malone, T.F. (1995), ‘‘Reflections on the human prospect’’, in Socolow, R.H. (Ed.), Annual Review of Energy and the Environment, Annual Reviews, Palo Alto, CA, pp. 1-19. Malone, T.F. (1997), ‘‘Building on the legacies of the international geophysical year’’, Eos Transactions, American Geophysical Union, Vol. 78 No. 18, pp. 187-91. Malone, T.F. (1998), ‘‘A new agenda for science and technology for the twenty-first century’’, Proceedings of The KOSEF’s 20th Anniversary Symposium on Issues of Science and Technology in the 21st Century, 2-6 June 1997, KOSEF and East-West Center, pp. 67-90.
Miringoff, M. and Miringoff, M.-L. (1999), The Social Health of the Nation, Oxford University Press, New York, NY, p. 245. More, T. (1516), Utopia, Knopf Publishers, New York, NY, p. 144. National Research Council (1993), National Collaboratories, National Academy Press, Washington, DC, p. 105. National Research Council (1999a), Our Common Journey: A Transition Toward Sustainability, National Academy Press, Washington, DC, p. 363. National Research Council (1999b), Industrial Environmental Performance Metrics, National Academy Press, Washington, DC, p. 252. National Research Council (1999c), Nature’s Numbers, National Academy Press, Washington, DC, p. 251. National Research Council (2000), The Digital Dilemma: Intellectual Property in the Information Age, National Academy Press, Washington, DC, p. 340. National Research Council, (2001), New Horizons in Health: An Integrative Approach, National Academy Press, Washington, DC, p. 224. Rhodes, F.H. (2001), The Creation of the Future. The Role of the American University, Cornell University Press, Ithaca, NY, p. 265. Ruttan, V. (2001), Technology, Growth and Development: An Induced Innovation Perspective, Oxford University Press, New York, NY, p. 672. Sigma Xi (1992), Global Change and the Human Prospect: Issues in Population, Science, Technology and Equity, Proceedings of a Forum, 16-18 November 1991, Sigma Xi, Research Triangle Park, NC, p. 294. United Nations Development Program (2001), Human Development Report 2001, Oxford University Press, New York, NY, p. 264. Wilson, E.O. (1998), Consilience – The Unity of Knowledge, Knopf Publishers, New York, NY, p. 332. World Bank (1998), World Development Report: Knowledge for Development, Oxford University Press, New York, NY, p. 248. World Resources Institute (2000), World Resources 20002001. People and Eco-systems: The Fraying Web of Life, Elsevier Science, New York, NY, p. 389. Yohe, G. and Van Engel, E. (2001), ‘‘Equity and sustainability over the next fifty years – an exercise in economic visioning’’, Wesleyan University, Middletown, CT, p. 48.
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A synergistic convergence The explosive evolution of the knowledge management (KM) movement has been attributed to three economic drives which ignited amidst the expansion phase of an unprecedented global business cycle. The drives identified (Carrillo, 1999) were: (1) the need to align overwhelming information resources and technologies; (2) the accelerating obsolence rate of labour competency; and (3) the increasing awareness of the role of ‘‘intangible’’ production factors.
Francisco J. Carrillo
The author Francisco J. Carrillo is Director at the Center for Knowledge Systems, ITESM, Monterrey, Mexico. Keywords Knowledge-based systems, Economic growth, Capital Abstract This paper explores ways in which knowledge management (KM) can enrich and be enriched by practices associated with social-level knowledge-based development (KBD), thus bridging both fields. It begins by establishing a continuity between personal-, organizational- and social-level KM. Social-level KBD is referred to economic growth theory in search of a complete, consistent, systematic and inclusive framework for global development. Enter capital systems, a KM framework aiming to satisfy those criteria at the organizational level. The capital systems approach, originally developed as a solution to some methodological concerns in intellectual capital valuation, is described as the operationalization of a generic value structure. Such a structure is applied to the analysis of production or valueenhancing dynamics underlying major economic eras throughout human history until the present day. Structural constraints in current financing for development practices are identified. New knowledge-based development strategies are explored and, finally, examples of current KBD policies are examined in the light of this analysis and alternative strategies to systematically identify and develop individual, organizational and capital systems are suggested. Electronic access The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1367-3270.htm Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 379–399 MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440884
The business-driven origins of KM have earned it citizenship in corporate environments. But as the KM movement evolved from a ‘‘dispersion’’ to a ‘‘contraction’’ to an ‘‘institutionalization’’ phase (Carrillo, 1999), it found application opportunities in areas such as education, government, international agencies, NGOs and other major kinds of human organizations. As KM comes of age, it is evolving into a strategic management approach, applicable to purposeful human organizations in general. The emergence of knowledge societies has multiplied the extent to which both productivity innovations and social transformations rely on knowledge capital. Major international agencies such as the World Bank (1998), the UNO (2001), the OCDE (2001) and regional development institutions like the European Commission (2001) and the Commonwealth (Mansell, 2002, this issue) have adopted KM frameworks. Regardless of the level of application, the rationale for KM is basically the same: to leverage the value-generation capacity of individuals, groups, and organization as a whole. ‘‘Value’’ here is considered in a broad axiological sense, including all criteria to determine which options are preferred over which others. Therefore, value-generation refers to an recognizable progress in the pursuit of the specific goals and purposes of an individual system (personal, organizational, social). Hence, KM processes and methods are generic to all kinds of organizations, while KM tools and techniques can be quite specific. For instance, a KM certification program offers dual commercial and government certification tracks, where the KM approach is basically the same, and the
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difference is one of emphasis (KMCI, 2001). Comparison between KM practices in commerce and government, public and private suggests differences of degree, rather than of substance (Lelic, 2002). A similar distinction can be drawn throughout commercial organizations themselves, where differences in KM procedural focus can be found by industry (oil, manufacturing, consulting, finance), size (global corporations, large and medium companies, SBs), and developmental phase (new ventures, mature business). Consequently, a continuum of KM concepts and approaches across the social, the organizational and the individual domains is becoming increasingly evident. While the status of organizational-level KM is obvious to most KM practitioners, this is not yet so evident at the personal and social levels. The comparative status of each of these domains is analyzed below. Indeed, the main contention of this paper is that the scope for KM theory and practice can be furthered to encompass all three levels and that in doing so, KM can collaborate in a multidisciplinary effort to unleash the development potential of individuals, organizations and societies. The main body of the paper is devoted to substantiating this claim, with particular emphasis on social-level KM knowledgebased development (KBD). Table I shows the correspondence between these three domains, the level of KM practice and the associated label (frequently used acronym). The multidisciplinary nature of an integrated KM field is bound to contain multiple issues which deserve attention by subject-matter specialists. The intention of this paper is to point out enough common ground between KM and KBD to encourage further multidisciplinary work in this direction. This would be of significance to both KM practitioners and specialists from disciplines currently and potentially associated with KBD. Table I Social/organizational/personal domains and corresponding KM functions and labels Domain
Function
Label
Individual Organizational Social
Personal KM Organizational KM Knowledge-based development
PKM KM KBD
Personal and social KM Although individual-level KM received proportionally little attention in the early phases of the movement, it was somehow implicit. An underlying intuition is now getting wide recognition: personal development is the building block (or better still, the living cell) of all knowledge-based (k-based)[1] organizational and social development. This concept was well captured by Bennis (1997): In the best of all possible worlds, community and individual growth are complementary goals, not incompatible ones.
Personal development frameworks are rooted in the value base of cultures and religions. That circumstance draws our attention to the axiological and epistemological axes on which a particular personal development scheme is anchored. Furthermore, psychology and other social sciences have made significant contributions to identifying developmental patterns in human individuals and their relation to specific cultural settings. Those philosophical and scientific perspectives might now be inserted into the domain of individual KM, some more obviously than others. There is a natural correspondence, to instantiate the most obvious, between the recent development of ‘‘emotional intelligence’’ (e.g. Goleman, 1995) and ‘‘personal intellectual capital’’ (Stewart, 1997). Consider Stewart’s closing remark to his 1997 review of IC: Intellectual capital is the source of wealth for individuals as well as for organizations – and it is held in common between them (Stewart, 1997, p. 216).
Other contributions in the psychology and sociology of knowledge are finding their way into personal KM-PKM, as it is becoming known. Pienaar et al. (1999), for example, offer a scheme for developing the personal knowledge base. Skyrme (1999) has explored the individual bases of organizational growth, while West (2001) has articulated the concept of ‘‘the individual as a brand’’. More recently, Bhatt (2002) addressed the interdependencies between individual and organizational knowledge and the distinctive strategies required to develop each level. To judge from the growing attention it is receiving, PKM is here to stay. With regard to the social level, the concept of leveraging collective development through knowledge also has a millennial tradition.
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Major ancient cultures and religions make references to the social worth of knowledge. Confucius (c. 551-479BC) is well identified as a pioneer in knowledge-based political economy. Throughout the centuries, philosophers and statesmen have sustained the view that social investment in learning pays. But this political stand could not be supported by empirical evidence until a few decades ago. In the course of the second half of the twentieth century, many economists, including Nobel laureates Solow and Becker, provided compelling evidence of the causal relation between social k-base and economic growth. Such a relationship is now widely recognized. By the year 2000, all major international development agencies and nations with the highest levels of overall development had espoused deliberate KBD policies. Some of the most evident convergence points between KM and KBD have already been addressed by economic growth theory (EGT), to which we will refer later. EGT made significant contributions well before the advent of KM. But other contributions, perhaps less apparent, may help to determine the social dimensions of knowledge. Take as an example the notion of knowledge as a social construction. Actually, according to The Norton Dictionary of Modern Thought, the field of social epistemology is . . . ‘‘an intellectual movement of broad cross-disciplinary provenance that attempts to reconstruct the problems of epistemology once knowledge is regarded as intrinsically social’’ (Bullock and Trombley, 1999). Thus, the continuity between individual, organizational and social levels of KM seems rather natural. It is therefore assumed that the analyses carried out throughout this paper apply to all KM domains regardless of the scope of the particular system under consideration. In seeking the implications of such continuity we will be making reference to a specific KM approach which looks at an underlying stratus of all three KM levels: knowledge-based value systems (Carrillo, 1998). The technical side of such conceptual approach is The capital systems method. This method, to be summarized below, was developed in a business environment. It is therefore of intrinsic relevance to productive organizations. Thanks to its generic value base, its applicability to non-productive organizations is becoming increasingly evident. K-based capital systems have been
applied to R&D units (Center for Knowledge Systems, 1998; Torres 2002), universities (Barrientos, 2002) and government (Villarreal, 2002). Its further applicabillity to regional and global settings is explored next. Beyond commercial globalization: from national to planetary wealth One of the axes of modernity was the advent of the ‘‘Nation State’’. Smith identified the ‘‘State’’ as a prime reference to collective good and founded the competitive characterization of national economies on this assumption. In The Theory of Moral Sentiments he writes, The state or sovereignty in which we have been born and educated, and under the protection of which we continue to live, is, in ordinary cases, the greatest society upon whose happiness or misery, our good or bad conduct can have much influence [. . .] When we compare it with other societies of the same kind, we are proud of its superiority, and mortified in some degree, if it appears in any respect below them [. . .] The love of our own nation often disposes us to view, with the most malignant jealousy and envy, the prosperity and aggrandisement of any other neighbouring nation (Smith, 1759, Part VI, Section III, Chap. II).
Smith’s analysis prompts another key issue of the KM-KBD convergence. As long as the coexistence between individuals, groups or nations is seen as predominantly zero-sum, interaction strategies are bound to be predominantly competitive. The former statement implies no value judgement on competitive behavior nor a human predisposition towards competition. In fact, from the perspective of contemporary psychology, competition need not be seen as a predisposition, but simply as an array of circumstances that allocates a value outcome to a particular behavior. So is cooperation. Both cooperation and competition result when the associated outcomes are inclusive or exclusive. In Smith’s naturalistic analysis, rivalry amongst nations is the product of distinctive competitive conditions. Were those condition to become a commonwealth of interests, an outcome of benefit to mankind, then: In such improvements each nation ought, not only to endeavour itself to excel, but from the love of mankind, to promote, instead of obstructing the excellence of its neighbours. These are all proper objects of national emulation, not of national prejudice or envy (Smith, 1759, Part VI, Section III, Chap. II).
