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Relational knowledge transfers

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  • Garicano, Luis
  • Rayo, Luis

Abstract

An expert with general knowledge trains a cash-constrained novice. Faster training increases the novice’s productivity and his ability to compensate the expert; it also shrinks the stock of knowledge yet to be transferred, reducing the expert’s ability to retain the novice. The profit-maximizing agreement is a multi-period apprenticeship in which knowledge is transferred gradually over time. The expert adopts a "1/e rule" whereby, at the beginning of the relationship, the novice is trained just enough to produce a fraction 1/e of the efficient output. This rule causes inefficiently lengthy relationships that grow longer the more patient the players. We discuss policy interventions.

Suggested Citation

  • Garicano, Luis & Rayo, Luis, 2016. "Relational knowledge transfers," LSE Research Online Documents on Economics 66427, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:66427
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    Cited by:

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    2. Lisa Coleman, 2022. "Global Inclusion, Diversity, Belonging, Equity, and Access - GIDBEA. The Architecture of A New Different," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 25, pages 91-103, January.
    3. Zhao, Wei & Mezzetti, Claudio & Renou, Ludovic & Tomala, Tristan, 2024. "Contracting over persistent information," Theoretical Economics, Econometric Society, vol. 19(2), May.
    4. Jason J Sandvik & Richard E Saouma & Nathan T Seegert & Christopher T Stanton, 2020. "Workplace Knowledge Flows," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(3), pages 1635-1680.
    5. Wadud, Zia & Mattioli, Giulio, 2021. "Fully automated vehicles: A cost-based analysis of the share of ownership and mobility services, and its socio-economic determinants," Transportation Research Part A: Policy and Practice, Elsevier, vol. 151(C), pages 228-244.
    6. Baccara, Mariagiovanna & Lee, SangMok & Yariv, Leeat, 2023. "Task allocation and on-the-job training," Journal of Economic Theory, Elsevier, vol. 207(C).
    7. Antoni-Komar, Irene & Rommel, Marius & Posse, Dirk & Wittkamp, Moritz & Paech, Niko, 2021. "Stable Schools in der Solidarischen Landwirtschaft. Ein transdisziplinäres Setting zur Förderung organisationaler Stabilität," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317057, German Association of Agricultural Economists (GEWISOLA).
    8. Hagiu, Andrei & Wright, Julian, 2015. "Multi-sided platforms," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 162-174.
    9. Heski Bar‐Isaac & Clare Leaver, 2022. "Training, Recruitment, and Outplacement as Endogenous Adverse Selection," Economica, London School of Economics and Political Science, vol. 89(356), pages 849-861, October.
    10. Kukharskyy, Bohdan, 2020. "A tale of two property rights: Knowledge, physical assets, and multinational firm boundaries," Journal of International Economics, Elsevier, vol. 122(C).
    11. Francesc Dilmé & Daniel F. Garrett, 2023. "Relational Contracts: Public versus Private Savings," Econometrica, Econometric Society, vol. 91(3), pages 1025-1075, May.
    12. Purnomo, Agung, 2021. "Teori Kewirausahaan Limpahan Pengetahuan: Inovasi dari Mobilisasi Informasi," OSF Preprints k26vh, Center for Open Science.
    13. Santiago Caicedo & Arthur Seibold & Miguel Espinosa, 2019. "The Effects of Mandating Training in Firms: Theory and Evidence from the Colombian Apprenticeship Program," 2019 Meeting Papers 888, Society for Economic Dynamics.
    14. Zdravkovic, Srdan & Magnusson, Peter & Miocevic, Dario & Westjohn, Stanford A., 2021. "Vicarious animosity: Taking sides on provocative issues," Journal of Business Research, Elsevier, vol. 124(C), pages 77-85.
    15. Adam Feher, 2024. "Guarding Expertise and Assets: Non-competition Agreements and Their Implications," IAAEU Discussion Papers 202404, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    16. Venturini, Roberto & Ceccagnoli, Marco & van Zeebroeck, Nicolas, 2019. "Knowledge integration in the shadow of tacit spillovers: Empirical evidence from U.S. R&D labs," Research Policy, Elsevier, vol. 48(1), pages 180-205.
    17. Cahuc, Pierre & Hervelin, Jérémy, 2024. "The effect of workplace vs school-based vocational education on youth unemployment: Evidence from France," European Economic Review, Elsevier, vol. 162(C).

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    More about this item

    Keywords

    general human capital; international joint ventures; relational contracts;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General

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