The Facets Of New Economy Commerce Essay


Throughout the present paperwork we undertook a theoretic and practical approach of the impact that information and knowledge have upon nowadays economy. The main part of the work resides in establishing the roles of each concept in turn and also reaching out the correlations between them. The confusion between information management and knowledge management comes from the previous mistake of taking information as knowledge or otherwise. Information and knowledge are tools within the new economy and the most fashionable channels to use them have now become the social networks. Social networking is just one arm of web 2.0 phenomena and is expected to be a new pillar of today businesses. Within the contents of this paperwork we tried to give information, knowledge and networking the chance to emphasize their characteristics, to convince with strong arguments and to bring cooperation opportunities. The final outcome of theory and series data analysis is positive and strongly inviting for companies, governments and individuals in order to reach out the benefits of the new economy.

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Keywords: knowledge, information, knowledge management, web 2.0, social networking, innovation, intellectual capital.

Introducing Knowledge vs. Information Economy

Nowadays, it has been widely agreed that a defining aspect of the New Economy is the continuously increasing importance of knowledge. And as we have already got used to, it can't be described neither by a couple of issues nor within a few phrases, as today's facts are strongly interdependent and out of these may arise the strangest events. This era the economy has been named as the knowledge economy, and there are various interpretations and arguments to this phrase. The purpose of this paper is to follow up the red wire and get to the bottom of these. We shall further discuss the ostentatious/staring issues in the domain.

To begin with we have to mention that nowadays there are two important types of knowledge industries to consider: first, there are those industries which major product is knowledge itself; then there are industries that manage or convey information. The first group includes industries such as software, biotechnology, and information technology hardware; and occupations such as engineers, scientists, programmers, and designers, whose major output is research that translates into new products and services. These industries are driven not by machinery, skilled shop floor workers, or even capital- although these all play a role- but rather by individuals engaged in research, design, and development. While these industries make up less than 7 percent of the economy's output, they are considered to be in many ways key drivers of the New Economy. Just as capital- and machinery- intensive industries (e.g., autos, chemicals, steel) drove growth in the 1950s and 1960s, knowledge production firms are the growth engines of the New Economy. On the other hand, a large share of the economy is now involved in managing, processing, and distributing information. These industries include telecommunications, banking, insurance, advertising, law, medicine, and much of government and education; and occupations such as managers, lawyers, bankers, sales reps, accountants, and teachers. In these industries, effective handling and managing of information, rather than breakthrough knowledge generation, are the keys to success.

The increased importance of knowledge means that the net stock of intangible capital (e.g., education and research and development) has grown faster than tangible capital (e.g., buildings, transportation, roads, and machinery). In the New Economy, intangible capital has become at least as important as tangible capital, and a greater share of the value of tangible capital is based on intangible inputs. As we have become richer, we have increasingly consumed services and goods with higher value-added content. This trend is demonstrated by the fact that the economic output of the U.S. economy, as measured in tons, is roughly the same as it was a century ago, yet its real economic value is 20 times greater. In other words, we have added intangible attributes to goods and services, the most important being knowledge. One example is anti-lock brakes, which are the product of a generation of research and development, and are loaded with electronics. They don't weigh any more than conventional brakes, but they certainly provide a great deal more value to drivers.

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"A knowledge-driven economy is one in which the generation and exploitation of knowledge play the predominant part in the creation of wealth" (United Kingdom Department of Trade and Industry, 1998). In the industrial era, wealth was created by using machines to replace human labour. Many people associate the knowledge economy with high-technology industries such as telecommunications and financial services. Today, in advanced economies such as the US, more than 60 per cent of workers are knowledge workers. Knowledge workers are defined as "symbolic analysts", workers who manipulate symbols rather than machines. They include architects and bank workers, fashion designers and pharmaceutical researchers, teachers and policy analysts.

