Knowledge and Skills Needed in Knowledge Economy

Abstract

Knowledge is a complex and multidimensional term, while knowledge management is a rather new phenomenon. Philosophy of knowledge is involved in organizations and nations, while economy and individuals are significantly determined by knowledge society. How to manage organizations through innovations and organizational knowledge in global economy with limited resources and extended competition? How to develop unique and specific skills and technologies? How to form efficient learning organizations and transform strategy into high quality results? IT helps to design learning organizations while the imperative for learning and constant growth is becoming the essential part of individual and organizational activities. The process of permanent education and improvement of skills and knowledge becomes the key feature in the successful behaviour of a certain organization. This paper examines the education potential and gives a new view on the role of future knowledge management and skills. We agree that sustainable knowledge economy is demanding. In the next decade, we will probably find the answers on following questions: What is the role of 21st century education? What specific kind of knowledge and skills will be important in 2020?

Full text

Knowledge and skills needed in knowledge economy
Ivana Marić, Petra Barišić, Ivana Jurjević
Faculty of Economics and Business,
University of Zagreb, J. F. Kennedy sq. 6,
10 000 Zagreb, Croatia
imaric@efzg.hr, pbarisic@efzg.hr, jurvevic.@gmail.com
Abstract. Knowledge is a complex and
multidimensional term, while knowledge management
is a rather new phenomenon. Philosophy of
knowledge is involved in organizations and nations,
while economy and individuals are significantly
determined by knowledge society. How to manage
organizations through innovations and organizational
knowledge in global economy with limited resources
and extended competition? How to develop unique
and specific skills and technologies? How to form
efficient learning organizations and transform
strategy into high quality results?
IT helps to design learning organizations while
the imperative for learning and constant growth is
becoming the essential part of individual and
organizational activities.
The process of permanent education and
improvement of skills and knowledge becomes the key
feature in the successful behaviour of a certain
organization.
This paper examines the education potential and
gives a new view on the role of future knowledge
management and skills. We agree that sustainable
knowledge economy is demanding. In the next decade,
we will probably find the answers on following
questions: What is the role of 21st century education?
What specific kind of knowledge and skills will be
important in 2020?
Keywords: knowledge, knowledge economy,
education
1 Introduction
The world is changing daily and is increasingly
becoming determined by technology and knowledge
philosophy.
Knowledge is a fluid mix of framed experience,
values, contextual information and expert insight that
provides a framework for evaluation and
incorporation of new experiences and information. It
originates and is applied in the mind of a scholar. In
organizations, it often becomes embedded not only in
documents or repositories but also in organizational
routines, processes, practices and norms [1].
The question of defining knowledge and its role
in forming a balanced society has occupied the minds
of philosophers and theoreticians for ages.
There are many definitions of knowledge. One
of them tries to define knowledge through information
and data. Vance (1997) defines information as data
interpreted into a meaningful framework whereas
knowledge is information that has been authenticated
and thought to be the truth [19].
Knowledge is the process of practical
networking of information. Knowledge is a result of
processing information in people’s mind [2].
Probst and Geussen (1997) define knowledge as
integrity of knowledge and skills applied to solve
problems. It includes both theoretical knowledge and
practical everyday norms and instructions for actions.
Knowledge is based on data and information, but
unlike them, it is always relayed to a person.
Knowledge appears as individual process in specific
context manifested in action [12].
2 Towards to knowledge society
The recent interest in knowledge management
and knowledge management systems has been fuelled
by the transition into information age and the theories
of knowledge as the primary source of economic rent
[1]. Knowledge management [21] is a process of
identifying, capturing and leveraging the collective
knowledge in an organization in order to boost its
competence.
Knowledge management [1] involves distinctive
but interdependent processes of knowledge creation,
knowledge storage and retrieval, knowledge
distribution and knowledge application. Knowledge
management is not monolithic, but a dynamic and
continuous organizational phenomenon.
Hackbarth (1998) finds that knowledge
management is purported to increase innovation and
responsiveness [7].
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The knowledge remains useless if not managed
and applied properly. Organizations are constantly
looking for new models and techniques of successful
managing within turbulent, unpredictable and highly
competitive environment. Knowledge management is
one of the winning strategies. The next table describes
various definitions of knowledge and different
implications for Knowledge Management (KM)
accordingly [1, 10].
