Knowledge-Intensive Business Services as Knowledge Intermediaries in Industrial Regions: A Comparison of the Hsinchu and Tainan Metropolitan Areas

Abstract

The literature repeatedly stresses the role of knowledge-intensive business services (KIBS) as a provider of knowledge and information to other businesses and organizations. KIBS simultaneously promotes, mediates and enables client innovation. This investigation mainly seeks to link KIBS to the analytical structure of concepts, including regional innovation systems, knowledge exchanges and innovation patterns. This investigation interprets the role of KIBS as that of a knowledge intermediary that mediates and transmits knowledge among actors. This study also clarifies the mechanism of knowledge exchanges in different geographic innovation systems. The analytical results obtained by this investigation are applied to analyse the intermediary functions of KIBS in various metropolitan areas in southern and northern Taiwan. This investigation demonstrates variations in how KIBS act as knowledge intermediaries, and that these variations depend mostly on industrial cluster patterns, the dominant innovation patterns at their locations and the birth of sustainable KIBS. KIBS in large/core metropolitan regions, thus, are initially based on science, technology and innovation industrial activities, and further closely resemble doing, using and interaction industrial activities. Consequently, more informal learning processes, such as local buzz and discussion/competition relations, tend to develop in such regions.

Funding

The author would like to thank the National Science Council of Taiwan for financially supporting this research [Contract Numbers NSC 102-2410-H-216 -007 and NSC 100-2410-H-216- 009-MY2].

Notes

1. A regional innovation system is recognized as a cluster of interactions of private and public interests, formal mechanisms and other organizations. Its functions are determined based on negotiations and relationships of various organizations and institutions that enable knowledge generation, utilization, diffusion and delivery (Doloreux, 2004). That is, a regional innovation system comprises knowledge and institutional infrastructure that supports innovations within regional industrial structures (Asheim & Coenen, 2005).

2. The argument can also be made that the co-location of KIBS and their (international) clients stems from urbanization economies, which include the availability of urban amenities, the cosmopolitan atmosphere of a place, the presence of universities and government administration and easily accessible, internationally well-connected transportation hubs (Jacobs et al., 2014). It is often argued that it is the diversity of economic activity, offered by large cities, that leads to the development of new products, services and markets (Frenken et al., 2007; Jacobs et al., 2014).

3. Jensen et al. (2007) pointed that one, the Science, Technology and Innovation (STI) mode, is based on the production and use of codified scientific and technical knowledge. The other, the Doing, Using and Interacting (DUI) mode, relies on informal processes of learning and experience-based know-how.

4. This implies that the primary function of KIBS in STI industrial clusters is to support STI companies by providing information and knowledge that are outside of their core competencies (Aslesen & Isaksen, 2007a).

5. Synthetic knowledge flows mainly on two levels—the first is among consumers, producers and suppliers, and the second is internally within companies and local industrial social groups.

6. The Northern Region includes Taipei, New Taipei, Keelung and Hsinchu Cities, and Taoyuan, Hsinchu and Yilan counties; the population is 10.3 million; there are 27,685 KIBS firms in the Northern region. The Southern region includes Kaohsiung, Tainan and Chiayi Cities, and Chiayi, Pingtung and Penghu Counties; the population is 6.4 million; there are 9,698 KIBS firms in the Southern Region.

7. The Industrial Technology Research Institute was created in 1973. Since its inception, it has trained more than 70 chief executive officers, incubated 165 start-ups and accumulated over 10,000 patents. Currently, it has 13 research units and centres and over 5000 researchers and professionals.

8. He described that the comprehensiveness of a supporting environment facilitated spin-off or start-up formation and survival, and thus strengthened regional self-growth.

9. Out of the 21 companies successfully incubated by the ITRI Incubator from 1997 to 2001, 60% chose to thus locate in the Hsinchu area (including in HSIP).

10. This kind of firms is either younger spin-offs from surrounding research institutions/universities or larger firms. Klepper and Sleeper (2005) pointed out that spin-offs will have a better chance of survival and growth than start-ups because they will likely follow the routines from the parent company/institution.

11. This is related to agglomeration theory, which concerns itself with the presence of positive externalities that stem from the localization of similar types of industry; these positive externalities include, most notably, input sharing, knowledge spillovers and a specialized labour force, which result in increasing returns to scale (Jacobs et al., 2014).

12. As aforementioned, it is heavily influenced by the proactive participation of universities and research institutions and the intensive spin-offs. The accumulation of such interactions/activities stimulated demand for and dependence on KIBS, further boosting demand for various types of specialized support, namely KIBS-births.

13. Knowledge–labour interactions include formal and informal channels. Informal channels include personal contacts and the utilization of equipment of employees in related industries and research institutions through literature review, and private gatherings such as book clubs and discussion forums. In contrast, formal channels include joint R&D projects or innovation activities, corporate R&D projects or innovation activities in partnership with academic and research institutions, and professional consulting projects (Hu, 2008; Hu & Chen 2014).