What does nowadays' knowledge mean? "He who receives an idea from me receives instruction himself without lessening mine; as he who lights his taper at mine receives light without darkening me."(Thomas Jefferson) The bottom line is that unlike capital and labour, knowledge strives to be a public good or what economists call "non-rivalrous". Once knowledge is discovered and made public, there is zero marginal cost to sharing it with more users. Secondly, the creator of knowledge finds it hard to prevent others from using it. Instruments such as trade secrets protection and patents, copyright, and trademarks provide the creator with some protection.

Some knowledge may matter more than other knowledge as there are different kinds of knowledge that can usefully be distinguished. Following, we shall briefly introduce some examples. Know-what, or knowledge about facts, is nowadays diminishing in relevance. Know-why is knowledge about the natural world, society, and the human mind. Know-who refers to the world of social relations and is knowledge of who knows what and who can do what. Knowing key people is sometimes more important to innovation than knowing scientific principles. Know-where and know-when are becoming increasingly important in a flexible and dynamic economy. Know-how refers to skills, the ability to do things on a practical level.

Knowledge gained by experience is as important as formal education and training. The implication of the knowledge economy is that there is no alternative way to prosperity than to make learning and knowledge-creation of prime importance. There are different kinds of knowledge. "Tacit knowledge" is knowledge gained from experience, rather than that instilled by formal education and training. In the knowledge economy tacit knowledge is as important as formal, codified, structured and explicit knowledge.

According to New Growth Economics a country's capacity to take advantage of the knowledge economy depends on how quickly it can become a "learning economy'. Learning means not only using new technologies to access global knowledge, it also means using them to communicate with other people about innovation. In the "learning economy" individuals, firms, and countries will be able to create wealth in proportion to their capacity to learn and share innovation (Foray and Lundvall, 1996). Formal education, too, needs to become less about passing on information and focus more on teaching people how to learn. At organisational level learning must be continuous. Organisational learning is the process by which organisations acquire tacit knowledge and experience. Such knowledge is unlikely to be available in codified form, so it cannot be acquired by formal education and training. Instead it requires a continuous cycle of discovery, dissemination, and the emergence of shared understandings. Successful firms are giving priority to the need to build a "learning capacity" within the organisation.

To become knowledge driven, companies must learn how to recognize changes in intellectual capital in the worth of their business and ultimately in their balance sheets. A firm's intellectual capital - employees' knowledge, brainpower, know-how, and processes, as well as their ability to continuously improve those processes - is a source of competitive advantage. But there is now considerable evidence that the intangible component of the value of high technology and service firms far outweighs the tangible values of its physical assets, such as buildings or equipment. The physical assets of a firm such as Microsoft, for example, are a tiny proportion of its market capitalisation. The difference is its intellectual capital.

What about the information and communication technologies (ICT)? They are also in the spot lights but do they have any worth mentioning benefits? ICT are the enablers of change as they do not by themselves create transformations in society. ICT are best regarded as the facilitators of knowledge creation in innovative societies (OECD, 1996). The New Economics looks at ICT not as drivers of change but as tools for releasing the creative potential and knowledge embodied in people. However, the ICT sector has a powerful multiplier effect in the overall economy compared with manufacturing, for example.

The Information Economy

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The rate of technological change has greatly increased over the past thirty years. Three laws have combined to explain the economics of information. Moore's Law holds that the maximum processing power of a microchip at a given price doubles roughly every 18 months. In other words, computers become faster, but the price of a given level of computing power halves. Gilder's Law - the total bandwidth of communication systems will triple every 12 months - describes a similar decline in the unit cost of the net. Metcalfe's Law holds that the value of a network is proportional to the square of the number of nodes. So, as a network grows, the value of being connected to it grows exponentially, while the cost per user remains the same or even reduces.

With the advent of information and communication technologies, the vision of perfect competition is becoming a reality. Consumers can now find out the prices offered by all vendors for any product. New markets have opened up, and prices have dropped. When businesses can deliver their products down a phone line anywhere in the world, twenty-four hours a day, the advantage goes to the firm that has the greatest value-addition, the best-known brand, and the lowest "weight'. Software provides the best example: huge added value through computer code, light "weight" so that it can be delivered anywhere at any time.

