1. Knowledge should be a free and not a commodity. In a contemporary society, knowledge is considered to be a long-termed process that enables a person to perform tasks. Knowledge is considered to be a basic prerequisite and something that is intrinsic in nature. It is an intensified recognition and considered as a corporate asset that provides greatest competitive advantage. According to Altbach (2015) knowledge is considered to be of economic advantage and meaningful resource that establishes and treats the knowledge management. From the content perspective, knowledge is viewed as codified and stored repositories that allow knowledge to be retained and shared. Arguably, knowledge should be considered to be a free-floating entity that is understood as provisional, relational and primarily text-bounded. From this perspective, knowledge is considered to be process of knowing and the ability of an individual to act (Filieri and Alguezaui 2014).
From the content perspective of epistemological standpoint, knowledge is treated as a commodity that can be easily exchanged between people and managed independently by the knower. However, knowledge should be treated away from commodity and as an independent free asset. It is unquestionable and human related that works towards the benefit of people that acts knowledgeable. Arguably, from the relational perspective, it seems to deny knowledge as a substantiate commodity whatsoever. In the view of relational writers, knowledge is limited to social relations that give a narrow view of knowledge (Jacob 2014).
The technocentric content view treats the knowledge as commodity that is easily transported and can be exchanged between organizations. In addition, anthropocentric view treats knowledge as a pure subtle, tacit and based on experience. It also views knowledge as a manipulation of the social relations. It is frequently used with information and viewed as textual content (Antonelli and David 2015).
Knowledge should not be considered as commodity and it is inexpensive, free and easy to achieve. In today’s world, knowledge is viewed as a raw material that is economic and easily accessible. However, knowledge is awareness, familiarity or understanding of something or someone. It is a collection of facts, descriptions, information or skills that are acquired through education or experience via discovering, learning or perceiving. It is not a commodity and a theoretical understanding of a subject. It is the interpretation of data that is free and intrinsic in nature. In contrast, in today’s world, knowledge acts as a fuel that runs the organizational economy and gain benefits (Hausmann 2013).
In today’s world, the scenario of knowledge production and distribution is changing. New technologies and agents are diversifying the traditional methods of knowledge production and distribution. Knowledge is a fictitious commodity that substantiates economy and called knowledge-based commodity. The distribution of knowledge is via formal and informal ways that are the essential components for economic performance. It is increasingly codified and transmitted through the information technology, communication networks and computers called the information society. There is requirement of skills and adaption to codified knowledge that is required in tacit knowledge that is the underlying reason for the continuous learning. In the era of knowledge-driven economy, innovation is driven via the interactions between the users and producers where they exchange codified and tacit knowledge (Machlup 2014). Information technology is related to knowledge, media and computer networking. The intensity of knowledge or information is related to the efficient production of knowledge. Media technology increases the production and distribution of knowledge that becomes accessible through data based networking that interplays between users and producers. The distribution of knowledge in a economy based approach is the possession of knowledge and applying it to solve a problem. It is an aggravated collective distribution of knowledge where the knowledgeable people unite in a community to solve a problem with the help of information technologies and media (Machlup 2014).
2. Innovation is a process where new ideas that hold social and economic value It acts as a instrument that aids in delivering the productivity and economic benefits that are associated with investments and development of key innovative tools. It is a way to tackle the major social challenges and improve the quality of life (Tirole 2015).
Investment in innovative technologies is a risky process. It has uncertain outcomes and requires a large amount of funding. Therefore, in the process of investing in innovation, there are key market failures that affect the mechanism process. The failures include knowledge or technological spillovers, appropriability and public goods, network or coordination failures and imperfect asymmetric information (Bleda and Del Rio 2013).
Knowledge or technological spillovers is the process of end result while undertaking innovation. For example, the product is the end result of an innovation that is capable to generate positive externalities. However, from a private market perspective, innovative projects are unprofitable and might be capable of drawing large social benefits, so it is considered to be a market failure and withdrawn (Barbaroux 2014).
Appropriability and public goods are another market failure. For example, the ideas and knowledge are non-excludable and people cannot be excluded to avail the benefits that are generated from innovation. It is not possible for the people to pay individually for the availed benefit from innovation and as a result, the private firms give up the innovative projects (Mazzucato 2016).
