nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2007‒02‒24
twelve papers chosen by
Emanuele Canegrati
Catholic University of the Sacred Heart

  1. Teaching locals new tricks: foreign experts as a channel of knowledge transfer By Markusen, James R.; Trofimenko, Natalia
  2. The Return to Knowledge Hierarchies By Thomas Hubbard; Luis Garicano
  3. WHAT IS AN ENTREPRENEURIAL OPPORTUNITY? By Jeffery S. McMullen; Lawrence A. Plummer; Zoltan J. Acs
  5. The Entrepreneurship-Philanthropy Nexus: Nonmarket Source of American Entrepreneurial Capitalism By Zoltan J. Acs; David Audretsch; Ronnie J. Phillips; Sameeksha Desai
  6. Collective Risk Management in a Flight to Quality Episode By Ricardo J. Caballero; Arvind Krishnamurthy
  7. Capturing the Evolving Nature of Science, the Development of New Scientific Indicators and the Mapping of Science By Masatsura Igami; Ayaka Saka
  8. Network Formation and Strategic Firm Behaviour to Explore and Exploit. By Muge Ozman
  9. Institutions, Governance and Economic Growth in the EU: is there a role for the Lisbon Strategy? By Annette Bongardt; Francisco Torres
  10. R&D, productivity and market value By Bronwyn Hall
  11. Outsourcing of Manufactoring R&D Functions - Motives and Results (in Finnish with an English abstract/summary) By Jyrki Ali-Yrkkö
  12. District leaders as open networks: emerging business strategies in Italian industrial districts By Eleonora Di Maria; Stefano Micelli

  1. By: Markusen, James R.; Trofimenko, Natalia
    Abstract: Gains from productivity and knowledge transmission arising from the presence of foreign firms have received a good deal of empirical attention, but theoretical micro-foundations for this mechanism are limited. Here we develop a dynamic model in which foreign experts may train domestic workers who work with them. Gains from training can in turn be decomposed into two types: (a) obtaining knowledge and skills at a lower cost than if they were self-learnt at home, (b) producing domestic skilled workers earlier in time than if the domestic economy had to rediscover the relevant knowledge through 'reinventing the wheel.' We use fixed effects and nearest neighbour matching estimators on a panel of plant-level data for Colombia that identifies the use of foreign experts, to show that these experts have substantial, although not always immediate, positive effects on the wages of domestic workers and on the value added per worker.
    Keywords: foreign experts; knowledge transfer; spillovers
    JEL: F10 F23 O24 O33 O47
    Date: 2007–02
  2. By: Thomas Hubbard; Luis Garicano
    Abstract: Hierarchies allow individuals to leverage their knowledge through others. time. This mechanism increases productivity and amplifies the impact of skill heterogeneity on earnings inequality. To quantify this effect, we analyze the earnings and organization of U.S. lawyers and use the equilibrium model of knowledge hierarchies in Garicano and Rossi-Hansberg (2006) to assess how much lawyers, productivity and the distribution of earnings across lawyers reflects lawyers. ability to organize problem-solving hierarchically. We analyze earnings, organizational, and assignment patterns and show that they are generally consistent with the main predictions of the model. We then use these data to estimate the model. Our estimates imply that hierarchical production leads to at least a 30% increase in production in this industry, relative to a situation where lawyers within the same office do not vertically specialize. We further find that it amplifies earnings inequality, increasing the ratio between the 95th and 50th percentiles from 3.7 to 4.8. We conclude that the impact of hierarchy on productivity and earnings distributions in this industry is substantial but not dramatic, reflecting the fact that the problems lawyers face are diverse and that the solutions tend to be customized.
    Date: 2007–01
  3. By: Jeffery S. McMullen; Lawrence A. Plummer; Zoltan J. Acs
    Keywords: entrepreneurial opportunity, creation, knowledge, discovery, strategy
    JEL: L26 M13 D5
    Date: 2007–02
  4. By: A. Rodriguez-Pose; Riccardo Crescenzi
    Abstract: Research on the impact of innovation on regional economic performance in Europe has fundamentally followed three approaches: a) the analysis of the link between investment in R&D, patents, and economic growth; b) the study of the existence and efficiency of regional innovation systems; and c) the examination of geographical diffusion of regional knowledge spillovers. These complementary approaches have, however, rarely been combined. Important operational and methodological barriers have thwarted any potential crossfertilization. In this paper, we try to fill this gap in the literature by combining in one model R&D, spillovers, and innovation systems approaches. A multiple regression analysis is conducted for all regions of the EU-25, including measures of R&D investment, proxies for regional innovation systems, and knowledge and socio-economic spillovers. This approach allows us to discriminate between the influence of internal factors and external knowledge and institutional flows on regional economic growth. The empirical results highlight how the interaction between local and external research with local and external socio-economic and institutional conditions determines the potential of every region in order to maximise its innovation capacity. They also indicate the importance of proximity for the transmission of economically productive knowledge, as spillovers show strong distance decay effects. In the EU-25 context, only the innovative efforts pursued within a 180 minute travel radius have a positive and significant impact on regional growth performance.