Table 1. Implications for Knowledge Management
Definition of
Knowledge
Description
Implications for
Knowledge Management
(KM)
Knowledge
vis a vis
Data and
Information
Data are facts, raw
numbers
Information is
processed/
interpreted data
Knowledge is
personalized
information
KM focuses on exposing
individuals to potentially
useful information and
faciliating assimilation of
information
State of
Mind
Knowledge is the
state of knowing
and understating
KM focuses on exposing
individuals to potentially
useful information and
faciliating assimilation of
information
Object
Knowledge are
objects to be
stored and
manipulated
Key KM issue is building
and managing knowledge
stocks
Process
Knowledge is a
process of
applying expertise
KM focus is knowledge
flows and the process of
creation, sharing, and
distributing knowledge
Access to
Information
Knowledge is a
condition of
access to
information
KM focus is organized
access to and retrieval of
knowledge content
Capability
Knowledge is the
potencial to
influence action
KM is about building core
competencies and
understanding strategic
know-how
The state of knowledge [15] is related to storage
and accessibility of knowledge in an organization.
Šikyr, Boras and Bakić-Tomić explain HRM practices
in managing knowledge workers, the concept of
knowledge and its application to organization.
Explicit knowledge is usually stored in the databases
systems and can be accessed relatively easily. Tacit
knowledge is stored only in the workers’ memory and
is not easily accessible. The flow of knowledge is
related to creation, sharing and use of knowledge in
an organization. Explicit knowledge is created, shared
and used through information systems and
information and communication technologies
(IS/ICT). Tacit knowledge is created, shared and used
through interaction and communication among
workers. The application of Knowledge Management
in the organization results from the business strategy
whose objectives and practices are specified in both
information and human resources strategy.
Information as a production factor does not have
intrinsic value. Only when transformed into
knowledge and applied within companies does it gain
value [11].
Wilke [22, 6] talks about knowledge society or the
one based on knowledge where structures and
processes of material and symbolic reproduction of
society are so pervaded by knowledge dependent
operations that information process, symbolic analysis
and system of experts get primary role.
People, their knowledge and skills, their potential
and commitment, are an essential capital when
building a successful organization. The dominant
competitive advantages of modern society [18] are the
knowledge and the skills of the workforce.
Knowledge as a resource is a central part of the circle
that also includes globalization, structural
transformation, as well as information and
communication technology. Finally, the whole
process is enabled by directing global business
processes and world information transparency
illustrated in Figure 1 [10, 15].
Structural
transformation
in the
information
and knowledge
society
Globalization
Information and
communication
tehnology/
importance
increase
-Knowledge becomes scares resource
-Appear information and knowledge
marke ts
-
Speed transactions
-Decrease costs of transactions
-
Local and global competition
-International
acceleratedlearning processes
RESUORCE OF
KNOWLEDGE
-Worl d information transparency
-Directing global business processes
Figure 1. The role of knowledge as resource
The specific knowledge may partly be
subconscious where a knowledge worker is not
necessarily aware of the importance of his/her specific
knowledge to the organization. The access of others
to specific knowledge may be limited. They do not
need to be able to learn the specific knowledge
because they may be lacking their own skills,
abilities, experience, interest, time, money, etc., or
their access to the specific knowledge may be
restricted by certain rules.
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3 Knowledge workers and
human capital
Knowledge is a key factor of competitive
advantage of individuals, organizations and the entire
economy. It is a distinctive organizational feature that
distinguishes successful from unsuccessful
organizations. Bahtijarević and Pološki [3] emphasize
the need for learning and say that people,
organizations and companies who want to succeed are
forced to learn constantly and quickly, promptly
receiving relevant information and knowledge.
The most valuable asset of 21st century
organization, both profit and nonprofit ones, is
knowledge workers and their productivity [6].
The term knowledge worker is related to
human capital. Good management has the potential to
transform all organizational knowledge to
organizational results. Relations between human
capital and knowledge workers are presented in
Figure 2 [16, 38].
Figure 2. Human capital and knowledge workers
According to World Competitiveness Report
among 139 countries [15], the survey that has
included 13 500 business people ranked Croatia at
position 77, while overall quality of the education
system put Croatia to place 89. Knowledge
management in Croatia is moderate. Unfortunately,
the data are very unfavorable regarding lifelong
learning and further education at work, the fact that
positioned Croatia at place 128.
The first significant research of practice
knowledge management in large Croatian companies
was conducted in 2008 by Vidović [20], and the final
results showed that there existed an awareness of the
need for serious approach to knowledge management.
At that time the field was at an early stage of
evolution. The conclusions of that research confirmed
that the large Croatian companies were still in the first
phase of knowledge management and that they were
much better at managing explicit knowledge rather
than the tacit one. There are no significant differences
in the perception of employees and the actual practice
of knowledge management in large Croatian
companies. The development of knowledge
management is not related to the company’s success.
Education is the key part of progress and
investing in knowledge economy, that is, a well-
organized and innovative education system, is a
crucial segment of the whole economic growth. The
paradigm of work in the future and the concept of
living is dramatically changing and undergoing
transformation through the development of IT,
innovations and knowledge management. Knowledge
organizations will be agents of knowledge of 21st
century and new skills and knowledge will be needed
at the global scene.
