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Box K2.3. Codified and tacit knowledge

Two types of knowledge can be distinguished, according to the degree of formalization:

•Codified knowledge: More accessible and distance is less of a barrier to gaining access to it. Modern electronic communications facilitate rapid dissemination of codified knowledge. This increazes the opportunity for regional variations to be compressed. However, without the presence of the necessary personnel to utilise this codified knowledge, its effective use is limited.

•Tacit knowledge: More limited and more likely to remain local. Tacit knowledge and experience are necessary to understand formal codified knowledge.

Establishing and building competence in tacit knowledge among a community requires:

•Effective communication;

•Building technical knowledge; and

•Knowledge of customers, markets and associated factors such as choice, tastes and fashions.

Local factors are very important in the dissemination of knowledge:9

•Social interaction, which is the channel through which knowledge flows, is based on trust and this is more easily established when these interactions take place within proximity.

•The building of a knowledge infrastructure has a clear territorial dimension, with positive effects related to the achievement of critical mass, including the availability of a varied mix of services.

Skills base and innovation capability

There is a clear consensus across business that access to a strong skills base is very important in terms of maintaining a competitive advantage. Those companies that are successful are able to access and nurture a wide range of skills, including those related to:

•Strategic management skills for business leaders;

•Entrepreneurship for graduates;

•Management and production techniques;

•Leadership;

•Mentoring and coaching; and

•Personal development skills.

9 Simmie, James (2003), “Innovation and urban regions as national and international nodes for the transfer and sharing of knowledge”, Regional Studies, Vol. 37.

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The innovation capabilities of a region depend on a developed skill base that is regularly updated. Initiatives in this area should observe the following principles:

•Focus on the network or cluster, as opposed to being technology-based;

•Emphasise industry specific knowledge;

•Provide crucial links to industry associations;

•Use business not equipment as its context;

•Develop a function as an information repository and information portal;

•Stress staff and curricula (knowledge) in budgets, not bricks and mortar;

•Share curricula and information region-wide and train personnel from other places;

•Identify a lead responsibility for needs assessments;

•Work with network associations on skill standards and certification; and

•Provide out-reach to socially excluded populations.

Skills development through partnerships

Access to appropriate skills (managerial, technical and scientific) is one of the key factors in supporting business development. Coordination between various stakeholders is a necessary condition to identify skill needs and ensure appropriate development. It can take various institutional forms, including the creation of skills and education councils. Coordinated partnership is needed to:

•Provide strategic direction for employment and skills policy in a particular territorial unit. This should be based on evidence of needs for skills that will improve productivity in the existing workforce, as assessed by regional employers.

•Identify, through engagement with employers, skills gaps that can be filled through suitable existing training provision or, where none exists, to work with providers and other partners to create appropriate programmes.

•Facilitate dialogue between all individuals and organizations engaged in education, skills and/or employment by promoting best practice to businesses, support partners and training providers and communicating the priorities, activities and achievements of this partnership to the wider public.

Consultative process on regional skill needs

The main purpose of this process is to assess skills shortages over a range of time horizons in order to plan to meet this through investment in relevant courses or in wider projects such as building competence by establishing a business school or links with one that already exists. The consultative process to determine the regional skills needs involve:

•Representatives of the business sectors in a region, including, for example, human resource teams;

•Representatives of business support agencies;

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•Providers of qualified staff at secondary, further and tertiary sectors, including careers departments from educational institutions among others;

•Representatives of the workforce; and

•Members of community groups.

The importance of functioning networks

Cooperative networks enable the formal and informal flow of knowledge through their members and create the basis for partnerships. Networks can:

•Have a well-defined geographical dimension, as in the case of clusters; or be based on sectoral interests.

•Emerge naturally, as a result of common interests, since they deliver real value to participants. The formation of these networks is a slow process.

•Be supported by emerging institutional structures such as Chambers of Commerce, entrepreneur clubs or equity capital groups. These arrangements can provide stability and accelerate the development of networks.

The importance of networks has been increasingly recognized in innovation policies:

•Networks can reduce the effective risk of innovation for the individual firms, as this is shared with other entrepreneurs.

•In networks organized along geographical lines, proximity encourages the rapid exchange of information. This, together with trust, rivalry, and extensive outsourcing arrangements ensures that innovations in individual firms upgrade the overall cluster.

Public policy and networking

The social benefits of a network may be substantial but the private costs for some participants may exceed private benefits. Therefore, there is a role for public involvement in the formation of networks.10 Public intervention can help in addressing issues that emerge at various stages of the networking process, in particular:

•Awareness of a networking possibility;

•Search for partners;

•Building trust and a shared knowledge base;

•Organizing the network;

•Ensuring complementary resources; and

10 Polt, Wolfgang (2001), “The role of Government in networking” in OECD, Innovative Networks. Co-operation in National Innovation Systems, Paris.