Competition is fostered by the increasing size of the market opened up by these technologies. Products with a high knowledge component generate higher returns and a greater growth potential. Competition and innovation go hand in hand. Products and processes can be swiftly imitated and competitive advantage can be swiftly eroded. Knowledge spreads more quickly, but to compete a firm must be able to innovate more quickly than its competitors.

Social Networking for Knowledge

Looks like the new art of managing resides in being attractive rather than profitable, meaning that companies' earnings are directly proportional to the number of members. Today a major focus of companies is to create, develop and protect their interest society.

Across time, companies developed through using physical raw materials, technology, intellectual capital, knowledge and now they use people, and not as employees but as informal collaborative throughout social networking. Marketing taught us that the word of mouth is quite a powerful advertising method, which is both cheap and effective. Companies which are aware of this meaning have a lot to gain as it isn't a matter of choice because the previsions are irresistible to those which seek competitive advantage/profit throughout popularity.

From the individual's point of view, social networking sites are online gathering places for people to create and join virtual communities, and built relationships. Participants have the ability to access an even greater number of people through their friends' extended online social networks. There are social networks online for business connections, political affiliations, college and university alumni associations, music groups and other interests. How are people using social networking sites? A person starts by creating an identity and profile using personal information they feel comfortable sharing, such as first name, a favorite band, book or a movie. By searching through social networking profiles participants may find peers with who may share interests, ideas and information similar to a club or sport board. Social networking brings people together united by a common interest. The enterprise perspective of social networking is that participants benefit from the convenience of being able to easily share ideas, and connect with peers. Social networking gives participants the opportunity to express a passion or talent, reach vast audiences, and find peers that share and appreciate their gift.

Social networking is the grouping of individuals into specific societies, like small rural communities or a neighborhood subdivision, if you will. Although social networking is possible in person, especially in the workplace, universities, and high schools, it is most popular online. This is because unlike most high schools, colleges, or workplaces, the internet is filled with millions of individuals who are looking to meet other people, to gather and share first-hand information and experiences about golfing, gardening, aesthetics and cosmetic surgery, developing friendships or professional alliances. The topics and interests are as varied and rich as our society and the history of the human being.

When it comes to online social networking, websites are commonly used. These websites are known as social sites. Social networking websites function like an online community of internet users. Depending on the website in question, many of these online community members share common interests in hobbies, religion, or politics. Once you are granted access to a social networking website you can begin to socialize. This socialization may include reading the profile pages of other members and possibly even contacting them.

The friends that you can make are just one of the many benefits to social networking online. Another one of those benefits includes diversity because the internet gives individuals from all around the world access to social networking sites. This means that although you are in the United States, you could develop an online friendship with someone in Denmark or India. Not only will you make new friends, but you just might learn a thing or two about new cultures or new languages and learning is always a good thing.

As mentioned, social networking often involves grouping specific individuals or organizations together. While there are a number of social networking websites that focus on particular interests, there are others that do not. The websites without a main focus are often referred to as "traditional" social networking websites and usually have open memberships. This means that anyone can become a member, no matter what their hobbies, beliefs, or views are. However, once you are inside this online community, you can begin to create your own network of friends and eliminate members that do not share common interests or goals.

We have to be aware, there are dangers associated with social networking including data theft and viruses, which are on the rise. The most prevalent danger though often involves online predators or individuals who claim to be someone that they are not. Although danger does exist with networking online, it also exists with networking out in the real world, too. Just like you're advised when meeting strangers at clubs and bars, school, or work -- you are also advised to proceed with caution online. By being aware of your cyber-surroundings and who you are talking to, you should be able to safely enjoy social networking online. It will take many phone conversations to get to know someone, but you really won't be able to make a clear judgement until you can meet each other in person. Once you are well informed and comfortable with your findings, you can begin your search from hundreds of networking communities to join, including MySpace, FriendWise, FriendFinder, Yahoo! 360, Facebook, Orkut, and Classmates.

