2. Knowledge Spillovers in High-tech Clusters in Developing Countries Effie Kesidou (Ecis) Eindhoven Centre for Innovation Studies (TU/e) Eindhoven University of Technology Ph.D.-School on National Systems of Innovation and Economic Development

3. Local Knowledge Spillovers (LKS) LKS are positive externalities which derive from the inability of a firm A to retain the full product of its innovative activity. Thus, firm B may take advantage of the new product directly and without compensating firm A. Is Innovation a local process? Economic Geography: LKS are the reason for the clustering of economic activity (Jaffe 1989, 1993, Audretsch and Feldman 1992). Tacit Knowledge cannot be codified. Rather it is exchanged locally through face-to-face interaction.

4. Territorial TheoriesSources of Clustering or Innovation New Economic Geography Advantages related to Transaction Cost Economic Geography Knowledge Spillovers Porter’s Cluster Theory Competion & economies of agglomeration New Industrial Spaces Economies of agglomer. & institutions/ culture Industrial District Economies of agglomer. & social embeddedness Innovative Milieux Local Institutions that support Innovation Regional Systems of Innovation Formal Institutions that target Innovation Learning Region Emphasis on the role of social/cultural environment

5. Critic The relationship of patents-patent citations as well as R&D-innovation output constitutes an inderect evidence of the presence and strength of LKS (Breschi and Lissoni 2001). Does knowledge circulates freely within the cluster (Zucker et al 1998)? Attributes of knowledge: tacit-codifiable. This is an extreme categorisation (Cowan, David and Foray 2000). Which are the Mechanisms of Knowledge Flow?

6. Knowledge Flow Local Knowledge Spillovers ( Audretsch and Feldman 1996, Allen 1983, Lundvall 1992) Pecuniary Local Knowledge Flows (Zucker et al 1998) Non-local Knowledge Spillovers Local exchange of knowledge based on reciprocity (Von Hippel 1987 and 1994). Type of knowlede exchange Free exchange of knowledge Non-free exchange of knowledge Free exchange of knowledge Reciprocal exchange of knowledge Place of knowlede exchange Local exchange of knowledge Local exchange of knowledge Non-local exchange of knowledge Local exchange of knowledge Actors Firms- Universities/Research Institutes & Between Competitors (horizontal relation) & User-producer (Vertical relation) Firms- Universities/Research Institutes & Between Competitors (horizontal relation) & User-producer (Vertical relation) Firms- Universities/Research Institutes & Between Competitors (horizontal relation) & User-producer (Vertical relation) Between Competitors (horizontal relation)

7. Knowledge Flow Local Knowledge Spillovers (Audretsch and Feldman 1996, Allen 1983, Lundvall 1992) Pecuniary Local Knowledge Flows (Zucker et al 1998) Non-local Knowledge Spillovers Local exchange of knowledge based on reciprocity (Von Hippel 1987 and 1994). Mechanism of acquisition of external knowledge Informal exchange of knowledge between university employees and local firm employees Informal exchange of knowledge between employees of local firms Informal exchange of knowledge between employees of suppliers and users of local firms Contract agreements Consultancy R&D co-operation License or selling of proprietary technological knowledge Joint investments in training or in research. Reverse engineering Journals Trade fairs Patent disclosures Informal exchange of knowledge through communication/meeting of employees

8. Mechanisms of Learning, Knowledge Flow & Innovation Intra-firm learning Inter-firm learning Mechanisms of learning Firm’s Innovative capabilities Knowledge flow Firm’s Innovative Performance Trial-error Learning by operating Learning by changing System performance feedback Routines Learning by hiring Learning by training Learning by searching Informal meetings Trade fairs 1. Local Knowledge Spillovers 2. Pecuniary Local Knowledge Flow 3. Non-local Knowledge Spillovers 4. Local exchange of Inofrmation based on Reciprocity

9. Project outcome Identification of the mechanisms of knowledge flow within a cluster. How important are LKS vs other mechanisms of knowledge flow for firm’s technological performance? Which is the quantitative distribution of the different mechanisms of knowledge flow over firms within the cluster? Is there any correlation between absorptive capacity of firms and their choise of a particular type of knowledge flow?