Digital Competences (VI). Joan Torrent: Electronic skill-biased technological change (e-SBTC), enterprise and work

Notes from the course Competencias digitales: conocimientos, habilidades y actitudes para la Sociedad Red (Digital competences: Knowledge, skills and attitudes for the Network Society), organized by the CUIMPB, and held in Barcelona, Spain, on July 16th and 17h, 2009. More notes on this event: competencias_digitales_cuimpb_2009.

Electronic skill-biased technological change (e-SBTC), enterprise and work
Joan Torrent

The Knowledge Economy

From the industrial economy to the knowledge economy: Digitization and technological revolution, Globalization, and change in the structures of demand.

Globalization is the last stage of capitalism, understood as the maximization of profit in the market. Capitalism is led by an expanding trend, and always move towards no limits of time or space. And the difference between internationalization and globalization is the time factor.

The fluxes of information and knowledge will be the groundings for development in the next decades: for the first time in History, we’ve got now technology that helps human beings in their mental work, vs. other technologies (steam engine, combustion engine, etc.) that were applied to — and were substites for — manual work. Thus why now knowledge is becoming the booster of wealth, the asset upon which creation of wealth is leveraged. Though knowledge is not new in the production equation, it is new in a sense of magnitude and intensity, leading to changes in productivity, competitiveness, etc.

Implications of this new economic sphere that is the Knowledge Society:

  • Complementary effect: technology has an impact when used to achieve goals in a specific framework, but it has not an impact in itself — though it is the core for economic transformation. But technology biases skills: depending on the technology used, skills will be different: the skills required for working in an assembling line are different from the ones required for working with computers.
  • Synergistic effect: impact on competitiveness, productivity, salaries, etc. But only if there is an effect of co-innovation, of complementarity amongst organizational change, technology and skills.
  • Substitution effect: substitution of manual or mental work by technology
  • Expansion effect or spillovers: network effect or network spillovers among the infrastructure (Technology) with the structure (Economy) and the superstructure (Society). The inclusion of ICTs has affected all aspects of life, changing the Economy and the Society, and not only production itself. The Knowledge Society is a new economic paradigm and a Third Industrial Revolution.

Kinds of knowledge

  • Know what: observable knowledge, non-rival, ability of exclusion, high increasing returns, decreasing marginal utility, lock-in
  • Know why: observable knowledge, non-rival, medium ability of exclusion, high increasing returns, decreasing marginal utility, lock-in, network spillovers
  • Know how: tacit knowledge, low exclusion, medium increasing returns, decreasing marginal utility, low barriers of exit, network spillovers
  • Know who: tacit knowledge, low exclusion, medium increasing returns, decreasing marginal utility, low barriers of exit, network spillovers

The struggle of firms to turn tacit knowledge into observable knowledge will lead to the class war of the XXIst century.

Knowledge economy and enterprise

On a network for enterprises, there’s a process of decentralization, specially of external decentralization: e.g. providers are externalized. In the knowledge economy, also internal decentralization is made possible, leading to the networked enterprise.

And in the case of work, we also witness a transition towards the networked work: ICTs as substitutes of mental skills, production on-demand and differentiated, non-manual knowledge and work, continuous training and corporate training (i.e. There is no knowledge society without a learning society), innovation, flexible salary, self-programmable (i.e. learn how to unlearn), the networked enterprise as the new framework and networked organization, more commitment than the one agreed by contract (i.e. You cannot leave your brain at your workplace), individual relationship with the enterprise, flexibility as value (i.e. flexisecurity), health hazards related with mental illnesses (stress, burnout, mobbing, etc.).

Digital sills

Skills depending on routine vs. non-routine tasks; and depending also on analytical tasks & manual taks.

  • Enterprises that transform the competences base + organization on a flexible way of production and work + and development of work relationships that increase commitment = higher productivity.
  • New practices in human resources management + new organizational systems + intensive use of ICTs = higher productivity.
  • Delegation of responsibilities + lower levels of hierarchy + intensive use of ICTs + human resources management that leads to higher commitment + fostering innovation = higher productivity

Enterprises that are networked are more knowledge intensive, are more innovative, have higher skilled workers, etc. and, in general, are more competitive and have better work conditions.

Workers from the knowledge industry have higher wages; workers that have knowledge-intensive jobs have higher wages; workers that are in the knowledge industry and have knowledge-intensive jobs are the best remunerated.

Conclusion: we have to evolve towards a change in the competences of both workers and enterprises. And accompanied with investment in technology and a deep organizational change.

But the reality shows that most people are unskilled and, ever worst, do not follow continuous training paths, as do their highly skilled peers. Thus, the gap between the unskilled (or less skilled) and the highly skilled increases.

Q&A

Q: how is it that in this days of crisis we don’t see a debate towards knowledge? A: in a situation of crisis (and always) governments have to capitalize the economy, increase its amount of capital. But politically, this is not that easy; there are some economic trends (e.g. the building industry in Spain) that are difficult to stop; and there are some costs in the shift (e.g. several thousands of workers that are going to lose their jobs) that, politically, are unbearable.

More information

Course on Digital Competences (2009)

If you need to cite this article in a formal way (i.e. for bibliographical purposes) I dare suggest:

Peña-López, I. (2009) “Digital Competences (VI). Joan Torrent: Electronic skill-biased technological change (e-SBTC), enterprise and work” In ICTlogy, #70, July 2009. Barcelona: ICTlogy.
Retrieved month dd, yyyy from http://ictlogy.net/review/?p=2538

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