Many people today are on at least one social networking site such as LinkedIn, Facebook, MySpace, Friendster even Twitter. Most people have joined these sites for one of two reasons: to get in touch with friends and family, or to network. Many people make the mistake in thinking that if you are on Facebook or MySpace for social reasons that it won't impact your professional life. This may have been true before social networking began to flourish as a component of business internet strategies, but it is not the case now.

Social networking is the practice of expanding the number of one's business and/or social contacts by making connections through individuals. While social networking has gone on almost as long as societies themselves have existed, the unparalleled potential of the Internet to promote such connections is only now being fully recognized and exploited, through Web-based groups established for that purpose.

Six degrees of separation is the theory that anyone on the planet can be connected to any other person on the planet through a chain of acquaintances that has no more than five intermediaries. The theory was first proposed in 1929 by the Hungarian writer Frigyes Karinthy in a short story called "Chains."

Nowadays recruiters consistently turn to social networking technology to find qualified candidates to fill employment vacancies. Normally, they don't seek out candidates from social sites like Twitter or MySpace, but instead look at the business networking sites, such as LinkedIn. Getting "connected" is a very important aspect of job hunting and equally important is portraying a positive online persona. The question is then, why have you taken the time to build an online persona? For most of us the answer is to connect. Staying in touch with family members, old friends, high school classmates, and college buddies through social sites (like Facebook) is how many people currently stay connected. For others, it's to get noticed and seen by those who are more likely to hire them or utilize their education, experience and services.

There are social networking sites that are actually designed to help you find a job. One such site is Plaxo. It is very similar to LinkedIn, you can sign up, create your profile, put in your contact information and list your social media links (Twitter, Facebook, MySpace). You can even share photos and send e-cards here. Plaxo helps you find a job because it stores your address book and it keeps track of all your contact information including a map showing you where those contacts live. Plaxo is also integrated with Comcast's Simple Hired ( which is a job aggregator site. That means that this site will search all of the job boards and company career pages to bring to you a list of possible jobs that meet your skills and location.

Jobster would be another highly useful social networking site that more job seekers pay attention to. Jobster puts you in contact with the people that are looking to hire you. You can actually connect with employers, not recruiters or resume pages. You can upload your resume; you can showcase links and even upload a video resume if you have one. Jobster allows you to network with the potential employers. If you are serious about having the professional career you have always dreamed of then perhaps it's time you learn the importance of an online presence and the value of social networking sites. Searching job boards and classified ads in your local paper will only take you so far, instead build a positive image online and network with those that you want to work with and land your dream job.

Enterprise web 2.0

Today the business world is undergoing a significant transformation thanks to a set of technologies collectively known as "Web 2.0." Web 2.0 represents an important step in the evolution of Internet-based tools, and in the years ahead, it's likely to have a major impact on the way information and knowledge are managed and distributed within the company.

Briefly, Web 2.0 technologies move data and computing power off desktop PCs and onto the Internet, thus making it easier to collaborate and share information, either among close-knit teams or vast populations.'s customer relationship management tools, the YouTube video-sharing site, and's news-aggregation service are all examples of Web 2.0 technology. In order to get convinced that Web 2.0 indeed matters, consider that not only are Web 2.0 tools simpler to deploy and manage than traditional software, they're often significantly cheaper as well - in some cases, they're even free.

Social networking refers to systems that allow members of a specific site to learn about other members' skills, talents, knowledge, or preferences. Commercial examples include Facebook and LinkedIn. Some companies use these systems internally to help identify experts.

Web services are software systems that make it easier for different systems to communicate with one another automatically in order to pass information or conduct transactions. For example, a retailer and supplier might use Web services to communicate over the Internet and automatically update each other's inventory systems. Wikis, such as Wikipedia, are systems for collaborative publishing. They allow many authors to contribute to an online document or discussion.

Web 2.0 is a term referring to the ongoing transition to a full participatory Web, with participation including both humans and machines. Web 2.0 is characterized by the following themes:

The Read/Write Web: In which the Web is seen as a two-way medium, where people are both readers and writers. The main catalyst for this is social software, allowing communication and collaboration between two or more people.

