nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2013‒03‒16
fourteen papers chosen by
Laura Stefanescu
European Research Centre of Managerial Studies in Business Administration

  1. Service outsourcing and its effects on knowledge By Richtnér, Anders; Rognes, Jon
  2. The Governance of Knowledge By Evers, Hans-Dieter
  3. Modeling the future of knowledge economy: evidence from SSA and MENA countries By Asongu, Simplice A
  4. Firms' innovation capability-building paths and the nature of changes in learning mechanisms: Multiple case-study evidence from an emerging economy By Figueiredo, Paulo N.; Cohen, Marcela; Gomes, Saulo
  5. Are ICT, Workplace Organization and Human Capital Relevant for Innovation? A Comparative Study Based on Swiss and Greek Micro Data By Spyros Arvanitis; Euripidis N. Loukis; Vasiliki Diamantopoulou
  6. Innovation and Inclusive Development: A Discussion of the Main Policy Issues By Caroline Paunov
  7. Privatization of Knowledge: Did the U.S. Get It Right? By Cozzi, Guido; Galli, Silvia
  8. Financial constraints and the failure of innovation projects By Agustí Segarra; José García-Quevedo; Mercedes Teruel
  9. Constraints in Organizational Learning, Cognitive Load and it’s Effect on Employee Behavior By Chatterjee, Sidharta
  10. Effects of R&D spending on Innovation by Irish and Foreign-owned Businesses By Doran, Justin; Jordan, Declan; O'Leary, Eoin
  11. Which form of venture capital is most supportive of innovation? Evidence from European biotechnology companies By Bertoni, Fabio; Tykvová, Tereza
  12. Internacionalizacion y Sistema Nacional de Innovacion argentino: una perspectiva de tramas productivas. Los casos automotriz y siderurgico By Morero, Hernan Alejandro
  13. Innovation and productivity: evidence for 4 Latin American countries manufacturing industry By M. Constanza Demmel; Juan A. Máñez; María E. Rochina-Barrachina; Juan A. Sanchis-Llopis
  14. Sequential R&D and Blocking Patents in the Dynamics of Growth By Cozzi, Guido; Galli, Silvia

  1. By: Richtnér, Anders (Dept. of Business Administration, Stockholm School of Economics); Rognes, Jon (Dept. of Business Administration, Stockholm School of Economics)
    Abstract: Purpose <p> The purpose of the paper is to identify changes in different types of knowledge in a service outsourcing relationship as knowledge is transferred from the client to the provider, which correspond to the research question that guides the paper: ‘What are the effects on knowledge types when parts of service production are outsourced to a third party and knowledge is transferred?’. To answer this question we explored changes in both tacit and explicit knowledge taking place in several service outsourcing relationships. <p> Design/methodology/approach <p> A case study approach is chosen, as data is obtained from multiple levels. We studied four service outsourcing relationships, with outsourcing providers and outsourcing clients based in Europe and South-east Asia. <p> Findings <p> It is possible to identify two major changes as service outsourcing is conducted. (1) There is a change of relative importance of knowledge types; there is an increased emphasis on explicit knowledge as opposed to tacit knowledge. This is (2) caused partly due to the transfer situation and partly due to a focus on efficient mass production and a standardisation and industrialisation of the service. The focus on explicit knowledge leads to a loss of tacit knowledge. <p> Research limitations/implications <p> Our research is limited in two ways. First, we examined two countries. Thus, there are opportunities for expansion into more settings. Second, our findings can be tested by survey-type research thereby increasing the sample. <p> Practical implications <p> In a service outsourcing relationship the emphasis is most often on explicit knowledge. This is beneficial in a transaction cost relationship with standardized tasks being transferred. However, the more complex tasks being transferred the more difficult it is to clearly specify what is going to be transferred as the knowledge becomes more tacit, calling for more long-term relationships with other mechanisms for knowledge transfer of tacit knowledge in place. As a manager one need to be able to distinguish which type of relationship is wanted. <p> Originality/value <p> This paper helps to clarify what happens in a transfer situation when outsourcing is conducted. Particularly we emphasize the importance of tacit knowledge – a dimension often neglected in research – opposed to solely emphasizing explicit knowledge.
