News

Knowledge, Innovation, and Creativity: Designing a Knowledge Society for a Small, Democratic Country

20 March 2006

Byline:	Dr Louise O’Brien, Victoria University of Wellington; Dr Brian Opie (Convenor), Victoria University of Wellington; Dr Derek Wallace, Victoria University of Wellington
Source:	HUMANZ Knowledge Policy Research Group

A report presented to the Ministry of Research, Science and Technology, 22 September 2000.

Table of Contents:

Acknowledgments
Executive Summary

Part I: Definition and Scope of the Research
Part II: Research Conclusions
Section A: General Conditions for a Knowledge Society
i. The dynamics of a knowledge society
ii. Descriptors of a knowledge society
Section B: Directions to a Knowledge Society
i. What are the natures of transformations needed for New Zealand to become a 'knowledge society'?
ii. How can this be influenced, directly and indirectly, by Government actions?
iii. How can we build stronger, two-way flows of understanding between the science community and society so that both are equipped to move forward together?
iv. How do the arts and sciences relate to each other and what should Vote RS&T be doing to foster stronger links and why?

Part III: Elaboration of Research Conclusions
Section A: General Conditions for a Knowledge Society
i. What is a knowledge society?
ii. A cultural model of innovation for a knowledge society
iii. Convergence
Section B: Specific Conditions for Innovation
i. The New Zealand context
ii. Literature on innovation
iii. The cluster matrix model
iv. Common languages for collective learning
v. Explanatory framework for invention and creativity

Part IV: Recommendations for Further Research
i. Knowledge as a cultural resource
ii. Case studies
iii. Issues for the research funding system

Bibliography
Endnotes

ACKNOWLEDGMENTS

This research project was commissioned and funded by the Ministry of Research, Science and Technology

This report has been prepared by the HUMANZ Knowledge Policy Research Group

the writers

Dr Louise O'Brien, Victoria University of Wellington
Dr Brian Opie (Convenor), Victoria University of Wellington
Dr Derek Wallace, Victoria University of Wellington

were assisted by

Ian Bull, Radio New Zealand
Vincent Catherwood, Vince Catherwood & Associates
Derek LeDayn, Hexad Consulting Group Ltd

The work of the HUMANZ Knowledge Policy Research Group is supported by a grant from the Trustees of the National Library.

Executive Summary

New Zealand is a small nation in an increasingly complex world order. To become a knowledge society requires new kinds of understanding both of global change and local distinctiveness.

The argument of this report is based upon the following propositions:

• Innovation and creativity are complex social and cultural processes which are increasingly foregrounded as the content and context of production becomes more cultural in character and society and markets become more highly differentiated.
• What is described as the convergence between arts and sciences is actually the breakdown of modern Western classifications of knowledge and the institutions which have regulated and reproduced them. It is also the consequence of the increasing importance of culture as a component in economic production, and the diffusion of scientific and technological knowledge throughout society.
• The process of disintegrating hierarchical structures in business organisations is being repeated in other sectors of society, including tertiary education. Experts increasingly relate to one another across organisational and discipline boundaries in the search for solutions to complex problems.
• Open access to public knowledge is a necessary condition for the development of a knowledge society, just as free speech is for a democratic society.
• City-centred regions are the core of the knowledge economy. These social environments are intensively networked, knowledge-rich, organisationally diverse and culturally vibrant.
• The role of the government in a small, post-colonial nation is as a negotiator with the agencies of globalisation, and an interpreter and manager of the process of globalisation, on behalf of its citizens.
• There is no pre-existing model or template which New Zealand can simply adopt in order to become a knowledge society. Cultural history and physical location provide critical parameters for the reflexive development of such a society in a particular place.

Part I: Definition and Scope of the Research

The New Zealand Government is committed to devising policies that will facilitate the country's continuing transition from a largely agricultural economy to a 'knowledge society' in which expert knowledges combine through information and communications technologies (ICT) to create innovative products, including those derived from the 'value-added' treatment of traditional primary production. The success of this transition is perceived to depend on a cultural transformation of New Zealand society through which citizens will become oriented to constant innovation in economic life while maintaining core cultural values and identities in social life.

As part of an inquiry into the conditions required for the establishment of such a 'culture of innovation' (or its approximate collocations, 'entrepreneurial culture', 'enterprise culture', 'clever society', 'creative society', etc.), the Ministry of Research, Science and Technology (MoRST) has asked the Humanities Society of New Zealand (HUMANZ) to investigate the following questions:

1. What are the natures of transformations needed for New Zealand to become a 'knowledge society'?
2. How can this be influenced, directly and indirectly, by Government actions?
3. How can we build stronger, two-way flows of understanding between the science community and society so that both are equipped to move forward together?
4. How do the arts and sciences relate to each other and what should Vote RS&T be doing to foster stronger links and why?

This report will provide in Part II a summary of the defining features of the knowledge society and the principal signposts relevant to defining an approach to each question. While the signposts provided are comprehensive, they are offered provisionally, in the context of further necessary research which is described in Part IV. Part III provides a more extended discussion of key issues informing our assessment of the questions and of the need for further research.

Consistent with the emphasis on reflexivity (the ability of experts to critique their own expertise) in the research literature we have consulted, this report is presented in a form which is designed, in its approach to the presentation of its conclusions, to focus precisely on reflexivity as a necessary condition for the establishment of a knowledge society.

The recent production of The Heart of the Nation: A Cultural Strategy for Aoteoroa New Zealand, the current work of the Tertiary Education Advisory Committee, and the increased emphasis on regional development, are all important instances of related enquiries which will need to be taken fully into account in any further development of this project.

A further development of this research could usefully generate a presentation of the principal relationships discussed in this report like 'Framework for a Shared Vision', which is Table 1 in TEAC's first report, Shaping a Shared Vision: Strategy, Quality, Access (July, 2000).

The references on which this report is based typically use as examples countries or areas in countries (like Silicon Valley in California) which are not comparable to New Zealand. Lash and Urry note that during the twentieth century there were 'no more than a dozen or so organized capitalist societies, which were all located within the north Atlantic rim. . . . Beyond them were scores of other, 'more-or-less' societies in colonial or semi-colonial relations with this organised core.'(i) At every point in this report new research is needed to identify the specific conditions, policies, and practices which will permit a knowledge society to develop fully and distinctively in New Zealand.

Part II: Research Conclusions

Section A: General Conditions for a Knowledge Society

i. The Dynamics of the Knowledge Society

The term 'knowledge society' identifies the dominant feature of the social transformations associated with globalisation as the world-wide integration of economic activity, information as the raw material of production, and communication through electronic networks as a global medium of social exchange.

