Business Models and Their Implications for Skills

The dominant political-economic narrative of our time is that, under conditions of global competition with low-wage economies able to undercut even efficient western firms, the only viable and sustainable route to competitiveness is to trade on high value-added goods and services and that these in turn require enhanced skills and knowledge. This kind of analysis finds echo and sustenance in the management literature concerning ‘knowledge’. For example, in a much-cited observation, Stewart (1997) claims that knowledge is ‘the most important factor in economic life. It is the chief ingredient of what we buy and sell, the raw material with which we work. Intellectual capital – not natural resources, machinery or even financial capital – has become the one indispensable asset of corporations ’.

While this kind of analysis sets the agenda in management theory and policy circles, there is less certainty at the level of business practice. At firm level there is rather more evidence of multiple strategies – many of which do not depend upon upskilling. This may help explain why the take- up and demand for training provision, which is on offer, often falls short of the supply.

However, the nature of the knowledge identified by those politicians and commentators who stress the importance of knowledge in the context of the global knowledge economy requires attention. In these analyses and exhortations, knowledge is defined as a factor of production – as a resource to be used in the design and production of goods and services. And so indeed it is. But it is more than this: it is also a key factor in the decision-making and capacity of senior managers, which impinges significantly on how they respond (or indeed even recognise) the competitive pressures their businesses face. The behaviour of senior managers with regard to how (and if) they respond to the opportunities and challenges of the knowledge economy raises a distinct and important set of issues pertaining to a different but crucially important type of knowledge – the knowledge required and the kinds of knowledge curre ntly held at top levels (Storey and Salaman, 2005). Building on a series of research projects and a number of board level consultancy assignments, our analysis suggests that exhortation has only limited effects. The critical point of focus for us is the mental models constructed and used by individual members of top teams and by these teams collectively. However much directors may concur with the general rhetoric at one level, when it comes to practical business – their practical business – they can remain deeply sceptical and resistant. In this paper, we explore and illustrate these points drawing upon detailed case evidence.

Publication number: 
11
Publication Date: 
01 October 2008
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Institution: 
The Open University Business School and SKOPE
Publication Type: 
monograph