The Ninth Wuhan International Conference on E-Business –Innovation Management Track 1301
Digital Natives in a Knowledge Economy: will a New Kind of
Leadership Emerge?
Alessio Maria Braccini, Alessandro D’Atri and Antonio Marturano
CERSI LUISS Guido Carli Rome, Italy
Abstract: The aim of this paper is to understand whether digital natives will need a different approach to
leadership development. The authors discuss that in knowledge economies extrinsic and explicit knowledge
(knowing that) learning approaches are more important than traditional learning methods based on the idea that
knowledge has a value per se and it is transferred tacitally (knowing how). In conclusion, authors do acknowledge
the importance of extrinsic and explicit knowledge in digital natives learning; but, if they wish to become leaders,
digital natives still have not only to turn their explicit knowledge into an implicit one (internalization) in order to
intuitively use what they are learning but also natives need to learn more about social skills.
Keywords: digital natives, digital immigrants, leadership, knowledge economy, internalization.
1. INTRODUCTION
The aim of this paper is to answer to the question whether the shift to a knowledge economy will change
the way in which leadership is usually practiced in business organizations. Knowledge economy indeed puts its
emphasis on management of intangible assets than management of material goods.
In the first paragraph we will analyse the significance of such shift for leadership and we will argue that
“knowledge” in knowledge economy became a kind of commodity and therefore it has an extrinsic value; for
this reason it should be accessible virtually in the most explicit way. In the second paragraph we will show how
people that have been born in the digital era deal with knowledge they get basically from Information and
Communication Technologies which at the same time shapes their minds. Digital native knowledge processes,
are quite different from the past popular theoretical-based learning; digital natives rely more on explicit
knowledge. In the fourth paragraph we will show that in digital natives, knowledge management processes play
a relevant role in this stage of decision making. In the fifth paragraph we will follow Nonaka showing how
knowledge is usually transformed among individuals by means of four knowledge transformation processes:
externalization, internalization, socialization, and combination. In the sixth paragraph we will see with the help
of Chinese’s art of contextualizing such transformation processes allow for a holistic understanding of
phenomena; such methodology helps firms themselves to face the need to become learning organisations,
continuously adapting management to change.
In the conclusions we will acknowledge the importance of extrinsic and explicit knowledge in digital
natives learning; but, if they wish to become leaders, digital natives still have to turn their explicit knowledge
into an implicit one (internalization) in order to intuitively (or emotionally) use what they are learning, together
with a deeper understanding about social skills.
2. FROM MATERIAL PRODUCTION TO KNOWLEDGE ECONOMY: A CHANGE IN
LEADERSHIP PARADIGMS
It’s a common knowledge we entered into a knowledge economy. Knowledge economy is a term that refers
either to an economy of knowledge focused on the production and management of knowledge in the frame
of economic constraints, or to a knowledge-based economy. In the second meaning, more frequently used, it
refers to the use of knowledge technologies (such as knowledge engineering and knowledge management) to
produce economic benefits as well as job creation. Although not yet well distinguished in the mainstream
literature, “knowledge” in the first case is a product; in the second case “knowledge” is a tool. However is in the
very nature of knowledge to be ambiguously a product and a tool; in fact, knowledge produces new knowledge
which can be used the same times as a tool to produce material goods. A typical example is electricity:
knowledge about electricity created new knowledge on electricity too (knowledge as product) that leads to the
invention of lamps (knowledge as tool) which is in turn an interesting subject of knowledge.
Furthermore, according to J.F. Lyotard (1979)
“We may thus expect a thorough exteriorisation of knowledge with respect to the “knower,” at whatever
point he or she may occupy in the knowledge process. The old principle that the acquisition of knowledge is
indissociable from the training (Bildung) of minds, or even of individuals, is becoming obsolete and will
become ever more so. The relationships of the suppliers and users of knowledge to the knowledge they supply
and use is now tending, and will increasingly tend, to assume the form already taken by the relationship of
commodity producers and consumers to the commodities they produce and consume – that is, the form of value.