The Web as Platform: In which the Web is seen as a programming platform upon which developers create software applications. The main catalyst for this is Application Programming Interfaces, or APIs, allowing communication between two or more software applications.

It is important to recognize, however, that "Web 2.0" is not anything other than the evolving Web as it exists today. It is the same Web that we've had all along. But the problems, issues, and technologies we're dealing with are in many ways different, and so using the term "Web 2.0" is a recognition that the Web is in a constant state of change, and that we have entered a new era of networked participation.

The Online Community Is the Enterprise Revenue

Nowadays world is characterized by variety and choice. It is up to each individual to decide what kind of life to live and for how long. And we refer to the fact that there are many types of societies to which people choose to belong to and to conform with as long as they enjoy themselves. This is the match point -for companies to struggle in order to grow their specific world by attracting more and more individuals and feeding their interest towards the company's benefit.

In the Social Networking industry, the two sectors that show the largest potential for revenue are: (1) Enterprise Social Networking (also known as Business Social Networking) and (2) Mobile Social Networking. Both are exciting spaces to watch, with the industry being re-invented with each new technology being introduced to the market.

Enterprise Social Networking: Intracorporate Networking has grown significantly over the last 4 years. Many desktop software companies are embedding social networking for enterprise applications. As a way to increase productivity, idea sharing and increased business performance, enterprise social networking has found its way in the workplace as a collaboration tool. Mobile: Many experts in the industry agree that mobile usage of the internet will eclipse computers and laptop usage. For the social networking industry, this technology represents the road to the future. Mobile social networking is strongest in Europe and is growing significantly in the Far East.

The web 2.0 revolution is changing our lives; it is a ground swell that touches both our personal and professional environments. Social Networking is a concept that federates all of these changes and is at the center of this transformation. Tools and behaviors which sprang from the consumer area are now making the transition to the corporate world; with diverse implications for businesses of how it may change the way they work.

Further we shall discuss some predictions and challenges for business, but let's start with the main notions and principles embraced in the concept of Social Networking:

-Electronic tools can increase the number of active connections each person can maintain (human limit is around 150 stable relationships);

-The 'six degrees of separation' concept, meaning that virtually anyone can be connected through 6 steps;

-Weak ties (contacts you rarely see and barely know) often create more value when you need help than strong ties;

-In every demographic set, for a given incidence (marketing campaign, application deployment) there is as much opportunity in the main target small group as in the numerous niches constituting the long tail: applications such as e-commerce and social networks are delivering value for and from this 'long tail';

-The new generation just starting their working careers, also called the Millenials, is made up of digital natives -born with a mouse in their hand, who have mastered the Internet and the PC and have a radically different approach to computing, with profound implications for the professional world.

Social Networking takes advantage of all the above notions to produce tools that foster collective intelligence, collaborative work and support communities: not only social networks but also search engines (where result order is based on the number of hits from the wide community), blogs, wikis, collaborative tagging and instant messaging/presence features, at least, are part of the Social Networking movement. It is a constantly changing area where applications integrate with each other and new features are regularly launched.

Social Networking and Knowledge Management in Organizations

The above presentation of two distinct concepts revealed them to be strongly related regarding both purpose and results. The web 2.0 opportunities increase organizations' interest and will greatly impact their work. As web 2.0 is rapidly spreading and embraced, organizations are getting forced to adapt along and do their best to reach a compatibility stage. We consider that those which approach accordingly the implementation of knowledge management won't miss out the benefits of web 2.0 integration. As in negotiation this is a win-win situation, because both parties have their gain: companies improve their work and clients have the chance to obtain perfect services.

Thorough adaptation of social networking to the organization's activities shall bring sooner than later some of the following results:

Change of communications. Social Networking is bringing a broad new range of technology innovations to communications: multimedia, presence, interactivity, etc… Now, customers are not only looking for the value of the products, but for corporate values that make sense.

