Knowledge Intensive Business Services

Markets, Institutions, and Innovation-Related Services – Hamburg - June 2006

Institute of

Innovation Research

Knowledge Intensive Business –

Innovation-intensive and Innovation-enabling?

Ian [email protected]


Institute of

Innovation Research

Pulling together in KIBS

and KISA books

Studies over a decade

• Original KIBS study 1994/5• SI4S included “services in innovation”• Environmental services sector• IPR in KIBS• CRIC work on business services with

ECORYS for EC• CRIC analysis of KIBS in innovation surveys• R&D in services (and role of R&D services)

including…


Institute of

Innovation Research

Growth of Business Service Economy

• Growth in Services Sectors widely recognised by 1960s

• Early work paid little attention to business services (producer, intermediate services) - attention focused on consumer and public services– though Greenfield was a pioneering exception

• Rapid business service growth mainly seen as just routine increase of the division of labour

Harry I. Greenfield, Manpower and the Growth of ProducerServices (New York, Columbia University Press, 1966)


Institute of

Innovation Research

KIBS (1995) –Knowledge-Intensive Business Services

• Rely heavily upon professional/expert knowledge. • High employment of scientists, engineers, experts of all types. Often small firms (we now know 95%<10emp).• Tend to be leading users of Information Technology.• Help define and solve problems in business processes of users in private and public sectors.• Products may be primarily information and knowledge resources; or intermediate inputs to clients’ knowledge generating and information processing activities.• Service often coproduced with client, highly customised or specialised – a fusion of generic and local knowledge.


Institute of

Innovation ResearchNACE Classn

Sectors Most important activities

71.1, 71.21-23,

Leasing & renting •Renting of transport and construction equipmentRenting of office machinery incl. computers

72.1 - 6 Computer •Hardware consultancy • Software consultancyData processing • Database activities

73.1, 73.2 R&D •Research and experimental development on natural sciences and engineering • …on social sciences and humanities

74.2, 74.3 Technical •Architectural activities • Engineering activitiesTechnical testing and analysis

74.11- .12, 74.14

Professional •Legal activities • Accounting & tax consultancyManagement consulting

74.13, 74.4 Marketing •Market research • Advertising

74.5 Labour recruitment

•Labour recruitment and provision of personnel

74.6, 74.7 Operational •Security activities • Industrial cleaning

74.81-84 Other •Secretarial and translation activities Packing activities • Fairs & exhibitions

Sectoral definition of business services NACE 71-74 (note excludes telecomms, some finance)

NACE

KIB

S

Professional KIBS

Tech-based KIBS


Institute of

Innovation Research

Relative Scale of various BS in the UK, 2000

0 10 20 30 40 50 60 70 VALUE ADDED bn euros

Rapid growth, across

industrial world


Institute of

Innovation Research

Technological and Professional Graduate-Intensity UK CIS3 data analysis by Tether & Swann

0%

10%

20%

30%

40%

50%

60%

70%

Fre

ight T

ransport

Passenger

Tra

nsport

Low

Tech M

anufa

ctu

ring

Legal / A

ccounting

Renting a

nd L

easin

g

Oth

er

Tra

nsport

Constr

uction

Bankin

g, In

sura

nce, P

ropert

y T

radin

g

Mediu

m L

ow

Tech M

anufa

ctu

ring

Whole

sale

Publis

h, T

rav/E

st A

g, M

kt R

es

Extr

action, U

tilit

ies, R

ecyclin

g

Mediu

m H

igh T

ech M

anufa

ctu

ring

Managerial / O

rganis

ational S

erv

s

Tele

com

s &

oth

er

IT s

erv

ices

Hig

h T

ech M

anufa

ctu

ring

Arc

hitectu

re &

Engin

eering

Com

pute

r S

erv

ices

R&

D a

nd T

echnic

al T

esting

Mean % Other Graduates

Mean % S&E Graduates

"professional KIBS"

“technology-based KIBS”


Institute of

Innovation Research

ambient conditions

ergonomic conditions

atypical hours

working hours

job demands

job control

task flexibility

skilled work

social support

discrimination

“Working Conditions”

Better than average of other sectors Worse than average of other sectors

Real Estate + Business Services, EU15, 2000

skilled work: incs. meeting standards

judging quality solving problems

few monotonous tasksmore complicated tasks

doing new things


Institute of

Innovation Research

KIBS are often particularlyinnovative - CIS2 data

Percentage innovating

Also – German data (Hipp) shows these are less standardised sectors


Institute of

Innovation Research

Hipp - German Survey studied standardisation and innovation

• Half the innovating service firms thought their innovations positively impacted client performance/productivity – 16% “very important” productivity, 13% performance - (but only 1/3 of the firms supplying standardised solutions)

• 4/5 of software firms thought this (and only 2/5 financial firms, for instance)

• Service innovation>organisational innovation (but this can have an impact too)

Services vary in standardisation… some more designed for client


Institute of

Innovation Research

Swedish Survey (Nahlinder)

1000 KIBS firms

(Higher for less standardised services)

(All higher for more innovative firms)


Institute of

Innovation Research

Knowledge of environments – internal and external

CompetitorsClients, Suppliers

Collaborators

Regulators

Financiers

Markets

Social & Institutional

Env

Natural & Physical

Env

Process Technology

Management

Organisational Structure/ Design

Routines

Techniques

Human Resources

Product Technology & Design


Institute of

Innovation Research

Knowledge of environments – internal and external

What’s the background?

