Chapter-II: Review of Literature

Chapter-II
Review of Literature

2.1: Introduction
This chapter deals with the review of existing literature on the knowledge
economy with respect to developed as well as developing country context. A large
number of literatures in Indian context have also been

reviewed for our purpose.

Based on this review we have been able to identify some of the important aspects of
the knowledge economy vital for the growth and expansion of different sectors such
as agriculture, industry and the service sectors of the Indian economy. The review of
literature has been done in section 2.2.

2.2: The Review

Knowledge Harizons (2000) edited by Charles Despres and Daniel Chauvel
(Budler worth Heinemana) have arranged valuable 15 papers in four arranged
valuable 15 papers in four sectors in which section I (Part I: Knowledge Management
what is it?) comprises three articles, one by Kavl M. Wiig, one by Robert M. Grant
and the third one by Charles Despres and Daniels Chauvel. The first article by Wiig
elaborately discusses the long history of knowledge management, a major part of it
being the intellectual roots of knowledge management. The present day knowledge
management, according to Wiig, has many origins, like philosophical thinking,
concerns for requirements of expertise in the work place, perspectives of education
and business leaders.
The second article in the book by Robert M. Grant explores two specific
questions relating to current knowledge revolution in management. The questions are
as follows.
Why this recent explosion of interest in knowledge management? What are
critically important contributions that the knowledge perspective offers to
management theory and practice? The first section investigates the reasons for the
14

Chapter-II: Review of Literature

surge of interest and activity in knowledge management. The author specifically

focuses in particular on the changes that have occurred in the world economy. In
discussing second question the author explains that management is subject to fashion,
hype, bandwagon effects, misinformation, and the activities of unscrupulous
entrepreneurs. Grant views that in spite of its drawbacks knowledge management
offers a set of ideas and insights that give if the potential to make the most important
advance in management theory and practice of the past 50 years. The author asserts:
although information and communication technology from e-mail to groupware, the
Internet, and intranets have made huge strides in classifying, storing and transferring
explicit knowledge, it is the management of tacit knowledge that the major challenge
remains. The third article by Charles Depress and Daniele Chauvel (the editors of the
book) explain, in detail, the sociology of knowledge wherein they define community
and discuss models in the community. They also summarise three pillars of
knowledge management as explained by Karl Wiig.
In section II of the book (Part II: Knowledge Intensive Management) there
are four important and resourceful papers relating to knowledge intensive
management. The first article in this section, contributed by Ikujiro Nonaka and
Partick Reinmoellen, is about creation and utilization processes in knowledge creation
theory which in effect discusses hard and soft components and structural and
procedural perspectives of dynamic systems, creative routines, and hard and soft
components of dynamic systems for knowledge creation and utilization. The
structural perspective includes both information technology and organizational
systems. IT provides the structure of creation and exploitation of explicit knowledge.
IT in knowledge, the authors address, has three advantages, viz, efficiency,
effectiveness and velocity. The authors give so much emphasis on human resource
and career development programmes because these are the systems promoting
internalization of explicit knowledge.
Another paper in this edited book by Anthony K.P. Wensley and Alison
Venwijk O Sullivan discusses knowledge management and the nature of the tools
that we may have at our disposal to manage knowledge. The authors in this article
state that knowledge management has to do with the management of all stages in the
generation, codification, refinement, and transmission of knowledge. They also
discuss that web offers a powerful platform for tools supporting all stages of
15

Chapter-II: Review of Literature

knowledge management such as SAP, ERP/ ERM package, AFC (Active

Collaborative Filtering) etc.
David J. Teece in his Managing Knowledge Assets in Diverse Industrial
Contexts analyses that competitive advantage (superior profitability) at the enterprise
level depends on the creation and exploitation of difficult to replicate no tradable
assets among which the most important one is knowledge assets. It also discusses that
competitive advantage flows from the creation, ownership, protection, and use of
difficult to imitate knowledge assets.
J. C. Spenden in his Managing Knowledge Systems clearly mentions that
knowledge is a corporate asset which must be managed scientifically. But it is not
possible to manage knowledge until and unless it is identified properly. It also
considers knowledge as an asset that can be privatized and objectified. Knowledge
assets also present special management problems when knowledge needs to be
transported, transferred, traded, or stored. Much knowledge management is about
identifying and protecting and exploiting knowledge such as patenting. Another is
about managing the processes of invention and innovation and is also managing
information systems. Section III (Part III: knowledge Intensive Organisations)
comprises five most relevant papers.
Peter Murray, in his paper (Designing for Business Benefits from knowledge
Management) develops a programme of action for organizations that are considering
knowledge management and for this draws on a survey of 260 European businesses
conducted by the Information Systems Research Centre at the Canfield School of
Management. The paper specifically examines the perceived need for knowledge
management, its nature, how success can be ascertained, and what learners there is to
be effective knowledge management, and suggests some ways of implementing the
programme. Michael J. Earl and Ian A. Scolt in their paper (What do we know about
CKOs?) in 1997 made a study in the title the Chief knowledge officer or CKO and
their results were published in 1999. They studied 20 CKOs in three steps, namely,
they conducted interviews, administered a personality test and held workshops with
the participants in London and New York to discuss their survey results. The CKOs
are appointed by the CEO and they are not the permanent staff. Their aim, as the
paper suggests, is to initiate knowledge management and ensure that the philosophy

