Determinants of Innovative Activity in Newly Founded Knowledge Intensive Business Service Firms

Innovative activity is performed to a considerable extent in the service sector, namely within the socalled knowledge intensive business services (KIBS). Nevertheless, little is known about the determinants of innovative activity in these firms. In the present paper, some of these determinants are examined on the basis of a recently created dataset of 547 newly founded German firms (KIBS Foundation Survey 2003). The results show that the access to knowledge through cooperation and networking is an important factor determining innovative activity in the KIBS sector, whereas, surprisingly, neither managerial characteristics nor spatial proximity have general influence.

Management consulting : structure and growth of a knowledge intensive business service market in Europe

The globalisation of contemporary capitalism is bringing about at least two important implications for the emergence and significance of business services. First, the social division of labour steadily increases (ILLERIS 1996). Within the complex organisation of production and trade new intermediate actors emerge either from the externalisation of existing functions in the course of corporate restructuring policies or from the fragmentation of the production chain into newly defined functions. Second, competitive advantages of firms increasingly rest on their ability to innovate and learn. As global communication erodes knowledge advantages more quickly, product life cycles shorten and permanent organisational learning results to be crucial for the creation and maintenance of competitiveness. Intra- and interorganisational relations of firms now are the key assets for learning and reflexivity (STORPER 1997). These two aspects of globalisation help understand why management consulting - as only one among other knowledge intensive business services (KIBS) - has been experiencing such a boost throughout the last two decades. Throughout the last ten years, the business has grown annually by 10% on average in Europe. Management consulting can be seen first, as a new organisational intermediate and second, as an agent of change and reflexivity to business organisations. Although the KIBS industry may not take a great share of the national GDP its impact on national economies should not be underestimated. Estimations show that today up to 80% of the value added to industrial products stem from business services (ILLERIS 1996). Economic geographers have been paying more attention to KIBS since the late 1970s and focus on the transformation of the spatial economy through the emerging business services. This market survey is conceived as a first step of a research programme on the internationalisation of management consulting and as a contribution to the lively debate in economic geography. The management consulting industry is unlimited in many ways: There are only scarce institutional boundaries, low barriers to entry, a very heterogeneous supply structure and multiple forms of transaction. Official statistics have not yet provided devices of grasping this market and it may be therefore, that research and literature on this business are rather poor. The following survey is an attempt to selectively compile existing material, empirical studies and statistics in order to draw a sketchy picture of the European market, its institutional constraints, agents and dynamics. German examples will be employed to pursue arguments in more depth

The impact of regional and functional integration on the post-entry performance of knowledge intensive business service firms

Knowledge intensive business service firms (KIBS) are an important element of modern economies and thus attracting increasing interest in scientific research. In the existing literature it is argued that due to the important role of knowledge, innovation and user-producer interaction in the KIBS sector, functional and regional integration are particularly decisive for the firms’ post-entry development. Nevertheless, few existing studies are dealing with questions of entrepreneurship in the KIBS sector using micro firm data. This contribution gives an empirical analysis of the determinants of post-entry performance of KIBS in three German metropolitan regions. Due to the lack of suitable firm micro data, telephone interviews with 547 firm founders have been conducted. By applying multivariate estimation methods it can be shown that functional linkages to knowledge providers, customers and co-operation partners indeed matter for the performance of young KIBS. Regarding regional integration, however, especially a high diversification of spatial reach is proved to be crucial. JEL-Classification: D21, J23, L80, O30 Keywords: Employment growth; Entrepreneurship; Entry; Innovation; Knowledge-intensive business services; Post-entry performance

Firm Foundations in the Knowledge Intensive Business Service Sector. Results from a Comparative Empirical Study in Three German Regions

A key feature of the knowledge-based economy is a remarkable increase in the number of knowledge intensive business service firms (KIBS). KIBS are based upon highly specialised knowledge and they acquire knowledge in the course of the interaction process that takes place whilst they provide their services. As knowledge and its organisation are tied to personal capabilities and information, spatial “proximity” to providers and users of knowledge appears to be crucial for the foundation and early development of KIBS. The quality of regional environments (e.g. configurations of incubator and intermediate organisations or a regional “entrepreneurial climate”) and the foundation and development of KIBS are obviously interrelated. Based upon a standardised survey, the present paper analyses regional differences in the foundation process and early development of KIBS in three German regions in a comparative way. The results of our descriptive analysis show strong regional ties of founders and KIBS firms during the founding process as a result of spatial proximity. With only slight differences, those ties could be observed in all three regions. They are primarily related to the former activities of the founder, the transfer of results and experiences into the new firm, and spatial proximity to the most important customers or other partners within the exchange of knowledge. Major differences can be derived with regard to the development of the firms (e.g. Munich KIBS firms show a much better development in employment), obstacles in accessing the regional market, and the general assessment of the regional framework conditions from the point-of-view of the KIBS founders.KIBS; firm foundations; interaction; spatial proximity; Germany

On the significance of geographical proximity for the structure and development of newly founded knowledge-intensive business service firms

