In The Era of Human Capital (Book Review)

1. Book Review
In the Era of Human
Capital
Richard Crawford
Published 1991
HarperBusiness , New York
By: Mohamad Adriyanto
Mohamad Adriyanto @adriyanto
http://bit.ly/adriyanto madriyanto@gmail.com

2. The Dawn of the Knowledge Economy
• In the new knowledge economy, information and
knowledge, replace physical and financial capital
as the major competitive advantage in business.
• Creative intelligence underlies the wealth of the
new society.
• New model: new knowledge  new technology
 economic changes  social & political
changes  new paradigm or view of the world.
• Human capital (skilled & educated people) is
central in the global transformation.
• Information is the raw material for knowledge.

3. Knowledge Characteristics
• Knowledge is expandable & self-generating (a
surgeon who has performed an operation 10
times has more knowledge & understanding) 
scarcity of resources is replaced by expansion of
resources.
• Knowledge is substitutable (it replaces land,
labor, capital)
• Knowledge is transportable (in electronic society,
knowledge can move anywhere at the speed of
light)
• Knowledge is shareable (could be used by others)

4. Productivity, Innovation &
Entrepreneurship
• Productivity is the driving force for change, it
moves the economy from one level to the next.
• Knowledge economy model: Increased
productivity  Innovation  Profit as the
catalyst  Entrepreneurship
• Multinational corporations are the agents of
world integration, operating throughout the
world, viewing the world as a single market.
• Multinationals are accelerating the spread of
knowledge around the world.

5. Knowledge & People: The Rise of
Human Capital
• Human beings are part of the capital stock of the
world.
• More new jobs come from information-processing &
knowledge services, the information worker (white-
collar) increases in importance.
• Education is the most important creator of human
capital.
• Investment in human capital is growing rapidly.
• Major human capital depreciation:
– The process of physical aging & health issues
– The rapid obsolescence of knowledge & technology (need
to engage in lifelong learning)

6. The Effect of Knowledge Economy on
Business & Management
• The shift to services, faster demand growth rate than
goods.
• Technology creates and destroys market
• From labor surpluses to labor shortages
• The managerial implications of changing markets and
changing labor force are enormous.
• Computerization and automation change almost all
business models.
• Changing in organizational management, from pyramid to
living organism.
• The new ethics are cooperation and participation, not
competition.