16

Chapter-II: Review of Literature

and practice become embedded in the organization. Thus the CKOs have two
particular leadership qualities they are the entrepreneurs and the consultants.
Regarding the functions of the CKOs the authors add: . they have to
create awareness of knowledge management, faster language and develop frameworks
to help managers understand what it is, what is new and what can be done to sell the
promise and to create support and demand for knowledge management initiatives.
Etienne Wenger (2000) in his paper Communities of Practice: The Structure
of Knowledge Stewarding [knowledge Horizon (2000), Edited by Charles Despress
and Daniele Chauvel, Butter Worth Heine Mana] discusses that communities of price
have been around for a long time. These are in fact the first forms of knowledge
organization. Communities of practice are found everywhere at work, at school, at
home, at gatherings it. This consists of three elements it has a sense of joint enterprise.
This brings members together. It works as a community which creates a relationship
of mutual engagement among the members. In this system learning takes place
through joint activities with a concrete relationship of trust and mutual understanding.
This produces the shared repertoire of communal rezones among the members
through their mutual engagement. This includes routines, lessons learned, semibilities,
artifacts, standards, tools, stories, vocabulary, styles, and so on. The communities of
practice are also found with the businesses, across business units across institutional
boundaries, and across multiple organizations.
Theories of the firm are concerned primarily with predicting the behaviour of
firms in external markets. Neoclassical theory of the firm uses, in most cases, partial
equilibrium analysis to predict firms purchase decisions in input markets and supply
decisions in output markets. Robert M.Grant(1996) in his paper explores the
coordination mechanisms through which firms integrate the specialist knowledge of
their members. Here knowledge is viewed as residing within the individual and the
primary role of the organisation is knowledge application rather than knowledge
creation. The author assumes that the critical input in production and primary source
of value is knowledge. An interesting feature of the knowledge-based approach, as the
paper suggests, is that it offers a theoretical basis for understanding a number of
recent organizational innovations and trends which include the renovation of
traditional organizational structures through delaying and empowerment and the
development of new organizational forms including horizontal and team-based
17

Chapter-II: Review of Literature

structures and inter-firm alliances. The knowledge-based approach also calls into
question other contemporary trends in corporate management. The primary driving
force behind corporate restructuring and strategic change has been the quest for
shareholder value maximization and enhanced shareholder power. The paper states
that if primary resource of the firm is knowledge if knowledge, is owned by the
employees, if more of this knowledge can be exercised by the individuals who own
this, then the theoretical foundations of the shareholder value approach are
challenged. The paper gives emphasis on the application of knowledge and the role of
individual.
Surendra Gera (1998) in his paper analyses industrial structure in Canada over
20 years from 1971 to 1991.In analyzing the role of knowledge in enhancing the level
of output in the Canadian economy the author relies on Statistics Canadas national
input/output data for three sub-periods: 1971-1981, 1981-86 and 1986-1991.The study
basically addresses three questions: Is the Canadian industry becoming more
innovative? Is the knowledge technology and skills intensity of industrial output
increasing? What are the key factors driving this structural change-domestic final
demand, exports, imports, and/or changes in production techniques? The study
analyses structural change at the sectoral and industrial levels. Industries have been
identified as high-growth and low-growth industries. Canadian changing
industrial structure has been analysed under three headings: change at the aggregate
level, change at individual industry level, and the pace of structural change. Analysis
at the aggregate level shows that there has been a dramatic decline in the
manufacturing sector and a rise in the service sector. It also shows that primary
industries and construction sectors have not shown any major changes in the output
share. Analysis at the individual industry level shows that of the 13 leading growth
industries in 1986-91 eight appear among those which led in the two preceding sub
periods. Eight industries such as computers and office equipments, communication
equipment and semiconductors, communication services, real estate and business
services; community, social, and personal services, pharmaceuticals; Electricity, gas,
and water; and finance and insurance are Canadas growth engines.
The

industries

in

decline

are

textiles,

leather;food,beverages,andtobacco;wood,woodproducts,

clothing,
and

footwear,and

furniture;

electrical

equipment and appliances; iron and steel; other transportation equipment; other
18

