Foundations of the Knowledge Economy

Foundations of the Knowledge Economy

Innovation, Learning and Clusters

Edited by Knut Ingar Westeren

This book presents new evidence concerning the influential role of context and institutions on the relations between knowledge, innovation, clusters and learning. From a truly international perspective, the expert contributors capture the most interesting and relevant aspects of knowledge economy.

Chapter 3: Growth of the Knowledge-based Economy in a Two-person Non-cooperative Game

Hanas A. Cader and John C. Leatherman

Subjects: business and management, knowledge management, economics and finance, regional economics, innovation and technology, innovation policy, knowledge management, urban and regional studies, clusters, regional economics


Introduction Hanas A. Cader and John C. Leatherman The last decade of the twentieth century witnessed remarkable growth in global output, technology, knowledge generation and transfer, transportation, and the proliferation of information. These changes were visible at all organizational levels from the global to the individual firm. These changes stem from one of the fundamental economic principles of our time originally articulated in the late nineteenth century. Alfred Marshall recognized that ‘knowledge is our most powerful engine of production’ (Marshall, 1890, p. 115). After 100 years, nearly all nations have embraced the concept that knowledge is an important factor of production. In Romer’s (1986, 1990) view, knowledge is the third important factor of production, while Peter Drucker (1999) argued that knowledge is the most valuable asset of a twenty-first century firm. As a result, firms have become ‘knowledge-intensive organizations’ (Florida, 1995). The significance of knowledge in production has been recognized beyond the boundaries of individual firms. As knowledge-intensive firms find, generate, use and disseminate knowledge, there are proximate, peripheral and remote beneficiaries. The degree of benefit depends on the proximity among knowledge-intensive firms. An increasing number of knowledge-seeking firms have clustered into knowledge-intensive geographic regions. These knowledge-specialized regions have been called the ‘learning region’ (Florida, 1995; Boekema et al., 2000) or the ‘knowledge-based city’ (Simmie and Lever, 2002). Alternatively, knowledge clusters can exist in the virtual world, given rise by common needs and interests and enabled through telecommunications and other information and communication technologies (Döring and Schnellenback, 2006; Russ...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information