1302 The Ninth Wuhan International Conference on E-Business –Innovation Management Track
Knowledge is and will be produced in order to be sold; it is and will be consumed in order to be valorised in a
new production: in both cases, the goal is exchange”.
Lyotard - in other words - seems to suggests that economy knowledge should be not focused on the idea that
knowledge is a process or tools; rather it should be focused on the idea that knowledge as such has not anymore a
pure intrinsic value (a value per se, as traditionally it did – Lyotard says “knowledge ceases to be an end in itself, it
loses its “use-value.”), but rather an extrinsic value. Indeed, according to Lyotard, “it is not hard to visualise
learning circulating along the same lines as money…”. Knowledge economies - in other words - realize a
commodification of knowledge: a modification of relationships, formerly untainted by commerce, into commercial
relationships. Knowledge did not have an economic value the raise of knowledge economy has assigned to
knowledge a value and hence market values have replaced other traditional social values (i.e. its intrinsic value).
3. KNOWLEDGE AS A COMMODITY
A peculiar characteristic of intrinsic knowledge is the fact that – especially for professional learning - was a
transfer of knowledge from a master to some disciples. Such learning was based on the transfer of specific skills a
disciple needed to be, in some ways, internalized. Often steps to understand how to paint, how to build an artfully
craft, were not explicit but tacitly passed from a master to a disciple. A peculiar characteristic of intrinsic
knowledge is the fact that – especially for professional learning – it was a transfer of knowledge from a master to
some disciples. Such learning was based on the transfer of specific skills to a disciple whom, in some ways, had to
internalize those skills. Often, steps to learning how to paint, how to build an artfull craft, were not explicit but
tacitally passed from a master to a disciple. If we look at the Renaissance, we have examples of master painters
able to transfer only some basic skills to their scholars whose have to reinterpret art in their own way. Famous
Perugino student Raphael (Raffaello Sanzio) did not work for the monumental Sistine Chapel in the Vatican, but
he learnt and improved his predecessor’s way to reproduce light in paintings which was unsurpassed during the
while Renaissance. Raphael is indeed one of the big names in the history of western painting, while Perugino plays
a marginal role (which is an example of tacit-tacit knowledge transfer, according to Nonaka and Takeuchi, 1995).
On the contrary, when knowledge is treated and exchanged as a commodity, some implications arise due to
its nature. Usually in an exchange something is given away and something is received. In economics this
exchange mechanism is at the very foundation of the market economy. Commodities are exchanged on markets,
and during the exchange their value is measured with the price, by means of money.
Knowledge by itself is a quite different kind of commodity, and its peculiarities appear evident in the
exchange. When knowledge is exchanged is never given away. In order to clarify with an example, let us think
about the situation where two persons, A and B, exchange two commodities a and b, respectively owned by
individual A and B. After the exchange A does no longer posses a, he now possess b. At the same time, B no
longer possesses b, but now possesses a. This is also known as the quid pro quo principle.
Anyhow, if the two commodities a and b are pieces of knowledge, after the exchange A possesses both a
and b. The same is also true for B. Thence, when knowledge is exchanged is not given away, and knowledge
does not fall under the quid pro quo principle. When knowledge is exchanged, from the point of view of the
individual exchanging it, is not lost, it is rather increased. Doing so, knowledge looses its scarcity and, by
loosing scarcity, it also looses its exchange value. Interpreted under this point of view it might seem that
knowledge is of no value. Indeed knowledge might have value even if it becomes less and less scarce in
exchange. This is so because many forms of knowledge exchange are not based on a market economy principle,
where value is a direct consequence of scarcity, but they are rather based on a gift economy principle, where
value is a direct consequence of abundance.
We are not digital natives and therefore we still have in mind a reminiscence of the distinction between
knowledge as having a value per se and knowledge as having an extrinsic value. The next step is to understand
whether this distinction still hold for digital natives.