Chapter-II: Review of Literature

manufacturing and heavy industries. As regards the pace of structural change

statistical measures suggest that the Canadian economy experienced the greatest
degree of structural change during the first half of 1980s.
The overall manufacturing sector in Canada, as the paper explains, has been
declining over the long term consistently losing output share to the service sector
since 1970s.This shows that there has been a clear shift in the composition of
manufacturing output towards knowledge-intensive industries.
The shift from the industrial economy into knowledge economy shows how
people think and what value they assign to all parts of their lives. Christopher S.
Rollysen (2006) in his paper shows that knowledge economy will transform roles
between all parties in the economy. It will see extensive collaboration in which buyers
will tap into sellers resources to participate in the design and delivery of products and
services. Similarly, sellers will access buyers knowledge about experiences and
emerging desires. This, in fact, according to Christopher, will benefit buyers and
sellers immensely and bring significant wealth. The knowledge economy, as the paper
states, will be able to bring a quantum leap in productivity over the industrial
economy. This is so because all economic agents (players) gain competence in
creating, managing and showing digitized knowledge.
The Indian software industry has made an impressive track record especially
since early 1990s.It is everywhere discussed that India can transform itself into a
knowledge-based economy by riding the information technology bandwagon.
Prabhudev Konana and Sridhar Balasubramaniam (2002), in their paper , give stress
on sustainable and effective changes in information technology in India and in this
discussion they expressed doubt about this situation because of the fact that nearly 80
percent of Indias population lives in villages with limited basic infrastructural
facilities .Not only this ,nearly 40 percent of the population is illiterate .Obviously,
they will not be able to take the benefit of information technology such as the use of
internet for gathering market information. A majority of the people whom we call
literate also are unable to go beyond the ability to read and write simple words. This
criterion does not support the growth and expansion of knowledge economy. It is a
fact that economic development is cumulative. If industry develops, for example, it
must help the agriculture sector to become more vibrant and productive. The
productivity in agriculture multiples because of industrial and biological innovations
19

Chapter-II: Review of Literature

including tractors, irrigation systems, fertilizers, pesticides and genetically engineered

seeds. This certainly improves standard of living across societal divides. This was
noticed in the developed nations during the age of industrial revolution. The paper
states that the IT sector employs a few million people. But the alarming fact is that the
IT industry holds limited potential for wealth to trickle down to the poor. This means
that the rich and the educated can derive the full advantage of IT industry while the
uneducated and the poor are oblivious to its impact. The IT can, the paper describes,
change the way a society communicates, collaborates, lives, works and plays. The
growth of IT sector in India symbolizes the potential of industry to perform at worldclass standards. But the fact is that the success of IT at the corporate level in India
cannot solve its unending social and economic challenges.
Resource-based theory tells us that there is perhaps no direct evidence to
verify the fact that intrinsic characteristics of resources and capabilities such as their
tacitness, complexity and specificity prevent imitation and thereby prolong
exceptional performance. Susan K. Mcevily and Bala Chakravarthy (2002) in their
paper investigate whether imitation barriers can protect advantages that stem from
unique knowledge. They have tested this resource-based proposition by examining
whether the complexity, specificity, and tacitness of a firms technological knowledge
affect the speed with which competitors match its product performance
improvements. An improvement, the paper explains, is any increase in product
efficiency above and beyond the level of performance previously offered by products
on the market, although it is distinguished between major and minor improvements
according to the degree of advance. The authors expect that resource-based
predictions for persistence will apply only to major product improvements because
these are based on distinctive knowledge. Resource-based theory maintains that if a
firms performance advantage is based on a unique resource, it should persist longer
when a firms rivals cannot easily recreate or gain access to that resource. The authors
continue that competitors must mimic a firms product design to match its
performance, and this requires possession of comparable technological knowledge
and that unique knowledge that is better protected by imitation barriers should confer
more persistent product advantages. The overall explanation is that imitation barriers
are at least partly located in resources, and suggest that the theory can be applied to
knowledge resources. One of the important qualifications offered to this theory is that
the size of a firms advantage may moderate the efficacy of these barriers.
20

Chapter-II: Review of Literature

The knowledge economy can transform the roles between all parties in the
economy. All economic agents can be beneficial from the effect of knowledge
economy. Manorama Tripathis paper(2006) gives an exposition of current
developments in the information and communication technology (ICT) sector in India
and their implications in transforming

the country into knowledge economy. It

specifically analyses the ICT infrastructure, policies, present states within the
framework of India Vision 2020.It also describes Indias rank in global IT
infrastructure , digital opportunity Task Force of G8 (Dot Force) World Summit on
the Information Society(WSIS) Geneva 2003 and Tunis 2005.The paper dwells upon
the challenges which must be overcome

to attain the status of knowledge economy

of the country.
Technology and knowledge are the key factors of production with increased
mobility of information and the global work force, knowledge and expertise can be
transported instantaneously around the world, and any advantage gained by a firm
can be reduced or eliminated by competitive advantage within a short time span. The
only thing that a country can enjoy is its comparative advantage of knowledge
economy. Carl Dahlman and Anuja Utz (2005) in their paper have modified the
definition of knowledge economy and have described that it would be appropriate to
use the concept more broadly to cover how any economy uses the new and existing
knowledge to improve the productivity in different sectors of the economy such as
agriculture, industry and service. This would ultimately increase overall well-being of
the country .They predict that India can increase its output at a maximum level if
labourers can be shifted from low productivity and subsistence activities in
agriculture, informal industry, and informal service activities to more productive
modern sectors and knowledge based activities. This effort can be able to reduce
poverty and touch every member of society. In their paper they have indicated that
India has a number of favourable points to become a leader in knowledge creation and
use. The paper states India has a critical mass of skilled, English speaking knowledge
workers, especially in science and technology. Not only this India has a well
functioning democracy and has a huge domestic market. It has macroeconomic
stability, dynamic private sector, institutions of free market economy, a well
developed financial sector and a broad and diversified science and technology
infrastructure. The paper gives stress on strong basic education system and
improvement of tertiary education. It states that tertiary education is critical for the
21

