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Knowledge and skills needed in knowledge economy

Ivana Marić, Petra Barišić, Ivana Jurjević
Faculty of Economics and Business,
University of Zagreb, J. F. Kennedy sq. 6,
10 000 Zagreb, Croatia
[email protected], [email protected], [email protected]

Abstract. Knowledge is a complex and documents or repositories but also in organizational

multidimensional term, while knowledge management routines, processes, practices and norms [1].
is a rather new phenomenon. Philosophy of The question of defining knowledge and its role
knowledge is involved in organizations and nations, in forming a balanced society has occupied the minds
while economy and individuals are significantly of philosophers and theoreticians for ages.
determined by knowledge society. How to manage There are many definitions of knowledge. One
organizations through innovations and organizational of them tries to define knowledge through information
knowledge in global economy with limited resources and data. Vance (1997) defines information as data
and extended competition? How to develop unique interpreted into a meaningful framework whereas
and specific skills and technologies? How to form knowledge is information that has been authenticated
efficient learning organizations and transform and thought to be the truth [19].
strategy into high quality results? Knowledge is the process of practical
IT helps to design learning organizations while networking of information. Knowledge is a result of
the imperative for learning and constant growth is processing information in people’s mind [2].
becoming the essential part of individual and Probst and Geussen (1997) define knowledge as
organizational activities. integrity of knowledge and skills applied to solve
The process of permanent education and problems. It includes both theoretical knowledge and
improvement of skills and knowledge becomes the key practical everyday norms and instructions for actions.
feature in the successful behaviour of a certain Knowledge is based on data and information, but
organization. unlike them, it is always relayed to a person.
This paper examines the education potential and Knowledge appears as individual process in specific
gives a new view on the role of future knowledge context manifested in action [12].
management and skills. We agree that sustainable
knowledge economy is demanding. In the next decade,
we will probably find the answers on following
questions: What is the role of 21st century education? 2 Towards to knowledge society
What specific kind of knowledge and skills will be
important in 2020?
The recent interest in knowledge management
and knowledge management systems has been fuelled
by the transition into information age and the theories
Keywords: knowledge, knowledge economy, of knowledge as the primary source of economic rent
education [1].
Knowledge management [21] is a process of
identifying, capturing and leveraging the collective
1 Introduction knowledge in an organization in order to boost its
competence.
The world is changing daily and is increasingly Knowledge management [1] involves distinctive
becoming determined by technology and knowledge but interdependent processes of knowledge creation,
philosophy. knowledge storage and retrieval, knowledge
Knowledge is a fluid mix of framed experience, distribution and knowledge application. Knowledge
values, contextual information and expert insight that management is not monolithic, but a dynamic and
provides a framework for evaluation and continuous organizational phenomenon.
incorporation of new experiences and information. It Hackbarth (1998) finds that knowledge
originates and is applied in the mind of a scholar. In management is purported to increase innovation and
organizations, it often becomes embedded not only in responsiveness [7].

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The knowledge remains useless if not managed Information as a production factor does not have
and applied properly. Organizations are constantly intrinsic value. Only when transformed into
looking for new models and techniques of successful knowledge and applied within companies does it gain
managing within turbulent, unpredictable and highly value [11].
competitive environment. Knowledge management is Wilke [22, 6] talks about knowledge society or the
one of the winning strategies. The next table describes one based on knowledge where structures and
various definitions of knowledge and different processes of material and symbolic reproduction of
implications for Knowledge Management (KM) society are so pervaded by knowledge dependent
accordingly [1, 10]. operations that information process, symbolic analysis
and system of experts get primary role.
People, their knowledge and skills, their potential
Table 1. Implications for Knowledge Management and commitment, are an essential capital when
building a successful organization. The dominant
Definition of Description Implications for competitive advantages of modern society [18] are the
Knowledge Knowledge Management knowledge and the skills of the workforce.
(KM)
Knowledge Data are facts, raw KM focuses on exposing Knowledge as a resource is a central part of the circle
vis a vis numbers individuals to potentially that also includes globalization, structural
Data and Information is useful information and transformation, as well as information and
Information processed/ faciliating assimilation of communication technology. Finally, the whole
interpreted data information
Knowledge is process is enabled by directing global business
personalized processes and world information transparency
information illustrated in Figure 1 [10, 15].
State of Knowledge is the KM focuses on exposing
Mind state of knowing individuals to potentially
and understating useful information and
faciliating assimilation of
information Structural
Object Knowledge are Key KM issue is building transformation
objects to be and managing knowledge in the
stored and stocks information
manipulated and knowledge
society
Process Knowledge is a KM focus is knowledge
process of flows and the process of -Knowledge becomes scares resource
applying expertise creation, sharing, and -Appear information and knowledge
distributing knowledge markets
Access to Knowledge is a KM focus is organized Information and
Information condition of access to and retrieval of communication
access to knowledge content tehnology/ Globalization
information importance RESUORCE OF
Capability Knowledge is the KM is about building core increase KNOWLEDGE
potencial to competencies and
influence action understanding strategic -Local and global competition
know-how -Speed transactions -International
-Decrease costs of transactions acceleratedlearning processes

