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 7: Entrepreneurship in the Knowledge Economy

Erik Stam and Elizabeth Garnsey

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


Erik Stam and Elizabeth Garnsey INTRODUCTION If the industrial economy ran on coal and iron ore, the fuel of today’s economy is knowledge.1 Technologies have always been underpinned by knowledge, but an economy run on knowledge is characterized by a critical role for information and communication technology (ICT), a high proportion of knowledge-intensive activity and intangible capital that amounts to more than tangible capital in the economy’s capital stock (Atkinson and Court 1998; Foray 2004).2 The emergence of the knowledge economy is not confined to high-technology and ICT services; it has spread across all sectors of market economies since the 1970s.3 Wealth creation increasingly depends on the generation and exploitation of knowledge involving not only science and technology but also knowledge of practice required to create economic value (Gibbons et al. 1994). That knowledge plays an important role in the economy is not a new idea or finding. Every economy is based on knowledge of farming, mining and construction (Mokyr 2002). Knowledge, embodied in people and technology, has always been central to economic development. But only over recent decades has its importance received so much emphasis (Harris 2001). The OECD economies are more than ever dependent on the production, distribution and use of knowledge (OECD 1996). While scholars in the 1950s and 1960s pointed to the economic importance of large firms (Galbraith 1956; Servan-Schreiber 1968), more recently a shift from the managed economy to the entrepreneurial economy in OECD countries has been identified (Audretsch and Thurik 2000,...

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