Both at the level of the individual organization (KM) and at the social level (KBD), the
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above considerations are important. At the organizational level because we are witnessing a trend towards ‘‘co-opetitive’’ transaction patterns, where both competitive and cooperative schemes contribute to maximize the value outcomes of a given system. The contribution by Escriba´-Esteve and Urra-Urbieta to this special issue explores from a KM perspective the phenomenon of increasing inter-firm cooperation. From the KBD perspective, attention to supranational schemes may help circumvent some of the dead ends in which the northsouth dialogue on development seems to be trapped. If international KBD transactions were to complement national interests with global ones, value dynamics would change. Postmodernity brought the transcendence of the nation state, the emergence of transnational corporations as major economic entities and globalization. Today, several Fortune 100 companies have as much economic output as medium-size countries. Supranational economies left their mark in the twentieth century. As we advance into the new millennium, ‘‘a re-evaluation of the theory of the multinational firm’’ takes shape through the emerging paradigm of the metanational company: . . . ‘‘a company that builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world’’ (Doz et al., 2001). Subtitled How Companies Win in the Knowledge Economy, Doz et al.’s (2001) book, From Global to Metanational, covers new ground in addressing the distributed and knowledge-based nature of today’s economy by addressing two key questions: (1) How dispersed are the clusters of critical capabilities and markets that companies need to succeed? (2) How can globally dispersed knowledge best be combined and leveraged?
countries’’, it is important to stress the holistic and systemic use of global or planetary (Laszlo, 1994). Amidon (2002) has advanced a framework for global collaboration based on knowledge and innovation. Thus, global or planetary development will mean more than worldwide capital flows and commercial transactions. It will mean the overall balance of our planet as a value system. Hence, we will be looking at the following characteristics of today’s economic realities: distributed, global, knowledgebased, and co-opetitive. Figure 1 shows how some KM and KBD practice fields compare with regard to their levels of molarity (from individual, through organizational and regional, through global) and generalization (to what extent practice rests on concrete experience or conceptual abstraction).
From national, to transnational, to metanational. What next? The obvious answer is global or planetary value systems. Both terms are used here as synonyms, for they both refer to the world as a whole: ‘‘relating to, or involving the entire earth’’ and ‘‘of or affecting the entire world’’ (respective entries in The American Heritage Dictionary of the English Language, 2000). Although the use of ‘‘global’’ often denotes ‘‘surface area’’ as in ‘‘a global company with operations in 120
It was precisely the identification of new value dynamics in economic growth which led to the emergence of ‘‘endogenous’’ or ‘‘new’’ growth theory (NGT) as an alternative to mainstream EGT. The ‘‘endogenous’’ or ‘‘from inside’’ character of NGT arises from the consistent realization of a faster growth in a productive system’s output than that which the external factors alone could achieve. The ‘‘new’’ character derives from the departure from Solow’s work in that:
Growth vs development Synergies between KM and EGT may contribute to a better understanding of KBD. Whereas EGT counts on a substantial scientific tradition, KM can bring new insights into how k-processes may leverage the capacity of a value system to achieve and sustain creative balance. The capital systems approach aims at representing all significant value dimensions for collective decision making. Two characteristics of k-capital must be emphasized at this point: (1) It is not only cumulative (stock) or transactional (circulant), but also referential and relational. An increase in its amount or flow does not necessarily lead to a better system balance. More is not necessarily better. (2) Different forms of capital call for different overall-worth tactics. Whereas preserving, retaining, accumulating and mobilizing are effective stock and flow tactics, other forms of k-capital call for other tactics.
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Figure 1 Hypothetical molarity vs generalization of KM/KBD practice arenas
the rate of technological change, and a fortiori the rate of growth, is no longer taken as given from outside, but is envisaged to depend on the ‘‘behaviour’’ of agents that is, on their preferences or tastes (Kurz and Salvadori, 2001).
These insights have awakened EGT from its relative slump in the 1970s and early 1980s to its current boom (Kurz and Salvadori, 2001). Some of the contributions, notably those of Romer, are of special significance for KBD and KM in general. In his paper, ‘‘Increasing returns and long-run growth’’ (Romer, 1986), he proposed a model in which economic growth is driven by the accumulation of knowledge. Therein, he identified some key differences between knowledge and physical capital (see We (1994) for a summary of his views). Gemmell (1997) provides a non-technical review of the literature on NGT. He includes the following remark on Romer’s contributions: Numerous models incorporating R&D activities and the production of ‘‘ideas’’ have been developed, but Romer (1986; 1990a, b; 1993) are among the most prominent. Romer (1990b) for example models an endogenous growth process in which growth results directly from physical capital investment which in turn is driven by investment in a research and development (R&D) sector generating ideas for ‘‘new’’ designs/goods. These new goods, by being used as intermediates elsewhere in the economy, provide the driving force behind knowledge accumulation. Romer then hypothesises that the creation of these new designs/goods is a function of the stock, as well as the growth, of human capital in the form of ‘‘basic’’ and ‘‘applied’’ scientific knowledge acquired via higher education. Thus firms operating in countries with a larger pool (and
faster growing pool) of qualified scientists can innovate more readily and therefore enjoy more rapid rates of technical progress and productivity growth (Gemmell, 1997, section 2.18).
However, NGT is far from consensual. There persists a good deal of unresolved questions and even a lack of some fundamental definitions. More recent analyses have raised issues which are of critical significance to any knowledge professional. In their well-known review, Aghion and Howitt (1998, p. 435) diagnose: . . . we do not have any generally accepted empirical measures of such key theoretical concepts as the stock of technological knowledge, human capital . . . the rate of obsolescence of old knowledge, and so forth.
Steedman (2001) has pointed out the many problems that NGT faces in dealing with k-capital. He reviews several prior warnings on the assumptions made regarding the nature of ‘‘the stock of knowledge’’, to conclude: It is certainly – and lamentably – common in the NGT literature to treat the ‘‘stock of knowledge’’ as if it were a single magnitude with a cardinal measure, without any justification being given for this highly dubious assumption (Steedman, 2001, p. 2).
Despite these concerns, NGT has already had a profound theoretical and political impact. Knowledge professionals can benefit both from learning about the new findings and novel interpretations of NGT, and from realizing potential contributions to KBD from KM practice insights. For an authoritative and updated review of the field, Solow (2000)
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is a must. The review by Aghion and Howitt (1998) is more extensive and technical. Jones (1998) provides an accessible introductory reading. As much as there is to learn from EGT, there are several other fields which become essential for a venture such as global capital development. Specifically, there is a convergence between the ‘‘sciences of development’’ and the ‘‘sciences of knowledge’’ (Carrillo, 2001) into the field of KBD. The area of convergence is largely uncharted territory. It is important to keep in mind that both development and knowledge refer to the whole domain of human experience and potential. Hence, all relevant dimensions must be taken into account. That challenge underlies the business rationale of KM as well as the human and political significance of KBD. The KBD challenge A KBD field theory must clearly satisfy some requirements to comprehend a global capital system. First of all, it must be complete: encompass all basic domains of collective human experience contributing to a sustainable global balance. That is, it should be radically knowledge-based. Knowledge is not a thing, a mere record in a medium. In its widest meaning, it is the articulation of experience: that culturalpsychological event by which relevant pieces of the world get connected with relevant perceptions and actions. Knowledge consists of value-enhancing associations. Therefore, KBD and KM are, above all, a matter of relevance or value: representing and managing value systems. Second, a KBD field theory must be consistent; that is, every k-factor must be expressed in terms of the operations to determine whether it occurs or not and in what proportion. For this purpose, quantitative and qualitative comparisons are legitimate, provided there is awareness of the scales in use. Some dimensions may prove to be too elusive, but we must humbly recognize what our current level of understanding of a value category is. Third, a KBD field theory must be systematic. This implies both a formal conceptual structure and a systems perspective. Given the complex multidimensional interrelations of k-events, insights from complex adaptive systems are
valuable when dealing with KBD dimensions such as those depicted in Figure 1. Although many requirements seem pertinent, a fourth one is indispensable: it must allow for diversity while achieving basic consensus; i.e. it must be inclusive. Premature homogeneity and artificial standardization have limited use and can become counterproductive. In seeking global significance, a capital system must capture first those major dimensions which are common to all elements in the system. The UN Universal Declaration of Human Rights is a concrete example of a consistent, operational and inclusive subset of a global value system. The pursuit of a global capital system also carries some risks. In an exploration of the globalization of the KM movement, some ‘‘potential negative impacts’’ have been identified (Carrillo, 1999), including abuses, intromissions and misappropiations. A global capital system should assertively identify alternative and critical views (e.g. Baudrillard, 1991; Bluden, 1998; Fuller, 2001a, b; Wilks, 2001).
Knowledge-based development KM domains: objects, agents and contexts In his assessment of endogenous growth theory, Fine (2000) considers amongst other critical issues’’ the incorporation of factors that have traditionally been outside mainstream economics’’. Steedman (2001) starts his own critical account by pointing out: In all too many contributions to New (Endogenous) Growth Theory – though not in all – central reference is made to ‘‘a stock of knowledge’’, a ‘‘stock of ideas’’, etc. this variable featuring centre-stage in the analysis. Yet it is immediately apparent that this is far from being a crystal clear concept.
As mentioned before, KBD may benefit as much as KM from a conceptual and methodological collaboration. The theory and practice of KM might provide some insights to a multidisciplinary KBD. What follows is a summary of the foundational elements of the knowledge-based value system approach which leads to the construction of k-capital systems (Carrillo, 1998, 2001). First, the relational nature of knowledge is emphasized: it constitutes an event rather than a mere object or record. This realization is parallel to the crisis that modern physics
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experienced by ‘‘de-materializing’’ itself. It need not imply a dualism. It involves an epistemological shift from matter-centered to relation-centered. It sets the ground for a continuous, homogeneous ground between ‘‘physical’’ and ‘‘knowledge’’ capital, i.e. between material objects and their representations. Indeed, it is difficult to see how KM and KBD could rest on any rational grounds – including how ‘‘intellectual capital’’ and ‘‘stock of knowledge’’ can acquire managerial and political significance – unless such natural continuity is established. This opens a search for the basic elements in a ‘‘k-event’’ (Figure 2). First, there is the most obvious, one with which most people identify knowledge: the k-object or that which is known. K-objects can be things, representations of things (images, words), people, events; actually any portion of the perceived universe. Second, there is the k-agent: she/he who knows. Agents in a k-event can be human individuals, groups, and arguably animals, automata and extraterrestrial life forms. Let us stay for the time being with individual humans and groups. An agent/object interaction must take place, but that is not enough for a k-event to happen. Third, there is the k-context which provides significance, i.e. selects a specific agent/object interaction from potentially infinite possibilities. This element has a referential nature, i.e. constitutes a value or a preference criterion. Thus, the necessary and sufficient elements for knowledge to take place are: an object, an agent and a context, all of which must be ‘‘process capable’’, i.e. have the qualities that enable a particular k-connection to occur. For example, all objects must be perceivable; all agents must be active and all contexts must be discernible. Figure 2 Three components of a knowledge event
In a simplified sense, all KM, including KBD, involves the identification of relevant values, agent and objects in a system and their alignment. In mainstream KM, not all three aspects have been given due attention. During the initial years (early 1990s), most KM practice focused on object management activities such as yellow pages, document management, organizational memories, and other archival, bibliographical and IT tasks. As early k-managers learnt, adequate user interface, motivation and skills were critical for the effectiveness of k-bases. During the second half of the 1990s, the transactional aspects of k-agents and objects, such as k-transfer, collaboration, etc. received increasing attention. Hence, flow-cycle secondgeneration KM models gained prominence. Up to this point, value is attributed to knowledge in terms of its accumulation (as in organizational memory) and distribution (as in shared practices). Stocking and circulating become the mechanisms for capitalizing on knowledge. Until the third element of k-events, context, is taken into consideration. Context is the element that grants semantic status to a k-event. The economic significance of knowledge does not become apparent until an agent/object interaction is framed in a value context. Take any k-object (a treasure map, a company memo, a technique description) and give a competent agent (e.g. one proficient in the language in which the object is recorded) access to it. Unless that agent has enough contextual elements to adequately interpret the object and determine the proper course of action, the value realization of that agent/object interaction will be impaired. Hence, the first and most critical task for managing knowledge is to determine and operationalize the value framework of the systems whose capacity to attain its goals are to be maximized. Value alignment becomes the primordial KM function. Once the value framework is expressed into a manageable structure – the capital system – the other two components of k-events can be adequately selected, developed and assessed. From this perspective, the plethora of available KM definitions can be organized into three families. Each family is recognizable in terms of: . what is to be managed (the nature of knowledge); . what is to be maximized (the nature of management); and
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what is the consequent approach (the nature of KM).
value yield of all elements in the organization.