A key feature of the knowledge-based economy is a remarkable increase in the number, foundation rates, and employees of knowledge-intensive business service firms (KIBS). KIBS are knowledge-intensive, in the sense that they are founded upon highly specialised knowledge. Based on the assumption, that knowledge and knowledge-organisation is tied to personal capabilities and information, spatial "proximity" to knowledge-providers and –users appears to be crucial in the development- and growth-process of KIBS. The idea, that a region matters to foundation activities primarily derives from a resource-based view. Different regional environments (e.g. configurations of incubator and intermediate organisations, regional "entrepreneurial social infrastructure") and the foundation pattern of KIBS are obviously interrelated. In addition to environmental factors affecting the development or growth of newly founded KIBS, factors related to the entrepreneur of KIBS as well as factors related to characteristics of the KIBS-firms have to be taken into consideration. Based upon a survey with founders of KIBS firms in three German regions, a selection of indicators will be used as determinants for new KIBS growth. Comparing the successful KIBS start-ups with those showing an employment decrease in the relevant time period, it has to be emphasized, that KIBS with employment in-crease are co-operating with other firms and institutions on all spatial levels, regardless of the function of the partner-firms for the KIBS activities. Keywords: KIBS – Region - Spatial proximity – Growth

On the significance of geographical proximity for the structure and development of newly founded knowledge-intensive business service firms

A key feature of the knowledge-based economy is a remarkable increase in the number, foundation rates, and employees of knowledge-intensive business service firms (KIBS). KIBS are knowledge-intensive, in the sense that they are founded upon highly specialised knowledge. Based on the assumption that knowledge and knowledge organisation are tied to personal capabilities and information, spatial proximity to knowledge-providers and users appears to be crucial in the development and growth process of KIBS. The idea that the region affects foundation activities primarily derives from a resource-based view. Different regional environments (e.g. configurations of incubator and intermediate organisations, regional entrepreneurial social infrastructure) and the foundation pattern of KIBS are obviously interrelated. In addition to environmental factors affecting the development or growth of newly founded KIBS, factors related to the entrepreneur of KIBS and to characteristics of the KIBS firms have to be taken into consideration. Based upon a survey with founders of KIBS firms in three German regions, a selection of indicators will be used as determinants for new KIBS growth. Comparing the successful KIBS start-ups with those showing an employment decrease in the relevant time period, it has to be emphasized that KIBS with employment increase co-operate with other firms and institutions on all spatial levels, regardless of the function of the partner firms for the KIBS activities. --KIBS,Region,Spatial proximity,Growth

The Impact of Functional Integration and Spatial Proximity on the Post-entry Performance of Knowledge Intensive Business Service Firms

Knowledge intensive business service firms (KIBS) are an important element of modern economies and thus attracting increasing interest in scientific research. In the existing literature it is argued that due to the important role of knowledge, innovation and userproducer interaction in the KIBS sector, functional integration and spatial proximity are particularly decisive for a firm’s development. Nevertheless, due to the absence of suitable micro data there is a lack of studies empirically analysing the impact of functional integration and regional proximity using micro firm data. Based upon newlyconducted firm micro data in three German metropolitan regions, this paper supplements the literature by giving a multivariate empirical analysis of the determinants of post-entry performance of KIBS. The results of the estimation of firm growth equations show that functional linkages to knowledge providers, customers and co-operation partners indeed matter for the performance of young KIBS. Regarding spatial proximity, however, especially a high diversification of geographical reach is proved to be crucial.Employment growth, Entrepreneurship, Entry, Firm growth, Innovation, Knowledge intensive business services, Post-entry performance

Important Market Characteristics in International Establishments

This study aims to identify important market characteristics that affect international market establishments in the IT consulting industry. A qualitative case study has been conducted at an IT consulting firm, where Osterwalder's Business Model Canvas has been used as a tool to identify and compare market characteristics to existing theory regarding internationalisation in the Knowledge-Intensive Business Service sector. The results showed that many of the derived market characteristics from the case company were rather consistent with theory. These were mainly attributable to the theoretical factors client interaction and knowledge acquisition as well as economic, cultural and political factors.This study aims to identify important market characteristics that affect international market establishments in the IT consulting industry. A qualitative case study has been conducted at an IT consulting firm, where Osterwalder's Business Model Canvas has been used as a tool to identify and compare market characteristics to existing theory regarding internationalisation in the Knowledge-Intensive Business Service sector. The results showed that many of the derived market characteristics from the case company were rather consistent with theory. These were mainly attributable to the theoretical factors client interaction and knowledge acquisition as well as economic, cultural and political factors

Important Market Characteristics in International Establishments

This study aims to identify important market characteristics that affect international market establishments in the IT consulting industry. A qualitative case study has been conducted at an IT consulting firm, where Osterwalder's Business Model Canvas has been used as a tool to identify and compare market characteristics to existing theory regarding internationalisation in the Knowledge-Intensive Business Service sector. The results showed that many of the derived market characteristics from the case company were rather consistent with theory. These were mainly attributable to the theoretical factors client interaction and knowledge acquisition as well as economic, cultural and political factors.This study aims to identify important market characteristics that affect international market establishments in the IT consulting industry. A qualitative case study has been conducted at an IT consulting firm, where Osterwalder's Business Model Canvas has been used as a tool to identify and compare market characteristics to existing theory regarding internationalisation in the Knowledge-Intensive Business Service sector. The results showed that many of the derived market characteristics from the case company were rather consistent with theory. These were mainly attributable to the theoretical factors client interaction and knowledge acquisition as well as economic, cultural and political factors