Chapter-II: Review of Literature

construction of knowledge economies. India, as the paper describes, currently

produces a solid core of knowledge workers in tertiary and scientific and technical
education, although the country needs to do more to create a larger cadre of educated
and agile workers who can adapt and use knowledge. In this paper, the authors
explain that, in India, with its relatively small formal sector, a very important part of
its innovation system relates to how modern and more efficient practices can be
diffused to the greatest number of users. India has done a remarkable stride in
diffusing knowledge and technology especially in agriculture.
The rise in knowledge intensity is being driven by the combined forces of the
information technology revolution and increasing pace of technological change all
over the world including India. Rajarshi Majumdar(2007) in his unpublished paper
(available in the website) states that since late 1990s, a large segment of mainstream
media and economists have been giving emphasis on the emergence of knowledge
economy in OECD countries and its consequent development in the developing
countries. This new model of growth, the paper addresses, depending more on human
knowledge and efficiency rather than on difficulty to disperse physical capital, is
supposed to be more egalitarian. Proper policies in developing countries are
advocated to build up large volume of working capital in terms of human resource
crunch and meagre stake in global- trade. The paper looks at some of the issues
related to knowledge economy in the context of Indian experience.
Ruben F.W. Nelson (2000) in his paper has rightly defined the knowledge
economy and its impact on the different spheres of the economy. The paper says that
it is the knowledge-in-use, and not merely the possession of information is the key to
sustained success in every area of life and it is revealed in the growing preoccupation
with the formation and transformation of cultures, whether in families, organisations
or whole societies. It stresses upon the fact that social cohesion can no longer be
achieved by either the assertion of ones authority-technical or structural-or by the use
of majority votes. Unconvinced minorities, as it describes now undercut virtually and
become ungovernable if it does not develop the capacity to create, trust and act on
knowledge that is both reliable and widely acceptable. The author gives a caution to
us: If we are to survive as free persons and societies, we must develop a much
deeper capacity than is now possessed by the citizens of any industrial society, to
democratically co-create and agree upon that which, for us as persons, organizations
22

Chapter-II: Review of Literature

and society will be true and binding knowledge. The author, in his paper, further
asserts that it is time to grow into a full adult maturity and to use this as the only
standard by which we will judge our knowing, believing and behaving.
The changing dimensions of the Indian economy in the light of the growth of
knowledge based society has been portrayed in the writing of Rajesh Kumar Jhamb
and Sanjay Kaushik(2008).

They have indicated that in the knowledge-based

economy, knowledge management has received considerable attention in the economy

and it has in fact now become a mainstream priority for any business organisation.
The paper relates the issue with globalization and concludes that information and
knowledge society have increased the comfort of living.
Multinational corporations are essential global players in terms of global
production and exports of goods and services. They are also more than enough
competent in the home market relative to foreign markets. Keller and Yeaples paper
(2008) explains all these aspects in detail with supportive data. This paper explains
that multinational firms face increasing costs to transferring the technology abroad.
This is contrary to the technology abroad. This is contrary to the general belief that
multinational corporations enjoy cost advantage because of cheap labour and lower
transport cost if produced in the developing countries than at home. The authors state
that due to increasing cost conditions abroad the MNCs are mush successful if they
continue to produce in the domestic market. This paper highlights the importance of
intermediate inputs in international market flows. The authors have introduced a
model of multinationals explaining a rich array of multinational behaviour by the
interaction between physical transport costs and technology transfer costs. This model
also considers physical transport costs and the ability of firms to fragment their
production technology into traceable components. An additional assumption in this
model is adopted. This assumption is that there also exist technology transfer costs
that are increasing in the complexity of components in the production process. This
also increases marginal costs of serving foreign markets as the size of transport costs
increase. A set of hypotheses have been tested. One such hypothesis is that the cost of
intermediates imported from the parent in total affiliate costs should be decreasing in
transport costs between multinationals slower for firms with relatively complex
production technologies. Another hypothesis that has been tested is that the
probability that a given multinational opens an affiliate in foreign location should be
23