4. DIGITAL NATIVES AS PROTAGONISTS OF KNOWLEDGE-ORIENTED ECONOMIES
Penetration and pervasiveness of Information and Communication Technologies (ICT) affect every aspect
of human life, starting from childhood to maturity. In 2001, discussing the adequateness of up to day USA
scholar systems, Mark Prensky introduced for the first time the concepts of “Digital Natives” and “Digital
Immigrants” (Prensky 2001a, Prensky 2001b).
For the first time Prensky noticed that the generation of pupils that were attending schools by that time has
one relevant difference from the previous generations. These pupils were all born in the digital era. They were
born and grew up in a world where Information and Communication Technologies were already there.

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These students have spent their entire lives surrounded by, and using, computers, videogames, digital
music players, video cams, cell phones, and all the other toys and tools of the digital age (Prenski 2001a).
According to Prenski, average college graduates have spent less than 5,000 hours of their lives reading, but over
10,000 hours playing videogames, and 20,000 hours watching TV.
These habits and behaviours contributed to develop in them new learning and information processing capabilities
that have been largely ignored by the traditional learning system (Prenski 2001b). Anyhow, these characteristics allow
them, as a matter of fact, to think and process information in a fundamental different way from their predecessors.
In his paper(s), Prenski depicts the identikit of digital natives as follows. Digital natives are used to receive
information really fast. They like to parallel process and multi-task instead of doing things in strict sequences.
They prefer graphics representations before the text, rather than the opposite. Instead of reading books from the
first to the last page, they prefer to walk through documents in random access: in other words, they prefer
hypertexts to books. Being used to mobile phones, social networks and the like, they work better when
networked. They thrive on instant gratification and frequent rewards. Finally, they prefer games to serious works.
All these characteristics can be noticed in digital natives. But the difference among digital natives and
digital immigrants is not only in these observed habits. These habits are just the exterior signs of something that
is more deep and profound. Being surrounded by technologies for their entire lives, Digital Natives started to be
acquainted and familiar to them pretty soon, in a matter that could have altered the way their brain work.
It is therefore not only because Digital Natives are used to technologies that they are capable of processing
information in a different way from their predecessors, but it is because they are different from their
predecessors. They have thinking and learning patterns profoundly different from those of the Digital
Immigrants (Prenski 2001a). Their brain reorganized itself in consequence of the stimuli received by the intense
use of Information and Communication Technologies. This claim is something more than an affirmation of a
researcher, but it is also supported by recent findings of the neurobiology science (Prenski 2001b).
Prenski describes the characteristics of Digital Natives to support his hypothesis that education and training
systems are not adequate to properly educate these students. Those who were graduates and students in 2000, will be no
longer students in the next years, but they will be next managers, decision makers, and leaders. Their characteristics,
their information processing skills, and their different thinking patterns, will anyhow stay (or will even strengthen).
5. DIGITAL NATIVES AND DECISION MAKING
Learning does not only happen in childhood and teen years. It rather goes with everyone for the entire
working carrier. The characteristics that, according to Prenski, Digital Natives show, will not only alter the way
they learn in schools and colleges. These characteristics will stay in their lives as permanent marks and will
modify their learning habits during their whole lives, both as individuals and as members of organisations.
Learning plays an important role in human activities. Organisation theory posits that organisations live and
act thank to the actions of people that compose them. The actions that compose organisational behaviours are
normally divided into three processes, called the fundamental organisational processes. These processes are:
sense making, decision making, and knowing (Choo 1998, Choo 2002).
In individual and in organizational contexts human actions does not happen detached from the environment.
Every action taken by an individual takes inputs and gives feedback to the environment where the individual
acts. With the sense making processes, each actor tries to give proper meaning to the events and the
environment that surrounds him in order to take a decision.
Once meaning of events and environments has been identified, action takes places. With the decision
making process, individuals take decisions, and therefore perform actions. Decisions may be taken in different
ways. Basically there are four kinds of decision making processes: standard, political, incremental, and
anarchical. Each one of these kinds of decision making processes requires an information processing activity to
generate proper understanding on the problem in order to take the decision. This intelligence activity happens
with respects of the limits of the bounded rationality principle (Simon 1947).
