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A Generalized Knowledge Production Function



This paper presents a generalized production model based on the knowledge production function. The model allows the relationships between corporate competitiveness strategy, innovation, efficiency, productivity growth and outsourcing to be investigated at the firm level in a number of steps. First, in reviewing recent developments of researches on the above relationships, provide discussion on data and the methods of measuring these variables. Second, depending on availability of information, different measures are transferred into single multidimensional index of corporate strategy using principal component analysis. Third, stochastic frontier production function and factor productivity analysis are used to estimate the efficiency and factor productivity growth at the firm level. Fourth, the causal relationships between the five variables of interest are established and modelled. Finally, given the direction of causality, the implications of the findings for estimation of the relationship are discussed. For the empirical analysis we use Swedish firm-level innovation survey data covering both manufacturing and service sectors.

Suggested Citation

  • Heshmati, Almas, 2006. "A Generalized Knowledge Production Function," Ratio Working Papers 89, The Ratio Institute.
  • Handle: RePEc:hhs:ratioi:0089

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    References listed on IDEAS

    1. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
    2. Baltagi, Badi H & Griffin, James M, 1988. "A General Index of Technical Change," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 20-41, February.
    3. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Almas Heshmati & Hyesung Kim, 2011. "The R&D and productivity relationship of Korean listed firms," Journal of Productivity Analysis, Springer, vol. 36(2), pages 125-142, October.

    More about this item


    Competition; innovation; outsourcing; productivity; efficiency; causality; firm;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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