Change of vision. As businesses become more transparent to the increasing volume of information available online, employees will rely more on the enterprise culture, and in parallel, stakeholders will seek proof of corporate social responsibility awareness, made inevitable by the growing transparency. Eventually, organizations will define their "unified collaboration and communication" strategy at the highest level / the vision.

Change the organization. Many businesses debate how they can flatten the pyramid, to gain the benefits of startups with their associated adaptability and fast growth models. Most will see very different consequences and roles and responsibility mutations as a result of Social Networking: managers will need to adapt and become Social Networking experts; knowledge management professionals will become the architects of this evolution; and the IT group will need to work much more closely to Knowledge Managers and users to enable the new applications.

Figure 1. Stages of digital identity maturity inside organization

Collective Intelligence and Customer Experience will lead Innovation. There are many different ways to innovate, all of which include collective thinking, most often through contests, but also via a regular process of gathering together employees, customers and partners from the value chain. With lifecycles getting shorter, the enterprise needs to capitalize on those relationships and anticipate customer needs. Hence, making the most of collective innovation is still a fumbling process that has to be formalized.

Networking will be the key of employee excellence. People think more globally as their contacts become increasingly international; they pay attention to what their online contacts mention and use social networking features to gain greater depth of knowledge in their areas of interest. In this way, they have access to multiple advisors and mentors, in addition to raw information; hence Social Networking is a true self development tool that can be used at any time, including from a mobile terminal like a BlackBerry or iPhone.

Employee mobility will increase. As employees increase their visibility and make their expertise available to communities, inside or outside their organizations, they will be more frequently solicited. This will also happen as they grow the number of online contacts they maintain, as long as these links are meaningful.

Organizations will adapt their motivation and career planning systems. To get employees to participate in collaborative work, corporations will need to adapt their motivation systems; they will also have to find inside the company or recruit externally the best "animators" who will value the quintessence of the new tools. Lastly they need to develop community motivations and rewards, in addition to just targeting individuals. Regarding career path, becoming an "animator" (a business blogger for example) will be recognized as a specific complementary experience, and expert paths will become more open as new tools help individuals to become visible and known within the community with minimal barriers. And excellence will remain the ingredient for success.

IT Applications will mutate. Some outcomes are already easy to predict: corporate directories will become rich applications (not necessarily comparable to social networks such as LinkedIn or Facebook but probably with a similar level of rich capabilities), intranets will be personalizable and presence features and user rating will invade almost every application.

Organization adoption will happen at different speeds. Some companies will adopt Social Networking tools and benefits faster than others / though in the end all that survive will do. Several triggers and accelerators will help predict how each corporation will do; and different Social Networking corporate models will emerge: knowledge management, business development, integration and brand consolidation.

Social Networking may allow increased revenue. As a result of the changes in communication and innovation mentioned above, the enterprise will be more visible and accessible to its market. Adopting a Social Networking strategy may also allow: expanded reach, conversion of direct marketing and ads from static to dynamic to better targeting prospects, faster launch and better new products, transformation of CRM in "personalizing" the contact with customers and reconnecting web, call center and online service centers for a better customer experience and retention, facilitation of external channel management by easily creating and animating powerful partner extranets other businesses will profit as they create new products and reach new markets through the use of these tools.

Last but not least, Social Networking may allow companies to find and address new markets, creating a new branch of their strategy as well as marketing and sales practices that we could call "niche management".

Symbiosis of Knowledge Management and Social Networking

About a decade ago Knowledge Management, was the focus of business and technology leaders alike. But after only a few years in the limelight, KM all but disappeared. However, knowledge management transformed, to a series of related applications, technologies and practices.  Among these are portals, intranets, BI, collaboration and two that are enjoying much attention of late Web and Enterprise 2.0. With these newly defined applications as arsenal, knowledge management is rising like the phoenix, though some do not recognize it or label it as such. The focus of these applications may obscure the underlying complexities that still belie knowledge management. 