If possible, to reduce computational uncertainty, standard rules and procedures are used to take the decision.
If such a strategy is viable, this decision making process is called standard. If it is the behavioural uncertainty
that has to be addressed, in the place of computational uncertainty, decisions are taken trying to puts generate
consensus and mediate conflicts among interested actors. This happens in political decision making processes. If
the problem to be addressed is very complex, and the decision to be taken is equal so, the decision is taken in a
step by step fashion, with a set of smaller decisions taken on a trial’n’error basis. This is the case of incremental
decision processes. Finally, if both the decisions and the solutions are already available in a garbage can of
problems and solutions, the decision might be taken by chance when a problem and a solution are, randomly,

1304 The Ninth Wuhan International Conference on E-Business –Innovation Management Track
matched. These kinds of decision making processes are called anarchical.
Finally, when the decision is taken, a knowing process is normally executed to generate new knowledge.
The information gathering and processing activity that supports decision making processes does not automatically
generate knowledge. To generate knowledge out of information, a learning process is necessary (Orlikowski
2002). Knowing processes are thence those processes that are executed after a decision has been taken to generate
new knowledge out of information gathered. Besides learning processes, also knowledge management processes
play a relevant role in this stage of decision making. The ability of an individual to successfully perform, and
therefore to successfully take decisions, in the environment, also depends on his stock of knowledge and on his
capacity to activate knowledge processes when the environment requires it (Thompson 1967).
6. COGNITIVE PROCESSES IN DIGITAL NATIVES LEARNING PROCESSES
Knowledge is a blurred concept whose definition engaged philosophers for thousand years (Walsham
2001). Usually knowledge is considered as the result of aggregation of one or more pieces of information, which
in turn are formed by one or more data (Laudon and Laudon 2006).
Tradionally, knowledge can be also divided into two main groups: tacit knowledge and explicit knowledge
(Polanyi 1966). Knowledge is explicit if it can be shared among individuals by means of a physical support.
Such a support can have the form of a book, a movie, a picture, a conversation, or similar. Thence, if it is
explicit, knowledge can be codified in some languages.
Explicit knowledge is not all the knowledge that individuals possess. As Polanyi says: “we can know more
than we can tell”. There is also the tacit knowledge. Tacit knowledge is that form of knowledge that
encompasses all the thinks individuals know but find difficulties in transmitting to others or making them
explicit. Intuition, ability, competence, and similar, are all forms of tacit knowledge.
Knowledge is usually transformed among individuals by means of four knowledge transformation
processes: externalization, internalization, socialization, and combination (Nonaka 1994). In an externalization
process and individual transforms his tacit knowledge in explicit knowledge, if possible, using a language and a
support to store it. The opposite process is instead called internalization, when one individual transform his
explicit knowledge into tacit knowledge. Externalization and internalization processes may involve only one
individual or more but, in any case, they involve an exchange from one form of knowledge (tacit or explicit)
into the other (respectively, explicit or tacit). When two (or more) individuals exchange the same form of
knowledge, and thence do not transform it, then the socialization and combination processes are necessary. With
the knowledge socialization process, two (or more) individuals exchange their tacit knowledge. With the
knowledge combination process, instead, two (or more) individuals exchange their explicit knowledge.
Knowledge processes, to be effective, do not only require individuals, but they also require a physical place
where they will take place. Nonaka and Konno (1998) introduce the concept of Ba to indicate a shared space
among all individuals involved, where knowledge transformation processes might take place. According to them,
there are four kinds of Ba called respectively: Originating Ba, Interacting Ba, Exercising Ba, and Cyber Ba.
Each one of these forms of Ba supports one of the previously described knowledge transformation processes.
