16.4: Knowledge Capital
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The importance of knowledge to creative industries is on the surface uncontroversial. Most people accept the proposition that the creative industries are knowledge based. Knowledge is a cognitive capacity, conventionally understood as expertise. In conventional media and cultural sector value chains, expertise is valued as an input into content generation, delivery, and sales (that is, marketing). Knowledge capital, sometimes referred to as intellectual capital, includes the workforce (human capital), demands and preferences of audiences and consumers (customer capital), and systems, products, processes, and capabilities (structural capital). 26 While this is invariably knowing-that, it embodies know-how.
Knowledge capital can be sticky: it is often difficult to transmit or export. The term absorptive capacity describes the capacity to absorb knowledge that presents as “spillovers,” the latter term implying unintended consequences of actions. Both spillovers and absorptive capacities exist because an organization or an individual cannot capture all the benefits resulting from inventive activity. A good example is business precincts where there are convivial spaces in which people meet and share ideas informally. Localized spillovers and cultures of interaction frequently occur when participants are close to the knowledge source. Such clustering allows the exchange of tacit knowledge: that is, people may become smarter by interacting with each other. Creativity, learning, knowledge networks, and innovation occur because of skilled labor markets and movement of people. Media capitals like Hollywood and Mumbai, and technology hubs such as Silicon Valley, provide evidence of how knowledge capital is shared. 27
In the past few years, a rise in collaborative production opportunities in China together with the construction of cultural parks and media bases has led to significant transfers of knowledge capital: this includes human capital, customers, and structural capital as well as technological know-how.