Network failures or lack of coordination is another failure, however, the private firms does not invest in innovation alone. This leads to problems that have an adverse effect on the coordination of the companies while interaction or during the delivery of innovation. For example, in research and development, there are number of problems that arise due to difficulties in coordination between the companies. There is also problems that give rise to inadequate access by the smaller companies to the innovation system (Fagerberg, Martin and Andersen 2013).
Asymmetric or imperfect information is a major failure that affects the financial markets investing in innovation. Funding is the major issue that is required in large amounts to invest in innovation as it is risky with unpredictable outcomes. For example, the small and medium enterprises (SMEs) who are engaged in high-tech innovative projects may find it difficult to get funding for the proposed information.
Innovative projects are greatly harmed by market failures and there is requirement of innovative policies or schemes that make innovation sub-optimal and interventions that are formed in a way that has a possibility to increase the innovation level.
An innovation policy is required to be developed by the economists in the light and encouragement in the path of innovation. The Innovation Policy that is developed by the World Bank Group and Organization for Economic Co-operation and Development (OECD) provides a platform that provides easy access to the learning sources, knowledge, practice of design with implementation and evaluation of the policy. It helps the udders to learn the operation of innovation systems with good practices, statistical benchmarking and application of solutions to policy problems. It helps in the facilitation of knowledge, its exchange and collaboration between the regions and countries. Innovation policy in Australia is developed from the national innovation system (NIS) perspective that addresses the notions in market failure that focuses on public sector commercialization and in the international emulation (Lember, Kattel and Kalvet 2014). This policy adopts the NIS framework by the national governments and policy organizations at the international level.
Innovation policy is a form of public action that encompasses the research and development policy, infrastructure policy, technology policy, educational and regional policy that focuses on every aspect of innovation apart from science and technology. It helps to address the market failures in key innovation that makes the efficient use of knowledge. The objectives of this policy are to address the productivity and economic growth, competitiveness and increased employment. Innovation policy intervention helps to balance the activities of markets and governments in the path of innovation. Moreover, in Australia, the free market trajectory addressed in policy-making is being complemented, extended and focused to complex-evolutionary system thinking and coordination (McCann and Ortega-Argil?s 2013). This innovation policy addresses the market failure and the policy makers are focused on the incorporation and continuation of the science and research instead of demand driven approaches.
Altbach, P., 2015. Knowledge and education as international commodities. International higher education, (28).
Antonelli, C. and David, P., 2015. The Economics of Knowledge and the Knowledge Driven Economy. Routledge.
Barbaroux, P., 2014. From market failures to market opportunities: managing innovation under asymmetric information. Journal of Innovation and Entrepreneurship, 3(1), p.5.
Bleda, M. and Del Rio, P., 2013. The market failure and the systemic failure rationales in technological innovation systems. Research policy, 42(5), pp.1039-1052.
Fagerberg, J., Martin, B.R. and Andersen, E.S. eds., 2013. Innovation studies: evolution and future challenges. OUP Oxford.
Filieri, R. and Alguezaui, S., 2014. Structural social capital and innovation. Is knowledge transfer the missing link?. Journal of Knowledge Management, 18(4), pp.728-757.
Hausmann, R., 2013. The Tacit Knowledge Economy. Project Syndicate. Available at: project-syndicate. org/commentary/ricardo-hausmann-on-the-mental-sourcesof-productivity-growth (accessed 30 October 2013).
Jacob, M.C., 2014. The first knowledge economy. Cambridge Books.
Lember, V., Kattel, R. and Kalvet, T., 2014. Public procurement, innovation and policy. International Perspectives.
Machlup, F., 2014. Knowledge: its creation, distribution and economic significance, Volume I: Knowledge and knowledge production (Vol. 1). Princeton University Press.
Machlup, F., 2014. Knowledge: Its Creation, Distribution and Economic Significance, Volume III. Princeton University Press.
Mazzucato, M., 2016. From market fixing to market-creating: a new framework for innovation policy. Industry and Innovation, 23(2), pp.140-156.
McCann, P. and Ortega-Argil?s, R., 2013. Modern regional innovation policy. Cambridge Journal of Regions, Economy and Society, 6(2), pp.187-216.
Tirole, J., 2015. Market failures and public policy. American Economic Review, 105(6), pp.1665-82.