What’s the problem?

What’s the solution?

How to do it?

Putting it into practice

Knowledge applied to Problem solving:

• Support for self-diagnosis

• Diagnosis

• Prescription

• Configuration

• Implementation of Solutions


Institute of

Innovation Research

Preliminary Problem Formulation

Coproduction and Absorption of Solution

Universities Laboratories Governments Other KIBS Clients Suppliers etc.

Interactive Processes

External (generic) knowledge resources *

Firm’s experience of problem

KIBS fusing generic and local

knowledge

* including previous service encounters

Intelligence

Diagnosis

Prescription

(Configuration)

Implementation


Institute of

Innovation Research

Interactive Innovation

External (generic) knowledge resources

Firm’s experience of problem

KIBS fusing generic and local

knowledgePreliminary Problem Formulation

Coproduction and Absorption of Solution

Intelligence

Diagnosis

Prescription

Configuration

Implementation

Knowledge concerning technologies; scientific and engineering principles; innovation-relevant market conditions,

regulations, laws

More detailed understanding of problem, ways of measuring and monitoring

Reduced risk in defining solution; introduction of new types of solution

Easier learning and application of experience in combining processes

Saving resources that can be applied to core products and processes


Institute of

Innovation Research

Effecting Innovation 1

KIBS InnovationData production, processing, knowledge generation, generalisation, synthesis methods; presentation tools; specific technologies and techniques for problem area...

Client InnovationReduced risks, accelerated learning, new ideas,

training, freer resources, focus on core problems

Coproduction of InnovationInteractive learning about problems and

potential solutions; new market opportunities


Institute of

Innovation Research

Implications for Innovation

• Apart from freeing up resources, and being dispensable…• KIBS are specialists - in acquiring, possessing and communicating knowledge. Alternative to labour mobility.

• Able to draw on generalised knowledge from other firms and sectors. FUSION – and some creation

• Less wedded to heritage, organisational rigidities, factions• But… how far do they really help clients move in new directions?


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Innovation Research

Who are the Users?

0

5

10

15

20

25

30

Pos

t an

dT

elec

om

Agr

icul

ture

and

Min

ing

Util

ities

Tra

nspo

rt a

ndS

tora

ge

Rea

l Est

ate

Con

stru

ctio

n

Fin

ance

and

Insu

ranc

e

Tra

de a

ndH

otel

s

Pub

lic S

ecto

r

Bus

ines

sS

ervi

ces

Man

ufac

turin

g

0

0.5

1

1.5

2

2.5

3sector share

relative to sector output

Various EU

countries, c1995

Intensive users

Major markets


Institute of

Innovation Research

Who are the Users? UK 1995

UK - Business Services mainly supporting other services


Institute of

Innovation Research

Who are the Users? UK 1995

France - Business Services mainly supporting other services, except R&D services


Institute of

Innovation Research

Some issues that arise – both practical issues and research questions• “ Absorption capacity” – what capabilities and practices do clients

need to make effective selection of KIBS, definitions of problems, use of solutions?

• “Organisational amnesia” – how can they cope with loss of memory when activities outsourced?

• Knowledge management (a) capture of new learning; (b) across organisational boundaries; (c) across professions?

• Standard solutions vs. sensitivity to organisational culture, national circumstances, etc.

• Professionalism: avoidance of “capture”, of collusion with clients and/or suppliers, of conflicts of interest

• Methods for maintaining and demonstrating quality control, addressing information asymmetries

• Retention and motivation of experts

Client side

KIBS side


Institute of

Innovation Research

End of Presentation

• questions and comments?


Institute of

Innovation Research

Top Ten Users- Computer Services UK

c1995

All services

85% of output

goes to top 20


Institute of

Innovation Research

Top Ten Users- R&D Services UK

c1995

85% of output

goes to top 20

- 9 are services,

many public


Institute of

Innovation Research

Top Ten Users- Other Business Services UK

c1995

84% of output goes

to top 20

9 of top 10 are services,

plus construction

Knowledge Intensive Business Services

Business

Transcript of Knowledge Intensive Business Services