Whereas there is a sequence in this evolution, these three families have coexisted, albeit in very different proportions. Object-centered KM was from the start, and still is, quantitatively dominant, but decreasing in proportion. Agent-centered KM is emerging with great strength and advancing rapidly. Context-centered KM, even if anticipated in some early contributions, only now is becoming a true alternative. Each subsequent family has subsumed the former elements. Table II shows how each family can be identified according to the aforementioned features: concept of knowledge, capitalization process and KM definition. This categorization implies no value judgement as to which approach is ‘‘best’’ in an absolute sense. Each approach capitalizes on specific attributes of a k-system and is therefore valuable in specific circumstances (‘‘situational KM’’). A context-centered approach aims at expressing all significant forms of capital, including object capital and agent capital. Therefore, this approach involves the following three core KM processes[2]: (1) Alignment and strategic consolidation of capitals. Determining, systematizing, and operationalizing the value universe of an organization. (2) Agent capital management. Determining and developing the value-generating capacities of productive individuals and teams, as well as those of the organization as a whole. (3) Instrumental capital management. Determining, implementing and developing the optimal array of conditions and resources to leverage the
These three KM processes and families of KM approaches can be related to identifiable KBD policies as follows. First-level KBD: distributing instrumental capital Most KBD strategies start by focusing on the most immediate area of impact: the instrumental base that would enhance the capacities of productive agents. An example of this is the World Bank’s Global Knowledge Partnership (GKP), which is committed to . . . ‘‘sharing information, experiences and resources to promote knowledge and information as tools of sustainable, equitable development through information and communication technologies (ICT)’’ (GKP, 2002). In its charter, GKP claims: Access to information and knowledge is essential if the disadvantaged, the marginalised, and the poor are to improve their lives and the lives of their children. GKP Partners believe that given the opportunities to access and use ICT, people can improve their economic well-being and empower themselves and their communities to participate in and be responsible for their own development. Mutual prosperity gained through effective use of information and knowledge would contribute to a more stable and equitable world.
The contribution by Robin Mansell to this special issue assesses the evidence and lessons learnt in leveraging development through instrumental capital through ICTs. Nath (2000) emphasizes the role of ICTs in building k-societies. The forthcoming ITU World Summit on the Information Society in 2003 will assess the global situation regarding ICTs (ITU, 2002).
Table II Three families of KM approaches Feature
Family I: object-centered
Family KM approaches Family II: agent-centered Family III: context-centered
Knowledge concept
Record
Flow
Alignment
Capitalization process Keeping and accumulating stock
Facilitating and increasing circulation
Attaining sustainable value balance
KM definition
KM is a method to identify, KM is a strategy to identify, systematize and develop the codify, structure, store, organization’s value universe retrieve and diffuse experience
KM is a tool for identifying, storing, keeping, organizating and retrieving the organization’s k-base
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Second-level KBD: developing human capital One of the earlier lessons learnt by major development agencies was how ineffective mere fund allocation was in promoting development in more depressed economic regions. Such capital flow involved a dual perversion of purpose: lack of transparency in local fund management and profiteering by contractors, often from the same donating countries. The old Chinese proverb: ‘‘do not give fish to the hungry man: teach him how to fish’’ also gained increasing empirical support. Human capital KBD policies are now strongly favoured by NGT. Education, selfmanaged learning, technology transfer, expertise assistance, experience sharing and other forms of k-flow are now a central issue in development programs. The report by Gemmell (1997) provides an excellent account of human capital in NGT, with special reference to higher education in the UK. Working examples of this policy approach are the WB’s Global Development Learning Network (GDLN) and the UN’s Science and Technology for Development Network (STDev). Highly flow-centered, these programs move towards the attributes identified above: knowledge-based, distributed, collaborative and global. While GDLN’s mission is . . . ‘‘to harness modern technology – including interactive video, the Internet, and satellite communications – in a cost-effective way, so that people who know are brought together with those who need to know, to learn with and from each other about the full range of development issues’’ (GDLN, 2002), the STDev defines itself as ‘‘a gateway to information on activities in the area of science and technology for development within the UN system, other multilateral and bilateral development institutions and NGOs’’ (STDev, 2002). Third-level KBD: developing capital systems When it gets to value-based KBD, we can make reference to some ideal specifications (those identified above), and to a vision, but to no actual instances. A global capital system that is complete, consistent, systematic and inclusive is the framework for the global KBD we seek. There are, though, several efforts which constitute steps in that direction.
The concept of moral capital has a tradition in the history of thought. Recently, Kane (2001) has used it to describe a form of asset of politicians and nations. Indexes to assess moral capital are becoming fashionable. Corruption indexes, for example, are being used to benchmark the reliability of public administration at regional and national levels as a key productivity factor and a determinant of the degree of investment qualifications. Transparency International is a nongovernmental organization, ‘‘dedicated to curbing both international and national corruption’’ (Transparency International, 2002). It generates a corruption perceptions index (CPI) to make governments and transnational operations more accountable for corruption. Most of these efforts tend to patch traditional economic and accountancy methods in view of their increasing incapacity to determine individual, organizational and social wealth. These ‘‘new measures’’ usually tend to complement the hard traditional measures with some form of soft addendum. What we get is a compound of heterogeneous indicators carrying different axiological assumptions, defined within different theoretical frameworks, obtained through different methodological rules and compiled under an inevitable umbrella of eclecticism. This circumstance, as we will see later, pervades current practices to determine kcapital at individual, organizational and social levels. While such gross comparisons may be of use at some early point, they cannot be the basis for a systematic development strategy. At the individual level, emotional intelligence emerged as a complement to traditional IQ measures. At the organizational level, Intellectual Capital constitutes mostly an addendum to real accountings. At the international level (not yet a global one), a new and growing branch of soft or knowledge-based benchmarks is getting wider recognition. Fortune Magazine has added profiles of Most Admired Companies and Best Companies to work for to its traditional Fortune 100 and Global Fortune 500 listings. In the USA, the metropolitan new economy index, developed after the new economy index and the state new economy index sponsored by the Progressive Policy Institute (2002), is part of a program aimed at developing ‘‘a new set of economic indicators
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to illustrate the structural foundations of . . . the New Economy’’. Probably the most extensive exercise in accounting for k-capital in the international arena is the WB’s Knowledge for Development program. The KBD framework and policies are set in the World Development Report: Knowledge for Development (World Bank, 1998), with the objective to aid developing countries ‘‘to exploit the knowledge revolution to help reduce poverty and promote sustainable development’’. Particularly relevant in terms of k-capital, the KforD program includes a k-assessment method and studies in specific countries aimed at developing national k-strategies. The assessment method generates ‘‘k-scorecards’’ consisting of 15 variables related to performance indicators (annual GDP growth and human development index), as well as to the four core aspects of the KBD framework: institutional regime, education and training, innovation system, and information infrastructure. Still, the KforD framework is aimed at client nations. Nevertheless, the lessons learnt through its evolution will contribute to a better understanding of what it may take to build a global capital system. A further recent development contributes to global capital from a different angle. This is the attempt by some of the international development agencies to define ‘‘global public goods’’ (GPGs). A GPG is one that ‘‘must be supplied through the joint effort of nations or international agencies, beyond a single government and that constitutes a benefit for the inhabitants of the whole planet’’ (Carrillo, 2002). The UN Program for Development (UNPD) distinguishes three kinds of GPGs: natural ones, such as the ozone layer or the atmosphere; man-made such as universal norms and cultural baggage; and political ones, such as international market efficiency, financial stability, security and peace, environmental sustainability and health (Carrillo, 2002). This important development initiates the collective capitalization of the global commons. But it is still different from the concept of a system of global capital, which would include the value universe of our planet, including all forms of value currently possessed or managed by any individual entity, those that are managed jointly through some form of cooperative alliance and those which so far are not claimed or managed by
any identifiable entity. Only such a domain would correspond to the complete, consistent, operational and inclusive global capital system we are seeking to develop. In the next section, the evolution of the KM area of intellectual capital is analyzed from the normative perspective of these four requirements. The introduction of the capital system approach suggests some new directions for IC.
Capital systems The taxonomy phase of IC As mentioned earlier, one of the economic drives for the fast expansion of the KM movement was the realization of the weight of intangible assets in companies, particularly public ones. The huge economic implications of this realization led to an intellectual gold rush aimed at identifying, measuring and capitalizing on such intangibles. As in the early stages of other conceptual fields, efforts have been predominantly inductive, resulting in arbitrary collections of IC ‘‘indicators’’. The variety of IC models and categories has been documented (e.g. Flores, 2000; Sullivan, 2000; Bontis, 2001). More often than not, such arrays are circumstantial (nonsystematic) and, hence, heterogeneous (with a mix of dimensions from different planes). One discovers that when attempting to value IC, very few of those arrays apply to basic canons of metrology. Even fewer differentiate a knowledge-based value dynamics (e.g. Thoreson and Blankeship, 1996). While IC has become one of the most fertile areas of KM, to what extent the basic dimensions describing knowledge-based value generation have been grasped remains an open question. Productive value structures The evolution of production systems throughout history may shed some light on the nature of knowledge-based value systems. Although a production system is not exclusively one aimed at increasing the stock of goods, services and exchange capital, we will refer mainly to these for the time being. Production systems aiming at furthering aesthetic, epistemic and ethical value do include mechanisms for such enhancing or development. Such mechanisms, common to all value systems, will be identified as a production function.
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Hence, looking at how humans have organized throughout history in order to obtain a positive differential of goods, services, investments and savings at the end of a working cycle, we recognize how productive systems have evolved. Nomadic tribes, by far the longest prevailing form of human society, were based on hunting-gathering. Under that scheme, a bare minimum of tools was kept to maintain effective and efficient hunting, collection and other basic life preserving and community building functions. Oral tradition was a dominant mechanism for preserving knowledge and transmitting it from generation to generation (Ives et al., 1998), The emergence of human settlements is associated with the advent of agriculture, and was to become the dominant production system for a few millennia, coexisting with ruminant forms of hunting and gathering. In agricultural societies, land was a prime capital, inputs such as water, seeds and fertilizers very important and productivity formulas, a relatively invariant technological stock. The agricultural cycle provided landmarks to cultural and religious frameworks. Recorded symbolic language became a vehicle to knowledge, with the advent of the printing as epitome. The degree of penetration and transformation of the natural landscape increased as productive systems evolved. From surface-bound hunting-gathering to land manipulation and landscape transformation in agriculture, human incidence on nature deepened. Extraction of natural resources, which started as nomadic tribes moved along territorial paths, increased as urban settlements allowed for more powerful tools and techniques. The combination of agriculture with extractive production and compatible hunting-gathering prevailed for most of documented history. In the scale of human history, modernity has just happened. One of its more significant outcomes, the industrial revolution, under such a time scale, is right before today. At that critical point, production systems undergo a major change. Extracted raw materials and energy are transformed through mechanical and chemical processes, using machinery and equipment to generate manufactured goods. Technology begins to change at an accelerating rate. The value added of manufactured goods supersedes that of agricultural production. Commercial mobility
increases, reaching today’s vertiginous flows of goods, services, financial capital, and technological innovations at a global scale. As modern economic science took hold, it became concerned with the way in which production factors combine into the most effective and efficient arrays. What the necessary and sufficient production factors are for a given system is a question that economic theory of the firm addresses. Through dynamic systems modelling, knowledge-based alternatives to business design and development are being explored (e.g. Guevara, 2002). Contemporary theory of the firm is a child of industrialization. It responds to the logic of production which is connatural to manufacturing. Even service industries are conceived under the same fundamental logic. Certainly, many issues which could be associated with knowledge-based production have been addressed by recent economic analysis, but only marginally. The dominant economic rationale is still founded on the distinctive value dynamics of mechanical and chemical transformation of matter and energy and the associated hierarchy of human labour, management and investment (Cyret and March, 1992). K-based value structures Certainly, there are continuities in the transition from material-based to representational-based production, as there were from hunting-gathering, to agricultural, to industrial societies. Economic phenomena are a manifestation of a combinatory of objects, agents and contexts. Economic principles are an abstraction of such a combinatory. Physical and chemical conditions inextricably constrain that combinatory, determining possible economic outcomes. In general, the properties of underlying natural phenomena predetermine the economic behavior of production systems. Continuities in economic processes from industrial to knowledge-based production are bound to happen insofar as material elements are involved and they do not get subsumed by k-processes. Human labour as production factor will behave in the same way it has as long as it is regarded primarily as a mechanical, muscle-bound activity. Even work in the service industry will be similarly regarded insofar as it is measured in traditional output units.