The high cost of investment in education [4] is
generally recognized in the world today. This fact is
being reflected in the percentage of gross domestic
product that governments allocate for formal
education in their countries (typically between 5%
and 6% of GDP), and substantial extra-budget funds
intended for formal and informal education of
company’s or organization’s staff and their individual
training.
Education system has to take into account new
trends, new needs and skills for e-generation [10] and
conduct the redefinition of educational institutions.
Automation, globalization, workplace change,
demographic change, personal risk and responsibility
are dominant forces that change skill demands these
days. Skills that most employers expect to become
more important in the next 5 years are: critical
thinking/problem solving, IT application,
teamwork/collaboration, creativity/innovation,
handling diversity. Additionally, Ledward and Hirata
(2011), in the context of 21st century skills,
encompass 4 elements of learning and innovation
skills and these are critical thinking, communications,
collaboration and creativity, namely, 4Cs [9].
Knowledge as a resource needs learning
organizations as formal forms and has to be structured
through inspired education and new skills and
competences illustrated in Figure 3.
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Figure 3. Process of creating skills and knowledge
There is a strong tie in the field of knowledge
between the educational institutions, knowledge
management and needed skills and knowledge.
21st century can be declared as ‘the knowledge
era’ needing new knowledge and new skills
consequently resulting in new knowledge. New
business concept requires new forms of management
guided by new knowledge workers.
Each organization at the global market becomes
learning organization. The concept of long life
learning is reforming and dramatically changing today
work and life in looking for new ways of thinking and
solving problems. As a result of all these changes,
new occupations and jobs are becoming more relevant
as the new age approaches.
New occupations with the fastest growth rate and
occupations that will add the most jobs since 2006 are
presented in Table 2 [5].
Table 2. Which occupations will see great growth
between 2006 and 2016?
Twenty occupations with the
fastest rate of growth
Twenty occupations that will
add the most jobs
Network systems and data
communications analysts Registered nurses
Personal and home care aides
Retail salespersons
Home health aides
Customer service representatives
Computer software engineers,
applications
Combined food preparation and
serving workers
Personal financial advisors Office clerks, general
Veterinary technologists and
technicians Personal and home care aides
Makeup artists, theatrical and
performance
Home health aides
Medical assistants
Postsecondary teachers
Veterinarians
Janitors and cleaners, expect
maids and housekeeping cleaners
Substance abuse and
behavioural disorder
counsellors
Nursing aides, orderliness, and
attendants
Skin care specialists
Bookkeeping, accounting, and
auditing clerks
Financial analysts
Waiters and waitresses
Social and human service
assistants
Child care workers
Gaming surveillance officers
and gaming investigators
Executive secretaries and
administrative assistants
Physical therapist assistants
Computer software engineers,
applications
Pharmacy technicians Accountants and auditors
Forensic science technicians
Landscaping and groundskeeping
workers
Dental hygienists
Elementary school teachers,
expect special education
Mental health counselors
Receptionists and information
clerks
Mental health and substance
abuse social workers
Truck drivers, heavy and tractor-
trailer
We can conclude that in the future the most
favourable occupations will be in the field of
information and communication technology, medical
and home care aids, financial advising and mental
care.
4 Conclusion
Today, knowledge is not just a term or a
phenomenon; it is a process, an acumen and a result.
It is a starting point, a final state, an input and an
output, a process in itself. Knowledge is a modern
religion; knowledge is changing society,
organizations and economy. The concept of our work
and living is significantly touched by paradigm of
knowledge. Knowledge economy is constantly
pushing us forward because we are involved in
process of learning, communicating and transforming
through new ideas, information and technology. This
makes knowledge the most influential factor and a
powerful tool of today.
Managers are increasingly coming to realize that
the continuing education and knowledge improvement
of their employees is one of the most effective ways
to achieve competitive advantage. It is a basic
precondition for entering the market competition and
a successful struggle for the affection of consumers
[13, 724].
Knowledge organizations will be agents of
knowledge of the 21st century and new skills and
knowledge will be needed at the global scene.
Education system has to reconsider new trends and be
transformed to inspire new skills and competences.
The roles of education and development in
learning organizations are directed towards creating a
new paradigm of learning based on innovations,
changes and new technologies that modify every
employee into a knowledge worker and organizations
into knowledge organizations.
In conclusion, we agree with Professor Sikavica
[14, 540] when he argues that the constant
technological progress and innovation in all areas of
human activities require that all employees must
constantly be educated and trained. Finally, their
knowledge
management
and education
educational
institutions as
agents of
knowledge
skills and
knowledge
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future and their survival in their organization depend
on it.
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