Regional innovation systems and the foundation of knowledge intensive business services. A comparative study in Bremen, Munich, and Stuttgart, Germany

Abstract

Knowledge intensive business services (KIBS) are believed to be one of the main drivers of technological change, innovation, and economic progress. Although firm foundations play a crucial role among KIBS, entrepreneurship research has hardly ever investigated the sector. As firm founders in early stages of their firms' development mostly draw on regional resources, and as the provision of the services is an interactive process, “proximity” between the different actors of the particular territorial innovation and production system clearly matters. This contribution analyses the interrelationships between KIBS foundations and their respective innovation and production systems by performing qualitative and conceptual in-depth studies of three German metropolitan regions.

Acknowledgements

This paper presents results from the research project “The Foundation of Knowledge-intensive Business Services in the Context of Industrial Core Regions: A Comparative Analysis in a Regional Economic Perspective”, funded by the German Research Foundation (Grant No. RO 534/6). Contributions of the participants of the workshop “Interdisciplinary Entrepreneurship Research”, Oestrich-Winkel, Germany, 30–31 October 2003 and the 2nd IECER-Conference in Regensburg, Germany, 18–20 February 2004, where earlier versions of this paper were presented, are kindly appreciated. The authors are especially grateful to Knut Koschatzky, Frieder Meyer-Krahmer, Gerd Ronning, Harald Strotmann, and two anonymous referees for helpful comments. Remaining errors and all opinions expressed in the paper are the sole responsibility of the authors.

Notes

1. For a detailed discussion of the dualism between tacit and codified knowledge, see Gertler (2003). For Hausmann (1996), “there is no doubt, that under certain conditions spatial proximity may be advantageous for an intensive information flow. But (…) spatial proximity is neither a necessary nor a sufficient condition for a communicative interaction among actors. From this position, a sheer learning by ‘being there’, which is suggested by various approaches, seems to be rather naive and even spatially oversocialized. For these reasons, spatial proximity must be refused as a precondition for face-to-face communication.”

2. The underlying hypothesis for this fact claims that firm cooperations with external actors are a precondition and a result of an increase in the division of labour or vertical disintegration (Storper, 1996). In an economy based on the division of labour, technology acquisition, and innovation, the production and the sale of a product are no longer realized by a single company. Instead, cooperation and mutual interaction of different actors take place (Koschatzky, 2001). Taking into account the specific characteristics of KIBS, particularly their knowledge orientation and the fact that services cannot be stored and traded, it is assumed here that proximity between KIBS and clients (also as knowledge-providers) is a precondition for the firms' success.

3. These planning regions (Raumordnungsregionen, RORs) have no administrative function; however, their boundaries follow the borders of the counties they include; thus, data can be obtained by aggregation of county data. Another advantage of using RORs is that functional linkages between a central city and its region can be included in the analysis (BBR, 2002).

4. The foundation rates below average in Bremen in the calculations (see Figure 3) might be attributed to the fact that the median was not used, but they also might appear due to the more restrictive sectoral definition as well as to the period investigated [Brixy & Grotz (2004) examined all business services founded between 1987 and 1997].

5. Fifteen interviews were conducted in Bremen (5 firms/10 experts), 16 in Munich (5/11) and 12 in Stuttgart (3/9) between March and December 2003.

6. For example, the DaimlerChrysler production plant located in Bremen—as the biggest local employer—generates little significant demand for business services or outsourcing activities. As purely production-oriented, no R&D or technology-oriented activities relevant for demand of knowledge intensive business services are carried out. In contrast, the relevance of the DaimlerChrysler headquarters in the Stuttgart region appears to be totally different.

7. Those sectors include maritime biotechnology, logistics, environmental technology, health economy, aviation and space, information and communication technology, and design. As it is expected that the most dynamic processes will take place in these fields, different political initiatives have been initiated by the regional government.