nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2010‒04‒17
eleven papers chosen by
Laura Stefanescu
European Research Centre of Managerial Studies in Business Administration

  1. The Strategic Use of Architectural Knowledge by Entrepreneurial Firms By Carliss Y. Baldwin
  2. Innovation input and innovation output: differences among sectors By Lesley Potters
  3. Entrepreneurship, Innovation and Economic Growth - past experience, current knowledge and policy implications By Braunerhjelm, Pontus
  4. Recombinant Knowledge and Growth: The Case Of Icts By Antonelli Cristiano; Krafft Jackie; Quatraro Francesco
  5. The Role of Knowledge in Regional Development. Theoretical Considerations and the Case of the Austrian-Hungarian Border Region By Melinda Smahó
  6. Property rights in the knowledge economy: an explanation of the crisis By Ugo Pagano; Maria Alessandra Rossi
  7. On Positional Consumption and Technological Innovation– an Agent-based Approach By João Bernardino; Tanya Araújo
  8. How does knowledge matter patenting inventions? By Ana Pérez-Luño; Ramón Valle-Cabrera
  9. Importance of Technological Innovation for SME Growth - Evidence from India By Bala Subrahmanya, M. H.; Mathirajan, M.; Krishnaswamy, K. N.
  10. Managing innovation systems in transition economies By Tomislav Baković
  11. Heterogeneous Distributions of Firms Sustained by Innovation Dynamics – a model with an empirical application By Andersson, Martin; Johansson, Börje