The state of knowledge [15] is related to storage

and accessibility of knowledge in an organization. -World information transparency
Šikyr, Boras and Bakić-Tomić explain HRM practices -Directing global business processes
in managing knowledge workers, the concept of
knowledge and its application to organization.
Explicit knowledge is usually stored in the databases Figure 1. The role of knowledge as resource
systems and can be accessed relatively easily. Tacit
knowledge is stored only in the workers’ memory and The specific knowledge may partly be
is not easily accessible. The flow of knowledge is subconscious where a knowledge worker is not
related to creation, sharing and use of knowledge in necessarily aware of the importance of his/her specific
an organization. Explicit knowledge is created, shared knowledge to the organization. The access of others
and used through information systems and to specific knowledge may be limited. They do not
information and communication technologies need to be able to learn the specific knowledge
(IS/ICT). Tacit knowledge is created, shared and used because they may be lacking their own skills,
through interaction and communication among abilities, experience, interest, time, money, etc., or
workers. The application of Knowledge Management their access to the specific knowledge may be
in the organization results from the business strategy restricted by certain rules.
whose objectives and practices are specified in both
information and human resources strategy.

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3 Knowledge workers and position 77, while overall quality of the education
system put Croatia to place 89. Knowledge
human capital management in Croatia is moderate. Unfortunately,
the data are very unfavorable regarding lifelong
Knowledge is a key factor of competitive learning and further education at work, the fact that
advantage of individuals, organizations and the entire positioned Croatia at place 128.
economy. It is a distinctive organizational feature that The first significant research of practice
distinguishes successful from unsuccessful knowledge management in large Croatian companies
organizations. Bahtijarević and Pološki [3] emphasize was conducted in 2008 by Vidović [20], and the final
the need for learning and say that people, results showed that there existed an awareness of the
organizations and companies who want to succeed are need for serious approach to knowledge management.
forced to learn constantly and quickly, promptly At that time the field was at an early stage of
receiving relevant information and knowledge. evolution. The conclusions of that research confirmed
The most valuable asset of 21st century that the large Croatian companies were still in the first
organization, both profit and nonprofit ones, is phase of knowledge management and that they were
knowledge workers and their productivity [6]. much better at managing explicit knowledge rather
The term knowledge worker is related to than the tacit one. There are no significant differences
human capital. Good management has the potential to in the perception of employees and the actual practice
transform all organizational knowledge to of knowledge management in large Croatian
organizational results. Relations between human companies. The development of knowledge
capital and knowledge workers are presented in management is not related to the company’s success.
Figure 2 [16, 38]. Education is the key part of progress and
investing in knowledge economy, that is, a well-
organized and innovative education system, is a
crucial segment of the whole economic growth. The
paradigm of work in the future and the concept of
living is dramatically changing and undergoing
transformation through the development of IT,
innovations and knowledge management. Knowledge
organizations will be agents of knowledge of 21st
century and new skills and knowledge will be needed
at the global scene.
The high cost of investment in education [4] is
generally recognized in the world today. This fact is
being reflected in the percentage of gross domestic
product that governments allocate for formal
education in their countries (typically between 5%
and 6% of GDP), and substantial extra-budget funds
intended for formal and informal education of
company’s or organization’s staff and their individual
training.
Education system has to take into account new
trends, new needs and skills for e-generation [10] and
conduct the redefinition of educational institutions.
Automation, globalization, workplace change,
demographic change, personal risk and responsibility
are dominant forces that change skill demands these
days. Skills that most employers expect to become
more important in the next 5 years are: critical
thinking/problem solving, IT application,
teamwork/collaboration, creativity/innovation,
handling diversity. Additionally, Ledward and Hirata
(2011), in the context of 21st century skills,
encompass 4 elements of learning and innovation
Figure 2. Human capital and knowledge workers skills and these are critical thinking, communications,
collaboration and creativity, namely, 4Cs [9].
Knowledge as a resource needs learning
According to World Competitiveness Report organizations as formal forms and has to be structured
among 139 countries [15], the survey that has through inspired education and new skills and
included 13 500 business people ranked Croatia at competences illustrated in Figure 3.

