Knowledge Driven Economy

Introduction

Beginning of life has proven that everything around us undergoes evolution at a certain point. Same is the case with the economical system of the world. A few hundreds of years back economies were measured by the agricultural strength and the amount of cattle people used to breed and possess. With the passage of time, the value of economies changed to the amount of manufactured goods and the richness of the country or state. But over two decades ago this trend shifted from manufactured goods and mere financial stability to knowledge based economy.

The new economy has introduced a new lexicon in which knowledge capital, intellectual capital, learning organizations, intangible assets, and human capital describe new forms of economic value (Bontis, 2001).

Knowledge Driven Economy

Knowledge in the new economy is now well recognized as the key source of competitive advantage. Knowledge has become the dominant component of customer value and an important resource for strategic management. The new economy states that intellectual property, human capital, and knowledge capital describes new value to the economy. The knowledge base of an economy has been defined as the ability to create innovative ideas, new production methods, new processes and the ability to transform these abilities into economic wealth and value. So what is knowledge driven economy then? It is the range of services that are knowledge intensive in term of both creating and usage of knowledge.

In the complex world of business there are different kinds of assets, accounted as tangible and intangible assets.

Tangible Assets

Tangible assets could be anything physical, from a mere office desk to heavy machinery and real estate, invoices etc. hence anything that has market value and can be monetized, is physical and can be seen on the balance sheet.

Intangible Assets

On the other hand intangible assets are those assets that cannot be touched, are not physical in nature and might not even appear on the balance sheet, but hold a great value for any successful organization.

One of the world's biggest firms, Microsoft, has most of its value in "knowledge capital," embedded in its personnel, its organization, patents, copyrights, brand value and so on.

Financial performance alone is not enough for a corporation to excel, customer expectation and the awareness of corporate social responsibility have changed the rules of decade old globalization.

Albert Einstein very well stated that, " Sometimes what counts can't be counted, and what can be counted doesn't count."

Tangible assets