  1. By: Carliss Y. Baldwin (Harvard Business School, Finance Unit)
    Abstract: This paper describes how entrepreneurial firms can use superior architectural knowledge of a technical system to gain strategic advantage. The strategy involves, first, identifying "bottlenecks" in the existing system, and then creating a new architecture that isolates the bottlenecks in modules. An entrepreneurial firm with limited financial resources can then focus on supplying superior bottleneck components, and while outsourcing non-bottleneck components. I show that a firm pursuing this strategy will have a higher return on invested capital (ROIC) than competitors with a less modular design. Over time, the focal firm can drive the ROIC of competitors below their cost of capital, causing them to shrink and possibly exit the market. The strategy was used by Sun Microsystems in the 1980s and Dell Computer in the 1990s.
    Keywords: architecture, innovation, knowledge, modularity, dynamics, competition, industry evolution
    JEL: D23 L22 L23 M11 O31 O34 P13
    Date: 2010–02
  2. By: Lesley Potters (JRC-IPTS)
    Abstract: This research investigates deals with the impact of various innovation activities on innovation output by using Spanish CIS3 data on 3,247 innovative firms and applying several Knowledge Production Functions. It is confirmed that different innovation activities lead to differences in both the propensity to innovate and innovation output, depending on the technological characteristics a firm has. In general, internal R&D leads to product innovation, while machinery acquisition leads to process innovation. Size, group belonging and protection of innovations are important determinants for innovation output, but show either a positive or negative relation, depending again on the firm's innovation strategy.
    Keywords: R&D, innovation, Knowledge Production Function, double sample selection
    JEL: O33
    Date: 2009–06
  3. By: Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Considerable advances, even breakthroughs, have been made during the last decades in our understanding of the relationship between knowledge and growth on one hand, and entrepreneurship and growth on the other. Similarly, more profound insights have also been gained as to how entrepreneurship, innovation and knowledge are interrelated. Yet, a comprehensive understanding is still lacking concerning the interface of all of those variables: knowledge, innovation, entrepreneurship and growth. The link between the micro-economic origin of growth and the macro-economic outcome is still too rudimentary modeled to grasp the full width of these complex and intersecting forces. The main objective of this paper is hence to shed light on recent advances in our understanding of the forces that underpin the creation of knowledge, its diffusion and commercialization through innovation, and the role of the entrepreneur in the growth process. The policy implications of recent research findings conclude this survey. Particularly important policy implications refer to the design of regulation influencing knowledge production, ownership, entry barriers, labor mobility and (inefficient) financial markets. They all have implication for the efficient diffusion of knowledge through entry. Knowledge creation has to be matched by incentives that induce mechanisms to convert knowledge into societal and useful needs.
    Keywords: Entrepreneurs; knowledge; innovation; growth; policy
    JEL: O31
    Date: 2010–04–10
  4. By: Antonelli Cristiano (University of Turin); Krafft Jackie; Quatraro Francesco (University of Turin)
    Date: 2010–04
  5. By: Melinda Smahó (Hungarian Academy of Sciences Centre for Regional Studies, West-Hungarian Research Institute)
    Abstract: Economic growth and development theories have neglected the role of knowledge and space for a long time. However, it is widely accepted that knowledge has played a more and more important role in economic development, and – due to its spatial characteristics – also in regional development. The aim of this paper is to explore the role and some spatial characteristics of knowledge, as well as their impact on regional development, also in regard to border regions. After some theoretical considerations, the paper investigates some features and cross-border cooperations of knowledge holders in the Austrian-Hungarian border region.
    Keywords: knowledge, universities, cross-border cooperation, Austrian-Hungarian border region
    Date: 2010–01–22
  6. By: Ugo Pagano; Maria Alessandra Rossi
    Abstract: Some of the roots underlying the recent crisis may be found in the global convergence towards a model characterized by strong property rights and an extremely limited role attributed to "open science". The modern economy has increasingly moved from an open science - open markets model toward a closed science - closed markets model. Paradoxically, while a non-rival resource like knowledge becomes the most relevant input, small firms and new entrants find it increasingly difficult to be competitive with large and well established organizations. Such a model is progressively increasing the costs of investment in new knowledge, with important negative consequences in terms of overall performance of the economy. We argue that in the knowledge economy, overcoming inequality and the economic crisis can be part of a single coherent policy. If some essential knowledge is moved from the private to the public sphere, this is has not only desirable inequality-decreasing consequences but can also contribute to re-launching the economy, creating the conditions for a sustained development. In a knowledge economy, a super-multiplier could couple the traditional effects of Keynesian spending in time of crisis with the multiplying virtues human knowledge, moved from the private to the public sphere.
    JEL: D21 F21 J24 L25 L43
    Date: 2010–03
  7. By: João Bernardino; Tanya Araújo
    Abstract: Positional behavior is a source of externalities and sets limits to wellbeing. Remedies against this market failure are defended by some authors and rejected by others, while the core of the discussion rests on the benefits and costs of applying economic instruments. One of the issues discussed is the role that the competition for positional goods may have in generating technological innovation. This paper aims to contribute to the understanding of this process by analyzing an agent-based model. We observe a plausible structure of the dynamics behind the process of generation of technological innovation by positional consumption and obtain results on the influence of some key factors on the pace of innovation, particularly those of income inequality, the Hirsch conjecture of relative increase of positional consumption with affluence, and consumer network and social neighborhood sizes.
    Keywords: Positional consumption, innovation, agent-based models, Robert Frank
    Date: 2010–01
  8. By: Ana Pérez-Luño (Department of Business Administration, Universidad Pablo de Olavide); Ramón Valle-Cabrera (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: While there is robust empirical evidence that firm patenting is positively associated with various measures of overall performance and competitiveness, less is known about what determines the patenting choice. For this reason, this paper examines whether R&D expenditure and the type of knowledge used in the invention determine the decision to patent. With this aim, we use a sample of firms and the European Patent Office to analyse how the combination of R&D expenditure and knowledge codifiability, observability and simplicity influences the patent decision. Our results contribute to the literature and assist R&D managers by showing that both R&D and codified knowledge have a positive impact on the number of inventions patented by a firm, while observable knowledge has a negative impact on patents. Furthermore, we find that the effect of R&D expenditure on the propensity to patent inventions is negatively moderated by knowledge observability and simplicity.
    Keywords: : R&D, patents, knowledge, invent
    Date: 2010–03
  9. By: Bala Subrahmanya, M. H. (Indian Institute of Science); Mathirajan, M. (Anna University); Krishnaswamy, K. N. (Indian Institute of Science)
    Abstract: This paper probes the drivers, dimensions, achievements, and outcomes of technological innovations carried out by SMEs in the auto components, electronics, and machine tool sectors of Bangalore in India. Further, it ascertains the growth rates of innovative SMEs vis-a-vis noninnovative SMEs in terms of sales turnover, employment, and investment. Thereafter, it probes the relationship between innovation and growth of SMEs by (i) estimating a correlation between innovation sales and sales growth, (ii) calculating innovation sales for high, medium, and low growth innovative SMEs and doing a one-way ANOVA, and (iii) ascertaining the influence of innovation sales, along with investment growth and employment growth on gross value-added growth by means of multiple regression analysis. The paper brings out substantial evidence to argue that innovations of SMEs contributed to their growth.
    Keywords: technological innovations, sales growth, auto components, electronics, machine tools, Bangalore
    JEL: L25 L26
    Date: 2010
  10. By: Tomislav Baković (Faculty of Economics and Business, University of Zagreb)
    Abstract: Successfully managing innovations has become the basic precondition for the development of both companies and national economies. At the national level governments are forming innovation systems whose primary goal is to create conditions at which science and technology can flourish and then transfer their findings trough private sector into new revolutionary products and services. Unfortunately not all countries have the same preconditions for creating such systems and transition economies due to many of their characteristics face serious difficulties. The aim of this paper is to first describe the role of innovations and innovation systems in economic development and then describe many problems transition countries face regarding this issue. After describing the main problems some of the measures that could be used to improve the current innovation output in transition economies are presented.
    Keywords: national innovation system, economic development, transition economies
    JEL: O30
    Date: 2010–03–17
  11. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper develops a framework to appreciate the observed heterogeneity of firm size distributions and the entry and exit of products and firms associated with it. It is based on a model where new products are introduced by innovating firms in a quasi-temporal setting of monopolistic competition. The rate at which a firm innovates, according to a firm-specific Poisson process, is assumed to be influenced by the firm’s past experience and cumulated knowledge assets. The model assigns a fundamental role to entrepreneurship of existing and potential firms. The empirical analysis is based on detailed firm-level export data, which describes firm size in terms of products and markets, and firm dynamics in terms of changes in the supply pattern (varieties and markets) of existing firms in combination with entry/exit of firms. The empirical results are consistent with the model. First, the modeled innovation process imply a persistent distribution of heterogeneous firms. Second, the invariant size distribution of firms is associated with significant micro-dynamics, where firms continuously add and subtract varieties from their product mix, and new firms may enter while some exit. Third, an econometric analysis where firms’ introduction of new varieties is explained by firm attributes provides support for the assumption of a firm-specific and state-dependent stochastic innovation process.
    Keywords: innovation; firm heterogeneity; size distribution; entry; exit; dynamics;
    JEL: F12 L11 L26 O31
    Date: 2010–02–11

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