A knowledge management implementation, under any name, is, at best, only partially about technology.  This is particularly the case with initiatives that fall under the 2.0 umbrella. Definitions and discussion all too often focus on technology. The inclusion of a technology focus provides a direction, however, we must still define the business imperative behind the initiative, unless we shall see it fail for this very reason. 

Further we shall describe a perfect organization symbiosis of KM and social networking. There are several actions to undertake in order to ensure a successful implementation of KM and social networking. Organizations should start by clearly defining the intended community and become intimate with its purpose and attitudes regarding knowledge sharing and innovation. Achieving this objective we should answer the following questions: Will the initiative allow users to function in a personalized manner, or be the foundation to building community and establishing common practices? Will knowledge production and sharing be viewed as a universal obligation or the domain of a few? Will the opinions and attitudes of some be drivers or magnets to the community? Is security necessary to regulate the community? On the next stage organizations have to take inventory of the knowledge sources the community uses/seeks, and those they do not use/seek. Challenge the validity of these assumptions and inclination. Identify each knowledge source as explicit or tacit. Determine the best means to organize the collection of explicit knowledge and make it assessable. Whatever approach is taken to collaboration and knowledge exchange, capture the knowledge in as much a facilitated fashion as possible and tag it appropriately. The value of the exchange will hopefully have a very long tail - well beyond the initial exchange. But remember knowledge captured but not findable is captured in vain. The goal should not just be to make it accessible however, but to shed light on its history, validity - its context. This is where understanding how community members place emphasis, faith and value on content is critical.

The challenge in combining the two phenomena consists in making them work as a system and return the organization its benefits otherwise it shall be a technology success - but a business failure. An effective KM initiative (no matter under what rubric it is brought in) requires the coordination of the cultural, technological, strategic and personal facets associated with a well-defined organization/community.

Instead of Conclusions

It is undisputed that European countries have recognized the importance of the knowledge economy. Knowledge-management activities play a key part within government agendas, corporate strategies and pioneering research; examples of good practice here are not difficult to find. In March 2000, the European Council in Lisbon launched a ten-year programme, the Lisbon Strategy, to focus on the economic, social and environmental revitalization of the European Union. The goal for 2010 is "to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion". (European Council, 2003)The EU has since initiated a number of programmes to understand intangibles and encourage innovation.

These projects demonstrate the shift that is taking place in the nature of the economy

and the drivers behind value creation: in the 20th century, companies valued margins, investment and asset productivity for comparative advantage; today, the 21st-century organization must focus on intangible elements, such as the ability to innovate, harness intellectual property and manage risks, such as loss of reputation. In terms of KM, the experiences of the region as a whole give a good indication of whether Europe will meet the goals set out in the Lisbon Strategy. Perhaps more importantly, the evolution of KM in more developed countries offers lessons for Eastern European nations at the early stages of harnessing the value of knowledge-based activities.

According to Leif Edvinsson, the world's first director of intellectual capital at Skandia and today CEO of Unic, the ideas surrounding the knowledge economy first emerged in Europe around 1990, with Scandinavian countries playing a pioneering role. As with other regions, there were many forces influencing this development. Globalization played its role by increasing competitive pressures, deeper and wider European integration, an aging workforce and a shortage of qualified labour were just some of the factors that have necessitated better management of knowledge resources for survival in a unified Europe. (

Edvinsson believes, though, that Europe's industrial and manufacturing traditions, and its focus on hardware and products have blocked KM's development. Yet there are elements within Europe's mix of cultures that offer the region advantages over other regions. "Europe is more advanced with knowledge management than the US, mostly because European companies concentrate more on the cultural and social aspects of KM, while US firms look for a technology silver-bullet solution," says Mariusz Strojny, knowledge-management co-ordinator at KPMG Central Eastern Europe. As Manon van Leeuwen, director of information society at the Foundation for the Development of Science and Technology in Extremadura in Spain, says, "Mediterranean cultures, for example, are based on sharing public spaces and developing their social lives within large groups that are open to interaction. It is therefore natural to continue sharing knowledge in an organizational environment".