A reflexive society

• Knowledge is first and foremost a capacity for social action. It provides the means both for conserving and reproducing certain features of society over time, and for impelling social change and innovation. It is the social product of human intelligence and creativity.
• Objectified knowledge, that is, any knowledge which is recorded and is publicly available, now provides the principal source of knowledge. Whether its origin is science, arts, tradition, or mass media, the totality of this stock of recorded knowledge is the raw material on which postmodern or knowledge societies draw to perpetuate and remake themselves.
• The management of this stock of knowledge to ensure its public accessibility, its conservation and its renewal, is a primary government responsibility. A national knowledge infrastructure which makes what is already known generally available for further use must be fully developed.
• Using the term 'cultural knowledge' for the knowledge base of a society recognises that knowledge is a collective accomplishment, where new knowledge is conditional on what has come before and rarely if ever is generated by an individual in isolation.
• As the members of a democratic society become more knowledgable, so centralised controls will become less effective and political organisation will become more fragmented.

Economy

• Capitalism as the economic engine of the knowledge society develops by creating new markets for new products. Both markets and products are increasingly differentiated, with information goods (cultural and media products) and the informational aspect of primary products becoming increasingly important. Economic activity is increasingly concentrated in urban areas, and its base material is information.

Technology

• Electronic and digital information technologies are (much more than earlier technologies like writing and print) closely aligned with human cognitive and communicational capabilities - discursive, imaginative, and computational; vocal, graphic and symbolic - with which we create cultural and economic activity, and envisage and plot social change.
• A critical marker of knowledge society capability is the density of communications and transport networks.

Competencies

Certain types of knowledge and skill (broadly informational) are necessary. They include:

• Cultural literacy (to recognise and exploit social, cultural, lifestyle, and ethnic distinctions).
• Managerial expertise (to coordinate the complex production regimes and networks).
• Teamwork (integral to highly diversified production).
• Technological competence (particularly of computers and programming to track and time-manage production and to facilitate information management).
• Customer relations and human resources.
• All types of design work.
• Language and communication competence.
• A reflexive relation to knowledge and practice.

Convergence and innovation

• The association of the three terms, knowledge, innovation, and creativity, signals the breakdown in modern western societies of boundaries between current conventional categories of knowledge. The self-characterisation of these societies as scientific societies is changing as science and technology become acculturated into ordinary knowledge and social practice.
• We are witnessing a convergence between scientific (innovative), artistic (creative) and humanistic (critical-interpretive) modes of knowledge creation. A model of knowledge creation based on the interaction of theory and practice can apply in any domain of knowledge.
• Organisations which have come into existence in the process of producing the current conventional distinctions between different kinds of knowledge and the values attributed to them, like government agencies and universities or polytechnics, are challenged by convergence. Is Creative New Zealand funding research? Is the Foundation for Research, Science and Technology funding creativity?

Conditions for innovation

• Intensive and extensive social interactions are needed to foster the circulation and development of ideas and to forge the alliances that turn ideas into artifacts.
• Innovation is the result of recursive and holistic rather than linear processes and practices.
• Much innovation in human society is characterised by incremental adaptation to changing circumstances.
• The cluster matrix model provides an appropriately complex way of conceptualising the critical aspects of an innovative knowledge society. It focusses on the multiplicity of intersections (or possibilities for dialogue) between individuals, cultures, communities of expert practice, and types of knowledge, as the necessary condition for innovation.
• The institution of the firm will remain vital in organizing and ordering knowledge practice and knowledge practitioners. But the firm cannot stand alone. It needs the direct association of other kinds of knowledge organisation, specifically public sector agencies and educational institutions.
• Knowledge is more likely to pass along networks of shared practice which transcend organisations than between communities of different practices within organisations.
• Regional collective learning is needed so that small and medium sized enterprises can develop a capacity for self-sustaining technological learning, innovation and the generation of new products.
• Information technologies can facilitate but not substitute for the dense reciprocity required to make and maintain strong formal and informal links between organisations in close physical proximity to one another.
• Protecting information stifles further innovation. Cycling between tacit and articulated knowledge is a key factor in the innovation process.
• The increase in expert knowledges needs to be balanced by the transcoding or translating of these knowledges into forms of language and modes of dissemination which permit wide diffusion of ideas and concepts from one knowledge domain to others. Education and media organisations have a principal responsibility for this work.

ii. Descriptors of a Knowledge Society

This section will state the key elements which our research indicates are characteristic of a knowledge society as a distinctive early twenty-first century social formation.

We advance this list as a heuristic, a means of testing the present capabilities of New Zealand's organisational, infrastructural and conceptual resources with respect to designing and implementing a knowledge society as a purposeful action of the government and other agencies.

The terms in the list will be explained and explored in detail in Part III, which will gather together key resources of evidence and analysis. Taken together in various combinations (no term is more important than any other) the terms make possible properly complex thinking about the knowledge society as a social environment in which knowledgeable people interact productively with each other through various media in a variety of physical and organisational settings. The fundamental requirements for successful interaction are shared cultural knowledge and a common language.

Multiple intersections
Dense reciprocity
Networks of shared practice
Collaborative funds of knowledge
Collective learning
Embodied expertise
Hybridising nature of knowledge
Positive intervention
Common languages
Shared values
Future directed
Increasing differentiation
Generational time frames
Symbolic production
Open systems
Organizational fluidity
Competent failure
Diverse political cultures
Democratic institutions

Engaging with these terms is to engage in the process of reflexivity which is being identified as a decisive feature of postmodern societies. Lash and Urry summarise their own extended analysis of the centrality of reflexivity to the conduct and evolution of knowledge societies as follows:

Overall we have emphasized that reflexivity is not merely a matter of cognition or ethics, but also of aesthetics. Such aesthetic or hermeneutic reflexivity, in its interpretive relation to social conditions and the self, is active in production and consumption, in critique and as a foundation for community. . . . Not only are there mobile objects, and this includes capital, technologies, labour-power and images, but there are also reflexive subjects, individually able to monitor their actions and increasingly embedded within systems which are themselves reflexive, cognitively, morally or aesthetically. (ii)

An example of the application of these descriptors is given in Part IV, iii. The signposts in the following section are also examples of the application of these criteria.

Part II: Section B
Directions to a Knowledge Society

Castells has pointed to the question of delayed diffusion.(iii) It takes a long time for cultural transformation to take place. Also, it is apparent that there are negative consequences derived from governments attempting very specific decision-making about what innovation will be funded. This report adopts the view that the role of the government is to set high-level parameters to guide individual and collective thought and action.

Mulgan puts the matter this way:
Our primary responsibility today is to find ways to live with interdependence, not to deny it. For governments, that means a sharp change in direction. In a world where governments no longer exercise much direct sovereignty either over their defences or their economies, the best service they can perform for their citizens is to help them be stronger, more responsible, more capable of making decisions and understanding the world in which they live.(iv)

i. What are the natures of transformations needed for New Zealand to become a 'knowledge society'?

