IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v10y2019i4d10.1007_s13132-016-0351-2.html
   My bibliography  Save this article

From Decreasing to Increasing Returns: the Role of Tacit Knowledge Capital in Firm Production and Industrial Growth

Author

Listed:
  • Jeffrey G. Woods

    (Indiana University–Purdue University Indianapolis)

Abstract

This paper integrates a learning model and two production models with endogenous technical change emphasizing the importance of tacit knowledge capital (KC). Individual business firms may experience diminishing returns to their existing tacit KC. However, when these firms update their tacit KC using the dialectical learning process, they can increase their productivity (output per worker) potentially creating a natural externality in their industry. Because firm-level production innovations cannot be perfectly patented or kept secret, tacit knowledge created by one firm can spill over to the industry leading to increasing returns to tacit KC. A conceptual framework is developed showing that increasing the tacit knowledge base of the firm is needed to foster the technical change required to increase productivity in both the firm and corresponding industry. Causes of diminishing returns to existing tacit KC at the firm level are discussed. Also, some pathways to increasing industrial returns to tacit KC are explored.

Suggested Citation

  • Jeffrey G. Woods, 2019. "From Decreasing to Increasing Returns: the Role of Tacit Knowledge Capital in Firm Production and Industrial Growth," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(4), pages 1482-1496, December.
    • Handle: RePEc:spr:jknowl:v:10:y:2019:i:4:d:10.1007_s13132-016-0351-2
    DOI: 10.1007/s13132-016-0351-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-016-0351-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-016-0351-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Christine Greenhalgh & Mark Rogers, 2010. "Innovation, Intellectual Property, and Economic Growth," Economics Books, Princeton University Press, edition 1, volume 0, number 9221.
    3. Clive Lawson & Edward Lorenz, 1999. "Collective Learning, Tacit Knowledge and Regional Innovative Capacity," Regional Studies, Taylor & Francis Journals, vol. 33(4), pages 305-317.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Ikujiro Nonaka, 1994. "A Dynamic Theory of Organizational Knowledge Creation," Organization Science, INFORMS, vol. 5(1), pages 14-37, February.
    6. Herbert A. Simon, 1991. "Bounded Rationality and Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 125-134, February.
    7. Berger, Suzanne with the MIT Task Force on Production in the Innovation Economy, 2013. "Making in America: From Innovation to Market," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262019914, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthias Firgo & Peter Mayerhofer, 2015. "Wissens-Spillovers und regionale Entwicklung - welche strukturpolitische Ausrichtung optimiert des Wachstum?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 144, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    2. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    3. Matthias Firgo & Peter Mayerhofer, 2015. "Wissensintensive Unternehmensdienste, Wissens-Spillovers und regionales Wachstum. Teilprojekt 1: Wissens-Spillovers und regionale Entwicklung – Welche strukturpolitische Ausrichtung optimiert das Wach," WIFO Studies, WIFO, number 58342, August.
    4. Yun, JinHyo Joseph & Ahn, Heung Ju & Lee, Doo Seok & Park, Kyung Bae & Zhao, Xiaofei, 2022. "Inter-rationality; Modeling of bounded rationality in open innovation dynamics," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    5. Chila, Vilma, 2021. "Knowledge dynamics in employee entrepreneurship : Implications for parents and offspring," Other publications TiSEM a1f5d18c-783b-4af6-8414-6, Tilburg University, School of Economics and Management.
    6. Hartwig, Johannes, 2022. "Semi-endogenous growth dynamics in a macroeconomic model with delays," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 538-551.
    7. Sredojević Dragoslava & Cvetanović Slobodan & Bošković Gorica, 2016. "Technological Changes in Economic Growth Theory: Neoclassical, Endogenous, and Evolutionary-Institutional Approach," Economic Themes, Sciendo, vol. 54(2), pages 177-194, June.
    8. Rao, B. Bhaskara, 2010. "Estimates of the steady state growth rates for selected Asian countries with an extended Solow model," Economic Modelling, Elsevier, vol. 27(1), pages 46-53, January.
    9. Prof. Dr. Adem KALCA & Resc. Assist. Atakan DURMAZ, 2012. "Diaspora As The Instrument Of Humane Capital," International Journal of Business and Social Research, LAR Center Press, vol. 2(5), pages 94-104, October.
    10. Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 2005. "Obsolescence and modernization in the growth process," Journal of Development Economics, Elsevier, vol. 77(1), pages 153-171, June.
    11. Kawalec Paweł, 2020. "The dynamics of theories of economic growth: An impact of Unified Growth Theory," Economics and Business Review, Sciendo, vol. 6(2), pages 19-44, June.
    12. Kar, Sabyasachi & Pritchett, Lant & Raihan, Selim & Sen, Kunal, 2013. "Looking for a break: Identifying transitions in growth regimes," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 151-166.
    13. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    14. Kumar, Sanjesh & Singh, Baljeet, 2019. "Barriers to the international diffusion of technological innovations," Economic Modelling, Elsevier, vol. 82(C), pages 74-86.
    15. Carine Nourry, 2012. "Dasgupta, D.: Modern growth theory," Journal of Economics, Springer, vol. 105(1), pages 97-100, January.
    16. Fofack, Hippolyte, 2008. "Technology trap and poverty trap in Sub-Saharan Africa," Policy Research Working Paper Series 4582, The World Bank.
    17. Sorin Celea & Petre Brezeanu & Ana Petrina Păun, 2013. "Fiscal Discipline within the EU: Comparative Analysis," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 13(2), pages 23-30.
    18. Jos� Lobo & Charlotta Mellander & Kevin Stolarick & Deborah Strumsky, 2014. "The Inventive, the Educated and the Creative: How Do They Affect Metropolitan Productivity?," Industry and Innovation, Taylor & Francis Journals, vol. 21(2), pages 155-177, February.
    19. Debelo Bedada Yadeta & Fetene Bogale Hunegnaw, 2022. "Effect of International Remittance on Economic Growth: Empirical Evidence from Ethiopia," Journal of International Migration and Integration, Springer, vol. 23(2), pages 383-402, June.
    20. Blomström, Magnus & Kokko, Ari, 2003. "Human Capital and Inward FDI," CEPR Discussion Papers 3762, C.E.P.R. Discussion Papers.

    Corrections

    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:spr:jknowl:v:10:y:2019:i:4:d:10.1007_s13132-016-0351-2. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.