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Financial analysts Waiters and waitresses

Social and human service
Child care workers
assistants
Gaming surveillance officers Executive secretaries and
and gaming investigators administrative assistants
knowledge
skills and management Computer software engineers,
knowledge Physical therapist assistants
and education applications
Pharmacy technicians Accountants and auditors
Landscaping and groundskeeping
Forensic science technicians
workers
Elementary school teachers,
Dental hygienists
expect special education
Receptionists and information
Mental health counselors
clerks
Mental health and substance Truck drivers, heavy and tractor-
educational
abuse social workers trailer
institutions as
agents of
knowledge We can conclude that in the future the most
favourable occupations will be in the field of
information and communication technology, medical
Figure 3. Process of creating skills and knowledge and home care aids, financial advising and mental
care.
There is a strong tie in the field of knowledge
between the educational institutions, knowledge 4 Conclusion
management and needed skills and knowledge.
21st century can be declared as ‘the knowledge Today, knowledge is not just a term or a
era’ needing new knowledge and new skills phenomenon; it is a process, an acumen and a result.
consequently resulting in new knowledge. New It is a starting point, a final state, an input and an
business concept requires new forms of management output, a process in itself. Knowledge is a modern
guided by new knowledge workers. religion; knowledge is changing society,
Each organization at the global market becomes organizations and economy. The concept of our work
learning organization. The concept of long life and living is significantly touched by paradigm of
learning is reforming and dramatically changing today knowledge. Knowledge economy is constantly
work and life in looking for new ways of thinking and pushing us forward because we are involved in
solving problems. As a result of all these changes, process of learning, communicating and transforming
new occupations and jobs are becoming more relevant through new ideas, information and technology. This
as the new age approaches. makes knowledge the most influential factor and a
New occupations with the fastest growth rate and powerful tool of today.
occupations that will add the most jobs since 2006 are Managers are increasingly coming to realize that
presented in Table 2 [5]. the continuing education and knowledge improvement
of their employees is one of the most effective ways
to achieve competitive advantage. It is a basic
Table 2. Which occupations will see great growth precondition for entering the market competition and
between 2006 and 2016? a successful struggle for the affection of consumers
[13, 724].
Twenty occupations with the Twenty occupations that will Knowledge organizations will be agents of
fastest rate of growth add the most jobs
Network systems and data
knowledge of the 21st century and new skills and
Registered nurses knowledge will be needed at the global scene.
communications analysts
Personal and home care aides Retail salespersons Education system has to reconsider new trends and be
Home health aides Customer service representatives transformed to inspire new skills and competences.
Computer software engineers, Combined food preparation and The roles of education and development in
applications serving workers
Personal financial advisors Office clerks, general
learning organizations are directed towards creating a
Veterinary technologists and new paradigm of learning based on innovations,
Personal and home care aides
technicians changes and new technologies that modify every
Makeup artists, theatrical and employee into a knowledge worker and organizations
Home health aides
performance
into knowledge organizations.
Medical assistants Postsecondary teachers
Janitors and cleaners, expect In conclusion, we agree with Professor Sikavica
Veterinarians [14, 540] when he argues that the constant
maids and housekeeping cleaners
Substance abuse and
Nursing aides, orderliness, and
technological progress and innovation in all areas of
behavioural disorder human activities require that all employees must
attendants
counsellors
Bookkeeping, accounting, and
constantly be educated and trained. Finally, their
Skin care specialists
auditing clerks

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future and their survival in their organization depend [12] Probst, G. J. B., Geussen, A., Wissensziele als
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8, pp. 6-9, 1997.

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