• Enhancement of a multi-lingual, multi-cultural democratic social order.
• The recognition that scientific and technical knowledge is now a component of cultural knowledge, not in opposition to it.
• Openness to the possibilities for productive change and improvement, including self-improvement as well as technological and organisational improvement.
• The balancing of increased risk by increased reflexivity in individuals and institutions.
• The provision of life-long education as a social responsibility, and of modes of education and curricula which encourage speculative thinking across specialist boundaries
• A broader definition of, and education in, the principal kinds of literacy for knowledge work, that is, competence in the use of the principal symbolic representation systems: verbal, numerical and graphical.
• An approach to research and development which emphasises both the ability to combine diverse kinds of knowledge in and between organisations, and the need for the translation or transcoding of knowledge from expert languages to more widely shared or common languages.
• The integrated development of a national knowledge infrastructure permitting public access to the national stock of knowledge through a community-based network of knowledge centers based on the public library system.
• The planned evolution of denser regional infrastructures and concentrations of expertise and productive capacity, focussed on the principal cities and tertiary education institutions.

ii. How can this be influenced, directly and indirectly, by Government actions?

In general, the role of the state is to set the social and cultural parameters for the operation of the knowledge society.

The state in New Zealand is likely to be the only organisation able to accumulate consistently and over long periods the capital necessary for innovation. As the principal investor in cultural and economic development, the state must develop procedures for allocating its capital so that the optimum conditions for the generation of new ideas and products are established and maintained.

Actions which the government could take include:

• Improving the quality of democratic institutions so that political and cultural diversity in New Zealand is appropriately represented, government is open and government information readily accessible.
• Securing open communication channels enabling the greatest possible access to and circulation of public knowledge.
• Improving the infrastructure linking national knowledge organisations and resourcing those organisations so that they can manage the national stock of knowledge effectively.
• Encouragement of and research into retaining and securing knowledge in and for the public domain.
• Moving away from direct funding of research, which is based on an outmoded linear model of knowledge creation (pure idea followed by development and application), and is less effective than funding that will lead to improvements in the practice of information management and the functioning of networks.(v)
• Positive intervention, such as through technological and educational policies, to enhance the country's endowment in the factors encouraging knowledge production, and the retention of knowledge-based workers.
• Maximising opportunities of all New Zealanders for high quality education, re-education following skills obsolescence, and life-long learning.
• Ensuring that investment in education enables all students, but particularly Maori and Pacific Island students at this point in time, to develop the skills needed to participate effectively in a knowledge society.
• Encouraging collaboration, especially in cities and regions, between tertiary education institutions, public and private business and industry organisations, and national and local government agencies, in order to thicken the infrastructures needed for cluster development and innovation.
• Providing incentives to encourage the development of interdisciplinary industry and research clusters in order to foster innovation.
• Assisting with the complexity of management issues that organisations will face in moving to a cooperative environment.
• Facilitating such courses of action as establishing and participating in a mixed public and private network/working group focusing on knowledge creation issues. Public institutions would include: Intellectual Property Office, Ministry of Education, Vice-Chancellors' Committee, Tertiary Education Advisory Committee, Ministry of Economic Development, Ministry for Culture and Heritage, Te Puni Kokiri, Ministry for the Environment, Ministry of Research, Science and Technology.
• Establishing a Commission for the Future of the Knowledge Society.
• Focussing awareness of local and national cultural distinctiveness within the global economy.
• Developing policies in response to globalisation which enhance the ability of groups and individuals within its jurisdiction to act collectively in achieving economic and cultural development.

iii. How can we build stronger, two-way flows of understanding between the science community and society so that both are equipped to move forward together?

• The key issue may not be science as such, or lack of public appreciation of the contribution science and technology make to society, but the exploitation of science for profit, especially by groups and interests with no commitment to New Zealand society or its natural environment.
• Increasing numbers of people in a knowledge society will be experts in some area of knowledge and members of the public in many others. Society is too diverse and discontinuous, even in New Zealand, for any attempt to coordinate group relations to be successful. A commitment to enhancing public understanding of the national interest in expert knowledge as an end in itself is likely to be more productive.
• Promotion of more futures-oriented discussions, on the Foresight model, but targeted towards citizens rather than 'decision-makers'. They should take place in towns and suburbs where the majority of people live, with the aim of contributing to the building of local networks and the focussing of regional capabilities.
• Use of the mass media to provide access in ordinary language to the work of expert communities and individuals of all kinds, especially but not only in New Zealand.

iv. How do the arts and sciences relate to each other and what should Vote RS&T be doing to foster stronger links and why?

• The arts and sciences as they have become differentiated from each other methodologically during the C20th both create knowledge and understanding of the world in symbolic form, which is fundamental to the existence of a knowledge society. They are speculative and often abstract, and require interpretation and commentary to become part of the common stock of knowledge.
• A common factor linking arts and sciences is that both modes of knowledge creation enlarge cognitive possibilities, which is fundamental to creativity and innovation.
• While artists and scientists should be encouraged to engage with each other, the encouragement of intermediation between the expert and the public is probably more important, and can be promoted by public agencies administering the state's interest in various parts of the wide spectrum of expert knowledge.
• As economic production becomes more specialised and knowledge-intensive, the arts/culture and the sciences become increasing inter-related. Investigation is needed of the conditions which enable such cross-fertilisation to take place, and the extent to which it depends not so much on direct contact between expert practitioners as on diffusion by intermediary agencies and individuals.
• The ability of public agencies to understand and collaborate with each other in defining knowledge policy and funding priorities is critical to knowledge society development, through the creating and sustaining of networks, the removal of inherited boundaries between different kinds of expertise, the encouragement of public non-governmental organisations committed to the promotion of knowledge, and the conservation of existing knowledge. Further development of the Foresight model may be appropriate.
• Research projects which specifically require the interaction of people from arts and science backgrounds, through a collaboration between the Foundation for Research, Science and Technology, the Marsden Fund, and Creative NZ should be encouraged.
• The generation of new knowledge is based on access to diverse kinds of knowledge. Fiction, especially future or speculative fiction, may play an important role in generating and circulating new ideas. An annual writer's award could be established, building on the experience of the hypertext competition organised by the Ministry of Economic Development.
• Organisations and individuals able to provide good models of productive outcomes from the interaction of experimental art, technological developments, and cultural distinctiveness in New Zealand should be identified so that they can assist in the diffusion and wider adoption of these models.

Part III: Elaboration of Research Conclusions
Section A: General Conditions for a Knowledge Society
i. What is a Knowledge Society?

It is worth briefly delineating what we understand by the term 'knowledge society' and its history. It foregrounds and relates the contemporary conditions of globalisation and informationalism.

Capitalism as an economic, social, and cultural system develops and expands by finding ways of overcoming the contradictions that threaten to stall and destroy it. The phase of capitalism variously labelled postindustrial, informational, postmodern, cultural, or even post-capitalist has emerged from the drive to mass production running up against limits set by production's outstripping demand in those societies or sectors of societies able to afford what is produced. Capitalism has responded by recognising, and in some sense constituting, especially through advertising, the social quality of difference - the existence of group and individual identities, and related values, needs, representations.

