nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2012‒11‒11
five papers chosen by
Laura Stefanescu
European Research Centre of Managerial Studies in Business Administration

  1. Knowledge outflows from foreign subsidiaries: The tension between knowledge creation and knowledge protection By Alessandra Perri; Ulf Andersson
  2. Directed technological change: It's all about knowledge By Hart, Rob
  3. Rapid Innovation Diffusion with Local Interaction By Gabriel E. Kreindler; H. Peyton Young
  4. Innovation and e-commerce in clusters of small firms: The case of a regional e-marketplace By Eleonora Lorenzini
  5. Liquidity, Innovation and Growth By Aleksander Berentsen; Mariana Rojas Breu; Shouyong Shi

  1. By: Alessandra Perri (Department of Management, Università Ca' Foscari Venezia); Ulf Andersson (Department of Strategic Management and Globalization, Copenaghen Business School)
    Abstract: This paper analyzes the MNC subsidiaries' trade-off between the need for knowledge creation and the need for knowledge protection, and relates it to the extent of knowledge outflows generated within the host location. Combining research in International Business with Social Theory, we find that subsidiaries that extensively draw on external knowledge sources are also more likely to generate knowledge outflows to local firms. We argue that this may be explained by the subsidiariesÕ willingness to build the trust that facilitates the establishment of reciprocal knowledge linkages. However, when the value of the subsidiary's knowledge stock is very high, the need for knowledge protection restrains reciprocity mechanisms in knowledge exchanges, thus reducing the extent of knowledge outflows to the host location. This study contributes to the literature on the firm-level antecedents of FDI-mediated local knowledge outflows, as well as to the broad IB literature on the relationship between subsidiaries and their host regions. The implications for managers and policy-makers are also discussed.
    Keywords: local knowledge outflows, FDI, knowledge creation, knowledge protection
    JEL: O32 M16
    Date: 2012–10
  2. By: Hart, Rob (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: Directed technological change concerns how stocks of factor-augmenting knowledge evolve relative to each other. In a simple framework we show that relative investment rates depend directly on the relative factor shares, and that the resulting evolution of the economy depends on the substitutability between the factors and the nature of the links between the knowledge stocks. We thus generalize and reinterpret existing results. Furthermore, we propose a novel model of spillovers between stocks of factor-augmenting knowledge which results in multiple equilibria when the factors are substitutes. This may have profound implications for the modelling of technological transitions\m such as from `dirty' to `clean' technology, or from low-skill/low-tech to high-skill/high-tech production systems\m and hence for modelling long-run economic change in general.
    Keywords: Growth; directed technological change; knowledge spillovers.
    JEL: O11 O33
    Date: 2012–05–04
  3. By: Gabriel E. Kreindler; H. Peyton Young
    Abstract: The diffusion of an innovation can be represented by a stochastic process in which agents choose noisy best responses to what their neighbors are currently doing. Diffusion is said to be fast if the expected time until a majority of agents play the stochastically stable (risk-dominant) equilibrium scales with the size of the network. Previous work has identified specific topological properties of networks that result in fast diffusion. Here we derive topology-free bounds such that diffusion is fast in any network with a given degree distribution (and no restriction on the topology), so long as the payoff gain from the innovation is sufficiently high and the response function is moderately noisy. In particular for the logit response function it suffices that the error rate be on the order of 5% and the payoff gain on the order of 80% to achieve fast diffusion in any regular network.
    Keywords: Innovation diffusion, Convergence time, Local Interaction
    JEL: C72 C73
    Date: 2012
  4. By: Eleonora Lorenzini (Department of Economics and Management, University of Pavia)
    Abstract: This paper draws on the literature on innovation in clusters and e-commerce to investigate how a particular kind of innovation project, the establishment of a regional e-marketplace (REM), may contribute to regional development. Using a firm-centred perspective, the role of geographical and cognitive proximity, absorptive capacity and other firm characteristics in the adoption and development of this particular type of innovation project is assessed. Hypotheses are tested with reference to the case of an REM recently established in the Italian area of Valtellina. The policy implications of the study are that REMs deserve support as an instrument of territorial development both in the establishment and in the implementation phase, more with “soft policies” than with “hard policies”.
    Keywords: clusters, innovation policy, e-commerce, proximity, Italy
    Date: 2012–10
  5. By: Aleksander Berentsen; Mariana Rojas Breu; Shouyong Shi
    Abstract: Many countries simultaneously suffer from high inflation, low growth and poorly developed financial sectors. In this paper, we integrate a microfounded model of money and finance into a model of endogenous growth to examine the effects of inflation on welfare, growth and the size of the financial sector. A novel feature is that the innovation sector is decentralized. Financial intermediaries arise endogenously to provide liquidity to this sector. Consistent with the data but in contrast to previous work, reducing inflation generates large growth gains. These large gains cannot be easily reproduced by imposing a cash-in-advance constraint in the innovation sector.
    Keywords: Inflation; Growth; Search; Innovation; Credit.
    JEL: E5 O42
    Date: 2012–11–04

This nep-knm issue is ©2012 by Laura Stefanescu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.