As well as being a positive influence, workforce cultures and characteristics in Europe have had a negative impact on KM's evolution. Until relatively recently, a job was considered to be for life. Individuals would start a career at the lower levels of a firm and work their way up based on experience and skills. Nowadays labor markets bring insecurity and therefore employees feel less inclined to share knowledge as they believe it gives them power. However, flexibility and exploitation of knowledge assets are crucial to survival in a turbulent 21st century.

Today's KM world is indeed a restless one, but significant progress towards addressing these challenges is being made. Sweden, for example, is recognized as one of the highest investors in intangibles such as R&D, education and social infrastructure. However, there still remain numerous obstacles to overcome. Despite its early entry into the KM movement, the UK, for example, has had a difficult couple of years for knowledge management and software industry.

The change noticed for knowledge management in Spain refers to the fact that, two years ago, the main issue in KM was the implementation and application of ICT. The focus has now shifted towards a knowledge society that values people-based organizations and environments. In addition, KM is no longer the playground of large companies; much good-practice work is coming from SMEs, non-profit organizations and the public sector.

In order to sustain all presented theory and practical issues we have searched for correlations in the real economy. We have undertaken an analysis of 20 countries, regarding their state of development and number of users on a specific socializing network, respectively Facebook. The research consists in analyzing the interdependencies between the country size (population number), the country's development estate (GDP mil.$), and percentage of social networking penetration (number of Facebook users).

The series of data were transformed into percentage of GDP per individual and respectively the percentage of Facebook penetration within each state, by dividing the values to the total population number. For data analysis of the variables' series we used Eviews and following we shall present the outputs and comments.

Figure2. Dependency chart of Facebook users and GDP per capita

The chart shows the correlated evolution of the two variables which leads us to state that the number of Facebook users directly depends on the development estate of the country or more specific of people. The states range from the largest population ones to the smallest. We observe that the first 7 states on the chart have low variations due to the great number of population, as China, India or decreased development stage, as Bangladesh, Nigeria. Romania has a also low registrations both for GDP and Facebook users.

Correlating development and penetration of social networking we observe that the higher chart points are for Australia, Sweden, Japan, Denmark, and Norway. As we mentioned previously in the paperwork these countries are highly developed and sensitive to technology advance. And this chart stands for the statement that European countries have a stronger sense of knowledge management and higher interest for social networking.

We complete our analysis by determining the parameters relevance using the Least Squares method in Eviews and below we have the output provided automatically by the program.

Dependent Variable: USERS

Method: Least Squares

Sample: 2001 2020

Included observations: 20



Std. Error















Mean dependent var


Adjusted R-squared


S.D. dependent var


S.E. of regression


Akaike info criterion


Sum squared resid


Schwarz criterion


Log likelihood




Durbin-Watson stat




The variables dependency is being confirmed as medium by the value of R-squared- 0,403177 and Adjusted R-squared-0,370020 parameters.

Durbin-Watson test reveals that the error correlation hypothesis is valid due to the following criteria: the value of the test d = 1,70 is bigger than d1=1,10 and d2= 1,54 which are standard values from the Durbin-Watson Panel. Taking into consideration the previous observation and k=2, α = 0,05 and n=20 the conclusion is that the Durbin -Watson statistical value is confirming the test validity and the independece of errors hypotesis.

Regarding the values of F-statistic =12,15968 and Prob(F-statistic)=0,0002631 we can state that the value of the corelation report is significantly different from zero, with a significance level of 0,05 and we sustain that the indices have significant values.

The value of α = 2.54 means that the number of Facebook users strongly depends on the degree of development or at a micro level on the incomes of the population and as this dependency will continue the value of α shall slightly diminish.

Finally the bottom line of this topic is that information and knowledge management could be working together towards the enterprise development if confusions between the two are out. Some of the sources for business success are a clear strategy of any program, transparency of practices and collaborative objectives for company, employees and stakeholders.


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Presidency Conclusions on the Lisbon Strategy 2000-2003 by Theme (European Council, 2003) - site de educaţie informală