Capitalism's first major steps towards the knowledge society were the interacting knowledges of consumer constitution (advertising) and consumer accounting (market research). These knowledges could then be deployed in niche production and branding, both of which required further inputs of advanced knowledge - design and aesthetics, and techniques of customer service. These trends were very logically followed by ever-increasing differentiation of information goods (cultural and media products) and of primary and bio-engineered consumables.

At the same time, these responses could not have been achieved without contemporaneous advances in technology, specifically digital information and communications technologies: 'What is distinctive to the configuration of the new technological paradigm is its ability to reconfigure, a decisive feature in a society characterized by constant change and organizational fluidity.'(vi)

As a result, certain types of knowledge and skill (broadly informational) in addition to manufacturing expertise have become increasingly important. They include:

• Cultural literacy (to recognise and exploit social, cultural, lifestyle, and ethnic distinctions).
• Managerial expertise (to coordinate the complex production regimes and networks).
• Teamwork (integral to highly diversified production).
• Technological competence (particularly of computers and programming to track and time-manage production and to facilitate information management).
• Customer relations and human resources.
• All types of design work.
• Language and communication competence.
• A reflexive relation to knowledge and practice.

These are also regarded in other contexts as features of post-modern society.

The emphasis on social and cultural capacities is taken further by thinking of knowledge as a capacity for social action. In contrast to the modernist account of post-industrial society as rational, planned, problem-solving, and grounded in scientific and technical knowledge,

knowledge societies are societies characterized, to an unprecedented degree, by self-made social relations and a self-produced future including, of course, the capacity to destroy themselves....the greater capacity to act has the inverse consequence in that it reduces the ability of administrative bodies for example to plan and repress or, from the perspective of the potential targets of planning and manipulation, it heightens the capacity to resist these very efforts.

Knowledge is both a constant source of change and a principle of social organization. Knowledge societies offer unprecedented means to empower social actors to add to the self-transforming capacity of society....They are politically fragile, not because they are liberal democracies, as some would argue, but because they are knowledge societies.(vii)

In this account, which needs to be thoroughly tested in New Zealand, the expansion of capability with knowledge to a wider spectrum of society leads to greater contestation, scope for social action, and differentiation in society; but none of these capacities is evenly distributed. Stehr argues that 'such a society is not necessarily a technocratic society- the process I have in mind applies first and foremost at the intermediate level of action, that is, at the level of small groups, social movements, smaller corporations and not necessarily at the so-called institutional level of social action, referring for example to the state agencies, the political system, the economy, the educational system or even society and the nation-state.'(viii)

Furthermore, a knowledge society is a social formation affected at least as much by cultural and historical factors as by economic factors. Lash and Urry observe after an extended analysis of several different countries in terms of 'reflexive accumulation' that

categories [like industrial, capitalist . . .] lead analysts to minimize really important differences between societies, both historically and in the contemporary world. In this book we have demonstrated that there are major differences in the form of accumulation and the pattern of services as between Germany, Japan, certain Scandinavian countries, and the UK and the USA. . . . such differences are the complex product of the interplay between each society's history and the current flows of capital, technologies, people, ideas and images, where those flows are seen as having a history and a geography and where there are certain local nodes in particular societies involved in the propagation or reproduction of particular flows.(ix)

Another critical dimension of these epochal changes is that objectified knowledge comes to 'constitute the cultural resource of a society'(x), with particularly important implications for the relations between traditional conceptions of the arts and sciences, and for society's ability to record, store and provide general access to, its stocks of knowledge:

Knowledge can be objectified, that is, the intellectual appropriation of things, facts and rules can be established symbolically, so that in the future in order to know, it is no longer necessary to get into contact with the things themselves but only with their symbolic representations. This is the social significance of language, writing, printing and data storage. Modern societies have made dramatic advances in the intellectual appropriation of nature and society. There is an immense stock of objectified knowledge which mediates our relation to nature and ourselves….The real and the fictional merge and become indistinguishable; theories become facts and not vice versa, that is, facts do not police theories.(xi)

ii. A Cultural Model of Innovation for a Knowledge Society

The logic of difference, or distinction, which drives advanced economies can be broadly characterised by the stocks and flows represented in the following diagram (Figure One). A brief explanation follows.

Using the term 'cultural knowledge' for the knowledge base of a society recognises that knowledge is a collective accomplishment, where new knowledge is conditional on what has come before, is rarely if ever generated by an individual in isolation, and is inflected by the cultural, institutional, and physical settings in which it is produced.
Not all knowledge, however, as we know from the history of science, can be immediately applied to some specific end or product. The term 'cultural capital' in the model recognises that new knowledge or cultural production needs to win the acceptance of significant social actors or authorities in order to be seen as valid and legitimate. This validation may occur post hoc through the deployment of new knowledge in technological innovation.

Once created, knowledge or information capital, together with related existing technology and economic capital can then be invested or applied in further invention and innovation to produce new technologies or new cultural products or further new knowledge. (It will be apparent even from this brief sketch that innovation is the result of recursive rather than linear processes and practices.)

A critical capacity underlying these recursive processes and making them fully possible is access to national and international stocks of knowledge. Nationally, a knowledge management approach like that being adopted by major transnational organisations such as KPMG is needed, so that the knowledge already possessed by the nation can be available for re-use.

Innovation will ideally result in a return on investment of the contributing capitals, whether in financial terms, or in terms of making possible new knowledge and further validation of cultural capital, or both. The products of cultural innovation will, to a greater or lesser extent depending on what sort of products they are, be subject to obsolescence. This is clearly the case with many technological artifacts; it will also apply to certain scientific knowledge that becomes invalidated, and to much cultural production (artistic works, aesthetic goods, identity markers) exposed to the wheel of fashion.

However, a model of cultural innovation must also recognise the durability of some cultural production. This includes certain artistic compositions, certain aspects of scientific and technological knowledge, and certain cultural values. Furthermore, objects of knowledge which have for whatever reason lapsed can sometimes be rediscovered, reapplied or renewed; they are not always required to be replaced.

It will be clear that within this general model of a culturally-based innovation cycle or economy, much remains unexplained. Both components of what we could call 'applied creativity' - invention and innovation - are still largely black boxes which need to be opened up and understood better if we are to foster the processes and practices at work there. Of great interest to this report is the proposal by Lash and Urry to reverse a common conception about the relation of culture to the processes of economic production. They write, "Even in the heyday of Fordism, the culture industries were irretrievably more innovation intensive, more design intensive that other industries. . . .We are arguing . . . against the notion that culture production is becoming more like commodity production in manufacturing industry. Our claim is that manufacturing industry is becoming more and more like the production of culture."(xii)

iii. Convergence

The key terms which are serving to relocate the discussion about the social and cognitive processes which are implicated in the creation of new knowledge and its acquiring of economic and other values are knowledge, innovation, and creativity. In this process familiar institutional arrangements are being challenged, especially in the public sector, because they are based on categorisations which are being displaced.

