The Importance Of Knowledge In Modern Business Explained

Bandar Seri Begawan – In the modern society of today, it is unreliable to depend solely on the labour and capital that have gotten us this far.

This has led many to search for a new alternatives that complements the existing model in the economy to enhance productivity, creativity as well as quality. Many have opted for a 'Knowledge-based Economy' concept or better known as a K-Economy.

But what is K-Economy and how does it work?

The notion of what K-Economy really is has remained elusive so far.

Coupled that with the term 'New Economy' that is often associated with the K-Economy, this creates an even greater scale of confusion.

In reality, Knowledge-based Economy is really the application and incorporation of knowledge in the business arena.

There is no doubt that knowledge has played and will continue to play an important role in the economy but nowadays, knowledge has also caused a change in attitude, mentality and philosophy of many on the nature of economic growth and development.

Dato Dr. Zainal Aznam Yusof, a former Deputy Director General of the Institute of Strategic and International Studies of Malaysia, was one of the men who recently attended the Asean-EC's International Conference entitled 'The K-Economy: Competitiveness, Survival and Growth."

But essentially, some of the definition of what is knowledge and what is a Knowledge-based Economy can be incorporated into a very simple and general definition which is essentially something like an economy which in fact that uses and incorporates knowledge in the whole production to produce new products and new services.

There you can call knowledge, either tacit or codified knowledge, as something as what we would call intellectual capital.

Those where you depend much more on brain power, depend on the intellect, get much more knowledge based workers to use your resources, capital and labour to turn it into something new.

So that's where I think you have something to sell, to promote the idea that it's extremely important and that when you say that it's important, what is now becoming more and more important is what we call the human side, Dato Zainal said.

Why is it then that the K-Economy has now been thrust into the spotlight? Dato Zainal claims that there is now a new sense of appreciation for knowledge and intellectuals.

Another reason for the increase is the understanding through research of economic growth. How Asian countries grew faster than the old ideas of growth could explain.

One of the ways to look at it is under the total factor productivity.

The idea is that growth can be caused or contributed by sheer capital, sheer labour - that was the old idea.

Now more and more research has shown that that's not enough.

You can't explain how the economy is growing so fast. Something else is in fact contributing to growth.

So that Total Factor Productivity (TFP) and part of that is intellectual capital growth of knowledge, innovation, technology which is embedded has not been explained before very much.

Most Asian economies spend one to one and a half percent of their revenues on research and development, another important factor of the K-Economy.

So how will small and Medium Sized Entrepreneurs (SME) survive against big corporations that can afford to spend more in the K-Economy?

Small and medium, particularly small enterprises - there are evidence to show that they are not completely at a disadvantage.

They can have the advantage, which the big firms don't have which is that they are small and can turn very fast.

They can turn very fast to take advantage of the changing forces whereas the bigger firms like IBM may take sometime.

So there are some pluses and minuses in relation to scale or size.

But this doesn't detract from the fact that either you’re small or large, the important thing is that it's quite costly to invest in ICT.

The bottom line is that in this new playing field, there are no favourites.

Everyone, be it big or small, has an equal opportunity.

Furthermore, knowledge is something that can be achieved by constantly learning.

The K-Economy which categorizes knowledge into the know-what, know-why, know-how, and know-who will prove that there's much more than just labour and capital in a successful business. -- Courtesy of Radio Television Brunei 

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