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GGR221 Lec 7

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Deborah Leslie

Lec 7 Service knowledge and global cities March-09-14 3:19 PM Lecture 6 continued…. Innovation and Clustering - agglomeration: the tendency for industries to cluster in a particular region or place - great deal of recent interest in agglomeration and clustering in successful regions, such as Silicon Valley, Third Italy, Toyota City, B aden Wurttemberg - Lundvall : capitalism has entered a new stage in which knowledge is the most important resource and learning is the most important process (no longer raw materials) - knowledge: a framework or structure in which information is stored, processed and understood - different than information b/c it is any kind of information that has been interpreted, given a context and placed within context of values/beliefs - has becoming increasingly important in ALL industries - Knowledge typology (Asheim and Gertler, 2005) - argues that there are 3 kinds of knowledge that dominate in different industries - 1) Analytical knowledge- "know why"- trying to explain why things are the way they area - applying and studying new scientific laws and developing new models - very characteristic of science-based and medical industries - 2) Synthetic knowledge- "know how"- understanding how to do something rather than why - applying existing knowledges but in new ways - applied knowledge - oriented towards problem solving, practical - engineering based industries - 3) Symbolic knowledge- "know who"- who the market is and how market is changing, knowing the right people, being in right places, who you know - centred around symbols, signs, styles, fashion, imagery, design trends - cultural industries like TV and film - knowledge is important o all industries, but different kinds of knowledge important to different industries - huge difference between low-road strategy vs. high road strategy - low-road: try to compete on cost- lowest cost - high-road: competing on basis of value-added/quality - high road depends on the generation of new knowledge and the commercialization of that knowledge - Canada can't compete on the low-road strategy so need to compete on high-road. Increasing need to tap into knowledge and continuously learn - 2 types of knowledge important to innovation - 1) Codified knowledge: refers to formal, systematic knowledge that can be converted into written form through programs or operating manual (picture, diagram, writing), can be commodified and sold in patent (i.e. fashion designs that copy and sold cheaper) - 2) Tacit knowledge: refers to direct experience and expertise which is not communicable through written documents. Can only be learned by doing/experience. Practical knowledge. (i.e. Internship/training with someone, skilled trades) - a form of practical know-how embodied in skill sand work practices of individuals or organizations - i.e. Murano Glass from Venice - in order to pick up this skill, need to learn from someone else that makes the glass - art that can only be passed on from one person to another - can't be written down/told to someone else, but learned - argument: codified knowledge thought to be global, tacit knowledge local - tacit knowledge can only be learned by being someone/watching someone - codified knowledge you can be travelling a lot for work and still learn= placed based! - the more easily codifiable knowledge can be assessed,d the more crucial tacit knowledge is in sustaining or enhancing the competitive position or the firm - process of ubiquitificaiton- effect of globalization is that many previously localized capabilities have become ubiquitous - what is not ubiquified, however is non tradable/non-codified embedded tacit knowledge - tacit knowledge is key to innovation - what is innovation? the creation of new processes, products and services or modifications to existing ones to gain a competitive advantage in the market - very different from invention because invention need to be commercialized to become innovation - need to be able to use it - the traditional model of innovation was a linear model - old models focused on large corporations - innovation a series of steps: research and development --> design --> production, marketing - little communication between departments, very functional division of labour, little learning and knowledge transmission - this model is no longer efficient! - in recent years this approach has been replaced by an interactive approach - innovation as a circular or networked process based on cooperation and collaboration within firm and between manufacturers, users, suppliers, research institutes and development agencies - firm as laboratory- different people/expertise coming together and shared - Interactive model of innovation (different directions of flows/information between manufacturers/service provides, suppliers, customers,research institutes, outside experts etc.) - innovation as a constant process of improvement and learning - akin to kaizen concept from Japanese management- loopy/networked/interactive model - according to Shumpeter , innovation is to be understood in terms of systems. It is enacted through webs of social relations, rather than isolated events associated with heroic scientists or entrepreneurs - all innovation comes from systems and webs of relations rather than individuals Lectures Page 1 - all innovation comes from systems and webs of relations rather than individuals - probably the best known model of knowledge generation within the firm is the four sate SECI approach development by Japanese management theorists - means of gathering/sharing information and profiting - SECI: - socialization: articulation and exchange of tacit knowledge requiring face to face interaction between experts within a firm - externalization: based on the transformation of this tacit knowledge into codified form (becomes less valuable because can be shared) trick is to... - combination: refers tot he combination of different bodies of codified knowledge into more complex and integrated systems - internalization: the process by which firms embody codified knowledge in the kills of workers and the routines and work practices of the firm, turning it back into tacit knowledge - constant "spiral" like pattern - why is agglomeration important in learning and knowledge transmission within and between firms? - summed up in the Japanese concept of ba- a term which implies that context is important - key in being able to gain/learn/share knowledge is being embedded in a PLACE for sharing that information - not only is knowledge important, but also place - ba: a time and place shaped by the interaction between individuals involved in the process of knowledge creation - the writing ofAlfred Marshall very important here (1890s) - if embedded in a certain district (pottery, fashion), the 'secrets' are in the air - you learn by being there - highlights the importance of agglomeration to learning - Marshall: four main factors in agglomeration - a) the growth of subsidiary industries - if you get cluster of firms in same industry and attract suppliers, will reduce transportation costs - b) the development of a pool of skilled labour - attracting workers in district which brings down search costs for labour - c) the establishment of a dedicated infrastructure - specialized training schools or collages for sector/industry which will also reduce search costs and educational benefits - d) formal and informal f2f - advantages in terms of learning- learn from suppliers/schools/workers - 'secrets' are in the air - agglomeration economies: the cost advantages that accrue to firms because of their location within a cluster - advantages that firms derive from being located in a cluster/location - 2 kinds: - 1) localization economies: (Alfred Marshall) when firms in the same sector/industry cluster close to each other (i.e. Hollywood has all major film studios in LA, Toyota City) - agglomeration of firms within an industry - there will be spillover effects- companies learns from one another - Advantages: labour market pooling, reduced transportation costs, creation specialized suppliers, knowledge spillovers - 2) urbanization economies: (Jane Jacobs & Richard Florida on urban life) cities as great places for innovation because people and firms rub shoulders together Brings different people together. Brings different industries together (i.e. high-tech firms, auto, furniture) - economies available to local firms irrespective of sector arising from urban size and density - cross-pollination among industries - spillacross effects - exchanges that can happen within different industries - e.g. Cirque du Soleil --> exhange of knowledge between Cirque du Soleil Montreal and other circus troops. It is what it is today because it created a "new" type of circus that moulds together other art forms (theatre, dance, fashion, makeup) - it
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