The knowledge economy is an open system … effective control of the creation of knowledge or creative values requires quite different modes of organisation [than are characteristic of industry].(xiii)

Creativity depends on experiment and error, on the irrational and the unthought, on the ability to combine apparently incongruous elements into a new whole. It depends also on social structure, both at a macro and a micro level in the ways that people work together.(xiv)

Neither of these statements assumes a specific kind or mode or discipline of knowledge in the way that the government's publications in knowledge policy have usually assumed that science and technology are the only obvious kinds of knowledge which have sufficient economic value or potential to be included in such policy statements. It is equally the case that the value of other kinds of knowledge in which the government also has an interest (arts, heritage, education - in both Maori and Pakeha traditions) is not usually expressed in these terms.

One of the distinguishing traits of this period is that we are witnessing a convergence between qualitative and quantitative (symbolic and material) modes of production, reversing the recent history of increasingly rigorous separation between knowledge in the arts and culture (individually created) and knowledge in science and technology (industrially or organisationally produced). One sign of this convergence is the increasing use of 'creativity' in scientific and technological contexts; another is the use of 'industry' and 'product' in arts contexts.

An immediate consequence of such a convergence is a challenge to the organisations which have come into existence in the process of producing the current distinctions between different kinds of knowledge and how they are valued. On the one hand we have organisations like the Foundation for Research, Science and Technology administering the government's investment in science and technology knowledge-based product creation and on the other organisations like Creative New Zealand administering the government's investment in arts knowledge-based product creation. Is Creative New Zealand funding research? Is the Foundation for Research, Science and Technology funding creativity?

Lash and Urry argue that "the economy is increasingly culturally inflected and that culture is more and more economically inflected. Thus the boundaries between the two become more and more blurred and the economy and culture no longer function in regard to one another as system and environment."(xv)

Section B: Specific Conditions for Innovation
i. The New Zealand Context

Although creativity and invention do not flourish in every time and place there is no evidence to suggest that New Zealand at the beginning of the 21st century is lacking. It is clear from the daily public record that:

• Scientific advances and technological developments are occurring
• Artistic activity of all kinds can everywhere be found.

However, there are equally clearly problems, perceived or real:

• The population is small, and hence firms and domestic markets are also small.
• Overseas markets are distant.
• Highly qualified people (including scientists, artists, and entrepreneurs) are going elsewhere.
• Science is not popular in the population at large (a problem not confined to New Zealand).

Some of these problems are arguably more those of traditional economies; ICT-based transactions make light of smallness and distance and dispersal of personnel. Furthermore, tradition itself in New Zealand's case, for both Pakeha and Maori, offers a record of overcoming these problems in inventive ways. And this tradition continues to be invoked and seemingly responded to. Chief characteristics of this tradition include:

• Pioneering spirit.
• Defiance of isolation (ingenuity).
• Cultural exchange and (more recently) diversity.

These characteristics are equally true of other pioneering societies, such as Australia and the US. Clearly, however, the record of innovation is different, particularly for the US. What is it about the US experience that can explain the fact that for at least the last 150 years that country has dominated technological development? The following factors undoubtedly contribute:

• Sheer size of firms and domestic market (and hence available capital).
• The conception of 'the new world' which licenses and inspires technological and commercial ambition.
• Related early independence from the colonising country.
• Legal and financial measures.(xvi)
• Federal government investment in research and development.

Evidence gives at least some support to the popular notions that New Zealanders are successful inventors and early adopters. However, the ratio of innovation to invention appears to be comparatively low. A view worth testing is that, because of New Zealand's small population and its aspiration to first-world status, New Zealanders typically approach situations and problems more holistically than is usually the case in societies where expertise is more widely distributed and individuals more highly specialised.(xvii)

ii. Literature on innovation

The literature on innovation, and indeed the historical record, suggests that it is the size factor, particularly in relation to the firm and its networks, that is most significant in translating invention into full fledged innovation. Current literature on innovation agrees on the importance of rich and extensive social interaction in order to:

• Foster the circulation and development of ideas.
• Forge the alliances that turn ideas into artifacts.

The social environment which typically provides the richest possibilities of social interaction and communication is the city. Lash and Urry propose that "One might think of towns and cities as increasingly centres for the switching of information, knowledge, images and symbols."(xix) This observation is elaborated by Diane Coyle:

Contrary to the popular view that communications technology will disperse people away from the urban centres, turn us all into telecommuters, the weightless world will be one where cities resume the importance and economic dominance they have not enjoyed for a century. . . . Economic development means urbanisation. . . . The giant stride of prosperity represented by weightlessness will revive the fortunes of the great cities of the industrialised world. In New York and London, which have some of the most intensively wired land on the planet, this is already evident. In both, a fresh burst of creativity in the music and film industries, in fashion, software, advertising, financial and business services - all of the most weightless industries - is without parallel in at least the last 30 years and probably longer.(xx)

Within this consensus there are areas of dispute. For example, the extent to which local face-to-face interaction is crucial vis-a-vis dispersed electronic communication. Or the precise nature of the relations between tacit and explicit knowledge. Or the degree of importance that should be accorded to technologies in the formation and work of alliances. Or exactly how big the city-region needs to be in economic, population and organisational terms. There is not space to reprise the exact details of these arguments here. Fortunately, a recently published theory of innovation, the cluster matrix model advanced by John Seely Brown (Chief Scientist at Xerox Corporation and Director of the Xerox Palo Alto Research Centre) and Paul Duguid (research specialist in Science and Cultural Studies in Education at the University of California at Berkeley), addresses all these issues in a rounded and sensible way. We will give an account of this richly nuanced model in order to make more explicit the grounds for our conclusions concerning the necessary conditions for innovation.

iii. The cluster matrix model

The general explanatory power of the matrix notion derives from its formation through multiple intersections, whether of individuals, cultures, types of knowledge, technologies, concepts or ideas. The supposed efficacy of intersection, of the encounter or dialogue of two or more entities giving rise to something new, or usefully underscoring the identity of each, is a touchstone of contemporary cultural theory. In its broadest application, it marks the dialectical transformations brought about by practice (actual human action) shaping, yet being shaped by, system (or structure)(xxi) - a primary instance of innovation.

In Brown and Duguid's cluster matrix of technological and organisational innovation, there are two main kinds of intersection.

• A community of practice (occupational category) intersects with other communities of practice by virtue of the proximity of these different communities within the one firm.
• Members of a community of practice across a number of firms intersect by virtue of the commonality of work to form networks of practice.

As the authors say, "Our matrix of organizations and networks of practice . . . connects an organization's internal structure to the structure of the world around it."(xxii) They also give emphasis to the intersection between process (similar to system or structure) and practice as a way of thinking about the incremental adaptation to changing circumstances that characterises much innovation in human society (they criticise business process reengineering on account of its rigid privileging of process over practice).

