Creating Wealth from Knowledge

Creating Wealth from Knowledge

Meeting the Innovation Challenge

Edited by John Bessant and Tim Venables

This book illustrates that, although innovation has always mattered in economic development, simply increasing expenditure in creating knowledge may not be the answer: we need to look at the whole system through which such knowledge translates to value creation.

Chapter 1: Introduction

John Bessant and Tim Venables

Subjects: business and management, knowledge management, organisational innovation, innovation and technology, innovation policy, knowledge management, organisational innovation


John Bessant and Tim Venables AN OLD QUESTION . . . Innovation is vital to meeting the national challenges of the twenty-first century. As the economist William Baumol put it: ‘Under capitalism, innovative activity – which in other types of economy is fortuitous and optional – becomes mandatory, a life-and-death matter’ (Baumol 2002: 1). It lies at the heart of discussion of the concept of the ‘knowledge economy’, that is, the theory that advanced economies are increasingly based on the production, distribution and use of knowledge, and that their future competitive advantage lies in how efficiently and effectively they are able to engage in these activities (Baumol 2002; DTI 2003; NESTA 2006). Every year the UK spends around £21 billion of public and private sector money creating knowledge – an impressive figure but only a drop in the global ocean of R&D spending, which the OECD estimates at around £500 billion ($720 bn in 2004). Even this is likely to be an underestimate because we don’t really know how much some of the major new players like India and China are spending. As we move from the eras of labour and of capital intensity, so knowledge is increasingly recognized as the next major source of international competitiveness. No enterprise – and at aggregate level, no nation – wants to see itself left behind in this race, and so we see the rise of the ‘knowledge economy’ as the next step in economic evolution. Small trading nations like Denmark and Ireland see their future as...