    Keywords: Service outsourcing; BPO; knowledge; knowledge transfer; service management
    Date: 2013–02–21
  2. By: Evers, Hans-Dieter
    Abstract: Knowledge has been defined as a major resource for development. Especially countries without natural resources have found this idea attractive and have embarked on development strategies to develop a knowledge-based economy. In doing so they may fall into a “knowledge trap”. The paper postulates an “epistemic backlash”, because an increase of knowledge leads to an even greater increase of ignorance, which is accompanied by an increase of risk and an increase of necessary research funds for the next stage of development. A shortage of high-level manpower is likely to occur, which will reduce the chances for further knowledge-based development. A careful governance of knowledge is needed to avoid the “knowledge trap”. Five knowledge strategies are discussed: developing an ICT infrastructure, creating knowledge-clusters, creating knowledge-hubs and centres of excellence and creating comparative advantages through the use of local knowledge. Examples are drawn and data presented from Brunei Darussalam, Indonesia, Malaysia and Singapore.
    Keywords: knowlegde governance, knowledge and development, knowledge management, develoment, policy, Brunei, Malaysia, Indonesia, Singapore
    JEL: O1 O2 Z1 Z13
    Date: 2013–02–06
  3. By: Asongu, Simplice A
    Abstract: This paper projects the future of knowledge economy (KE) in SSA and MENA countries using the four components of the World Bank’s Knowledge Economy Index (KEI): economic incentive, education, ICTs and innovation. The empirical evidence provides the speeds of integration as well as the time necessary to achieve full integration. Findings broadly indicate SSA and MENA countries with low levels in KE will catch-up their counterparts with higher levels in a horizon of 4 to 7.5 years.
    Keywords: Knowledge economy; Principal Component Analysis; Panel data; Convergence
    JEL: F42 O10 O38 O57 P0 P00
    Date: 2013–01–15
  4. By: Figueiredo, Paulo N. (Brazilian School of Public and Business Administration, Getulio Vargas Foundation); Cohen, Marcela (Brazilian School of Public and Business Administration, Getulio Vargas Foundation); Gomes, Saulo (Brazilian School of Public and Business Administration, Getulio Vargas Foundation)
    Abstract: Although much has been written about organizational-level learning, there is a dearth of empirical studies that explore the role of changes in the nature of firm-centred learning mechanisms in affecting inter-firm differences and similarities in the accumulation of innovation capabilities, especially among firms from emerging economies, known as latecomers. By examining the relationships between these issues based on fieldwork evidence from 13 natural resource-processing firms in Brazil (1950-2000s), this study found that: (1) firms that combined the use of external and internal learning mechanisms with increased intensity and quality achieved higher innovation capability levels than firms that used these learning mechanisms with limited frequency and unchanged quality over time; (2) the relative importance of both external and internal learning mechanisms changed as firms' capabilities approached world-leading levels; (3) some combinations of external and internal learning mechanisms were associated with the attainment of particular innovation capability levels. Therefore, if latecomer firms expend limited efforts in using and deliberately changing the intensity and, mainly, the quality of both external and internal learning mechanisms over time, they will deepen their innovation capabilities slowly and will remain innovation 'followers' rather than becoming world-leading innovators. Using a novel approach that explores the relationship between latecomer firms' innovation capability-building and the extent of changes in the underlying learning mechanisms, this paper furthers our understanding of the nature and dynamics of learning and its role as a primary source of firms' international innovation performance. It also challenges recent approaches that seem to over emphasize open learning processes and post-Chandlerian forms of learning as the leading sources of firms' innovation capabilities.
    Keywords: Innovation capability building, learning mechanisms, latecomer firms, natural resources, multiple case-study, Brazil
    JEL: O12 O32 O33 M10 Q20
    Date: 2013
  5. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Euripidis N. Loukis (University of the Aegean, Department of Information and Communication Systems Engineering, Greece); Vasiliki Diamantopoulou (University of the Aegean, Department of Information and Communication Systems Engineering, Greece)
    Abstract: This paper investigates the relationship between indicators for the intensity of use of ICT (examining three different types of ICT widely used in firms: internal, e-sales, e-procurement IS), several forms of workplace organization, and human capital on one hand, and several measures of innovation performance at firm level on the other hand, in an innovation equation framework, in which was also controlled for standard innovation determinants such as demand, competition and firm size. The empirical part is based on data of Swiss and Greek firms. This paper contributes to literature in three ways: first, it analyzes three important factors, i.e. information technology, workplace organization and human capital, which are considered to be drivers of innovation performance particularly in the last fifteen to twenty years, in the same setting, it uses several innovation indicators that cover both the input and the output side of the innovation process and, third, it does the analysis in a comparative setting for two countries, Greece and Switzerland, with quite different levels of technological and economic development.