There are some important implications of the cluster matrix model. It advocates the continued existence of the firm, despite suggestions that the dispersed and tenuous network will increasingly come to replace it. Although firms hinder the movement of knowledge, they also paradoxically make the use of knowledge possible. Despite the conventional assumption that firms are essentially homogeneous, communities of common practice within organizations form different, distinctive and locally specific identities. Because knowledge is acquired by shared practice, and practices are local and specific to communities, divisions between communities of practice within organizations prevent the movement of knowledge. Knowledge is thus more likely to pass along networks of shared practice which transcend organisations than between communities of different practices within organisations. However, as Brown and Duguid point out, knowledge that 'leaks' out of a firm in this way is only useful if it 'sticks' in another firm that has the organisational sophistication to apply it.

The institution of the firm is thus vital in organizing and ordering knowledge practice and knowledge practitioners. Despite claims that distance is irrelevant in the technological society, this matrix forms more easily and more strongly with geographical proximity, and clusters of industry emerge (as in Silicon Valley, for example). This proximity cannot be replicated simply by means of information technology, because it is not effective at allowing the dense reciprocity required to make and maintain strong and informal links. The benefits of such localized matrix clusters include:

• A shared high level of understanding,
• A market for skill which attracts labour,
• A pool of skill which attracts businesses,
• The production of large conglomerate economies of scale,
• The ready identification of possibility,
• The means of reliable risk assessment.

Most importantly, matrix clusters are fertile areas for the growth of knowledge because they are environments in which knowledge is used effectively. Knowledge flows between firms; invention and innovation develop together both within and between firms, driving and feeding each other. Knowledge is rarely lost in such an environment; it simply moves to where it is used most productively. In these respects, knowledge is like language, the power and social utility of which is based on its capacity for redundancy, resulting not in waste or inefficiency but in multiple possibilities for the formulation and communication of ideas.

The model also demonstrates particularly clearly that "m]any inventions . . . require complementary invention to produce innovation." Brown and Duguid continue:

Complementary innovation often involves more than the products of R&D labs, however. It requires innovation elsewhere in the organization. The mechanical inventions of the nineteenth century required…complementary administrative invention to come to fruition. The railroad needed inventions in information systems and documentation to become a safe and efficient network. Carlson's photocopier waited on complementary inventions in marketing sales, sales, and leasing to become a success. Thus the challenge in moving systematically from an initial invention through complementarity to innovation is the challenge of coordinating diverse, disparate, and often diverging, but ultimately complementary, communities of practice. In going from Xerox to Apple, the GUI was in fact going from a corporation unable to manage this complementarity to one able to manage it.(xxiii)

iv. Common Languages for Collective Learning

'Collective learning' is the capacity of a particular regional innovation milieu to generate and facilitate innovation behaviour by the firms which are its members. Regional collective learning is concerned primarily with regional mechanisms which reduce the uncertainty faced by firms in a rapidly changing technological environment, such as the competence gap arising from a firm's limited ability to process and understand available information. To eliminate or reduce this competency gap firms (and society in general) must develop 'transcoding functions' which translate information into language a firm may understand, merging tacit and codified information into firm-specific knowledge.

The cycling between tacit and articulated knowledge is the key to the innovation process, particularly the points at which tacit knowledge is made explicit, usually collectively. The process of articulating tacit knowledge is also a process of transforming it, not least through the codes of language. The prerequisite to articulating tacit knowledge is the sharing of another kind of tacit knowledge, the capacity to formulate technical problems in such a way that strategies for their solution may be found. Articulation thus requires some kind of ongoing team collaboration, by which one group gains knowledge of others' problem solving methods. This tacit knowledge is derived from assimilating organisational procedures and practices.

There are three areas in which firms must develop shared knowledge for collective learning to be successful:

• A common language for talking about technological and organisational problems (including a common standard of honesty and information-sharing outside the bounds of formal contracts).
• A shared knowledge of a more strictly technological or engineering sort, allowing effective collaboration on technical projects.
• A shared organisational knowledge (for instance, knowledge about responsibilities, management procedures).

Camagni suggests that a common language emerges through 'links-based' (eg, supply chain linkages, spin-off activity, links established through the movement of labour) and 'non-links-based' mechanisms (eg, imitation, emulation, reverse engineering). In both kinds of mechanism, proximity and membership of the milieu is important, though more important for links-based mechanisms. Yet neither linkages nor emulation transfer knowledge directly. Rather, they are part of the social environment in which new learning occurs and new knowledge is generated. Neither of these mechanisms involve the 'lock-in effect', where firms make a relation-specific investment in learning to work with another firm. Such an investment is large, with uncertain returns. But in a regional cluster, using the linkage mechanisms described, the risk is borne by the wider community, and firms can access regional knowledge without the risks associated with a relation-specific investment.

The concept of regional collective learning focuses on the argument that
regional clusters of small and medium sized enterprises can, given favourable environmental, socio-economic and institutional conditions and sufficient historical evolution, develop a capacity for self-sustaining technological learning, innovation and the generation of new products and enterprises. The development of a regional capacity for collective learning involves both the establishment of preconditions for learning, in the form of culturally based rules of behaviour, engagement and collaboration and accepted but tacit codes of conduct between individuals and firms which enable the development of trust, and conscious and unconscious regional processes of interfirm and organization networking, and diffusion of embodied expertise.(xxiv)

While this discussion of the concept of a common language has focussed on the firm as the typical site of new knowledge creation, it is important to emphasise that the firm is not the only form of organisation contributing to knowledge work. 'Outside' the firm are not only other firms but other organisations, some with a special responsibility for conserving and making available the public stock of knowledge. Lash and Urry emphasise

the significance of non-economic institutions within the economy; the crucial interconnections between the different sectors, especially high technology and producer services; the importance of collegial and cultural forms of governance in the informational economy; and the proliferation of expert systems within consumption as well as production.(xxv)

Educational and cultural institutions play a critical role in both new knowledge creation and in the dissemination (intermediation) of that knowledge to the public. Zygmunt Bauman describes the general situation as follows:

the typical post modern strategy of intellectual work . . . consists of translating statements, made within one community based tradition, so that they can be understood within the system of knowledge based on another tradition. Instead of being oriented towards selecting the best social order, this strategy is aimed at facilitating communication between autonomous (sovereign) participants.(xxvi)

v. Explanatory Framework for Invention and Creativity

We suggest that innovative activity emerges from the combined interaction of six pairs of key characteristics. In each pair the second term balances and underpins the other. Each pair represents an important dimension of the individual understood as an active member of a collectivity: the cognitive and aesthetic dimension (the relationship between tacit, explicit, technical and social knowledge); the institutional dimension (the dialectic between process and practice); the communicational dimension (over networks and in communities); the social dimension (the balance of freedom and protection); and the dispositional dimension (the balance of risk and security).

Network
Community of practice

Process
Practice

Explicit knowledge
Tacit knowledge

Technical knowledge
Social knowledge

Freedom (of information)
Protection

Risk
Security

We will briefly comment further on each pair.

