Pier Paolo Patrucco

Productivity Growth and Pecuniary Knowledge Externalities: An Empirical Analysis of Agglomeration Economies in European Regions

abstract The article investigates the effects of the agglomeration of technological activities on the growth in regional productivity, applying the notion of pecuniary knowledge externalities. Pecuniary knowledge externalities enable one to appreciate both the gains and losses associated with the regional concentration of knowledge-generating activities. Both are two sides of the same coin. The gains are due to the reduction in the prices of knowledge as input into its dedicated markets, while the losses stem from the reduction in the prices of knowledge as an output. This analysis allows us to contextualize the effect of geographic proximity on knowledge externalities and their impact on regional growth. Our analysis leads to the hypothesis of an inverted U-shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical analysis based on a large sample of European regions from 1996 to 2003 supports the hypothesis that agglomeration yields diminishing net positive effects beyond a maximum.

Institutional Variety, Networking and Knowledge Exchange: Communication and Innovation in the Case of the Brianza Technological District

P ATRUCCO P. P. (2003) Institutional variety, networking and knowledge exchange: communication and innovation in the case of the Brianza technological district, Reg. Studies 37 , 159-172. Elaborating on the literature on innovation systems and technological districts, this paper suggests that localization is conducive to a multilateral exchange of interdependent and external knowledge bases but requires explicit communication efforts in order to lead to innovation. In particular, the case of the Brianza technological district shows that different and yet complementary knowledge bases are built upon the institutional variety characterizing the local economic system. Moreover and more importantly, this case provides empirical evidence for the fact that the construction of an interorganizational network of dissimilar but complementary cooperative relations - in contrast to a concentration on one dominant kind of interaction - is the key source of innovation and growth of local firms.

INNOVATION PLATFORMS AND THE GOVERNANCE OF KNOWLEDGE: EVIDENCE FROM ITALY AND THE UK

Innovation is a collective process that entails the coordination of distributed knowledge across diverse organizations. Technology infrastructures provide innovation systems with governance mechanisms to create and sustain complementarities across otherwise dispersed competences. The paper presents innovation platforms as a specific case of technology infrastructure. Operating strategically at the interface between the public and the private sectors, platforms enable capacity- and capability-building for individuals, teams and organizations. Illustrative evidence on innovation platforms in the United Kingdom and Italy confirms the importance of institutional responsiveness to stimulate variety and ensure coordination in the context of collective innovation processes.

Collective knowledge production costs and the dynamics of technological systems

Technological knowledge can be understood as a collective good only when its production requires the absorption and integration of external knowledge. Such external knowledge is the outcome of R&D investments that cannot be fully appropriated by firms and generate spillovers. The exploitation of such knowledge spillovers requires specific investments in knowledge communication and absorption, which brings about specific costs. These costs are affected by the structural and dynamic characteristics of technological systems in terms of the knowledge base, the variety of actors and the communication infrastructures and processes. This paper analyzes the costs of collective knowledge production and their implications for the way in which the firm chooses the mix of internal and external knowledge. This choice in turn shapes the evolution of technological systems.

Complexity and the coordination of technological knowledge: the case of innovation platforms

This comprehensive and innovative Handbook applies the tools of the economics of complexity to analyse the causes and effects of technological and structural change. It grafts the intuitions of the economics of complexity into the tradition of analysis based upon the Schumpeterian and Marshallian legacies.

The Governance of Localized Knowledge Externalities

This paper articulates the hypothesis that there is an optimal size of knowledge pools. Too little a density of innovation activities reduces the accessibility of external knowledge. Too large a density enhances congestion and reduces appropriability. Firms can benefit from actual increasing returns stemming from the indivisibility, replicability and non-exhaustibility of knowledge only when the size of innovation networks is comprised between the two extremes. The empirical evidence confirms that the output elasticity of knowledge, included in a typical Griliches production function, is itself a quadratic function of the size of innovation networks. Knowledge externalities do trigger increasing returns that are external to each firm, only within a well defined interval. Knowledge externalities are a property of the system into which firms are embedded. As such they are endogenous to the system and likely to exhibit specific properties related to the changing characteristics of the system itself. The quality of knowledge governance mechanisms in place plays a key role in assessing the actual size of the net positive effects of knowledge externalities.

Pecuniary Knowledge Externalities: Evidence from European Regions

The paper investigates the effects of agglomeration and specialization of technological activities on regional productivity growth, applying the notion of pecuniary knowledge externalities. The latter are indirect interdependencies between firms mediated by the price system. Pecuniary knowledge externalities enable to appreciate both the positive and negative effects associated with the regional concentration of knowledge generating activities. Our analysis leads to specify the hypothesis of an inverted U-shaped relationship between the agglomeration of innovation activities and productivity growth. The empirical investigation, based upon 138 European regions in the years 1996 through 2003, supports the hypothesis that agglomeration yields diminishing positive net effects beyond a maximum. The homogeneity of knowledge generating activities however reduces absorption costs and hence rises the net benefits at each agglomeration level.

Changing network structure in the organization of knowledge: the innovation platform in the evidence of the automobile system in Turin

This paper borrows from complexity theory insights into the transformation of network structure in order to explain the changes in how economic actors and their organizations acquire and coordinate innovative and productive capabilities. Through the illustrative evidence of organizational change that had occurred in the automobile industry in the area of Turin over the last 40 years, this paper describes how transformations in the structure of interactions between firms are steered by the modification in the pattern of specialization and differentiation in the capabilities and technological skills of economic actors. The automobile system in Turin is characterized by the emergence of a distributed innovation platform, which is seen as a major innovation in the organization of innovation and technological knowledge in the system.

The Evolution of Knowledge Organization and the Emergence of a Platform for Innovation in the Car Industry

The paper aims at explaining the changes in how economic actors and their organizations acquire and coordinate innovative and productive capabilities. Using the illustrative evidence from organizational change in the automobile industry in Piedmont over the last 50 years, the paper describes how transformations in the structure of interactions between firms are steered by changes in the pattern of specialization and differentiation in the capabilities and technological skills of economic actors. The system is characterized by the emergence of a platform for the coordination of productive and technological activities, which can be seen as a major change in the organization of innovation in the system.

Systemic innovation and organizational change in the car industry: electric vehicle innovation platforms

The design and development of electric vehicles (EVs) is a complex and distributed process that has led to the creation of large partnerships the aim of which is to learn and acquire selective technological competencies, including those developed outside the car industry. The introduction of electric vehicles can be described as a collective innovation wherein different actors, such as traditional OEMs (original equipment manufacturer), automobile battery producers, utilities, and system integrators contribute their complementary resources and technologies, to work towards common goals and incentives. We argue that the process of integration, coordination and direction of the different strategies and goals of the various organizations involved demands a novel form of organization that combines the scope of learning typical of networks with the coherence of the centralized decision-making typical of the vertical corporation. We identify the innovation platform, which has recently been the focus of numerous studies in the field of innovation, as the appropriate organizational solution to the problem of dynamic coordination.