In the knowledge economy knowledge productivity is the main source of competitive advantage and thus the biggest management challenge. Based on a review of the concept from two distinct perspectives, knowledge productivity is defined as the process of knowledge-creation that leads to incremental and radical innovation. The two main elements in this definition are "the process of knowledge creation" and "incremental and radical innovation". The main aim of this chapter is to contribute to a better understanding of the concept of knowledge productivity in order to support management in designing policies for knowledge productivity enhancement. After elaborating on the concept of knowledge productivity, the two main elements are combined in a conceptual framework -the knowledge productivity flywheel. This framework appeared to be an effective model for supporting initiatives that aim for enhancing knowledge productivity.
INTRODUCTIONOur economy has changed from an industrial into a knowledge economy Toffler, 1981), in which the competitive advantage of organizations is based on the ability to exploit knowledge resources. The increased importance of knowledge as an economic resource has been reviewed from many perspectives, resulting in slightly different denotations, each usually emphasizing a different but related aspect of the same phenomenon. Some examples of this are the "knowledge society" (Toffler, 1981), "knowhow society" (Sveiby & Lloyd, 1988), "information society" (Giddens, 1994), "information economy" (Shapiro & Varian, 2003), "learning society", "learning economy" , "network society" (Castells, 1996), "intangible economy" (Andriessen, 2004) and the "creative economy" (Florida, 2002). Within the different denotations of the new reality, we see that authors are either referring to society as a whole, or to the economy. However, as Jacobs (1999) argues, the term knowledge society is a tautology -a needless repetition -as society and mankind have always been dependent on the interpretation of knowledge. Yet, the knowledge economy, in which knowledge has become the main factor of competitive advantage, is a new phenomenon. The transition to the knowledge economy is about the increase in scale of knowledge as a production factor. Knowledge is not a new production factor, but the relative importance of knowledge, related to land, labour and capital, has substantially increased during the past few decades (Castells, 1996;Weggeman, 2000). In line with this reasoning, Stewart reminds us that, "not for nothing are we homo sapiens, thinking man" (Stewart, 1997, p.5, italics in original). Inspired by Stewart (2002) and , the essence of the knowledge economy can be summarized in three characteristics. First, in the knowledge economy, knowledge is what we buy, sell, and do. Second, intellectual capital (IC) is the new wealth. Third, knowledge productivity (KP) is the biggest challenge (Stam, 2007). Whereas the first and second characteristic of the knowledge economy are extensively elaborated on, the third rem...