Network/Community

It would seem vital that firms retain at least a core of localised agents against trends towards ever greater dispersal. There are advantages in chance physical encounters, face-to-face contact, conversation, the mulling over of ideas. The local must also be interpenetrated by the access to new contexts, different objectives and perspectives which networks provide. Mulgan states that "The value of a network rises exponentially relative to the square of the numbers using it, because each new person connected to the network increases its value for everyone already on the network. . . the power of creativity rises exponentially with the diversity and divergence of those connected into a network: in other words, its capacity to innovate or create depends on dissonant and complementary ways of thinking, not on consensus."(xxvii)

Process/Practice

Brown and Duguid point out that in a process-dominated approach such as business process reengineering, there is no place for improvisation, spontaneity or local knowledge, or innovations in practice, within the structure of process. Rather, improvisation and innovation take place because of and within the gap between the limited model of the world which is embedded in process, and the world as practitioners actually find it. The gap between reality and process is bridged by the improvisation inherent in practice, through the lateral communities of common practice. Communities of common practice form collaborative funds of knowledge which are used to overcome the limits of process based information. The concept of 'routinization' describes the adaptation of the world in order to make it fit the general schema of an organisation. Yet these skills and acts of innovation are unconsciously hidden and disguised by practitioners, because they are unauthorised by process. This disguise is implicitly and explicitly encouraged by organisations that are blind to those resources outside the tunnel of process. Routines and processes thus encourage employees to hide their insights and innovations, deceiving the organisation. By subordinating practice to process an organisation encourages its employees to mislead it, even though improvisation can be a valuable indicator of inadequate processes and changing environments.

Explicit/Tacit Knowledge

In other words, too narrow a focus on process restricts the interaction between tacit and explicit knowledge that is needed for high level, concentrated innovation. The economist Geoffrey Hodgson draws out the implications of a proper recognition of tacit knowledge:

Knowledge is both social and contextual; it is rooted in practice. For it to be accessible, conceptions and practices have to be shared. But there are limits to the amount of shared or widely accessible knowledge. Learning depends on ingrained familiarity, obtained through repeated routine. For this reason … in any complex society, people have no alternative but to be specialists. There are limits to the amount of knowledge that can be understood by any individual or group…. As Polanyi explained, all scientific advances and technological innovations are bound up with tacit knowledge. They rely on accumulated skills and habits, embedded in individuals and institutions. The creative spark is often the result of the striking of intuition upon the flintstone of tacit skills, rather than coming by logical deduction or rational deliberation.(xxviii)

Technical/Social knowledge

Involving the users of products in the identification and/or the development of technologies and other products is an important aspect of innovation. Knowledge of needs, uses and functions is held both explicitly and tacitly by users, and can be elicited by social research; this knowledge is a compound of technical and social knowledge. The more representative of an entire society the group of involved users can be, the more accurate and useful their feedback.

Freedom/Protection

The question of private property is increasingly recognised to be central to the new knowledge economy. Another of the fundamental contradictions integral to capitalist economy is emerging to undermine informational capitalism. Its logic runs like this:

• Information is increasingly the fuel (capital) of the economy.(xxix)
• Firms are responding by protecting (privatising) information.(xxx)
• But innovation occurs through 'conversation' and open circulation of information.(xxxi)

The upshot of this contradiction is that secrecy will stunt further innovation. Intellectual property legislation, it can be argued, has the potential to stimulate creativity and encourage innovation because it protects the rights of the innovator and allows them to profit directly from their intellectual work. The opposing argument asserts that because innovation necessarily draws on a shared fund of knowledge and information, those rights are asserted illegitimately; because intellectual property law removes knowledge and information from that shared fund of knowledge, future innovation is actually stifled.(xxxii)

The way out of this impasse is to recognise that excessive secrecy may not actually be necessary. The complex relationship of information 'sticking' and 'leakage' described by Brown and Duguid, and the critical issue of tacit knowledge, point to the hybridizing nature of knowledge. There is no direct move or single step from a 'bit' of knowledge to an immediate application. This argument finds its most forceful and convincing advocate in Stuart McDonald, Professor of Information and Organization at the University of Sheffield. McDonald argues that it is futile and, in fact, counterproductive to attempt to protect new or strategic information. He bases his argument on the view that new information can be got most readily and profitably from outside, rather than being created entirely within an entity; but in order to obtain information knowledge workers have to be prepared to give information, to engage in information transactions (as part of a network). And because new information generally has to be mixed with old information in order to generate innovation, there is actually little risk of giving away strategic information that could be applied immediately (in 'pure' form) by competitors.

Risk/Security

The sociologist Anthony Giddens argues that in a society that has 'broken away from tradition and nature' and is based on what Stehr calls 'objectified knowledge', risk is the 'energizing principle', and a 'positive engagement with risk is a necessary component of social and economic mobilization.'(xxxiii)

Giddens describes the key components of such a society in his 'risk matrix', which shows that opportunity and innovation must be balanced by, respectively, security and responsibility. The challenge is clearly to develop a culture where risk-taking is widely valued and practised. But for widespread and effective risk taking to take place, people must be assured of some reasonable degree of security in case of failure, and they must be required to accept responsibility for social and environmental harm in order to minimise reckless behaviour. A 'culture of innovation' is more specifically a 'culture of risk and responsibility' both on the part of innovators and those who provide the supporting infrastructure, whatever form the latter may take.

Part IV: Recommendations for Further Research

Many matters raised in this report merit further research and analysis. Some specific issues are:

i. Knowledge as a Cultural Resource

Valuable confirmation of the core relationships identified in this report as constituting a knowledge society is given by the present division of UNESCO's priority areas of work into: culture; communication; science; education.

• The diffusion of scientific and technical knowledge throughout modern societies, such that while its continued expansion requires increasing specialisation its discoveries and their social applications are part of ordinary life and discourse, is the clearest evidence of its having become a part of cultural knowledge rather than an opposing mode of knowledge.
• The long phases of scientific discovery and artistic creation are paralleled in the increasingly long phase of education, as the time taken to acquire expert competence in knowledge lengthens, and the cost of both to society also increases.
• Culture is the inherited content of values, beliefs, authoritative knowledge and modes of perception, the basic framework of individual and collective identity, reproduced and critiqued in education and continually modified by social practice and new knowledge.
• Communication identifies the complexity of means and media of symbolic representation in modern societies, including but not limited to ICT, by which multiple networks are constituted.

UNESCO New Zealand should be fully involved in any further development of this research. An important publication by UNESCO is World Culture Report: culture, creativity, and markets (Paris: UNESCO, 1998).

ii. Case Studies
Further investigation and development of the matters brought forward in this report could include:

• Several case studies of local (New Zealand) instances of knowledge society formations which have many of the features identified above. These could include: a sample of the members of the Creative business cluster in Wellington; a regional development project; a small firm in another part of the new economy, for example, finance; a project or an agency in which artists and scientists are engaged in some kind of collaboration.
• Producing a model which shows how a New Zealand city-based region can be developed to achieve the density of networks and infrastructure needed for knowledge creation. Such a model would have to show how the work of higher educational institutions, cultural institutions, research and research-funding organisations, businesses, mass media, and local and central government could be coordinated and integrated to produce innovation in a dynamic environment.
• Investigating the implications of the idea that the expansion of capability with knowledge to a wider spectrum of society leads to greater contestation, scope for social action, and differentiation in society, but that none of these capacities is evenly distributed.
• Testing the proposition that New Zealanders typically approach situations and problems more holistically than in societies where expertise is more widely distributed and individuals more highly specialised, and that this characteristic influences innovation.
• A study of the conflicts knowledge generates between experts and their clients. The importance of this situation for the relations between experts and politicians needs to be investigated.
• Understanding better the components of what we could call 'applied creativity' - invention and innovation.

iii. Issues for the Research Funding System

How does the government ensure that its investment in knowledge creation supports only innovative research and development across the knowledge spectrum?