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But there are also discontinuities in the economic behavior of production systems once the predominant factors are representational or knowledge-based. Indeed, this is the very raison d’eˆtre for KM and for the whole spectrum of knowledge-based development. How old and new factors will combine is an open question. While some of the most visible characteristics of the knowledge-based economy have been pointed out (Choi et al., 1997; Woodwall, 2000; OECD, 2000; European Commission, 2001) they still need to be formally structured and empirically tested. Beyond those currently under debate, received concepts such as intellectual property and the capital/labour dichotomy need revision. The bet on the distinctiveness of k-production factors rests on the physiological, psychological and social strata of k-events. While there are causal interdependencies between material and represented objects (as there are between physical, chemical and biological processes) there are also behavioral patterns idiosyncratic to each level. Once we enter the domain of represented objects or events, the combinatory is singular and as a consequence so is the spectrum of economic outcomes. This is the main point. For the purpose of the overall argument it is enough to raise such a possibility. What exactly are those natural differences and how they determine economic outcomes is a major question which we are only beginning to grasp. Metaproductive organizations and the global society Production was identified above as a generic function of all value systems. Such a function aims at preserving and enhancing the total worth of the system. ‘‘Worth’’ does not necessarily mean an increase in size or an accumulation, but a preferred state relative to a specific value structure. Economics, as we know it, has accounted basically for the production and distribution of material resources and their financial representations. The production component, in its most irreducible structure (an input/process/ output model) involves: an investment income, an agent, an instrument, and an outcome. Table III compares major production systems throughout history along these categories. Early service industries are regarded as transitional
into the knowledge economy and, hence, not differentiated in this comparison. As the output of production systems needed to be represented for practical reasons, currencies and records were developed. This alone multiplied the value combinatory of material products. Thus, material production systems generated a form of metacapital, one which served as representation of all other forms of production value and allowed for its quantification, recording and exchange. This combination of material and financial capital has been the dominant realm of economics. Once ‘‘represented’’ or ‘‘knowledge-based’’ production factors became increasingly relevant and the intellectual gold rush exploded, the need for not only a new structure of production factors, but also of its combination rules became apparent. Figure 3 shows a generic arrangement of such factors, followed by their definition. Whereas any of these can include k-capital, the best identified forms (internal elements) are still related to production capital, such as instrumental (mostly, k-objects) and agent (mostly, human competencies). The most elusive or ignored so far are new metacapitals (external elements), those which are not directly productive but which determine the overall productivity of the system. Amongst these, two major categories emerge: referential and articulating capital. The first has a function to focus and align, like a compass or lighthouse. It includes endogenous (identity) and exogeneous (intelligence) capital. Articulating capital has the function of interconnecting all other forms, like glue or cement. It includes financial (the first form of metacapital) and relational capitals. Generic capital system definitions The generic capital system definitions are as follows: (1) Generic capital system: the taxonomy of a system’s value categories. (2) Metacapital: . Referential capital (value elements which allow the identification and alignment of all other value elements): – identity capital (endogenous value referents); and – external intelligence (exogeneous value referents).
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Table III Dominant factors of major production systems Process Input
Agent
Instrument
Output
Hunting-gathering
Natural habitat
Human
Hands and primitive tools and techniques
Agriculture
Land, water, seeds, fertilizers Raw materials and energy
Human and animal
Agricultural equipment and techniques Industrial machinery, equipment and techniques
Game, fish and collected natural goods Agricultural goods
Industrial
Human and automata
Articulating capital (value elements which allow the interconnection or exchange amongst value elements): – relational capital (interaction status amongst significant agents); and – financial capital (monetary expression of some or all value elements). (3) Input capital: investment capital (value element from another system which is brought in as an input). (4) Production capital: . agent capital (those value-generating capacities of individuals – animal, human and automata – and their groupings, as well as those from the organization as a whole to improve its own performance); and .
Figure 3 A generic system of capitals
Manufactured goods and industrialized products
instrumental capital (the means of production through which every other capital leverages its valuegenerating capacity). (5) Output capital: product capital (the inventory of values generated by all other value elements which has not been realized yet in another form of capital). .
Were we able to capture completely and consistently the capital system of any given entity, we would be representing its ‘‘value blueprint’’, the state of the system with reference to its ideal state. Such an ideal state would be one where each of the value elements existed just in the right proportion to achieving full balance. Hence, value systems are unique, as unique as personalities or cultures. And, therefore, capital systems are as diverse as the multiplicity of systems amenable to a singular description. This would apply to every individual, every organization, and every society. The emphasis on metaproductive values helps us understand that production does not have primacy in all systems. Indeed, no single form of value has primacy: it is only the perfect equilibrium of all value elements (whatever their relative weights) that becomes an ideal for probably all systems. From a planetary perspective, the challenge becomes one of identifying the value universe for all stakeholders and achieving the best possible balance. A global capital system can provide a platform to construct planetary value propositions.
Capital development strategies Much aid about nothing The writing of this paper coincided in time and space with the UN Conference on 391
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Financing for Development (Monterrey, March 2002). Despite much diplomatic ado, it was clear well before that no significant agreement could be reached at the conference because there was a prior agreement that no further consensus would be sought beyond an earlier draft which introduced no structural modification to current affairs. Even if effective Aid For Development (AFD) schemes were actively sought by UN members, it is difficult to see what such schemes could be as long as national perspectives prevail. Until structural problems in north-south capital flow, such as the perpetuation of debt and the international commodities pricing scheme, are addressed from a supranational perspective, there is little hope for change. An example of a supranational, although still limited, perspective was that adopted by the European Community, each member state should allocate at least 0.35 percent of its GDP to AFD. From this perspective, the relatively modest UN Millennium Goal of increasing AFD to 0.7 percent of GDP in all developed countries looks remote. The EU has the highest rate so far and the USA’s is below 0.1 percent. There has been substantial debate over the conditions that receiving countries should guarantee in order for aid to have a positive impact. Even if those conditions were met, even if the UN goals on aid were met, it is unlikely that the geography of global financial capital would reach a sustainable balance. Current imbalances are manifested in a more substantial south-north capital flow than north-south. Under this perspective AFD becomes irrelevant. The scarcity of funding for development is bound to continue under the prevailing national, non-systemic and dependency-generating scheme. Whether there are any funding alternatives is a question that acquires direct significance to KM from a capital systems perspective. Under the current scheme, individual industrialized countries struggle internally to allocate so much funding to AFD, systematically falling short of UN goals. At the same time, developing nations get locked into an insufficiency trap. The question is twofold: (1) Are there any AFD schemes that can overcome the current financial trap? (2) Can these schemes be enriched from a knowledge-based, capital systems perspective?
In sum, can the capital systems approach provide an alternative to knowledge-based development? In the following sections, several dimensions are explored which suggest it can. Capital dimensions The prevailing Financing for Development rationale is based on fractions of surplus industrial capital from developed countries being donated to developing countries. Alternatively, the capital systems rationale focuses on the following questions: . How can individual developing countries identify and balance their distinctive value structure? . Can developed countries do something to help themselves advance towards that goal? The possibility that the first question is not merely rhetorical rests on some as yet untapped potential of human capital systems. Financial AFD is a by-product of the production and financial capital characteristic of material economies. It will always be competing with other internal priorities. The USA, by far the wealthiest industrial economy, devotes several times less to AFD than it spends on curing excess-consumptionrelated diseases. The only chance for KBD is to find alternative sources. That alternative may well be in those capital dimensions which remain untapped and in new flow options. To begin with, the basic realization of the intellectual Capital movement can be brought to the social level: the total developmental potential of a nation is above that of its current economic output. The challenge is to identify all forms of new k-capital and bring them into the realm of accountable and actual value (Figure 4). Actually, there is a precondition for any form of capital, regardless of its status, to become accountable and manageable. In fact, identifying ‘‘unrealized capital’’ does not make it manageable or even a potential asset. It Figure 4 Capitals by regular accountability
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could actually be a potential liability. Until any capital is operationalized, in the scientific sense (i.e. Bridgman, 1927; Feigl, 1954; Carrillo, 1983), it cannot be regarded as manageable. An operational capital is one which is defined in terms of how we actually identify and compare it. That can be, for example, the consensus of three experienced supervisors. Customer loyalty can mean many things. For some, it is . . . ‘‘a favourable predisposition to buy again’’. Others suggest anything from rate of reincidence to customers’ NPV. Reichheld (1996) has constructed a hierarchy of customer loyalty measures which indicates the most appropriate index for each use. Operational capitals move along the scale as they become better understood and defined, very much as concepts in other areas of human understanding have evolved (Figure 5). The domain of accountable and manageable capital is that of operational capital, regardless of its status in traditional accountancy and management. We can think of total capital as the mass of an iceberg, where that part traditionally accounted for is the tip above sea surface. Operational capital attributes All operational capital has three dimensions which jointly determine their net worth: (1) productivity; (2) functionality; and (3) availability. These dimensions are expressed in positive and negative magnitudes. Any capital can be assessed in terms of its net worth as a product of the combined value of these three dimensions. Each is described next. Productivity Not all capitals are benign, since systems may be better off without some such capital (i.e. a ‘‘white elephant’’). Efficacy refers to the extent that any capital actually improves the worth of the value system, i.e. adds to its positive contributing factors. All capitals carry an ownership cost which should always be less than their total worth if they are to be regarded as positive (Figure 6). Figure 5 Capitals by degree of operationalization
Figure 6 Capitals by degree of productivity
Functionality Capitals can be of more or less worth but that worth can be attained with different degrees of efficacy. A capital may have real worth but be an idle or even in a death condition. They can also become obsolete or out of season. Only fully functional capitals deliver their total worth. All functional capitals are productive capitals. Productive but idle capitals do not deliver their worth, but they may, if put to work. Death capitals are those that are beyond any possibility of becoming productive (Figure 7). Availability Productive and functional capital may become lost by accident, neglect or premeditated action. It can also be out of reach (e.g. databases for which the access path or access code is forgotten or unavailable). Access cost diminishes net worth (Figure 8). NPV and NAV The net potential value (NPV) of a Capital System is the total worth that it is capable of achieving. The net actual value (NAV) of a capital system is the total worth that it has actually achieved. NAV = NPF if and, only if, each of the capital components is fully productive, fully functional, and fully available (including evolutionary elements). Capital strategies Once the distinctive dimensions of k-capital systems are eventually understood, a new combinatory of developmental factors may Figure 7 Capitals by degree of functionality
Figure 8 Capitals by degree of availability
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emerge. Until now, the received view focuses on two possibilities: borrowing fresh funds or receiving them as aid. Yet, there are a number of other capital flow options, beyond the unidirectionality of current flows. Figure 9 shows some such possible flows, several of which can be reciprocal or cooperative. Considering all of the above capital dimensions, new possibilities arise. In fact, the level reading of each capital dimension considered above leads to a rather obvious course of action. Figure 10 summarizes some of the most prominent strategies that each capital dimension reading indicates. Arrows denote the general path of development for any entity. Current KBD policies International agencies, such as the OCDE, the World Bank and the UN, have embraced knowledge-based development approaches. However, such policies have some way to go before they contribute by design to the new economic ethics identified earlier: distributed, global, k-based and co-opetitive. Nevertheless, some KBD agendas exemplify current trends. DeLong (1996), after survey of endogenous growth, extracted KBD policies based on principles that guided the design of the 1992 democratic economic growth agenda in the USA. Similarly, the Progressive Policy Institute (1999) identifies ten ‘‘Rules of the Road’’. These are both examples of domestic (US) KBD policies. The OCDE, (2001) states the following generic KBD policies. While specific policy priorities may differ across countries, ‘‘The new economy: beyond the hype’’ encourages
governments to adopt a comprehensive growth strategy based on a combination of actions in order to: (1) Strengthen economic and social fundamentals, by ensuring macroeconomic stability, encouraging openness, improving the functioning of markets and institutions, and addressing the distributive consequences of change. (2) Facilitate the diffusion of ICT, by increasing competition in telecommunications and technology, improving skills, building confidence and making electronic government a priority. (3) Foster innovation, by giving greater priority to fundamental research, improving the effectiveness of public R&D funding, and promoting the flow of knowledge between science and industry. (4) Invest in human capital, by strengthening education and training, making the teaching profession more attractive, improving the links between education and the labour market and adapting labour market institutions to the changing nature of work. (5) Stimulate firm creation, by improving access to high-risk finance, reducing burdensome administrative regulations and instilling positive attitudes towards entrepreneurship.
The World Bank (1998) identifies the following lessons learnt:
Figure 9 Some capital flow options
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The Report suggests three lessons that are particularly important to the welfare of the billions of people in developing countries. First, developing countries must institute policies that enable them to narrow the knowledge gaps separating poor countries from rich. Second, developing country governments, multilateral institutions, nongovernmental organizations, and the private sector must work together-to strengthen the institutions needed to address the information problems that cause markets and governments to fail.
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Figure 10 Capital development strategies matrix
Third, no matter how effective these endeavors are, problems with knowledge will persist. But recognizing that knowledge is at the core of all our development efforts will allow us to discover unexpected solutions to seemingly intractable problems.
To conclude this KBD policy analysis, the following remark by DeLong (1996) seems appropriate:
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There is no basis for the often-heard claim that countries must learn to live with rather than try to change their long-run growth trend, and every reason to think that pro-growth policies can nurture – and anti-growth policies destroy – long-term economic growth.
