The keys to strong performance in the KBE are the successful generation, acquisition, diffusion, and exploitation of knowledge. This is the challenge facing all of the world's advanced economies, including Canada. A firm's ability to grow depends upon innovation. Successful firms place greater emphasis on their innovation capabilities and devote more effort to activities in these areas. The failure to innovate has been a major reason for Canada's relatively slow productivity growth over the past two decades.
Knowledge acquisition is as important as knowledge generation in innovation.
The adoption rate of advanced technology is one indicator of the rate of knowledge acquisition. While Canadian businesses have caught up to similar sized US counterparts in the use of advanced technologies, Canada's overall technology adoption rate is still lower than that of the United States. At the company level, new technologies transform basic business functions, offer enhanced flexibility and responsiveness to clients, better quality and delivery and improved efficiency of supplier linkages. In emerging sectors such as IT, we are seeing the proliferation of new industries such as new media and entertainment, which combine technology, transmission and content to provide a wide range of new information applications, products and services. These new industries hold the promise of creating thousands of new, highly-skilled jobs and contributing significantly to economic growth.