    Keywords: ICT, workplace organization, product innovation, process innovation
    JEL: O31
    Date: 2013–03
  6. By: Caroline Paunov
    Abstract: Inclusive development is a key policy priority since growth processes have not always helped lowerincome groups. Innovation is a major driver of growth and its relationship with inequalities in income and opportunities raises some important policy questions: Do innovation and the resulting technological change necessarily lead to increased inequalities? Do policies aimed at supporting innovation foster inequalities? To what extent can innovation be mobilised to improve the life conditions of the lower income groups? These questions are the basis of this report, which, prepared for the OECD-DST Conference on Innovation for Inclusive Development, reviews the existing evidence in response.<P>L'innovation et le développement inclusif : une discussion des principales questions politiques<BR>Le développement inclusif est une priorité politique importante car la croissance économique ne bénéficie pas toujours aux groupes à faible revenu. L'innovation est un moteur de la croissance, et sa relation avec les inégalités de revenus et d'opportunités soulève des questions majeures : l'innovation et le changement technologique qui en résulte conduisent-ils nécessairement à l'accroissement des inégalités ? Les politiques visant à soutenir l'innovation conduisent-elles à une augmentation des inégalités ? Dans quelle mesure l'innovation peut-elle être mobilisée pour améliorer les conditions de vie des groupes à faible revenu ? Ces questions sont au départ du présent rapport, préparé pour la Conférence de l'OCDE et du DST sur l'innovation et le développement inclusif, qui passe en revue les informations et connaissances existantes sur le sujet.
    Keywords: inclusive, frugal and grassroots innovations, inequalities in income and opportunities, within-country innovation and productivity dispersion, ICTs for inclusive development, developing and emerging economies, innovation, inclusives, frugales et « grassroots », inégalités de revenus et d’opportunités, dispersions d’innovation et de productivité à l’intérieur des pays, TICs pour le développement inclusif, les économies en développement et émergentes
    JEL: D20 I30 L30 O10 O30
    Date: 2013–01–29
  7. By: Cozzi, Guido; Galli, Silvia
    Abstract: To foster innovation and growth should basic research be publicly or privately funded? This paper studies the impact of the gradual shift in the U.S. patent system towards the patentability and commercialization of the basic R&D undertaken by universities. We see this movement as making universities becoming responsive to "market" forces. Prior to 1980, universities undertook research using an exogenous stock of researchers motivated by "curiosity." After 1980, universities patent their research and behave as private firms. This move, in a context of two-stage inventions (basic and applied research) has an a priori ambiguous effect on innovation and welfare. We build a Schumpeterian model and match it to the data to assess this important turning point.
    Keywords: R&D and Growth, Sequential Innovation, Basic Research, Patent Laws
    JEL: O31 O34 O41
    Date: 2013–03
  8. By: Agustí Segarra (Research Group of Industry and Territory, Department of Economics and CREIP, Universitat Rovira i Virgili, Av. Universitat, 1; 43204 – Reus (Spain)); José García-Quevedo (Department of Public Economics and Barcelona Institute of Economics (IEB), University of Barcelona, Av. Diagonal 690; 08034 – Barcelona (Spain)); Mercedes Teruel (Research Group of Industry and Territory, Department of Economics and CREIP, Universitat Rovira i Virgili, Av. Universitat, 1; 43204 – Reus (Spain))
    Abstract: Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints.
    Keywords: barriers to innovation, failure of innovation projects, financial constraints
    JEL: O31 D21
    Date: 2013–03
  9. By: Chatterjee, Sidharta
    Abstract: Traditionally, learning organizations face certain constraints related to both exogenous and endogenous factors. In this paper, I model three well established constraints that employees face while being part of their organizations. These are in the tune of constraints on their natural behavior which is explicit, and two implicit constraints on their endeavor to acquire new knowledge and perform new actions. The implicit constraints which are elaborated, is related to their relative performance in acquiring new knowledge and by their consecutive actions based on the new knowledge gained. This paper, so forth, attempts to underline such limitations which the agents face under organizational culture and suggest possible strategic initiatives that would effectively counteract such binding limitations to stimulate positive performances from their end.
    Keywords: Organizational learning, constraints, employee behavior, cognitive load, knowledge, organizational adaptation
    JEL: L20 M14 M51
    Date: 2013–01–11
  10. By: Doran, Justin; Jordan, Declan; O'Leary, Eoin
    Abstract: This paper estimates the private returns to four different kinds of R&D spending on the probability of Irish and foreign-owned businesses engaging in product, process and organizational innovation. By providing econometric analysis of nearly 2000 businesses in the Community Innovation Survey: 2004 to 2006, it makes an important contribution to our understanding of the effects of Irish innovation policy, which has incentivized businesses to spend on R&D in Ireland. The main findings are that Irish owned businesses are significantly more likely than foreign-owned to introduce new products as a result of creative R&D work undertaken. Foreign-owned businesses, which spend nearly 6 times more per worker on R&D than Irish-owned, enjoy very high returns mostly from the purchase or licence of patents. This reflects a fundamental difference in the innovation activities of these businesses, which is critical for policymakers’ understanding of the Irish innovation system.
