Absorptive Capacity and Innovation in the Knowledge Intensive Business Service Sector

Posted: 7 Jul 2010

See all articles by Andreas Koch

Andreas Koch

Institute for Applied Economic Research (IAW)

Harald Strotmann

Pforzheim University

Date Written: October 31, 2008

Abstract

Innovative activity is performed to a considerable extent in the service sector, namely within the so-called knowledge intensive business services (KIBS). Particularly emphasizing the role of absorptive capacity, we analyze possible determinants of incremental and radical firm innovation using firm micro data from the KIBS Foundation Survey. The results show that access to knowledge through networking and cooperation is of utmost importance for innovative activity in the KIBS sector. Access to knowledge from universities and research institutions is particularly important for radical innovation, notwithstanding the degree of formality of cooperation. In contrast, access to knowledge from clients or suppliers only has a significant impact on the probability to innovate if the cooperation with these partners is based on formal cooperation via joint projects or formal cooperation contracts. Furthermore, we find empirical evidence for a positive correlation between KIBS firms and clients from the manufacturing sector: these stimulate in particular incremental, but also radical innovation.

Keywords: Innovation, Absorptive capacity, Knowledge intensive business services, Networking Technological opportunities, Germany

JEL Classification: D83, L89, O31

Suggested Citation

Koch, Andreas and Strotmann, Harald, Absorptive Capacity and Innovation in the Knowledge Intensive Business Service Sector (October 31, 2008). Economics of Innovation and New Technology, Vol. 17, No. 6, 2008, Available at SSRN: https://ssrn.com/abstract=1635201

Andreas Koch (Contact Author)

Institute for Applied Economic Research (IAW) ( email )

Ob dem Himmelreich 1
Tubingen, 72074
Germany

Harald Strotmann

Pforzheim University ( email )

Tiefenbronner Str. 65
75175 Pforzheim
Germany

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