Chapter-II: Review of Literature

decreasing in transport costs and the rate of decrease should be faster for firms using
technically complex production technologies. The authors have empirically tested the
hypothesis and found that when technologies are relatively complex, affiliates have
less opportunity to substitute for imports from their parent with local production. Also
it is found that both the extensive and intensive margins of affiliate activity contract as
transport costs rise, and this is true for firms with relatively complex production
technologies.
Vinod Kumar, Harsha Sinvhal and Vinay K. Nangia (2009) study the impact
of some thirteen areas in shaping a knowledge economy. They, in fact, elaborately
analysed a proposal / project titled National Competitiveness in the Knowledge
Economy prepared and submitted by Indian Institute of Technology Roorkee to the
Department of Information Technology of the Ministry of Communications and
Information Technology in 2006. The key areas highlighted in the paper are
demography, socio-economic scenario, IT-based and non-IT based technology,
environment, natural resources renewable and non-renewable, energy resources
renewable and non- renewable water management, national, regional and global
inequalities, health, military, geo-political realities, agriculture and global system. It is
stressed that India is going to be country of young people while the so-called
developed nations may have a large size of population who are in relatively older
group. In their paper a set of questions were raised regarding national, regional and
global inequalities. The questions are as follows. What factors will decide the
national, regional and global inequalities, and evolve strategies to bridge the gaps?
Will knowledge economy widen the divide or bridge it? How can knowledge
economy deal with the issue related to equal rights and opportunities, irrespective of
colour, race and gender? It is stated that with better technology and knowledge of
modern techniques, in developing countries also there may be a major shift of
population from agriculture to other sectors of economy. It is also stated that the
effect of knowledge economy on agricultural sector may ensure a better life for the
majority of Indian population.
K. Narayanan and Savita Bhat (2009) in their paper have analysed the
structure and behaviour of the IT fibers in India. The pattern of growth for the three
segments of IT industry i.e. computer hardware, software and IT-enabled services has
been attempted in this paper. An overview of IT industry in India has been analysed in
24

Chapter-II: Review of Literature

which the details of the initiation of IT industry in India during 1960s and 1970s and
the role India can play in this sector have elaborately been provided. By 1980s India
was capable of exporting software and computer peripherals. Also India permitted
import of mainframes and super computers for the purpose of modernizing the Indian
IT industry. The paper highlights the major policy issues India Government took
during 1960s and 1970s, 1990s and during 200-2006 for the growth of Indian IT
sector and its consequent effect on the growth of income and the growth of the gross
domestic product (GDP). This sector alone had an impact of over 35 percent to the
total exports. An empirical analysis of the sample data from the Indian IT industry has
been done wherein the growth, profits and technological behaviour of IT firms have
critically been described.
Arindam Banik and Pradip K. Bhaumiks paper Indias Transition to
knowledge Economy: Variation Across States (2009) makes a comparison between
human and economic capital in developing country perspective. They have shown in
this paper the interdependence of economic and human capital. It is found that the
productivity of economic capital depends on the intensity of human capital and viceversa based on data published by the CMIE, Economic Survey data 2005 2006
published by the Government of India and the data published by Indiastant.com Only
the data of 2003-2004 were considered to especially explain the time dimension of the
transition of Indian economy into knowledge economy. The findings reveal that the
rise of knowledge economy is very important aspect for the overall growth of Indian
economy in the 21 st century.
Siddharth Mahajan, Ashoka Chanda and Mainak Sarkar in their paper An
Approach to Developing Knowledge Economy Indicators for Individual States
(2009) have developed a knowledge economy methodology for the states of India
with a discussion on knowledge assessment methodology framework developed by
the World Bank.
The knowledge assessment methodology (KAM) developed by the World
Bank is based on four pillars, namely education and training, innovation and
technological advancement information infrastructure and economic and institutional
regime. The variables related to first pillar (i.e. education and training) are adult
literacy rate, secondary enrolment & tertiary enrolment. Innovation and technological
advancement include researchers in R & D (per million population), patent
25

Chapter-II: Review of Literature

applications granted by the USPTO (per million population). The third pillar i.e.
information infrastructure includes telephones per 1,000 persons, computers per 1,000
persons and internet users per 1,000 persons. Economic and institutional regime
comprises tariff and non-tariff barriers, regulatory quality and rule of law. The authors
have measured the performance of a particular state over time with the help of
knowledge economy indicators (KEI). KEI is calculated by taking the average of the
normalized scores on the four pillars of the knowledge economy for each state. A
state KEI between 0.9 and 1.0, the authors estimated, implies that the state is in the
top 10 percentile amongst the states in moving towards a knowledge economy. A state
KEI between 0.2 and 0.3 indicates that a state is in the bottom 30 percentile but above
the bottom 20 percentile in moving towards a knowledge economy.
The comparison of a states KEI in a reference year (for example, 2000) with
its KEI in the current year (May, 2013) can be seen in fig.-2.1 shown below.
Fig-2.1:
1.0
0.8
0.6
0.4
0.2
0

0.2

0.4

0.6

0.7

0.8

1.0

In figures-2.1, the X axis indicates state KEI in the base year and the Y axis
the state KEI in the current year. The solid line bisecting the figure in the line y = x,
that is the state KEI in the current period is the same as the KEI in the base period. A
point to the left of the solid line in the figure indicates that the state has improved its
relative performance i.e. the state KEI in the current period is higher than the state
KEI in the base period. Similarly, a point to the right of the base line indicates that the
state KEI in the current period is lower than the state KEI in the base period.
26

