ABSTRACT
This chapter considers the emergence of the new knowledge industry as the result of the
institutional formation of an actual market for knowledge. This formation is seen to be
based on a three-pronged process consisting of the deverticalisation of knowledge-production
activities from the boundaries of corporations, the specification of a real demand for
technological competence, and the specialisation of independent firms in the production
of knowledge and technological competence. Information and communication
technologies are the enabling engine of such a process, which in turn increases the rate of
further technological innovations. Within this evolution, the various organisational modes
of knowledge-production have illustrated the contrasting effects in terms of innovation
incentive, resource allocation, dissemination capability and private efficiency. The most
recent growth of specialisation in the context of the new knowledge economy offers a
potential solution to the knowledge trade off and an enhanced role for knowledge-
intensive business services.
