Division of Interfirm Activities in the Knowledge-Based Economy: The Crucial Role of Knowledge Processors

Division of Interfirm Activities in the Knowledge-Based Economy: The Crucial Role of Knowledge Processors

Poul Houman Andersen (University of Aarhus, Denmark)
DOI: 10.4018/978-1-60566-270-1.ch004
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Abstract

In order to capture market dividends and stay at par with the competition in the knowledge-based economy, firms must constantly develop their skill profile. There is considerable scope for learning through interfirm learning processes. However, the uncertain and costly nature of this process hampers exchange of knowledge in interfirm networks. This opens up for a new form of intermediary specialised in the absorption, generation, and dissemination of knowledge: the knowledge processor. This contribution addresses the core strategic issues faced by this type of firm, and illustrates the process through a case study of a knowledge processor.
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Introduction

In the current debate, the role of learning and knowledge is repeatedly stressed as a distinguishing feature of the new economic realities. Several contributions point at the importance of knowledge and learning as the true generators of economic growth (Freeman & Soete, 1997; Romer, 1995). Knowledge has always been central to production activities, and it may therefore seem inaccurate to use this term to describe the present state of affairs in economic development as compared to the “old economy.” However, a distinguishing mark today is that firms can no longer rely on a relatively stable set of skills and resources for capturing market dividends, but must constantly renew their knowledge for to stay at least at par with the competition (Lundvall & Foray, 1996).

The single most important distinguishing factor of the learning or knowledge-based economy1 is the widespread utilisation information and communication technology networks, which has made possible an economy in which trade and specialisation are driven by the supply-side learning behaviour of specializers (Storper & Salais, 1997). Maintaining competitiveness is increasingly linked to the range and speed of innovation in the globalizing marketplace. The competitive stance of the single firm hinges upon its ability to outpace the imitation and catch-up attempts of competitors by constantly renewing and generating knowledge as well as capturing knowledge from intellectual property rights. Interfirm interaction plays a crucial role in such learning processes (Lundvall, 1993). In order to survive the race for innovation and technological flexibility, firms seek external partners to exchange and develop technological capabilities (Andersen & Christensen, 2000).

Behind the alleged growing importance of learning in the economy, a new rationale for explaining interfirm division of labour is arising. Whereas traditional theory explains segregation of firm activities from potential efficiency gains from deepened specialisation, recent thinking in knowledge-based economy may explain division of labour based on incentives to learn rather than achieving gains from specialisation. This chapter contributes to this discussion by conceptualising one particular role in this new scheme of coordination: the knowledge processor. The particular competence of this firm is in the area of identifying potential learning synergies between firms with complementary learning profiles. Taking on a case study of Cotas Computer Technology, a Danish developer and manufacturer of advanced electronic control systems within the machining industry, we follow an example on how this strategic role can evolve and become organised. We use this to address more fundamental issues in the knowledge-based economy pertaining to property rights and governance structures. An overview of the chapter is provided in Figure 1.

Figure 1.

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