The Use of Knowledge in Society Essay Example | Topics and Well Written Essays - 1750 words

The Use of Knowledge in Society - Essay Example Since the process of decision making process is heavily influenced by the type of knowledge possessed and the type of organizations involved, the motivation for decision making i.e. the type and level of knowledge possessed by them, is of crucial significance. This essay on ‘Use of knowledge in Society’ aims to discuss, analyse, and assess the views put forward by the author, F. A. Hayek (1945) and ascertain the implications of the claims made in view of various micro-economic theories and concepts. Summary: The article by Hayek (1945) on the use of knowledge in society discusses the various merits and influence of price mechanisms on the decision making process and role of specific knowledge as a decision-making mechanism. He states that â€Å"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely a s the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess (p. 519)." He implies that that it is humanly impossible for a single individual to possess all the relevant information to arrive at a favourable decision. The quest of individuals with regard to addressing the economic problem is hence not about applying the available information or knowledge for optimum utilization of resources but rather on the manner in which the best possible resources can be acquired by means of the limited knowledge available at our disposal. Merits of the argument: Product specific or consumer specific knowledge is known to help firms / organizations in maximizing their profits and sustaining their competitive positioning in the industry. The application of market oriented specific knowledge by the organizations helps firms in warding off competition and in developing effective strategies. Critical information or knowledge regarding one's com petitors such as products, prices, or policies adopted by them etc., plays a key role in producing market/ consumer oriented ideas/ products thus helping organizations in effectively catering to their target consumer/ market segment (Glazer, 1991). Such market / consumer oriented strategies developed based specific knowledge provides organizations with a competitive advantage (Barney, 1991) and helps them in succeeding regardless of the presence of negative influences / obstacles in the external environment (Jaworski and Kohli, 1993; Narver and Slater, 1990). Hayek has stressed the relevance and significance of knowledge in the development of society stating that awareness and application of specific knowledge is likely to contribute towards the overall development of the society and it is hence vital for individuals and societies to acquire and apply such knowledge for generating and maximizing their profits. Since capital is by far the most critical input of production in an indus trial society, possession of appropriate knowledge is inevitable for enabling effective decision making in order