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Innovation and Diversity in a Dynamic Knowledge Network

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  • Tamás Sebestyén

    ()
    (Department of Economics and Regional Studies, University of Pécs)

Abstract

In this paper we examine the evolution of network formation. We present a model in which companies in an industry can innovate alone or in alliance with others. Alliance formation is based on the cognitive distance of companies. If two companies form an alliance, their probability of success in innovation depends on their proximity in knowledge space, that is, their cognitive distance. Knowledge, on the other hand, is modelled in two dimensions: breadth and depth. The main results of our analysis are that in the present setting heterogeneity decreases among companies whilst innovation can increase and decrease also, depending on the initial parameters of the industry's knowledge endowment. The model also reveales the importance of external shocks in maintaining heterogeneity and concludes with a possible typology of cluster evolution among the dimensions of heterogeneity and innovativeness.

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File URL: http://krti-en.ktk.pte.hu/pec/pdf/201001.pdf
File Function: Revised version, 2010
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Bibliographic Info

Paper provided by University of Pécs, Department of Economics and Regional Studies in its series Working Papers with number 2010/1.

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Length: 50 pages
Date of creation: Mar 2010
Date of revision: Mar 2010
Handle: RePEc:pec:wpaper:2010/1

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Web page: http://www.krti-en.ktk.pte.hu/
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Related research

Keywords: knowledge network; innovation; knowledge heterogeneity; alliance formation; cluster evolution;

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  1. Max-Peter Menzel & Dirk Fornahl, 2007. "Cluster Life Cycles - Dimensions and Rationales of Cluster Development," Jena Economic Research Papers 2007-076, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
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