Chapter-II: Review of Literature

The authors also have tried to show a relationship between annual economic
growth and knowledge economy indicators in the country level. Himanshu Joshi,
Vidhu Shekhar Jha and Siddharth Mahajan (2009) in their paper have analysed that
knowledge and learning are the fundamental factors for achieving business
excellence. For this, the authors consider, it is necessary to establish and sharing. In
their paper the authors have established a relationship between knowledge
management and learning organization. It is a great challenge before any organization
to properly manage its intellectual capital. In any business enterprise today knowledge
has become power and learning rapidly has become a pre-eminent strategy for
success. Obviously, knowledge is becoming more important to organization than
financial resources, market positions, technology and other tangible assets. The
authors have adapted the model of learning organization and business excellence from
causal model of Eskildsen et al. (1999). This model is shown below in fig.2.2.
Fig 2.2: Model of Learning Oganisation and Business Excellence

Cognitive
Processes
Knowledge
Management
Support
Processes

Team learning and

personal Mastery

The
learning

The creation
organisation
Strategies and
Techniques

Shared vision and

Mental Models

Business
Excellence

Enables
Results

Communication
and Evaluation

Source: Knowledge Economy, 2009, page, 76. The Indian Challenge, Sage Publications.

Organizational transformation and the proposed benefits have been nicely

described in the paper. The authors have built up a reinforcing model of knowledge
management practice towards a learning organization for achieving business
excellence. The model development by the authors is shown in figure-2.3.

27

Chapter-II: Review of Literature

Fig.-2.3: Reinforcing Model of Knowledge Management Practice towards a

Learning Organisation for Achieving Business Excellence
Trust, Networks,
Norms

Organizational Culture

Design

People
Action

KM
Process

Technology
Capture, Encode &
Distribute
knowledge

Implement

L
Assess

Observe

Improved business disciplines / Improved Performance

Improved processes

Reduced Variability
TQM
continuous
Improvement

Source: Joshi, Jha & Mahajan, 2009

Prema Rajagopalan and M.S. Matheds (2009) in their paper entitled

Indentifying New knowledge stream in the Evolving Knowledge Economy have
described eight core areas as streams of knowledge that evolve knowledge economy.
These areas are identified in a workshop held at the Indian Institute of Technology,
Madras. The Key areas thus identified are power and communication, computer
science, biotechnology, infrastructure, nanotechnology, energy, manufacturing and
mechatronics. It is stressed to recognize the existence of multiple knowledge
economics in the global context and the scope and dimensions of each economy can
range from a small community of a country to a regional integration of even many

28

Chapter-II: Review of Literature

countries. It is also hoped that each individual knowledge economy is well developed
based on its distinct characteristics.
For economic development of a country the role of knowledge is paramount.
Knowledge plays an extremely important role in the three pillars of development, i.e.,
economic development, environment development and socio-cultural development
and it is the innovation and competitiveness that are vital for knowledge economy.
Rajeeva Ratna Shahs paper entitled Innovation in Knowledge Economy explains
elaborately the key drivers of innovation, viz, technology, global competitiveness
human resource, role of public and private sectors, public private partnership etc. In
a knowledge society, the author states, knowledge benefits the common man. Due to
innovation and the consequent growth of the ICT it is now possible to have a
complete list of all the villages and the names and addresses of all the villagers in
India. Naturally, the implementation of rural development programmes such as
MGNREGA can easily be monitored, although data capture is still a problem.
A.K. Sengupta in his paper Intellectual Property Rights in Knowledge
Management (2009) has described some issues concerning the interplay of
intellectual property rights (IPR) in the knowledge management processes, in the
industry and traditional knowledge sectors in Indian context. A detailed discussion
has been made on the agreement on Trade- Related Aspects of Intellectual Property
Rights (TRIPS) in which eight categories of intellectual property have been defined.
These are patents, copyrights, trademarks and service marks, design registration,
layout designs for integrated circuits, trade secrets and undisclosed information,
geographical indications and new plant varieties.
An elaborate analysis has been made to patents throughout the paper. It is said
that an effective intellectual property rights system can speed up the process of
identification, development, dissemination and undertake of innovations through the
expansion and development of knowledge economy in India.
Arundhati Chattopadhyay, G.S. Krishnan and U.S. Singh sponsored
mechanisms, such as, 48, Association of Southeast Asian Nations (ASEAN), South
Asian Association for Regional Cooperation (SAARC) and Organisation for
Economic Cooperation and Development (OECD) establish international networks in
the economic field.

