Analía Erbes, Verónica Robert, Gabriel Yoguel and José Borello

1. Seminario internacionalglobalización, conocimiento y desarrollo. UNAM-Instituto de Economía 15-17 marzo 2006Diffusion and appropriation of knowledge in different organizational structures Analía Erbes, Verónica Robert, Gabriel Yoguel and José Borello

2. Questions and hypothesis Questions: What are the forces that determine the continuum negative relationship between knowledge diffusion and appropriation in the framework of the new techno productive paradigm? How does new knowledge diffuse in a capitalist economy and how this process is related to a collusive or classical spread of the benefits of technical progress? Hypothesis: The inverse relationship between diffusion and appropriation depends strongly on the simultaneous interaction of technological specificities, knowledge management and prevailing market structures.

3. Technical change, knowledge and competitiveness • From individual firms to interrelated agents: the key role of knowledge in the development of competitive advantages. • From public goods to club goods. • Imperfect competition and the increasing importance of intangible assets in dynamic competitive advantages. • Flexibility in different organizational forms. • Knowledge, technological interrelations and complementarities in the development of increasing returns, quasi rents and dynamic competitive advantages.

4. Innovation and knowledge in economic development • Schumpeter (1912, 1942), Arrow (1962), Nelson (1962), Polanyi (1958), and the new evolutionary school (Freeman, Nelson & Winter, Metcalfe, Perez, Lundvall, Dosi, David, Foray, Nonaka, Cohendet, Ancori, Noteboom, Malerba, Orsenigo) • From some pre Smithian authors to development theory authors in the 50´ have already discussed: • the relevance of productive and commercial specialization profiles; • the idea of the central role of imperfect competition, increasing returns to scale and excess labor not absorbed by the productive system to explain why economic development is such an uneven process, specially in developing countries.

5. Firms’ taxonomy according to the importance of knowledge and of production networks ………………………………………………………………………………………………………………………………...………………………………

6. Taxonomy of firms and technological regime Source: Own elaboration based on Malerba and Orsenigo (2000)

7. Diffusion Technological regime Mark I Mark I Mark II Mark II Risk

8. Firms’ taxonomy and knowledge management regime

9. Diffusion Technological Regime Mark I Mark I Mark II Mark II Risk Weak Flexible inside Hierarchy Flexible inside and outside Knowledge Management Regime Level of Development of cognitive capabilities

10. Table 4. Firm’s taxonomy and competition regime

11. Technological Regime Mark I Mark I Mark II Mark II Appropriation Risk Competitive Weak Competitive Flexible inside Oligopoly Oligopoly Hierarchy Flexible inside and outside Knowledge Management Regime Competence Regime Level of Development of cognitive capabilities

12. Diffusion QUADRANT I TECHNOLOGICAL REGIME QUADRANT IV DIFUSSION-APPROPRIATION RELATION Isolated Companies Mark I Knowledge Islands Bureaucratic Networks Mark I Mark II Knowledge Networks Mark II Risk Appropriation Competitive Weak Competitive Flexible inside Oligopoly Hierarchyy Oligopoly Flexible inside and outside QUADRANT II KNOWLEDGE MANAGEMENT REGIME Level of Development of cognitive capabilities QUADRANT III COMPETITION REGIME

13. Curves displacement • Technological regime affected by changes in specialization pattern. • Knowledge regime affected by changes in the national and local systems of innovation. • Competition regime affected by restrictions in property rights (intellectual property, regulations, antitrust law).

14. QUADRANT I TECHNOLOGICAL REGIME Isolated Companies Knowledge Islands Mark I Bureaucratic Networks Mark I Mark II Knowledge Networks Mark II Competitive Appropriation Weak Competitive Flexible inside Oligopoly Oligopoly Hierarchy QUADRANT II KNOWLEDGE MANAGEMENT REGIME Flexible inside and outside QUADRANT III COMPETITION REGIME Level of Development of cognitive capabilities Curves displacement QUADRANT IV DIFUSSION-APPROPRIATION RELATION Risk

15. Conclusion and policy recommendations (1) • Altogether, these three regimes explain the inverse relationship between knowledge diffusion and appropriation of quasi-rents • Developing countries face the challenge of moving in the diffusion-appropriation curve towards positions with greater levels of appropriation for equal degrees of diffusion. • This movement will require industrial and technological policies since a free market would consolidate the specialization pattern rather than modify it.

16. Conclusion and policy recommendations (2) • The design of these policies requires, however, operating in a space in which public knowledge increasingly becomes a club good. • In that sense, interventions should go beyond the idea of solving market failures. • From the perspective of developing countries, appropiability becomes the name of the game. In this sense, appropiability means taking advantage of windows of opportunity by choosing the right technology, and the appropriate knowledge and competition regimes, which would be associated to the right production network.