    Keywords: Innovation Policy; Innovation Output; Research & Development
    JEL: O31 R19
    Date: 2013
  11. By: Bertoni, Fabio; Tykvová, Tereza
    Abstract: We argue that different forms of venture capital contribute differently to the innovation process and, consequently, differ in their impact on portfolio companies' innovation output. Our results suggest that the innovation output of companies financed by independent VCs increases significantly faster than that of both non-VC-backed companies and of companies financed by governmental VCs. However, governmental VCs may be beneficial for innovation by complementing the skills and resources provided by an independent VC in a heterogeneous syndicate. --
    Date: 2013
  12. By: Morero, Hernan Alejandro
    Abstract: In recent decades the highlighted characteristics of the economic and techno-productive context involves an increasing degree of internationalization: a large expansion of international trade flows, capital, technology and information, greater interconnection between socio-institutional and production systems of nations, and an important transnationalization of the major economic actors. In this context, the Thesis inquires into the relevance of the domestic sources of knowledge for the innovative performance of firms that perform in internationalized production activities in an emerging economy, such as Argentina. Addressing this problem involves asking about the way in which the internationalization of production affects the National System of Innovation (NSI). More precisely, we wonder about its ability to affect the innovative performance of firms in internationalized production activities in a developing economy. In fact, a recurrent issue in the NSI’s literature is the way which the national dimension of the Systems of Innovation (SI) is affected by the phenomenon of internationalization of production and, within this problem and in this context, the relative relevance of domestic sources of production of knowledge for innovation (Lundvall, 2007, 1992, Johnson 1992, Nelson, 1993; López, 1996; Chudnovsky, 1999; Balzat and Hanusch 2004). The literature that studies the SI’s internationalization has pointed two main conclusions (Carlsson, 2006): first, empirically the growing internationalization of the ISs, and, secondly, the national institutions maintain their importance in supporting innovative activity, even in activities increasingly internationalized. However, this literature focuses mainly on developed countries. Then, the general concern of this paper is if a developing country, like Argentina, which is far from the international technological frontier, the NSI, the national institutions and the domestic sources of generation of knowledge, remain important for the support of innovative activity, or if, on the contrary, its significance is marginal in highly internationalized production activities. The main objective of the Thesis is to study the way in which the National System of Innovation (NSI) affects the innovation capabilities in internationalized production activities from an emerging economy. Particularly, to analyze the importance of the NSI and the relative relevance of the domestic sources of knowledge for the innovative performance of firms that operates in internationalized production activities in an emerging economy, as Argentina. A National System of Innovation approach from a Production Network (PN) perspective is adopted to analyze two internationalized PNs in Argentina: The Automotive (APN), organized around foreign subsidiaries of Multinational Companies (MNCs); and the Iron and Steel (IPN), organized around a domestic MNC’s headquarter. In that sense, a second specific objective is to analyze if the relevance of NSI and the domestic knowledge sources for innovation differs between internationalized PN organized around MNC’s foreing subsidiaries, or around local headquarters. The main idea that guides the research is that the national dimension of the NSI is relevant to the processes of accumulation and generation of knowledge even in internationalized PN. It follows the first hypothesis of the research: it is expected that even in internationalized PNs, the firms that complement their external knowledge with domestic knowledge, will have better innovative performance than those firms with sources of knowledge that remain mainly external and foreign. However, this importance will vary according to the particular characteristics regarding the type of internationalization of each PN. In particular, by of the importance of the tacit dimension of knowledge rooted in the nation, in the internationalized PNs whose cores are local, the importance of the NSI for the generation and accumulation of knowledge of the companies will be higher, respect to the internationalized PNs whose cores are outside the country; which is the second hypothesis of the Thesis. A qualitative and a quantitative analysis were done to deal with these hypotheses. The qualitative analysis involves an historical approach though secondary sources of the internationalization process in both PN, and a structural characterization of each PN at the moment of the data of quantitative analysis (2006). The chapter II presents the historical evolution of Argentina's APN focusing on its internationalization’s process. This analysis tries to emphasize the character that the globalization process acquired in this network from its beginnings, and the relative importance that acquired the domestic and foreign elements in this processes. This will involve analyze the process of development of the production network’s cores, the development of their supply chain, the evolution of the trade, technological and production flows, and the impact of the sectoral policy. The analysis will follow five parts: the first covers the period between 1920 and 1950, characterized