    Keywords: Economic growth, innovation, R&D, knowledge, spillovers,
    JEL: R11 R12 R58
    Date: 2006–01
  5. By: Zoltan J. Acs; David Audretsch; Ronnie J. Phillips; Sameeksha Desai
    Abstract: What differentiates American capitalism from all other forms of industrial capitalism is a historical focus on both the creation of wealth (entrepreneurship) and the reconstitution of wealth (philanthropy). Philanthropy has been part of the implicit American social contract that continuously nurtures and revitalizes economic prosperity. Much of the new wealth created historically has been given back to the community to build many of the great social institutions that have paved the way for future economic growth. This entrepreneurship-philanthropy nexus has not been fully explored by either economists or the general public. The purpose of this paper is to suggest that American philanthropists—particularly those who have made their own fortunes—create foundations that, in turn, contribute to greater and more widespread economic prosperity through knowledge creation. Analyzing philanthropy sheds light on our current understanding of how economic development has occurred, as well as the roots of American economic dominance.
    Keywords: entrepreneurship, philanthropy, capitalism, knowledge
    JEL: D64 M13 M14
    Date: 2007–02
  6. By: Ricardo J. Caballero; Arvind Krishnamurthy
    Abstract: We present a model of optimal intervention in a flight to quality episode. The reason for intervention stems from a collective bias in agents' expectations. Agents in the model make risk management decisions with incomplete knowledge. They understand their own shocks, but are uncertain of how correlated their shocks are with systemwide shocks, treating the latter uncertainty as Knightian. We show that when aggregate liquidity is low, an increase in uncertainty leads agents to a series of protective actions -- decreasing risk exposures, hoarding liquidity, locking-up capital -- that reflect a flight to quality. However, the conservative actions of agents leave the aggregate economy over-exposed to negative shocks. Each agent covers himself against his own worst-case scenario, but the scenario that the collective of agents are guarding against is impossible. A lender of last resort, even if less knowledgeable than private agents about individual shocks, does not suffer from this collective bias and finds that pledging intervention in extreme events is valuable. The intervention unlocks private capital markets.
    JEL: E30 E44 E5 F34 G1 G21 G22 G28
    Date: 2007–02
  7. By: Masatsura Igami; Ayaka Saka
    Abstract: There is a long history describing the structure and evolution of science. Recent unprecedented progress in access, use, and analysis of information on scientific publications and patents open innovative ways to study the structure and evolution of science. Especially, a mapping of knowledge has received wide recognition as a new, evolving area of research.<p> The ultimate goal of this study is to contribute to endeavours to understand and track the changing nature of science. In this study, current trends in scientific activities were mapped and their characteristics were examined. Research areas were explored through a co-citation analysis and a map of science was generated to analyse how research areas were related to each other. Methodology which is commonly used in social network analysis was also applied to examine knowledge networks at the institutional level.<p> The analysis clearly shows the multi-disciplinary character of some research, such as ‘Nano materials and devices’, ‘Genomics’, and ‘Environment’. A precursor of the emergence of nano-bioscience is also observed. Measurement of countries’ specialisation clearly indicates an increased share of the BRICs (Brazil, Russia, India, and China) in some research. The BRICs are currently in a stage of intense catching up and their importance in knowledge networks is likely to become substantial. Social network analysis at the institutional level reveals that the structure of knowledge networks strongly depends on research and each institution probably has its own function in the network. These results show how science is evolving not only across disciplines but also across countries or regions. <P>Mise en évidence du caractère évolutif de la science, élaboration de nouveaux indicateurs scientifiques et typologie de la science <BR>Il existe une longue tradition de description de la structure et de l’évolution de la science. Cependant, les progrès récents sans précédent dans l’accès à l’information sur les publications et brevets scientifiques et dans l’utilisation et l’analyse de cette information ouvrent des voies nouvelles pour étudier la structure et l’évolution de la science. En particulier la typologie du savoir est de plus en plus reconnue comme un nouveau domaine de recherche prometteur.<p> Le but ultime de cette étude est de contribuer aux efforts pour comprendre et retracer le caractère évolutif de la science. Dans cette étude, les tendances actuelles des activités scientifiques ont été mises en évidence et leurs caractéristiques analysées. Les domaines de recherche ont été explorés au moyen d’une analyse de co-citations et une typologie de la science a été dressée pour analyser les liens existant entre les différents domaines scientifiques. Une méthodologie couramment employée dans l’analyse des réseaux sociaux a également été utilisée pour examiner les réseaux de connaissance au niveau institutionnel.<p> L’analyse a clairement montré le caractère pluridisciplinaire de certaines recherches, comme les « nanomatériaux et nanodispositifs », la « génomique » et l«’environnement ». Un précurseur de l’émergence de la nanobioscience a également été observé. La mesure de la spécialisation des pays a clairement indiqué l’émergence des BRICs (Brésil, Russie, Inde et Chine) dans certaines recherches. Les BRICs sont actuellement engagés dans une phase intense de rattrapage et ils vont certainement prendre une importance significative dans les réseaux de connaissance. L’analyse des réseaux sociaux au niveau des institutions a montré que la structure des réseaux de connaissance est fortement conditionnée par la recherche et que chaque institution occupe sans doute une fonction propre dans le réseau. Ces résultats ont mis en évidence la façon dont la science évolue non seulement entre les disciplines, mais aussi entre les pays et les régions.