The Originating Ba represents a face-to-face space where individuals share feelings, emotions, experiences,
and mental models. The Originating Ba supports the knowledge socialization processes. The Originating Ba is the
primary Ba from which knowledge creation processes begins. The Interacting Ba is close to the Originating Ba, but
it is more consciously constructed. In this case the interaction always happens face to face, but among people with
the right mix of specific knowledge and capabilities like those forming project teams, taskforces, or cross-
functional teams. In this Ba, individuals share their mental models, but also reflect and analyze their own. The
Interacting Ba supports the externalization process. In the Cyber Ba, instead, the interaction happens through a
virtual world instead in a real space and time context. In this form of Ba, collaborative environments utilizing
information and communication technologies support knowledge combination processes. In this Ba individuals
combine their existing information and knowledge with new explicit knowledge generating and systematizing new
explicit knowledge. Finally the Exercising Ba supports the internalization phase facilitating the conversion of
explicit knowledge to tacit knowledge. In this form of Ba, focused training with senior mentors and colleagues
form the basis for continuous exercises that stress certain patterns and working out of such patterns.
7. LEARNING MODELS AND THE ROLE OF INFORMATION TECHNOLOGIES BETWEEN EAST
AND WEST
Knowledge learning is traditionally based on knowledge transfer (from a teacher to, usually, many students)
and linear ways of learning. Such linear paradigm reflects the way in which we advance in our reasoning.

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German philosopher Immanuel Kant (1787: A48-49/B66), in particular, showed how the linear notions of time,
space and causality were not empirical constructs but rather forms of sensibilities that are a priori necessary
(immanent) conditions for any possible human experience: they are tools, so to speak, through which we make
order among different kind of tangible experiences. Kant claimed that the human subject would not have the
kind of experience that it has were these a priori forms (or tacit forms of knowledge) not in some way
constitutive of him as a human subject. For instance, he would not experience the world as an orderly, rule-
governed place unless time, space and causality were operative in his cognitive faculties.
On the contrary, Chinese tradition, “sought the understanding of order through the artful disposition of
things, a participatory process which does not presume that there are essential features, or antecedent-
determining principles, serving as transcendent sources of order [such as time, space and causality in western
tradition]. The art of contextualizing seeks to understand and appreciate the manner in which particular things
present-to-hand are, or may be, most harmoniously correlated. Classical Chinese thinkers located the energy of
transformation and change within a world that is ziran, autogenerative or literally ‘so-of-itself’, and found the
more or less harmonious interrelations among the particular things around them to be the natural condition of
things, requiring no appeal to an ordering principle or agency for explanation” (Hall and James, 1998).
While information technologies may be moving the border between tacit and codified knowledge, they are also
increasing the importance of acquiring a range of skills or types of knowledge. In the emerging information society, a
large and growing proportion of the labour force is engaged in handling information as opposed to more tangible
factors of production. Computer literacy and access to network facilities tend to become more important than literacy
in the traditional sense. Although the knowledge-based economy is affected by the increasing use of information
technologies, it is not synonymous with the information society. The knowledge economy is characterised by the need
for continuous learning of both codified information and the competencies to use this information.
As access to information becomes easier and less expensive, the skills and competencies relating to the
selection and efficient use of information become more crucial. Tacit knowledge in the form of skills needed to
handle codified knowledge is more important than ever in labour markets. Codified knowledge might be
considered as the material to be transformed, and tacit knowledge, particularly know-how, as the tool for
handling this material. Capabilities for selecting relevant and disregarding irrelevant information, recognising
patterns in information, interpreting and decoding information as well as learning new and forgetting old skills
are in increasing demand. The accumulation of tacit knowledge needed to derive maximum benefit from
knowledge codified through information technologies can only be done through learning or contextualizing.
Without investments oriented towards both codified and tacit skill development, informational constraints may be
a significant factor degrading the allocative efficiency of market economies. Workers will require both formal
education and the ability to acquire and apply new theoretical and analytical knowledge; they will increasingly be
paid for their codified and tacit knowledge skills rather than for manual work. Long life education will be the
centre of the knowledge-based economy, and learning the tool of individual and organisational advancement.
