Abstract

Successful innovation depends on the management of a firm’s incoming and outgoing knowledge flows. Managing knowledge is a challenging task, since firms are faced with a dilemma. On the one hand, firms profit from the knowledge of other firms, in that they can advance their own technology. On the other hand, knowledge is often only valuable if it is privately held, and others are excluded from its usage. Knowledge that is asymmetrically distributed among firms allows the firm that disposes the specific knowledge to appropriate rents. However, knowledge is also inherently a public good, which implies that it is flux – its possession does not imply natural excludability of others (Arrow, 1962). Hence, firms must make a decision (a) to take actions to keep knowledge as a private good (Liebeskind, 1997), (b) freely reveal the knowledge, or (3) stay passive by neither actively preventing nor supporting knowledge spill out. This paper empirically investigates if in an environment within which spillovers are considerable, firms regulate outflows more or less strongly whereby we propose a “take and give” approach rather than a “knowledge absorption” approach.

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