    Date: 2007–02–20
  8. By: Muge Ozman
    Abstract: The aim of this paper is to investigate the effect of technological opportunities and knowledge tacitness on inter-firm network formation, under two different industry regimes. In the first regime environment is stable and the aim of firms is to exploit knowledge. In this case, they attribute more value to repeated interactions with geographically close firms. In the second regime, there is environmental turbulence, which increases the value of access to novel information from distant partners for exploration. The question addressed is, under these regimes how do technological opportunities and knowledge tacitness influence structure of networks? The main contribution of the paper different from previous work is that it explicitly models the effect of history between two firms on networks that form. A simulation model is carried out where firms select partners and learn from them, which further shapes their selection process. The results reveal that in both regimes richer technological opportunities and higher tacitness generates local and global star firms depending on the parameter range.
    Date: 2007
  9. By: Annette Bongardt (Universidade Moderna); Francisco Torres (IEE, Universidade Católica Portuguesa)
    Abstract: In order to ensure that the internal market delivers (growth, jobs) in the face of a changing market and technological environment (internal market liberalisation, globalisation, the knowledge-based economy) and to take advantage of the opportunities that it presents, the European Union (EU) needs to create an adequate institutional framework that promotes its efficiency potential and adaptive capacity. In the reality of European mixed economies, its capacity to solve the structural problems that impair productivity and economic growth in Europe hinges very much on governance, in particular when reforms to realise international synergies and complementarities or policy-learning with a view to common goals involve not only the EU but as well the Member State level. The Lisbon Agenda can be considered an exercise of policy coordination that needs to ensure that Member States’ over-regulated economies comply both with liberalisation in the Single Market and with an adequate European-wide institutional environment for sustainable growth without coordination mismatches, protectionism and market segmentation. This ultimately raises the question, central to this paper, of the adequate governance level and of the regulatory model to adopt (systems competition and/or European regulation).
    Keywords: Economic Integration; Governance; European Union; Single Market; Lisbon Agenda; Open method of coordination; Liberalisation; Regulatory model; Growth and competitiveness.
    JEL: F15 P48 F50 H73
    Date: 2007–02
  10. By: Bronwyn Hall (Institute for Fiscal Studies and University of California, Berkeley)
    Abstract: Measuring the private returns to R&D requires knowledge of its private depreciation or obsolescence rate, which is inherently variable and responds to competitive pressure. Nevertheless, most of the previous literature has used a constant depreciation rate to construct R&D capital stocks and measure the returns to R&D, a rate usually equal to 15 per cent. In this paper I review the implications of this assumption for the measurement of returns using two different methodologies: one based on the production function and another that uses firm market value to infer returns. Under the assumption that firms choose their R&D investment optimally, that is, marginal expected benefit equals marginal cost, I show that both estimates of returns can be inverted to derive an implied depreciation rate for R&D capital. I then test these ideas on a large unbalanced panel of US manufacturing firms for the years 1974 to 2003. The two methods do not agree, in that the production function approach suggests depreciation rates near zero (or even appreciation) whereas the market value approach implies depreciation rates ranging from 20 to 50 per cent, depending on the period. The concluding section discusses the possible reasons why this is true.
    Date: 2006–11
  11. By: Jyrki Ali-Yrkkö
    Abstract: This study analyses the motives and results of outsourcing. According to the results, companies have pursued outsourcing for a variety of reasons. Cost savings are the major driving force behind the outsourcing of production function. Increased flexibility, focusing and additional capacity are other important motives. In most cases, R&D outsourcing is driven by knowledge acquisition, but increasing R&D capacity and increasing flexibility are also important motives. In addition to outsourcing motives, another major result of the study concerns the results of out-sourcing. Approximately 50% of companies have completely achieved the original goals of outsourcing. Moreover, the targeted cost savings have been completely achieved in 40% of cases.
    Date: 2007–02–12
  12. By: Eleonora Di Maria (University of Padova); Stefano Micelli (University of Venice)
    Abstract: Italian industrial districts are no longer self-contained systems of small firms, where firms' competitiveness is the result of physical proximity and links with global economy are limited to export sales. A new generation of firms is taking the lead, reshaping the form of districts through their innovative strategies focused on R&D, design and ICT. Most of these firms are leaders within their markets and organize their value chains by coupling district knowledge and competencies with opportunities offered by globalization processes. The rise of these open networks contributes to the transformation of industrial districts and the real drivers of the district firm's competitiveness. Based on a survey of 650 Italian SMEs from 41 Italian districts, the paper describes the characteristics of this new firm model, compared to the traditional district one. The paper also discusses implications for districts in terms of innovation dynamics and governance.
    Keywords: district firms, open networks, global value chain, innovation, governance
    Date: 2007–02

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