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Towards global KBD From a global capital perspective, the following are some of the most evident lines of KBD policy transition: . From industrial to k-based. Every entity, regardless of its current developmental status (industrialized, nonindustrialized, etc.), must embrace a KBD perspective. In fact, not all of the richest economic entities which built their might under the industrial production ethics will automatically become the wealthiest under a capital systems perspective. . From non-operational to fully operational. All systems must advance in the understanding and measurement of their constituent values. . From dependence through self-reliance, to interdependence. Each developing entity must undertake responsibility for its own
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development. Aid should become more facilitating and less intrusive. From exogeneous through endogenous to systemic. Individual entities must seek their own identities and establish positive transactions with other entities. From counterproductive to fully productive. All existing capital must be turned into a positive development factor. From idle to fully functional. All existing capital must be made productive to its full potential. From unrealized to fully available. All existing capital must become accessible. From national to planetary. All development efforts must be conceived within the proper system coordinates to multiply their developmental impact: individual, community, local, national, regional, continental, multinational, planetary. From linear to systemic. All development policies must consider not only the immediate and most apparent impacts, but also look at broad longer-term pattern of interdependencies.
Figure 11 shows the progression from merely exogeneous to interdependent capital flows. Eventually, these policy elements may converge in a systemic, multidimensional space of capital development which is applicable to all individuals, organizations and societies (Figure 12). Although there is a long way to go to formalize capital systems and their
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Figure 11 Sources for financing KBD
Figure 12 Capital systems levels
applications to individual, organizational and social KM domains, right now diverse entities are helping to advance clarification of the value framework and understand how each of its constituent elements is contributing (or not) to making it what it aims to be. At the global level, it may help to achieve greater accountability and transparency in the way in which major constituencies (individual nations, international agencies and multinational corporations) contribute to planetary worth. This is one of the goals of the World Capital Institute.
approach. However, this is not a linear task. There are no absolute grounds to prove it is even a desirable one. The viability and moral adequacy of the program outlined here is open to question. Some contemporary ideas actually clash straightaway. Bluden (1998), for example, looks at the very relation between knowledge and value as an ethical and epistemological axle of modernity and its unsustainable outcomes. Baudrillard (1991), in what could be described as the ultimate social entropy, considers that value itself has become a meaningless category:
Conclusions: a global capital agenda The sciences of development A systematic approach is required to build a consistent KBD framework. Capital systems, a framework common to KM and PKM, has been provided to instantiate such an 396
All these ups and downs take us back to the destiny of value . . . After the natural phase, the commercial phase, and the structural phase, the fractal phase of value has arrived . . . In this fractal phase there is no equivalence any more, neither natural nor general, one cannot really talk any more about the law of value, there is just some sort of value epidemic, of general value metastasis, of proliferation and random
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dispersion. To be precise, we should not talk about value any more, since this kind of demultiplication and chain reaction pre-empts any kind of evaluation (author’s translation from Spanish).
As a matter of fact, if Baudrillard proves right, the whole program advanced here would be meaningless. On the other hand, the only way out suggested by Baudrillard himself is one with which this KM approach concurs: a new account of alterity. Alterity is essentially a way of looking at the other not as he/she who exists independently of us, but as the very source and final destiny of ourselves (Bajtı´n, 2000). The ethos of alterity may also be the only conceivable one through which the articulation of a global capital system and the eventual emergence of a global consciousness can result. Perhaps the very confrontation with the limits of globalized modern culture may help mankind utter for the first time its collective identity and destiny. It seems worth betting on the viability of the deconstruction of our axiological and epistemological inheritance (Ferre´, 1998) and the subsequent articulation of an elementary grammar of value at once diverse and global.
Notes 1 Throughout this paper, the abbreviation ‘‘k-’’ is extensively used as a prefix. Every occurrence denotes that the term preceded by it applies to those instances where knowledge processes are predominant. Thus ‘‘k-capital’’ denotes forms of capital built on cognitive and emotional value, while a ‘‘k-event’’ is an act of knowledge. 2 Detailed disaggregation at the CKS Web site (www.knowledgesystems.org).
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Baudrillard, J. (1991), La Transparencia del Mal: Ensayo sobre los feno´menos extremos, Anagrama, Barcelona. Bennis, W. (1997), Organizing Genius: The Secrets of Creative Collaboration, Addison-Wesley, Reading, MA, p. 155. Bhatt, G. (2002), ‘‘Management strategies for individual knowledge and organizational knowledge’’, Journal of Knowledge Management, Vol. 6 No. 1, pp. 31-9. Bluden, A. (1998), ‘‘Knowledge and value’’, available at: http://home.mira.net/~andy/works/index.htm Bontis, N. (2001), ‘‘Assessing knowledge assets: a review of the models used to measure intellectual capital’’, International Journal of Management Reviews, Vol. 3 No. 1, pp. 41-60. Bridgman, P. (1927), The Logic of Modern Physics, Macmillan, New York, NY. Bullock, A. and Trombley, S. (Eds) (1999), The Norton Dictionary of Modern Thought, W.W. Norton, New York, NY. Carrillo, F. (1983), El Comportamiento Cientı´fico, LimusaWiley, Mexico City. Carrillo, F. (1998), ‘‘Managing knowledge-based value systems’’, Journal of Knowledge Management, Vol. 1. No 4, pp. 280-6. Carrillo, F. (1999), ‘‘The knowledge management movement: current drives and future scenarios’’, paper presented at the 3rd International Conference on Technology, Policy and Innovation: Global Knowledge Partnerships – Creating Value for the 21st Century, University of Texas, Austin, TX, available at: www.knowledgesystems.org Carrillo, F. (2001), ‘‘Meta-KM: a program and a plea’’, Knowledge and Innovation: Journal of the KMCI, Vol. 1 No. 2, pp. 27-54. Carrillo, L. (2002), Enfrentan rezagos desde globalizacio´n, El Norte, Monterrey, 31 March, p. 5A. Center for Knowledge Systems (1998), ‘‘Core KM processes’’, available at: www.knowledgesystems. org Choi, S., Stahl, D. and Whinston, A. (1997), The Economics of Electronic Commerce: The Essential Economics of Doing Business in the Electronic Marketplace, Macmillan, Indianapolis, IN. Cyret, R. and March, J. (1992), A Behavioral Theory of the Firm, 2nd ed., Blackwell Business, New York, NY. DeLong, J. (1996), ‘‘Endogenous growth: economic theory and faster growth’’, available at: http://econ161. berkeley.edu/OpEd/endogenousgrowth.html Doz, Y., Santos, J. and Williamson, P. (2001), From Global to Metanational: How Companies Win in the Knowledge Economy, Harvard Business School Press, Boston, MA. European Commission (2000), Innovation Policy in a Knowledge-based Economy, European Commission, Brussels. Feigl, H. (1954), ‘‘Operationalism in scientific method’’, Psychological Review, Vol. 52, pp. 250-8. Ferre´, F. (1998), Knowing and Value: Toward a Constructive Postmodern Epistemology, State University of New York Press, Albany, NY. Fine, B. (2000), ‘‘Endogenous growth theory: a critical assessment’’, Cambridge Journal of Economics, Vol. 24 No. 2, pp. 245-65. Flores, P. (2000), ‘‘Relacio´n de enfoques y modelos de Capital Intelectual’’, Guı´a del Mo´dulo 2: Sistemas de
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Capitales, Diplomado en Administracio´n del Conocimiento, CSC, Monterrey. Fuller, S. (2001a), ‘‘Knowledge RIP? Resurrecting knowledge requires rediscovering the university’’, TAMARA: Journal of Critical Postmodern Organization Science, Vol. 1 No. 1, pre-publication version, available at: www.zianet.com/boje/tamara/ issues/volume_1/issue_1_1/ FULLERtamaraVol1No1.htm, pp. 60-7. Fuller, S. (2001b), Knowledge Management Foundations, Butterworth-Heinemann, Oxford/KMCI Press, Hartland Four Corners, VT. Gemmell, N. (1997), Report 8: Externalities to Higher Education: a Review of the New Growth literature, The National Committee of Inquiry into Higher Education (UK), available at: www.leeds.ac.uk/ educol/ncihe/report8.htm Global Development Learning Network (2002), The World Bank, GDLN Web page, available at: www.gdln.org/ Global Knowledge Partnership (2002), GKP Web page, available at: www.globalknowledge.org/ Goleman, D. (1995), Emotional Intelligence, Bantham, New York, NY. Guevara, D. (2002), ‘‘Modelo de Negocios Basado en Conocimiento a partir de la Teorı´a de la Firma’’, Tesis de grado: Maestrı´a en Administracio´n de Tecnologı´as de Informacio´n, ITESM, Monterrey. International Telecommunications Union (2002), ‘‘The World Summit on the Information Society’’, WSIS Newsletter No. 1, available at: www.itu.int/wsis/ news/news01.htm Ives, W., Torrey, B. and Gordon, C. (1998), ‘‘Knowledge management; an emerging discipline with a long history’’, Journal of Knowledge Management, Vol. 1 No. 4, pp. 269-74. Jones, C. (1998), Introduction to Economic Growth, W.W. Norton, New York, NY. Kane, J. (2001), The Politics of Moral Capital, Cambridge University Press, Cambridge. Knowledge Management Consortium International (2001), KMCI Certification, available at: www.kmci.org/ Kurz, H. and Salvadori, N. (2001), ‘‘The ‘new’ growth theory: old wine in new goatskins’’, available at: http://csf.colorado.edu/authors/Salvadori.Neri/ growth.pdf Laszlo, E. (1994), The Choice: Evolution or Extinction?, Jeremy P. Tarcher/Putnam, New York, NY. Lelic, S. (2002), ‘‘A wealth of knowledge: realising the value of KM in the public sector’’, The Knowledge Management Newsletter, 17 April, available at: www.kmmagazine.com Mansell, R. (2002), ‘‘Constructing the knowledge base for knowledge-driven development’’, Journal of Knowledge Management, Vol. 6 No. 4, pp. 317-29. Nath, V. (2000), ‘‘Heralding ICT enabled knowledge societies way forward for the developing countries’’, Sustainable Development Networking Programme (India), available at: http://sdnp.delhi.nic.in/ resources/internetinfo/articles/heralding.htm OCDE (2001), ‘‘The new economy: beyond the hype’’, Final Report on the OCDE Growth Project, Meeting of the OCDE Council at Ministerial Level, available at: www.oecd.org/EN/home/0,,EN-home-33nodirectorate-no-no–33,FF.html
Pienaar, H. et al. (1999), ‘‘Organisational transformation at an academic information service’’, Library Management, Vol. 20 No. 5, pp. 266-72, Personal Knowledge Management Web page, available at: http://hagar.up.ac.za/catts/learner/heilap/ knowmant.html Progressive Policy Institute (1999), ‘‘Rules of the road: governing principles for the new economy’’, New Economy Task Force Report, available at: www.ppionline.org/ppi_ci.cfm?knlgAreaID =107&subsecID=196&contentID=865 Progressive Policy Institute (2002), ‘‘New economy index, state new economy index and the city new economy index’’, PPI Web site, available at: www.ppionline. org/ppi_ci.cfm?knlgAreaID =107&subsecID= 123&contentID=1268 Reichheld, F. (1996), The Loyalty Effect, Harvard Business School Press, Boston, MA. Romer, P.M. (1986), ‘‘Increasing returns and long-run growth’’, Journal of Political Economy, Vol. 94, pp. 1002-37. Romer, P.M. (1990a) ‘‘Endogenous technical change’’, Journal of Political Economy, Vol. 98, pp. S71-S102. Romer, P.M. (1990b) ‘‘Human capital and growth: theory and evidence’’, Carnegie-Rochester Conference Series on Public Policy, Vol. 32, pp. 251-86. Romer, P.M. (1993) ‘‘Idea gaps and object gaps in economic development’’, Journal of Monetary Economics, Vol. 32, pp. 543-73. (The) Science and Technology for Development Network (2002), Technology for Development Section, TEDB, Division on Investment, Technology and Enterprise Devlopment, UNCTAD, available at: www.unctad. org/stdev/ Skyrme, D. (1999), ‘‘The knowledge networker’s toolkit’’, Knowledge Networking: Building the Collaborative Enterprise, Butterworth-Heinemann, Oxford, Ch. 5. Smith, A. (1759), The Theory of Moral Sentiments, The History of Economic Thought Web site, Economics New School, available at: http://cepa.newschool. edu/het/ Solow, R. (2000), Growth Theory – An Exposition, 2nd ed., Oxford University Press, Oxford. Steedman, I. (2001) ‘‘On ‘measuring’ knowledge in new (endogenous) growth theory’’, paper presented at The Growth Theory Conference, Pisa. Stewart, T. (1997), Intellectual Capital: The New Wealth of Organizations, Doubleday/Currency, New York, NY. Sullivan, P. (2000), ‘‘A brief history of the ICM movement’’, Value-driven Intellectual Capital; How to Convert Intangible Corporate Assets into Market Value, Wiley, New York, NY, pp. 238-44, available at: www.sveiby.com/articles/icmmovement.htm Thoreson, J. and Blankeship, J. (1996), Information Secrets: Metrics and Measures for Valuing Information, Valuable Information, Richardson, TX. Torres, C. (2002). ‘‘Transformacio´n estrate´gica de un centro de investigacio´n en una organizacio´n basada en conocimiento’’, Panel: Desarrollo de la Actividad Profesional en Gestio´n del Conocimiento y la Innovacio´n, Memorias del Congreso Nacional de la ADIAT 2002, ADIAT, Col. Chimalistac. Transparency International (2002), TI Web site, available at: www.transparency.org/cpi/2001/ cpi2001.html
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United Nations Organization (2001), ‘‘Making new technologies work for human development’’, The Human Development Report 2001, UNO, New York, NY. Villarreal, H. (2002), ‘‘Sistema de Capitales en una organizacio´n gubernamental’’, XXXII Congreso de Investigacio´n y Extensio´n del Sistema ITESM, Monterrey. We, G. (1994), ‘‘What is endogenous growth theory?’’, A monograph for CMNS 840, Canada’s Information Highway, available at: http://oscar.cprost.sfu.ca/ ~we/misc/endogenous.html West, P. (2001), ‘‘The individual as a brand’’, copyrighted presentation, personal communication. Wilks, A. (2001), ‘‘Development through the looking glass: the knowledge bank in cyber-space’’, paper presented at the 6th Oxford Conference on
Education and Development, Knowledge Values and Policy, Oxford. Woodwall, P. (2000) (Ed.), ‘‘Survey: the new economy’’, The Economist, 21 September. World Bank (1998), Knowledge for Development: World Development Report, available at: www.worldbank.org/wdr/wdr98/index.htm
Further reading Center for Knowledge Systems (2000), ‘‘Modelo de Estructura de los Sistemas de Capitales’’, Manual del Diplomado en KM, Modulo 2: Sistemas de Capitales, CKS, Monterrey. Quintana, E. (2002), ‘‘Ricos o Pobres?’’, El Norte, NL, Monterrey, 21 de marzo, seccio´n negocios.