by the installation of the firsts assembly plants; the second between 1951 and 1958, when began the domestic production driven by the State; the third between 1959 and 1974, characterized by the domination of the network by foreign automakers; the fourth between 1975 and 1990, where the domestic institutional and macroeconomic instability led to a deep crisis in the network; and finally, the fifth between 1990 and 2006, characterized by the approaching of the local production network to the international technological frontier and its final integration into the global production chain. The chapter ends with a static characterization of the APN at 2006 year. The chapter III presents the historical evolution of the IPN focusing on their internationalization process. The analysis follow to three time periods: the first one covers the period between 1940 and 1975, when the gestation of the core companies was carried on by the state and there existed a public - private articulation, which was fully focused on supplying the domestic market; the second one covers from 1975 to 1990, with the incorporation of private actors as integrated factories, and the start of commercial internationalization through exports; and finally, the third one, from 1990 to 2006, was characterized by the privatization of state-owned companies, and by the productive internationalization -via FDI- to the rest of the world. The chapter ends with a static characterization of the IPN at 2006 year. Chapter IV presents the quantitative analysis. A Multiple Factor and a Cluster Analysis were carried out using data for 163 firms from a specific technological survey. A different innovative performance was identified according to the complementarities of knowledge sources: The best performance is positively related to a certain balance between domestic and foreign sources, although in the IPN case the international linkages are less important. The findings of this empirical paper are confirmatory of the working hypothesis in the following direction: i) the level of internationalization of industrial activities does not reduce nor extinguishes the importance of national sources of knowledge; ii) for those internationalized PNs organized around domestic MNCs’ headquarters, the best innovative performance underlines the relevance of some foreign knowledge sources, as regards PNs organized around foreign subsidiaries. Chapter V summarizes the main conclusions of the Thesis, were the qualitative analysis from chapters II and III adds elements to enlighten and to a better understanding of the quantitative results.
    JEL: B52 L6 L61 L62 O14 O31
    Date: 2013–02–08
  13. By: M. Constanza Demmel (Universitat de València and ERI-CES); Juan A. Máñez (Universitat de València and ERI-CES); María E. Rochina-Barrachina (Universitat de València and ERI-CES); Juan A. Sanchis-Llopis (Universitat de València and ERI-CES)
    Abstract: The literature on firm level productivity in developed countries recognizes the important role played by firm innovation activities on the evolution of firm productivity. However, the literature on this topic for developing and emerging economies is scarcer and far from conclusive. The aim of this paper is to study the innovation-productivity link at the firm level for four Latin American countries (Argentina, Mexico, Colombia and Peru) for the manufacturing sector. The paper distinguishes between different innovations types such as process and product innovations. The data used have been drawn from the World Bank panel Enterprise Surveys, which provides data for these countries for the years 2006 and 2010. Our estimation strategy follows two-steps: first, we estimate TFP measures following De Loecker (2010) approach and Wooldridge (2009) estimation procedure (this allows us to compare results both considering an exogenous or endogenous Markov process for the dynamics of productivity); and, second, we use the estimated TFPs as dependent variables in several models with innovation activities as covariates, in order to disentangle the effects of those variables on the TFP. From our results we confirm that the most productive firms self-select into innovation activities under the endogenous Markov, driven by product innovations, only for Argentina and Mexico. Further, we obtain that there are returns to innovation in terms of productivity for all innovation types, under an exogenous or endogenous Markov process but, again, only for Argentina and Mexico.
    Keywords: innovation types, Total Factor Productivity (TFP), GMM, endogenous Markov
    Date: 2013–03
  14. By: Cozzi, Guido; Galli, Silvia
    Abstract: The incentives to conduct basic or applied research play a central role for economic growth. How does increasing early innovation appropriability affect basic research, applied research, innovation and growth? In a common law system an explicitly dynamic macroeconomic analysis is appropriate. This paper analyzes the macroeconomic effects of patent protection by incorporating a twostage cumulative innovation structure into a quality-ladder growth model with skill acquisition. We focus on two issues: (a) the over-protection vs. the under-protection of intellectual property rights in basic research; (b) the evolution of jurisprudence shaping the bargaining power of the upstream innovators. We show that the dynamic general equilibrium interactions may seriously mislead the empirical assessment of the growth effects of IPR policy: stronger protection of upstream innovation always looks bad in the short- and possibly medium-run. We also provide a simple "rule of thumb" indicator of the basic researcher bargaining power.
    Keywords: Endogenous Growth, Basic and Applied Research, Endogenous Technological Change, Common Law.
    JEL: O31 O33 O34
    Date: 2013–03

This nep-knm issue is ©2013 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.