29

Chapter-II: Review of Literature

International networks in the cultural field are established through increased

communications and opportunities to travel. The core factors behind the current phase
of globalization, the authors suggest, are least possible barriers to trade and
investment, to minimum transport cost, least possible IT costs and the rule of internet.
A broad and informative discussion has been made in this paper about the importance
of knowledge network where the key elements of knowledge network are people,
hardware, software, and procedures like access, navigation, observation, analysis,
repository and learning. In this paper the authors explain that the problem of poverty
in the Indian economy may be eliminated if Indias natural and human resources are
fully utilized for building competence and technologies that lead to the qeuvation of
high income employment and value addition in different sectors of the economy and
for this purpose it is of utmost importance to create a knowledge society through the
creation and maintenance of knowledge society infrastructure, development of
knowledge workers, and the increase in productivity through creation, growth and
utilization of new knowledge.
K. Sankaran (2009) in his paper explains the impact of cultural and social
factors that promote self-organization among those who are trying to bring about
effective social IT networks. In the course of analysis the author describes that interorganizational arrangements such as justin-time (JIT) and business process
outsourcing (BPO) enhance overall effectiveness of network participants. The success
of inherent and the firms like Google, as stated by the author, attribute to the power of
collective minds together based on principle of self-organization. Mr. Sankaran has
referred to a qualitative study conducted on how information technology (IT) can
facilitate social capital among institution in the coastal areas of Karnataka. The
objective was, the author explained, to find out the extent to which internet and IT are
used by institution to exchange information among them, create and further
associations among them and receive and offer e-enabled services. In this study five
types of organizations are indentified. These organizations are

businesses,

professionals, service providers, non-governmental organizations (NGOs) and

government. The issues covered in this survey are of two types: Level 1 and Level 2.
Level 1 issues are surmountable through better resource availability and use. Level 2
issues are related to how individual view themselves and their roles in an IT-enabled
society. In this paper (chapter) the author argues for a more inclusive and open
approach to IT network creation that is sensitive to both technical abilities and social,
30

Chapter-II: Review of Literature

cultural and behavioural factors. Surinder Batra in his paper titled Promoting the use
of Knowledge Management as a Tool for securing Larger Good of the Society
(2009)describes about the importance of knowledge for development and for this
purpose he refers two reports- World Development Report Knowledge for
Development, 1998-99(1999) and the OECD Report (1996). According to World
Development Report, 1998-1999, knowledge is assured to be critical because
knowledge depends on every economic activity. Since resources are scarce thus such
resources needs to use in such a manner so that ever-higher return can be possible.
This will be possible only through wider and judicious application of knowledge in
production and management activities. The author discusses some of the
characteristics of knowledge in the context of development identified by Ferreira and
Neto (2005). The first characteristic/ feature of knowledge is that knowledge leaks
from the innovators to a large spectrum of society. The second feature is: when
knowledge spreads in society it becomes a public good. Another characteristic is that
linguistic, social and cognitive barriers impede knowledge from being transferred to
whoever may need this knowledge. The author analyses the region of knowledge
society in the Indian context and in explaining this he refers to the report of the task
force India as Knowledge Superpower: Strategy for Transformation,2001
(Government of India). In this report a detailed discussion is made about our saints,
poets, philosophers, scientists, astronomers and mathematicians towards our new
thoughts, principles and practices. The report observes that India possesses a huge
potentiality to be a leading knowledge society. In this report it is stressed that Indian
knowledge society has three drivers, namely, societal transformation for a just and
equitable society, wealth generation and protection of traditional knowledge.
Mainak Sarkar and Siddharth Mahajan (2009) in their paper (chapter in an
edited book titled Knowledge Economy - The Indian Challenge, edited by Ashoka
Chandra and M.K. Khanijo, Sage 2009) raise the question whether the government
can improve its ability to provide services such as health, education, governance to its
citizens through better management of knowledge. In this write up the authors discuss
how knowledge management at the societal level is different from that at the company
level. An interesting section in this paper discusses how typically knowledge
management is implemented in a company and lesson for governments. Some
interesting case studies have been highlighted wherein it is seen that governments are
likely to face in implementing a knowledge management system.
31

Chapter-II: Review of Literature

References
Amartya Sen(1985): The Standard of Living. Cambridge University Press.
Amartya Sen(2005): The Argumentative Indian Allen Lane.
Anil Bhuimali and Satrajit Dutta(2006): Foreign Trade of India Under WTO Regime:
Abhijeet Publications.
Anil Bhuimali(2003): Rural Cooperative and Economic Development. Sarup and
Sons.
Anil Bhuimali(2005): Poverty and Human Rights of Women (ed). Serials Publications.
Anil Bhuimali(2006):

Globalization and

Human

Rights(ed).

Serials

Publications.
Awad, Elias M and Ghaziri, Harsan M.(2006): Knowledge Management (2006)
Pearson Education, Delhi.
Chistopher S. Rollyson (2006) : How the Knowledge Economy will Transform
Markets and the producer/Consumer Relationship. www.rollyson.net
E. Mansfield, M. Schwartz and S.Wagner, (1981): Imitation Costs and Patents: An
Empirical Study. Economic Journal 91:907-918.
G.M. Grossman and E. Helpman(1991): Quality Leaders in theTheory of Growth
Review of Economic Studies,58: 43-61.
Gera, and G. Grenien(1994): Interindustry Wage Differentials and Efficiency
Wages: Some Canadian Evidence, Canadian Journal of Economics 27(1):
81-100.
Government of India (2006-2007): Survey of India. Ministry of Finance, GOI.
Government of India(2009): Economic Survey 2008-2009 Oxford University Press.
Grant, R.M.(1996): Towards Knowledge Based Theory of Firm. Strategic
Management Journal. Vol.17 (Winter Special Issue), 109-122.