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Evolving knowledge for development: the role of knowledge management in a changing world Kathia Castro Laszlo and Alexander Laszlo The authors Kathia Castro Laszlo and Alexander Laszlo are co-founders of Syntony Quest and faculty members at the Graduate School of Business Administration and Leadership (EGADE), Monterrey, Mexico. Keywords Knowledge workers, Corporate culture, Sustainable development, Learning Abstract In today’s changing world, knowledge, and the processes to generate it and manage it, have become key factors in creating competitive business advantage. However, the challenges facing contemporary global societies, from human conflicts to environmental degradation, call for an expanded research agenda in the field of knowledge management. Issues such as improvement of the role of corporate citizenship to promote socially and ecologically responsible operations and development of human and social capital should become part of a purposeful strategy for creating a better future. ‘‘Knowledge is power’’ – and it is up to those with access to knowledge to decide if that power will continue to be used over others to increase the gap between rich and poor or if it will be a power to empower visions and realities based on an inclusive planetary ethic. From an evolutionary systems perspective, this paper explores some of the implications and key contributions that knowledge management can make for the transition toward sustainable forms of social organization. The heuristic of evolutionary learning community (ELC) is presented as a participatory strategy for promoting learning and knowledge creation for evolutionary development. Electronic access The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1367-3270.htm Journal of Knowledge Management Volume 6 . Number 4 . 2002 . pp. 400–412 # MCB UP Limited . ISSN 1367-3270 DOI 10.1108/13673270210440893
Introduction Advances in science and technology have created unprecedented opportunities for human development and well-being. At the same time, the resultant progress evinced in the last 150 years has had certain ‘‘side-effects’’ (Meadows et al., 1972) that, although ignored for some time, have now become global issues that threaten the stability of societies and ecosystems the world over. Population growth, social inequities, hunger, armed conflicts, water shortages, pollution – these are but a few of the issues, each of which is related to every other, and together forming a complex challenge for societal development (Merry, 1995, p. 78). The finitude of resources on our planet calls for new forms of production, distribution, and consumption . . . and for new ways of learning, living, and enjoying life. The knowledge economy is an emergent reality for many organizations and nation states. ‘‘The wealth of a nation no longer depends on its ability to acquire and convert raw materials, but on the abilities and intellect of its citizens’’ (TFPL, 1999, p. 2). This knowledge economy has brought with it new fields of study and approaches that are contributing to a more robust understanding of the role of knowledge for the creation of human and social capital as key factors in societal development. The creation of these types of capital is in the interest of multiple sectors of society and benefits society as a whole. Nowadays, processes related to knowledge creation, learning, and innovation have a social impact just as significant as economic initiatives (OECD, 2001, p. 17).
Business, knowledge management and society Today, more than ever, business is a key shaper of the emerging global society. The exchange of knowledge, materials, energy and people; the blending of cultures; and the dissipation of geo-political boundaries are to a great extent the result of transnational business operations. The relevance of knowledge and the need for approaches to manage it became apparent first and foremost in the business world. In fact, in a survey of chief executives, knowledge management was put second on their ‘‘must do’’ list after globalization (TFPL, 1999, p. 3).
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Knowledge has always been relevant for the good performance of business. However, the kind of knowledge relevant to the development and maintenance of a competitive edge has changed over time (see Figure 1). During the first half of the twentieth century, successful companies focused on improving their internal processes since production and managerial operations needed to become more efficient. Scientific management, as developed by Taylor, is an example of this type of ‘‘business knowledge of the first kind’’. But increases in competition and expansion of the economy made it necessary to focus beyond the enterprise itself in order to learn more about one’s market, one’s industry, one’s consumers. This is ‘‘business knowledge of the second kind’’, a type of knowledge that is contextual and that uses benchmarks and best practices as reference points. The work of Michael Porter on competitive advantage is a typical example of business knowledge of the second kind with great impact in the 1980s. These two kinds of business knowledge tend to use metaphors that refer to business as a jungle (i.e. survival of the fittest; eat or be eaten), warfare (i.e. guerrilla strategies, ruthless competition), and the machine (i.e. efficiency and efficacy at any cost; humans as replaceable parts) (Solomon and Hanson, 1983), all of which derive from a reductionistic scientific paradigm. The challenges and opportunities emerging from a rapidly changing global environment demand that we go beyond these conceptions. Knowledge, and the processes of its
acquisition, generation, distribution and utilization, has become the main source of value creation. But science, as a knowledge creation enterprise, is itself evolving and transcending reductionistic and mechanistic conceptions. For this reason, it is important that contemporary knowledge management be grounded in the most recent scientific thought – in particular, the sciences of complexity (such as systems theory, chaos theory, and dynamical systems theory) that provide the foundations for a new understanding of how complex dynamic systems evolve. As a result, ‘‘business knowledge of the third kind’’ goes beyond the two previous types of knowledge by involving a systemic understanding of the socio-cultural and bio-physical dynamics of the global environment, thereby seeking to give rise to the evolutionary corporations of the twentyfirst century (Nattrass and Altomare, 1999). McElroy (2000) has pointed out the differences between what he has identified as two generations of knowledge management (KM). First generation KM focuses on knowledge sharing – on how to distribute existing organizational knowledge, usually through technology. In contrast, second generation KM focuses on knowledge creation – how to satisfy organizational needs for new knowledge, usually through processes of learning and value creation. In other words, first generation KM is about imitation (focusing on standards and benchmarks) while second generation KM is about
Figure 1 Business knowledge for evolutionary corporations
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innovation. This second generation is linked to the convergence that McElroy noted between first generation KM, organizational learning, and complexity theory as applied to business: all three areas have individual developmental paths but they share similar and complementary goals. As Senge (1993) and others have pointed out, the process of learning has become one of the main sources of sustainable competitive advantage. However, it is a particular mode of learning that is especially valuable for knowledge creation and innovation: learning through collaboration, which in the business world has been adapted and applied as ‘‘organizational learning.’’ The view of the organization as a machine in which humans are replaceable ‘‘resources’’ deadens the human spirit – the emotive, intuitive, and moral aspects of being – from organizational life and assumes this corporate machine to be a static and sterile system. And yet, the fact is that organizations are human activity systems (Checkland, 1981) that, like any form of community or society, reflect the purposes, values, expectations and feelings of the people who comprise them. A more appropriate metaphor for the organization – and for society as a whole – is that of a living organism: an image that makes explicit the dynamic complexity of organizational life. Complex systems are evolving systems that engage in self-organizing dynamics, though to different degrees and with varying levels of success. This can best be understood by considering how a living organism is capable of self-maintenance, self-renewal, and selftranscendence (Capra, 1996). These capabilities result from an evolutionary process of self-organization into higher levels of structural and functional complexity (Laszlo, E., 1996). Study of these features of complex evolving systems offer new insights for the design of organizational and societal strategies, structures, and processes. ‘‘The company that acts like a living organism will naturally be a learning organization absorbing and reacting to information in an evolutionary manner. Companies that are conceived of as machines, rather than living organisms, are unlikely to be aware of external shifts in public opinion or be sensitive enough to their key relationships, because they will not be sensitive to the unexpected’’ (McIntosh et al., 1998, pp. 74-5).
The concept of corporate citizenship (McIntosh et al., 1998) is gaining more weight as a performance benchmark among global enterprises. It is an important example of how business knowledge of the third kind includes issues of socio-ecological responsibility as part of its resourceful corporate strategy. We are not talking about information for the sake of compliance; we are talking about knowledge for the purpose of innovation. In a highly interconnected world, the field of knowledge management faces the challenge of making concrete and relevant contributions for the betterment of society and not only for promotion of competitive advantage for business. This involves a research agenda through which, first, KM can foster business knowledge of the third kind for the expansion of a corporate citizenship agenda and the emergence of evolutionary learning corporations; and, second, KM can make significant contributions for the creation of human and social capital required for evolutionary development.
The knowledge of evolution The suggested KM research agenda is geared to the generation of business knowledge of the third kind for corporate citizenship and for wider impact on global development. It is grounded on a new scientific paradigm that opens up new possibilities for human agency. We are making reference to the body of knowledge that is coming out of the sciences of complexity – systems theory, cybernetics, chaos theory, dynamical systems theory, nonlinear thermodynamics, autopoietic theory, to mention but a few of the areas which, considered together, inform the most recent understanding of evolutionary dynamics. For most people, evolution connotes Darwin. Unmistakably, he is important as a historical figure who legitimized a theory of evolution both scientifically and popularly. However, scientific understanding has advanced beyond even neo-Darwinian interpretations, and yet, for the most part, popular conceptions of evolution still remain strongly associated with classical Darwinism. Classical Darwinism sees evolution as a process of trial and error; something like the work of a blind watchmaker:
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A series of random genetic mutations is not likely to have produced all the complex species indicated by observation and the fossil record within the time that was available for biological evolution on this planet . . . In any case, if random mutation and natural selection require more time to produce viable species than the fossil record indicates, then Darwin’s theory, if not quite mistaken, is at least incomplete (Laszlo, E., 2000).
In recent years, an action-oriented systems approach to the development of human and natural systems has emerged from the study of evolutionary processes in nature and society. It is known as general evolutionary theory (GET) or evolutionary systems theory. It postulates that the evolutionary trend in the universe constitutes a ‘‘cosmic process’’ specified by a fundamental universal flow toward ever increasing complexity. It is now understood that this dynamic of complexification manifests itself through particular events and sequences of events that are not limited to the domain of biological phenomenon but extend to include all aspects of change in open dynamic systems with a throughput of information and energy. In other words, evolution relates to the formation of stars from atoms, of Homo sapiens from the anthropoid apes, as much as to the formation of complex societies from rudimentary social systems. The promise of general evolution theory is captured succinctly by Laszlo et al. (1993, pp. xvii, xix) as follows: General evolution theory . . . can convey a sound understanding of the laws and dynamics that govern the evolution of complex systems in the various realms of investigation . . . The basic notions of this new discipline can be developed to give an adequate account of the dynamical evolution of human societies as well. Such an account could furnish the basis of a system of knowledge better able to orient human beings and societies in their rapidly changing milieu.
