Acquiring Specific Knowledge
“There are at least two reasons why markets have been more successful than central planning in large economies. First, the price system motivates better use of knowledge and information in economic decision. Second, it provides stronger incentives for individuals to make productive decisions” (Managerial Economics, p.56). Therefore, the manager used general knowledge to make economic decision. For general knowledge to be transferable to specific knowledge, it requires the transaction cost, analysis of the information, and provide an incentive for the good use of information.
First, specific knowledge is associated with transaction cost of information. For managers to gain specific information about their organization and/or competitors, they need to pay transaction fee to get it. For example, Stetson Kennedy wants to gain specific information of how the Ku Klux Klan organization was organized. He needs to pay small amount of transaction fee to join the organization and received the specific information about the organization.
Second, when specific information is acquired from the external parties, the manager must analyze the specific information. Some information may or may not be specific to particular situations; therefore the manager needs to use his/her judgment to make decision about the information received.
Third, specific knowledge can be a power tool for manager to acquire an incentive for their own organization. Incentive is better information gain from external parties. When managers have accessed to better information, manager can design their own incentive to compete with the external parties. For example, the Real-Estate Agents designed their own incentive by gain specific knowledge from external organization and individual.
In conclusion, for general knowledge to be transferable, it requires transaction cost, analysis of information received, and provide an incentive for the good use of information. Information is a powerful tool for the managerial to make economical decision for their own organization and to gain competitive edge in the market institution. Therefore specific knowledge is a key to gain information advantage over the competitors.
First, specific knowledge is associated with transaction cost of information. For managers to gain specific information about their organization and/or competitors, they need to pay transaction fee to get it. For example, Stetson Kennedy wants to gain specific information of how the Ku Klux Klan organization was organized. He needs to pay small amount of transaction fee to join the organization and received the specific information about the organization.
Second, when specific information is acquired from the external parties, the manager must analyze the specific information. Some information may or may not be specific to particular situations; therefore the manager needs to use his/her judgment to make decision about the information received.
Third, specific knowledge can be a power tool for manager to acquire an incentive for their own organization. Incentive is better information gain from external parties. When managers have accessed to better information, manager can design their own incentive to compete with the external parties. For example, the Real-Estate Agents designed their own incentive by gain specific knowledge from external organization and individual.
In conclusion, for general knowledge to be transferable, it requires transaction cost, analysis of information received, and provide an incentive for the good use of information. Information is a powerful tool for the managerial to make economical decision for their own organization and to gain competitive edge in the market institution. Therefore specific knowledge is a key to gain information advantage over the competitors.
posted by Day at 2:12 PM
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