This process of learning is more than just acquiring formal education. In a knowledge-based economy
“learning-by-doing” is paramount. A fundamental aspect of learning is the transformation of tacit into codified
knowledge and the movement back to practice where new kinds of tacit knowledge are developed (Chinese art
of contextualizing). Training and learning in non-formal settings, increasingly possible due to information
technologies, are more common. Firms themselves face the need to become learning organisations, continuously
adapting management, organisation and skills to accommodate new technologies. They are also joined in
networks, where interactive learning involving producers and users in experimentation and exchange of
information is the driver of innovation (EIMS, 1994).
8. CONCLUSIONS: WHICH LEADERSHIP FOR DIGITAL NATIVES?
We have seen that digital natives learning is strongly based on know that, or learning by doing, that is on
what Nonaka calls the “externalization” process. However an effective leadership is characterized by intuitive
application of knowledge to a particular organizational dilemma or problem, which in turn is not just an
application of job knowledge but rather a mix of abilities mainly job knowledge and social skills.
A recent study conducted by Gary Small at the UCLA's Memory and Aging Research Center, Semel Institute
for Neuroscience and Human Behavior, (Small is UCLA's Parlow-Solomon Chair on Aging) (Lin, 2008) claims
that the Internet is indeed changing the way human brains operate, but at the same time it is making digital natives
anti-social and have an increased tendency to suffer ADD (attention deficit disorder). According to Small, digital
natives — young people born into a world of laptops and cell phones, text messaging and twittering — spend an
average of 8 1/2 hours each day exposed to digital technology (id.). This exposure is rewiring their brain's neural

1306 The Ninth Wuhan International Conference on E-Business –Innovation Management Track
circuitry, heightening skills like multi-tasking, complex reasoning and decision-making. But, Small concludes,
there's a down side: all that tech time diminishes social oriented skills, including important emotional aptitudes like
empathy. These are part of what in management studies is called emotional intelligence.
Emotional intelligence, indeed, plays a major role into recent leadership development research (Lyons,
2008): several research claims that emotional intelligence can correlate with less subjective workplace stress,
better health and wellbeing or even significantly contribute to bottom lines business results. At the same time,
claims surrounding the pliable nature of emotional intelligence since Daniel Goleman popular works (1995), has
led to the emergence of a veritable industry of human resource development professionals promoting the role of
emotional intelligence assessment and enhancement in several sectors such as personal development,
occupational and career assessment, occupational stress management, job performance and satisfaction and
work-life balance. Some studies provided evidence that emotional intelligence contains strong links to
leadership and executive competency (Lyons, cit.).
Therefore digital natives need training about emotional intelligence. They indeed generally lack of social
skills and they need to learn about such skills if they wish to become leaders.
On the contrary, digital immigrants seems not to be affected by a lacking of social skills; rather they can
experience an enhancement of their capability: a recent UCLA study has assessed the effect of Internet
searching on brain activity among volunteers between the ages of 55 and 76 — half of them well-practiced in
searching the Internet, the other half not so. Semel Institute researchers used functional magnetic resonance
imaging (fMRI) to scan the subjects' brains while they surfed the 'Net. The result: Researchers found that the
brains of the Web-savvy group reflected about twice as much activity compared to the brains of those who were
not Web-savvy (Lin, cit.). According to Small “A simple, everyday task like searching the Web appears to
enhance brain circuitry in older adults, demonstrating that our brains are sensitive and can continue to learn as
we grow older” These findings hold promise for older peoples' potential for enhancing their brainpower
through the use of technology, said Small, an expert on the aging brain who has written several books to help
people maintain vital brain function throughout their lives.
In conclusion, it seems that future holds a challenge for digital natives: if they wish to learn leadership
abilities they must develop some emotional intelligence, otherwise leadership will be possessed by a handful of
elder web savvy folks more able to internalize knowledge (because they are assisted by technology) and with
better social skills (they learnt during along their life).

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