By applying GET to societal phenomena, human social systems can be understood to evolve through a process of convergence to progressively higher organizational levels. When flows of people, information, energy, and goods intensify, they transcend the formal boundaries of the social system. Thus neighboring tribes and villages converge into ethnic communities or integrated states, these in turn become the colonies, provinces, states, cantons, or regions of larger empires and eventually of nation-states. Today, we are witnessing yet a further level of convergence
and integration as nation-states are joining together in the creation of various regional and functional economic and political communities and blocs, in Europe, North America, and elsewhere in the world. Through the notion of ‘‘bifurcations’’ (nonlinear and often indeterminate transitions between system states), general evolution theory can be applied to conditions that prevail when societies are destabilized in their particular time and place. Societal bifurcations – or macroshifts (Laszlo, E., 2001) – can be smooth and continuous, explosive and catastrophic, or abrupt and entirely unforeseen. However, they always describe the point at which a social system traverses a period of indeterminacy by exploring and selecting alternative responses to destabilizing perturbations. Bifurcations are revolutionary transformations in the development of society, and macroshifts are bifurcations that act on the civilizational level of human society. The reins of power change hands, systems of law and order are overthrown, and new movements and ideas surface and gain momentum. When order is re-established, the chaos of transformation gives way to a new era of comparative stability. GET explains how bifurcating societies either reorganize their structures to establish a new dynamic regime that can cope with the original perturbations, or disaggregate to their individually stable components. It provides a conceptual foundation for human emancipation and societal development. By suggesting that human destiny can be placed in human hands, it points to the possibility of moving toward the conscious creation of evolutionary strategies by which to guide the sustainable development of our societies. We have much to learn from nature with regard to self-organization and evolutionary governance, among other things. As Augros and Stanciu (1987, p. 231) point out, ‘‘her attributes of simplicity, economy, beauty, purpose, and harmony make her a model for ethics and politics.’’ This model involves learning or relearning what it means to be part of a natural community. Capra (1996, p. 4) points to this as ‘‘the greatest challenge of our time: to create sustainable communities – that is to say, social and cultural environments in which we can satisfy our needs and aspirations without diminishing the chances of future generations.’’
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The extent to which we inform our actions through a transdisciplinary theory of evolution will mark the extent to which the consequences of our actions and the implications of our thoughts will contribute to developmental pathways that are either more or less sustainable. Csikszentmihalyi (1993) put it quite plainly: In order to make choices that will lead to a better future, it helps to be aware of the forces at work in evolution. The emerging evolutionary paradigm brings with it a new sense of human possibilities, responsibilities, and response-abilities.
From knowledge transmission to meaning creation Not only is knowledge production increasing, the rate of knowledge production is itself increasing and accelerating. However, questions of what kind of knowledge is appropriate for socio-ecological well-being, who should be involved in its creation, and how it should be created, managed and positioned to evolve are as yet infrequently considered in development strategies. If knowledge is to be put to good use for human betterment, we need to democratize the processes through which knowledge is created, stored, shared, and used. Carrillo (1999) has recently outlined some of the current trends and future scenarios of the KM movement. He believes that once those engaged in the field of KM become aware of the knowledge base on ‘‘metaknowledge’’ (knowledge about knowledge and its management) it will enable the field of KM to ‘‘multiply its options for designing its own future’’ (Carrillo, 1999, p. 8). Knowledge is a process; a means more than an end in itself. The question that needs to be asked is: But a means for what? For increasing the gap between rich and poor? For exploiting natural resources in more efficient ways? For unleashing the creative potential of every human being? For creating just and sustainable societies? Without intentional directionality, the evolution of KM could go in many directions – not all of which are in our greater collective best interest. So again we affirm that knowledge is power. But it is up to those with access to knowledge to decide how to use that power: as power over others so that only an elite few can enjoy indulgent life styles, or power to empower
others in order they may engage in meaningful and sustainable forms of social organization. That is to say, it is not enough to have answers to the know-what and know-how questions. Today, more than ever, we need also to have answers to the know-why aspects of our initiatives. It is time to marry our technical knowledge with our ethical knowledge since we know that many individuals and countries – highly successful in applying the know-whats and know-hows for creating economic wealth – are still wondering: Was it worth it? It is time to move from knowledge acquisition to meaning creation. Figure 2 presents the ‘‘pyramid of meaning’’ (Laszlo, A., 2002) which places knowledge in context with other forms of meaning; some more rudimentary than knowledge such as data and information, some more sophisticated such as understanding and wisdom. Data comprises nothing more than ‘‘factoids.’’ A number out of context (e.g. 1985) means nothing since could mean anything: a year, a street address, the number of graduates in a class, etc. It becomes information when the context is made explicit. For instance, ‘‘Daniel lives on 1985 Broadway.’’ If someone asks, where does Daniel live? This would be the correct answer. As we move up the pyramid, it becomes more difficult to find ‘‘right answers.’’ Knowledge answers ‘‘how’’ and ‘‘how to’’ questions and is less certain. So, how do I get to Daniel’s house from here? Well . . . that depends. Are you driving? Walking? Do you have a helicopter? You may want to take the scenic route rather than the fast route. Knowledge and information can be taught and formally transmitted. But there are limits to teaching. Understanding cannot be taught: it has to be created by each person for themselves since it involves active engagement in learning and creating meaning. As a result, your understanding of a situation is unique to you, and by learning and collaborating together we can expand our individual understanding in order to share a common cognitive map. At the level of wisdom, meaning is often counterlogical. Sometimes, regardless of the facts, the strongest arguments, the greatest incentives, you cannot be convinced because in the greater scheme of things, you know it is not right or it simply does not make sense. The difference between knowledge, understanding and wisdom has deep implications for the design of educational
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Figure 2 The pyramid of meaning
systems. Research on learning, cognitive psychology, educational technologies, and so forth, are pointing to the need to engage learners in an active construction of meaning. Andragogical and learner-centered approaches are some of the sorts of responses that support the use of knowledge for the creation of understanding. The lower portion of the pyramid refers to forms of knowing that are more specific but also more limited. It feels more comfortable and more certain to answer the ‘‘what’’ questions, especially when we isolate the object of study from its context. In this sense, the lower portion is concerned with reductionistic approaches which assume that adding together an understanding of pieces will result in an understanding of the whole. ‘‘How’’ questions are more challenging to deal with; there are many possible paths to the desired outcome, as described in the examples given above. But ‘‘why’’ questions are more significant since issues of appropriateness and goodness of fit must also be considered. Understanding integrates reason and values, intellect and intuition. ‘‘Why’’ questions consider the impact and ethical implications of a decision according to the situation and its context. In this sense, understanding is more systemic, more holistic. The answers at the level of wisdom also deal with ‘‘why’’ questions, but now they engage your emotions, as well. Simply put, wisdom, in addition to understanding,
involves love. With this framework in mind, knowledge management makes sense only as an enabler to reach levels of understanding and wisdom that will permit a positive impact on the development of societies and on the evolution of human civilization as an integral part of this living planet. The distinction between reductionistic and systemic is correlated with the evolution of scientific knowledge that we mentioned earlier when describing the progression of business knowledge of the first, second, and third kinds. Science, as an inquiring and learning system (Checkland, 1981, p. 50), is evolving. The quest for knowledge and understanding is a human enterprise that moves continually toward higher levels of complexity, less clear-cut answers, and more evolutionary possibilities. Inquiry in the social and human sciences is moving away from quantitative research and advancing toward qualitative, dialogue-based, and actionoriented forms of investigation. That is the case, for example, of the participatory inquiry paradigm which seeks ‘‘to change the world . . . participation implies engagement which implies responsibility . . . Participatory research is thus essentially transformative’’ (Heron and Reason, 1997, pp. 287-8). The world view that supports collaborative forms of inquiry is fundamentally participative, systemic, pluralistic, and egalitarian. It is based on emancipatory education, spirituality and ecology, and supported by systems
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thinking and the new sciences of complexity. ‘‘This world view sees human beings as co-creating their reality through participation: through their experience, their imagination and intuition, their thinking and their action’’ (Reason, 1994, p. 324). Knowledge is a product of human experience and reflection. Given that it is context dependent, knowledge is a resource that can be embodied in an individual or a collective, or embedded in a routine or a process. Since knowledge can be either explicit or tacit, it can be incorporated in language, stories, rules, tools, resulting in an increased capacity for decision taking and action to achieve some purpose (Wong and Radcliffe, 2000). Explicit knowledge can be clearly articulated, communicated in formal and systematic languages or codes, and set down in written documents (Nonaka, 1994). Tacit knowledge is demonstrated through actions, embodied in personal experiences, and is difficult to transfer (Polanyi, 1966). De Long and Fahey (2000) distinguish between human knowledge, social knowledge, and structured knowledge. Human knowledge is both explicit and tacit – it is what individuals know (cognitively) or know how to do (procedurally and kinesthetically). Social knowledge exists in relations among individuals and groups. It comprises synergetic knowledge, is largely tacit, and is the result of working and learning together. Lastly, structured knowledge is embedded in the processes and infrastructure of a social system. Knowledge in this form is explicit and rule-based; it exists independently of human knowers and represents an organizational resource. These knowledge taxonomies are represented in the epistemology of the participatory inquiry paradigm (Heron and Reason, 1997), described below, since it not only includes these different types of knowledge but integrates them in a coherent framework that shows the relations and interdependencies among different forms of knowing. The participatory systemic paradigm is an integration of the different levels of the pyramid of meaning geared to disciplined and rigorous inquiry that enables new forms of social organization. Heron and Reason (1997) elegantly describe the epistemology of the participatory paradigm which includes four interdependent ways of knowing: experiential, presentational, propositional,
and practical. Experiential knowing involves direct encounter with another being, that is, participative and empathic interaction so that one feels both together with, and distinct from, the other. Presentational knowing is the symbolization (in graphic, musical, verbal, or any other metaphorical form) of the intuitive grasp of the meaning generated through the interaction with the world (i.e. experiential knowing). Propositional knowing involves rational conceptualization, as through theories and logical statements, derived from the metaphors of the presentational knowing and ultimately grounded in our experiential articulation of the world. Practical knowing is manifest in competencies that generate value through actions that fulfil and apply the other three forms of knowing. It is knowing through acting in, and changing, the world. A truly participatory and systemic inquiry will use all these forms of knowing through emotional and personal experiences, creative and aesthetic expressions, intellectual and theoretical articulation, and contextualized and transformative practice. In this form of inquiry, critical subjectivity – the awareness of the interrelations between these different ways of knowing – is complemented with critical intersubjectivity – the validation of knowledge through ‘‘shared experience, dialogue, feedback, and exchange with others’’ (Heron and Reason, 1997, p. 283). The epistemology for participatory forms of inquiry suggests that by engaging in processes of meaning creation, people can understand the implicit assumptions and embodied values of a social system. Understanding a situation is a precondition for proposing alternatives. That is the transformative and emancipatory power of participatory systems research which provides the platform for purposefully evolving structured knowledge, and hence, society. This epistemology and the integration of forms of knowing that move meaning generation toward understanding and wisdom represent, in a way, an initial proposal for the democratization of learning and knowledge management processes. We need to develop ‘‘research methods that can deal with the kinds of ‘data’ that emerge out of the everyday world of human conversations and activities’’ (Salner, 1996, p. 6) in order to unleash the collective intelligence and creativity needed to design appropriate responses to the practical
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challenges of socio-ecological survival ‘‘where no reliable guides exist’’ (Salner, 1996, p. 8).
Evoluntionary learning community When a person becomes part of a social system, much of the knowledge required to carry out his/her functions has to be picked up and learned progressively in day-to-day interactions, as well as through educational processes devised to transmit cultural values and practices. However, history shows that there is neither sufficient learning from past experiences, nor efficient preservation of vital knowledge from the present, for societies to evolve purposefully. This implies new challenges for both societal learning and knowledge management. Learning, inquiry, and dialogue are processes necessary for meaning creation. These knowledge processes call for human beings capable of engaging in self-directed and collaborative learning. But learning what? And how? Although necessary, it is not sufficient to learn exclusively from the past. We must invent the future into existence also through our dreams of what should be. Banathy (1996, pp. 318-19) differentiates between maintenance and evolutionary learning. The first is adaptive. It involves the acquisition of fixed viewpoints, methods, and rules for dealing with known and recurring events. It maintains the status quo, and is appropriate during periods of socio-cultural stability. Maintenance learning is more concerned with information and knowledge of ‘‘what is’’ and ‘‘what works.’’ In contrast, evolutionary learning is innovative. It enables the learner’s ability to cope with uncertainty and change, renew perspectives and creatively design coevolutionary human systems. It represents a more appropriate learning strategy during periods of socio-cultural instability or macroshifts where there are no clear guides to the future. By and large, contemporary educational systems are focused primarily on maintenance learning and the creation of ‘‘knowers’’ – that is, people who know a lot about an existing field or area of specialization. But new realities and global challenges call for evolutionary learning and the empowerment of ‘‘learners’’ – that is, people capable of generating new knowledge and processes as
appropriate responses to changing sociocultural and bio-physical environments (Laszlo and Castro, 1995). Evidently, knowledge is an essential by-product of learning, but the true focus of evolutionary learning is the transformation of social realities to produce increased personal, social and environmental well-being. Laszlo, K.C. (2000, 2001) has outlined the basic conditions for the design of evolutionary learning community. This form of community provides learning environments where people can learn together about the interconnected nature of our world, the ecological impact of our individual and collective choices, and the joy of finding a meaningful way to contribute to the emergence of sustainable and evolutionary futures. Einstein and Russell (1957) considered that ‘‘we have to learn to think in a new way’’ in order to apply our knowledge ethically and to provide creative solutions to the challenges that confront us. To learn to think in a new way – that is, to go beyond reductionism into a systemic mode knowledge management – may depend on our ability to learn how to learn in new ways since the dominant educational system is still grounded in reductionistic worldviews and continues to propagate outdated myths and values. Indeed, educational processes have been perpetuating the Grand Narrative of Progress (Feinstein and Krippner, 1988) that maintains or exacerbates the global crises, rather than creating alternatives and solutions. In the last few decades, many scientists, futurists, philosophers, and practitioners have been exploring visions and means of alternative positive futures (e.g. Banathy, 2000; Bohm, 1980; Chaisson, 1987; Eisler, 1987; Elgin, 1993; Goerner, 1994; Harman, 1988; Janstch, 1975; Laszlo, A., 2002; Leonard, 1968; Macy, 1991; Milbrath, 1989; Montuori, 1989; Nattrass and Altomare, 1999; Pearce, 1971; Theobald, 1997). The gap between this accumulated knowledge and the current negative realities around the world indicate the absence of channels to communicate and operationalize the growing body of knowledge. This gap represents the challenge of developing appropriate processes and environments where people can learn, understand, and create meaning that will empower them to live in ways that foster lifelong learning, community, and sustainability.
