The Knowledge Economy : Importance of Information Resources for Improved Organization Performance

In the information age of today, companies need to adapt to change rapidly or face falling behind competitors. Markets change continuously with the advent of new technology and constant product innovations. Companies who are successful are those who keep up with the change by creating new knowledge and disseminate it throughout the organization at greater speed than competitors and include that in new product developments. However, most managers misunderstand the concept of knowledge and how companies can exploit and benefit from it. In most western companies, knowledge is measured by quantifiable data such as increased ROI and efficiency measures. Japanese companies view knowledge differently, by focusing on the tacit knowledge in the company which is often subjective as compared to the objective processed information of western companies. This paper will focus on the process of knowledge creation, knowledge brokering and innovation, and how these can lead to increased performance in firms. According to the Austrian perspective of firms and economics, all economies are called "knowledge economies." Economies need knowledge to be dispersed in a similar way as companies need to do it to be competitive. This paper will also attempt to draw a parallel between the use of information, or knowledge, in firms and economies as a whole