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Knowledge Economies: Innovation, Organization and Location

Wilfred Dolfsma

2008, Routledge London and New York. 159 pages. ISBN: 9780415416658.

Reviewed by Iain Evans, University of Cambridge.

This book, which is a collection of papers, represents an attempt to contribute to the economic and management literature on knowledge economies whilst presenting a critical perspective from a sociological angle. Dolfsma’s aim with this collection of insights is to ‘understand the changing and extending role of knowledge in the economy’, through interaction and cooperation.

The introduction provides the reader with the fundamental questions that frame research in the knowledge economy in general. As such, it presents the authors argument and intentions. Identifying the issue of how one defines the knowledge economy, Dolfsma considers a range of theoretical insights, at multiple aggregations and from different perspectives. He uses this to examine the role of knowledge, knowledge development and knowledge diffusion in the heterogeneity of the economic landscape. These three components provide the common link across the book and are drawn together through their mutual dissatisfaction with the handling of these issues by economists. The remainder of the introduction reflects on the need for an interdisciplinary approach to overcome the lack of realism in economics and therefore suggests theoretical and empirical coherence should be combined into an integrated framework, where this book is intended to contribute.

The second chapter tackles the under-theorizing in economics concerning knowledge, and identifies the capital metaphor as being central to this problem. Building on this critique, Dolfsma examines knowledge qualitatively – using Polyani (1983) and Ryle (1966) to contrast with the capital metaphor. In applying this alternative conceptualisation, Dolfsma argues that there will be profound affects to how economists view technology and technological change. New interpretation of knowledge is suggested, as underlying assumptions in economics are ‘misleading and potentially economically disastrous’.

The third chapter shifts somewhat awkwardly to ideas of social capital given that this appears to contradict the authors’ standpoint in the previous chapter where the capital metaphor was critiqued for being misleading. Having described its main features, Dolfsma engages the term social capital to account for knowledge transfer, exchange and gifts. Even though the thrust of the chapter considers the context of communities, it fails to present any meaningful examples, which perpetuates the a-spatial engagement of the book to this point. This chapter, rather than building on the first, appears to explain methods to illuminate different aspects of processes of social capital rather than maintain the principle focus of the book concerning knowledge in a variegated economic environment.

The fourth chapter addresses the role agents play in the development of economic knowledge – therefore appearing to link more closely to the first, rather than the second, chapter. Dolfsma challenges the ignorance of modern theory to its antecedents and calls for diversity within the fields of economics in order to account for paradigm shifts.

The fifth chapter examines the dynamics of knowledge exchange within firms to suggest that knowledge transfer effects, rather than being simply informal, are instead a consequence of both informal and formal work-flow networks. This does not present anything new to the domain of network theory, the idea of buzz and pipelines, formal and informal networks is well established with a rich tapestry concerning network exchange, but this chapter does provide a useful example of intra-firm networking. The limitations noted by the author are of use to socio-economic geographers who may overlook some of the inherent artefacts of locations of study that are not immediately apparent.

Chapters 6 and 7 are of the most value to economic geographers. In these Dolfsma examines knowledge exchange between high-tech firms and the knowledge base of the economy respectively. Although the examination of Dutch high-tech firms is not particularly novel (indeed Ron Boschma’s work is of particular note), the conclusions concerning the composition and configuration of firms does engage with more recent work regarding the spatial evolution of firms and regions.

Chapter 7 asks ‘Can the knowledge base of an economy be measured?’ a particularly poignant question given the rise in interest in related variety, diversity in clusters and the balance of endogenous and exogenous knowledge networks. This chapter is a methodological exercise rather than providing interesting and insightful interpretations of the knowledge base of the Dutch knowledge intensive industries. I believe this provides an example of where systemic research fails to address the question that it intended to answer. As a result, the author is left to conclude between sectoral compositions rather than address major knowledge gaps in locations and in industries.

The penultimate chapter suggests that economists should now evaluate their theoretical foundations within the context of the situations and developments they encounter, rather than try to fit theory to reality. Dolfsma exemplifies this by suggesting a dynamic welfare perspective, based on the work of Joseph Schumpeter. Dolfsma uses Intellectual Property Rights as the vehicle for this illustration, “This makes intellectual objects (quasi-) public goods” and hence could affect social welfare in the form of inhibiting further innovation. I would suggest this is a bridge too far to jump in such a brief discussion as the interactions between innovation policy and welfare policy, i.e. the social returns to innovation, are extremely complex and each has there own time-lag of effects. The significance of IPR’s on social welfare in essence would be insignificant in the short term, and maybe conditional in the medium to long-term.

Having read the theoretical grounding and empirical contributions made by Dolfsma, I could not see a clear coherent stream throughout the book and this limits its overall contribution to economic geography. Indeed the ambitious aim of the book to analyse the extent of cooperation between actors is a relevant one, but the execution of this aim has not been fully realized. Although I do not think economic geographers will gain much insight from this book, the attempt to address the failures of formulaic economics has to be commended. It is a positive attempt to move towards an interdisciplinary discourse concerning knowledge and its role in the economy and society.

Each chapter was well structured and achieved its individual task. However, it was the nexus between chapters that could have gone further to formulate interesting, coherent insights. However, I do acknowledge that with such a vast topic and limited space, this is a difficult task. Arguably what we are left with is a number of essays, some theoretical, some empirical, which are well structured individually but lack a coherent stream around the central theme of knowledge economies.

Overall the book is a useful example of the problems with interdisciplinary discourse, and is a brave attempt to integrate economics into more intangible domains. I found its charm in the humble approach taken by the author and its attempts at acknowledging a variety of perspectives. The book provides methodological and reflective sections and therefore is likely to cater for research students and academics rather than a wider audience. I think the title may suggest more ‘geography’ than it actually delivers (being couched in space rather than place) and this may limit its value to economic geographers. On this basis it provides a brave step towards interdisciplinary debate and hence should be interpreted as such.

(Added 10 February 2009)