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By using the methodology evolutionary systems design (ESD) (Laszlo, A., 1999, 2002; Laszlo and Laszlo, 2000; Laszlo, K.C., 2001), the co-creation of ELC takes the form of participatory conversation, learning, design and action. An ideal image of the future and of the desired outcomes agreed upon by those engaging in the inquiry, guide the collaborative exploration that moves from an informed vision of ‘‘what should be’’ to a concrete reality of ‘‘what can be.’’ The process and results of this learning and design journey foster in the participants attributes such as lifelong learning, systems thinking, environmental stewardship, planetary citizenship, authenticity, empathy, creativity, pragmatism, optimism, and a passion for affirming life (Laszlo, K.C., 2001, pp. 387-8). The ELC seeks to serve as an embodiment of a balanced partnership between humans and nature, a place/space for future thinking, for ongoing learning, for enjoying work and play, and for producing a wholesome and syntonious (i.e. evolutionarily consonant) quality of life.
Third generation knowledge management Several authors have characterized the evolution of the field of KM through the description of ‘‘generations’’ (e.g. McElroy, 2000; Carrillo, 2001; Skyrme, 2000). These descriptions are exactly that – descriptive of the historical development of the field of KM from different perspectives. We have made reference to McElroy’s (2000) distinction between first generation KM and second generation KM. Following his line of thought, first generation KM describes ‘‘what is’’ and, by capturing collective intelligence through intellectual capital technologies, promotes best practices. Second generation KM departs from existing knowledge bases in order to suggest ‘‘what could be’’ through processes of learning and innovation. Our suggestion for a third generation of KM is not descriptive but prospective. That is, it is an exploration of ‘‘what should be’’ presented as a provocative invitation to engage in the purposeful and conscious evolution of the field of knowledge management. This prospective and somewhat prescriptive suggestion responds to the need for ethical social innovation and for explicit
Figure 3 Evolving KM
commitments to contribute to evolutionary development (see Figure 3). Third generation KM is relevant beyond business applications. And yet, it is correlated with the need for business knowledge of the third kind to support the evolution of business and the emergence of strong corporate citizenship (Laszlo, K.C., 2002). Global business operations are changing the world. That change should be for the good. Just as learning organizations can be seen as the vehicles for facilitating second generation KM, evolutionary learning communities – within corporations, families, nonprofit organizations, schools, neighborhoods – are the vehicles for enabling evolutionary learning processes that empower individuals and groups to participate in the co-creation of sustainable and evolutionary futures, that is, for third generation KM. Third generation KM is about the democratization of knowledge, about citizen involvement, and the expansion of the boundaries of what traditionally has been considered education in order to design an authentic learning society. It is not so much about knowledge and know-how any more but more about meaning and know-why. It is based on a new way of thinking informed by a planetary ethic and a different way of living from what is now favored by mass media commercialization. KM has both the potential and the responsibility to contribute to the emergence of a sustainable global civilization.
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A new look at development Most of the well intentioned development efforts that account for much of the ‘‘progress’’ achieved in the past, both in developed and developing countries, are responsible for major environmental damage and the widening of the gap between rich and poor on a global scale. To look at development from an evolutionary perspective involves making explicit and embracing the values, perspectives, assumptions, and knowledge required to move human societal systems to an ethical social innovation phase. How can we make development locally relevant and globally attuned? How can development promote higher quality of life? How can our species learn to live simply, meaningfully, and yet productively? These are the true, as yet unaddressed, challenges of development, and they are the ones to which the inquiry on evolutionary development is dedicated. Most traditional definitions of development are related to the concept of welfare and have direct linkages to economic dynamics. For instance, the meaning of development is often biased to ‘‘economic development’’ (Meier, 1970) and equated with industrialization. Authors such as Mathur (1999) correlate economic development with change in employment and self-sustained capital income, which implies growth in per capita income as well as in wealth and population movements. The Economic Development Council (United Nations, 1987) defines the term as the process of creating wealth through the use of all kinds of resources, and in the emerging global economy, knowledge is the newest form of capital. Yet, these are limiting definitions of development because they restrict its causes to quantifiable variables such as capital accumulation. To answer the question of why the distance between developed and less developed countries persists, theoretical approaches have been formulated using empirical instruments such as annual rate of growth and per capita income. Used as yardsticks, these approaches tended to reduce human wellbeing to numerical measures. In recent years a growing interest has been developing around the implications of the human factor as a central issue in economic development. Starting with Backer’s work (Meier, 1970), human capital has become
another investment element on the road to economic development. Through his model of the US economy, Schultz (1961) considers that, to a certain extent, the successful growth of America until 1960 can be explained by the high productivity of labor. Later, Lucas (Todaro, 1992) uses the interaction between the productivity of human capital and other resources to explain the growth rate in regions with human capital accumulation. From here, the concept of the learning regions has gained popularity, reinforced by the success of areas such as Silicon Valley in California and Route 128 outside of Boston. Learning regions theory (LRT) is concerned with those intangible factors of intellectual capital that make a region economically dynamic and competitive. It focuses on concepts such as the nature of business innovation and the conditions that enhance it. These regions are characterized by the presence of educated, creative, and entrepreneurial people as well as universities. According to LRT, the main cause of development is the social interaction among the agents that promote innovation and technological change. Economic development depends on the capability of the system to learn and to generate knowledge, know-how, and skills. Second generation KM is an appropriate tool for such development objectives. Notions such as dynamic change were integrated with so called evolutionary economic theory based to some extent on a consideration of evolutionary biological analogies. In this theory, economic development is based on a notion of continuous change where different forces combine to build a dynamic network of interactions. Economic agents are seen to behave in a systemic field such that every member of a society has a roll to play. The theory surfaces the processes by which energy sources maintain the functional and operational viability of the system through the generation and transmission of knowledge. In recent years, it has become imperative to gain a better understanding of the developmental pathways that take into consideration the whole of human experience in its socio-cultural and bio-physical environment. It implies nothing less than a revision of Schumacher’s (1973) core idea of ‘‘economics as if people mattered.’’ The design of strategies that promote evolutionary development, as any other human activity, is the result of particular Weltanschauungen.
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Consequently, in order to obtain a clearer image of the possibilities of evolutionary development, it is essential to adopt a new set of assumptions: The new concept of development takes account not only of economic growth but also of all those parameters that reflect the quality of life, full enjoyment of creative capacity and observance of human rights, which the principal decisionmakers should take into account so that development is not owned and dispensed by a few but is a common undertaking on an international, multilateral scale, with the human being as its centre, its sole agent and its beneficiary. All that is needed is a new look at the world, and different premises [emphasis added] (Mayor, 1990).
New research indicates the importance of expanding the traditional concept of development as to include issues of social and environmental sustainability through the creation of human and social capital (Laszlo et al., 2002; OECD, 2001). ‘‘Human capital represents the knowledge, skills and health embodied in individuals . . . [while] social capital refers to the norms and networks facilitating co-operation either within or between groups’’ (OECD, 2001, p. 12). These new forms of capital represent the foundation of the true democracy (i.e. a participatory democracy) necessary to enable purposeful and ethical socio-cultural evolution (Banathy, 2000). Knowledge management at the societal level seems to be a key component for the emergence of authentic democracy. Participatory democracy is an ideal form of governance in which all citizens are involved and share responsibility for making appropriate decisions and choices that will enable the well-being of society. However, third generation KM brings into play a futurecreating orientation that calls for anticipatory democracy which is both participatory and future enhancing. Yet unless knowledge is distributed efficiently among the population, even participatory democracy will remain a myth. In other words, unless individuals and groups (i.e. average citizens and local communities) have access to knowledge and learning opportunities, have the social context for collaboration and resourcefulness, have the competencies to shape their present conditions and to influence their future, and have the moral sensitivity to make informed and life-affirming choices, we cannot expect any development initiative to be successful
enough – evolutionary enough – for the transcendence of global problems and the emergence of a new social order. The trend is to shift from increasing the standard of living (measured in quantitative economic terms) toward more qualitative and quantitative metrics of the quality of life, closely linked to subjective issues of happiness, meaning in life, and socio-ecological well-being. Sustainability is a rich source of innovation. Doing more with less, promoting living simply and meaningfully, and creating a sustainable economy where present and future human needs can be met without compromising the natural environment – these are some of the concrete objectives that any society interested in moving toward an evolutionary stage can begin moving toward. Third generation KM and the research agenda derived from its intrinsic challenges and opportunities can bring to light and set in motion the elements of an evolutionary guidance system for the ongoing self-organization of human societies in syntony with the life support systems upon which they depend.
Implications for further research The present inquiry on evolutionary development and third generation KM departs from the well established foundations of evolutionary understanding based on the sciences of complexity, from the emancipatory and participatory traditions of systems thinking, from the wealth of resources in the growing field of KM, and from the expanding evidence that points to the interrelated set of global problems that currently challenge humanity. Evolutionary development is a call for integration, for applying what we already know, for innovating with the future of the planet in mind, for reinventing what it means to be human. The following is a list of research objectives that start to explore the ‘‘big moving picture’’ of our socio-cultural evolution and the integration of the knowledge and insights already available for a different approach to development initiatives. Suggested objectives for a comprehensive KM research agenda for evolutionary development include, but are not limited to, initiatives that seek to: . Facilitate the transformation of businessas-usual corporations into evolutionary
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corporations in order to launch the socioecological transformation of our global civilization (Hawken et al., 1999; Nattrass and Altomare, 1999; Senge et al., 2001). Explore the relation between anticipatory democracy and knowledge-based evolutionary development. Contribute to the deeper understanding of the role of human and social capital in evolutionary development. Design approaches and programs for broad participation of the global population in knowledge management processes of the first, second, and third generations. Develop ‘‘an integrated body of knowledge that provides empirical principles for the generation and distribution of wealth in a knowledge economy’’ (Carrillo, 1999, p. 9) in order to influence policy for the reduction of the concentration of wealth at both global and local levels. Contribute to the emergence of an authentic global learning society by emphasizing the importance of evolutionary learning and by creating the conditions for the integration of learning strategies in the core processes of business, mass media, the arts, health, governance, and community activities. Design methodologies for regional evolutionary development planning. Conduct action-research on the design of ELCs in diverse cultural contexts in order to increase the practical knowledge of how to interpret and adapt the vision of a sustainable and evolutionary future to their specific realities. To do so in ways that incorporate the design of appropriate learning agendas and action plans.
Evolutionary development is not a ‘‘leadersonly’’ form of strategic thinking. In fact, it is an approach for both policy formulation and citizen empowerment, for global thinking and local acting, for top-down decisions and bottom-up initiatives. Knowledge was the motor of change during the societal transition from medieval to modern society. It is metaknowledge, or knowledge about the way knowledge influences the kind of societies that we create and about the way knowledge and society evolves, that offers the opportunity to come up with bold proposals for change. As Margaret Mead pointed out: ‘‘This is the first time in history that man [sic.] has been able to
label what was happening to him while it was happening, and this is profoundly important’’ (in Montuori, 1991, p. 5). It is the first time that we have the challenge – and the opportunity – to be conscious participants in our socio-cultural evolution. Once we take on this responsibility, we will then have to learn what it means to become evolutionarily responsible. This is the challenge of KM practitioners of today, for tomorrow.
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