32

Chapter-II: Review of Literature

HT Syndication (2008): Knowledge Economy and Intellectual Property.

Manufacturing Business Technology, IL (first published in Assam Tribune on
9th November, 2008).
Kalam, A.P.J. Abdul, and Y.S. Rajan(2002): India 2020: A Vision for the New
Millennium. New Delhi: Penguin Books India.
Krugman, P.R.(1991): Technology and International Competition: Overview.
Document prepared for a National Academy of Engineering Symposium on
Linking Trade and Technology Policies: An International Comparison.
National Academy of Sciences. Washington, 10-11 June.
L.Tyson, (1992): Whos Bashing Whom: Trade Conflict in High-Technology
Industries (Washington, DC: Institute for International national Economics).
Maddison, Angus(2001): The World Economy: A Millennial Perspective. OECD,
Paris.
Ministry of Economic Development (MED)(2006): What is the Knowledge
Economy?. Manatu Changa. (Downloaded from the Internet.
National Knowledge Commission Reports to the Nation: Peoples Access to
Knowledge

Can

Transform

Indias

Potential.

Topics.

development

gateway.org
Organisation for Econonic Co-operation and Development (1996): The Halics
Knowledge-Based Economy. Paris: OECD.
P.M. Romer, (1986): Increasing Returns and Long-Run Growth. Journal of
Political Economy,94(5): 1002-37.
Peteraf MA.(1993): The Cornerstones of Competitive Advantage: A ResourceBased View. Strategic Management Journal 14(3): 179-191.
Pooja Lianchandani, (2008): Knowledge Economy: The Indian Opportunity and
challenge for skills Development. Pooja.g[at]ciioline.org

33

Chapter-II: Review of Literature

Rajarshi Majumdar(207): Emergence of Knowledge Society: The Indian Scenario.

http://mpra.ub.uni-merenchen.de Monorama Tripathi(2006): Transforming
India into a Knowledge Economy through Information Communication
Technologies-Current Developments. The International Information &
Library Review. Volume 38, Issue 3
Robert J. Barro and Jong-Wha Lee.(2001): International Date on Educational
Attainment: Updates and Implications. Oxford Economic Paper 3: 541-63.
Rogers E. (1995): Diffusions of Innovation(3 rd Edn.), Free Press: New York.
Ruben F.W. Nelson (2000): Knowledge Economy-Just What Does It mean? The
Alliance for Capitalizing on change
S.K. Yreme, David(1997): Creating the Knowledge Based Business. Business
Intelligence, London(UK).
S.Torrisi (1998): Industrial Organization and Innovation: An International study of
the Software Industry. Edward Elgar : Cheltenham , UK: 13-37.
Solar Energy Charity (2008): Emergence of Knowledge Economy. www.SolorAid.org
Spender J.C, Grant R. (1996): Knowledge and the Firm: Overview. Strategic
Management Journal. Winter Special Issue 17:5-9.
Statistics Canada(1987): The Input-Output Structure of the Canadian Economy 196181. Cat. 15-510. Ottawa Statistics Canada: 37-39.
Statistics Canada(1991): Statistics Canadas

Input-Output Model: General

Description, Critical Analysis of Partially Closed Version and Alternative

Solutions. Technical Series 52-E(Ottawa: Statistics Canada Input-Output
Pivision).
Surendra Gera, and Kunt Mang (1998): The Knowledge-based Economy: Shifts in
Industrial Output. Canadian Public Policy. Vol. 24, No.2, PP. 149-184.

34

Chapter-II: Review of Literature

Susan K. McEvily and Bala Chakravarthy (2002): The performance of KnowledgeBased Advantage: An Empirical Test for Product Performance and
Technological Knowledge. Strategic Management Journal. Vol.23,No.4,
PP.285-305
T.C. Lethbridge, (1994): Practical Techniques and Measuring Knowledge University
of Ottawa(Ontario), Canada.
Teece DJ.(1980): Economies of scope and the scope of the Enterprise. Journal of
Economic Behavior and Economic Organization 1: 223-247.
V.S. Ganesamurthy(2009): Environmental Economies in India New Century
Publications
Wagher RK. (1987) Tacit Knowledge in Everyday intelligent Behavi-our. Journal
of Personality and Social Psychology 52(6): 1236-1247.
Wikipedia,

the

free

encyclopedia

(2008):

Knowledge

Economy

www.wikipedia.com
World Bank(2005): India and the Knowledge Economy: Leveraging Strengths and
Opportunities. A world Bank Report.web.worldbank.org
Yasheng Huang, and Tarun Khanna(2003): Can India Overtake China. Foreign
Policy. July-August.
Zander U, Kogut B.(1995): Knowledge and the Speed of the Transfer and Imitation
of Organizational capabilities: An Empirical Test. Organization Science 6:
76-92. J.C. Spender and R. Grant.

35