The present methods fail because they are content or output focussed, and require discipline gatekeepers for their operation. To make the process fully bureaucratic would remove the necessary 'arm's length' relationship which the state should have to the allocation of its research funding. While the Strategic Portfolio approach for FRST is an important attempt to move beyond the limitations of expert panel-based funding, it remains caught in the 'specific project' mode of decision-making.

Excellence fails as a criterion for discriminating between projects, because it has more to do with established reputation than it does with innovative or creative capacity (although obviously these are not exclusive categories).

Furthermore, the current system of ranking privileges achievement recognised overseas. While that is an important measure of capability, it is not necessarily a measure of innovative capacity, since research is a professional activity and there is normal research as well as ground-breaking research.

Applying the concepts which constitute the framework as discriminants, a different approach can be hypothesised:

New Zealand researchers are just as capable as their northern hemisphere counterparts in intellectual terms; the difference lies in the low investment in our research and tertiary education institutes. The obvious problem in a proactive funding system is that, by definition, it is not possible to know in advance whether a particular project will produce innovative outcomes. Faced with this risk, the present procedures tend to emphasise 'security factors' like peer review and publication record.

1. The factors to look for in research proposals are not content factors, but process and practice factors. Anyone who applies to a national funding system can be assumed to possess the training and experience sufficient to conduct research, and that the application form will produce appropriate evidence; the issue is whether that research will be innovative in its outcomes, which are principally new knowledge as such, and new applications of knowledge whether the knowledge is itself new or not.
2. The key requirements, then, for a research and development funding system are that it should support projects which add to the knowledge infrastructure, generate more complex networks within New Zealand and between New Zealand and overseas, cross knowledge boundaries and organisation boundaries, increase diversity as well as collective learning, and multiply cognitive possibilities.
3. Rather than have a panel or a committee try to apply a test whether a particular project is likely to have the results proposed by the researchers, judgment should be based on how fully a project manifests the characteristics set out in (2).
4. To achieve this, in addition to the usual professional requirements of publications and referees, an applicant should be asked to nominate an example which represents in the applicant's judgment a significant innovation in that applicant's development as a researcher. The application should focus on the practice of the research, so that its contribution to evolution in New Zealand's knowledge infrastructure can be estimated. Reporting on the research should emphasise research process and practice, with respect to the concepts in the framework. At the end of the research, a report should be provided assessing the extent to which the research met its initial goals of achieving innovation.
5. The application should provide specific answers to the following questions:

• in what ways is it projected that this project will contribute to new knowledge (as distinct from extending existing knowledge) and/or to new applications of existing knowledge?
• why should New Zealand funding be used for this research?
• what networks of value to New Zealand will this research develop or enhance?

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Endnotes
i) Scott Lash and John Urry, Economies of Signs and Space (London: Sage, 1994), 332.
ii) Lash and Urry, 322.
iii) Manuel Castells, The Rise of the Networked Society (Massachusetts: Blackwell, 1996), 74.
iv) G.J. Mulgan, Connexity: Responsibility, Freedom, Business and Power in the New Century (London: Vintage, 1998), 10-11.
v) Stuart MacDonald, Information for Innovation: Managing Change from an Information Perspective (Oxford: Oxford University Press, 1998).
vi) Castells. 62.
vii) Niko Stehr, Knowledge Societies (London: Sage, 1994), 230-1.
viii) Stehr, 104-5.
ix) Lash and Urry, 321.
x) Stehr, 93.
xi) Stehr, 14.
xii) Lash and Urry, 123.
xiii) G.J Mulgan, Communication and Control. Networks and the New Economies of Communication (New York and London: Guildford Press, 1991), 181, 178.
xiv) Mulgan, Communication, 178.
xv) Lash and Urry, 64.
xvi) For example, the US does not require firms to depreciate goodwill prior to final statements of profit/loss. This requirement in New Zealand effectively treats intellectual capital as a fixed depreciating stock, contrary to what accounts of the knowledge society would have us believe. The reputation of New Zealand firms is suffering as a result of this devaluing of performance.
xvii) For a useful discussion of how small indigenous countries can achieve global advantage from 'the capture of local cultural strength', see Stephen Hill, 'Globalization of Indigenization: New Alignments between Knowledge and Culture' (in Knowledge and Policy, Vol. 8, No. 2, 1995, 88-112).
xviii) See Bonnie A. Nardi et al, 'It's Not What You Know, it's Who You Know: Work in the Information Age' (in First Monday: http://www.firstmonday.uk/issues/issues5_5/nardi/index.htm 2000).
xix) Lash and Urry, 220.
xx) Diane Coyle, The Weightless World: Strategies for Managing the Digital Economy (Cambridge: MIT Press, 1998), 192-194.
xxi) William H. Jr Sewell, 'The Concept(s) of Culture', in Victoria E Burnell and Lynn Hunt (eds) Beyond the Cultural Turn (Berkeley and Los Angeles: University of California Press, 1999), 47.
xxii) John Seely Brown and Paul Duguid, The Social Life of Information (Boston: Harvard Business School Press, 2000), 161.
xxiii) Brown and Duguid, 160-1.
xxiv) David Keeble et al, 'Collective Learning Processes, Networking and 'Institutional Thickness' in the Cambridge region', in Regional Studies (33:4, June 1999).
xxv) Lash and Urry, 96.
xxvi) Quoted by Stehr, 188.
xxvii) Mulgan, Connexity, 31.
xxviii) Geoffrey Hodgson, 'Socialism against Markets?' in Economy and Society (Vol. 27, No. 4, November 1998), 419.
xxix) Castells; Mulgan.
xxx) John Frow, Time and Commodity Culture: Essays in Cultural Theory and Postmodernity (Oxford, New York: Oxford University Press, 1997, 181-190) provides a succinct summary of the copyright extensions mobilised to achieve this. See also Philippe Riviere, 'Defining World Public Property' (in Le Monde Diplomatique, Jan 2000, 10); Philippe Queau, 'Defining World Public Property' (in Le Monde Diplomatique, Jan 2000).
xxxi) see MacDonald.
xxxii) Queau.
xxxiii) Anthony Giddens, The Third Way: The Renewal of Social Democracy (Cambridge: Polity Press, 1998), 63.