IDEAS home Printed from
   My bibliography  Save this paper

The Economics of Knowledge Regulation: An Empirical Analysis of Knowledge Flows


  • Haeussler, Carolin


Successful innovation depends on the management of a firm’s knowledge base. This paper empirically investigates the determinants of knowledge regulation. Using a unique survey dataset, the analysis suggests that R&D managers do not leak knowledge randomly, but rather regulate knowledge consciously. We find that the source and the channel of knowledge inflows impact knowledge regulation. The findings reveal that the more a firm profits from knowledge inflows from competitors, the fewer actions it takes to regulate outgoing knowledge. We do not find that the extent of knowledge inflows from collaborating firms impacts knowledge regulation. However, the type of channel being used to acquire knowledge matters. Compared to public channels, the different types of private channels used to access knowledge inflow and the type of the competitive relationship influence the firms’ decision to regulate knowledge outflow in the following way: concerning relationships with competitors, firms regulate knowledge outflow more when using formal channels, but less when using informal channels (although a significant difference is not found with the latter); concerning collaborative relationships, firms regulate knowledge outflow less regardless of whether they are using formal or informal private channels compared to using public channels. Presumably firms that acquire knowledge from competing firms through formal private channels compared to public channels, try to establish opaque and soundproof fences to surround them, whereas firms that acquire knowledge from collaborating firms through formal or informal private channels do not want to restrict circulation, but rather facilitate inter-firm knowledge exchange. Our results have important implications for academics and R&D managers alike.

Suggested Citation

  • Haeussler, Carolin, 2009. "The Economics of Knowledge Regulation: An Empirical Analysis of Knowledge Flows," Discussion Papers in Business Administration 8971, University of Munich, Munich School of Management.
  • Handle: RePEc:lmu:msmdpa:8971

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 437-459.
    2. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, vol. 54(2), pages 293-315, February.
    3. Schrader, Stephan, 1991. "Informal technology transfer between firms: Cooperation through information trading," Research Policy, Elsevier, vol. 20(2), pages 153-170, April.
    4. Dahl, Michael S. & Pedersen, Christian O.R., 2004. "Knowledge flows through informal contacts in industrial clusters: myth or reality?," Research Policy, Elsevier, vol. 33(10), pages 1673-1686, December.
    5. Stephane Lhuillery, 2006. "Voluntary technological disclosure as an efficient knowledge management device: An empirical study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 465-491.
    6. Oxley, Joanne E., 1999. "Institutional environment and the mechanisms of governance: the impact of intellectual property protection on the structure of inter-firm alliances," Journal of Economic Behavior & Organization, Elsevier, vol. 38(3), pages 283-309, March.
    7. Juan Alcácer & Wilbur Chung, 2007. "Location Strategies and Knowledge Spillovers," Management Science, INFORMS, vol. 53(5), pages 760-776, May.
    8. von Krogh, Georg & Spaeth, Sebastian & Lakhani, Karim R., 2003. "Community, joining, and specialization in open source software innovation: a case study," Research Policy, Elsevier, vol. 32(7), pages 1217-1241, July.
    9. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    10. Carliss Y. Baldwin & Kim B. Clark, 2006. "The Architecture of Participation: Does Code Architecture Mitigate Free Riding in the Open Source Development Model?," Management Science, INFORMS, vol. 52(7), pages 1116-1127, July.
    11. Liebeskind, Julia Porter, 1997. "Keeping Organizational Secrets: Protective Institutional Mechanisms and Their Costs," Industrial and Corporate Change, Oxford University Press, vol. 6(3), pages 623-663, September.
    12. Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
    13. Snejina Michailova & Kate Hutchings, 2006. "National Cultural Influences on Knowledge Sharing: A Comparison of China and Russia," Journal of Management Studies, Wiley Blackwell, vol. 43(3), pages 383-405, May.
    14. Henkel, Joachim, 2006. "Selective revealing in open innovation processes: The case of embedded Linux," Research Policy, Elsevier, vol. 35(7), pages 953-969, September.
    15. Cassiman, Bruno & Perez-Castrillo, David & Veugelers, Reinhilde, 2002. "Endogenizing know-how flows through the nature of R&D investments," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 775-799, June.
    16. Zucker, Lynne G & Darby, Michael R & Armstrong, Jeff, 1998. "Geographically Localized Knowledge: Spillovers or Markets?," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 65-86, January.
    17. Arora, Ashish & Fosfuri, Andrea & Gambardella, Alfonso, 2001. "Markets for Technology and Their Implications for Corporate Strategy," Industrial and Corporate Change, Oxford University Press, vol. 10(2), pages 419-451, June.
    18. Carolin Häussler & Hans-Martin Zademach, 2007. "Cluster Performance Reconsidered: Structure, Linkages and Paths in the German Bioteehnology Industry, 1996-2003," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 59(3), pages 261-281, July.
    19. Cockburn, Iain & Henderson, Rebecca, 1994. "Racing to Invest? The Dynamics of Competition in Ethical Drug Discovery," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(3), pages 481-519, Fall.
    20. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    21. De Fraja, Giovanni, 1993. "Strategic spillovers in patent races," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 139-146, March.
    22. Harhoff, Dietmar & Henkel, Joachim & von Hippel, Eric, 2003. "Profiting from voluntary information spillovers: how users benefit by freely revealing their innovations," Research Policy, Elsevier, vol. 32(10), pages 1753-1769, December.
    23. Coombs, Rod & Hull, Richard, 1998. "'Knowledge management practices' and path-dependency in innovation," Research Policy, Elsevier, vol. 27(3), pages 237-253, July.
    24. Nathan ROSENBERG, 2009. "Why do firms do basic research (with their own money)?," World Scientific Book Chapters,in: Studies On Science And The Innovation Process Selected Works of Nathan Rosenberg, chapter 11, pages 225-234 World Scientific Publishing Co. Pte. Ltd..
    25. Dahlander, Linus & Magnusson, Mats G., 2005. "Relationships between open source software companies and communities: Observations from Nordic firms," Research Policy, Elsevier, vol. 34(4), pages 481-493, May.
    26. Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    27. Dominique Foray, 2006. "The Economics of Knowledge," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262562235, July.
    28. Schmidt, Tobias, 2005. "Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany," ZEW Discussion Papers 05-22 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    29. von Hippel, Eric, 1987. "Cooperation between rivals: Informal know-how trading," Research Policy, Elsevier, vol. 16(6), pages 291-302, December.
    30. Iain Cockburn & Rebecca Henderson & Scott Stern, 1999. "Balancing Incentives: The Tension Between Basic and Applied Research," NBER Working Papers 6882, National Bureau of Economic Research, Inc.
    31. Franke, Nikolaus & Shah, Sonali, 2003. "How communities support innovative activities: an exploration of assistance and sharing among end-users," Research Policy, Elsevier, vol. 32(1), pages 157-178, January.
    32. Katsoulacos, Yannis & Ulph, David, 1998. "Endogenous Spillovers and the Performance of Research Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 333-357, September.
    Full references (including those not matched with items on IDEAS)

    More about this item


    knowledge management; R&D; biotechnology;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lmu:msmdpa:8971. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Debbie Claassen). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.