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Assessing the explanatory power of KIBS for
the international competitiveness of industrial
sectors
« Are we walking the lobby talk or not? »
Asier Murciego, Iñigo RdApodaca, Bart Kamp
Orkestra-Basque Institute of Competitiveness
Bilbao, 14 november 2014
bart.kamp@orkestra.deusto.es
Reported virtues of KIBS for industrial competitiveness –
Research angles from which KIBS receive attention
KIBS are good for innovation and a supplement to internal R&D and S&T support
structures:
Source of innovation and knowledge production (Miles, 2005; Muller and Zenker, 2001).
Both in the non-technological realm (NESTA, 2009)
Soft sources of knowledge and “novel practices rather than hardcore R&D
(Tether and Metcalfe, 2004)
And the technological realm (Miles, 1995; OECD, 2006)
Particularly for SMEs with last mile innovation; for whom classic S&T centres
are too high-end
KIBS are good for positioning a firm in Global Value Chains and GAV creation: “a
sub-sector consuming a high proportion of knowledge intensive services is
indicative of its strength in a GVC” (IDEA, 2013)
“The use of knowledge-intensive business services by an industry tends to correlate with
the level of gross added value of final outputs of that industry”
Moreover: whether these services are sourced locally or are imported, makes
tremendous difference for the regional anchorage of subsectors
KIBS as vitamines/engine for regional innovation systems: “KIBS are key players in
innovation systems, particularly to manufacturing competitiveness which largely
depends on knowledge contents provided by highly specialized suppliers”
(Corrocher & Cusmano, 2014)
KIBS are a defining element of innovation-oriented regions, whereas their scarcity and
slow growth distinctively characterize poor performing innovation systems
KIBS as (quasi) KET and pivots for industrial development: “KIBS as a strategic
sector to spur and diffuse transversal learning, innovation and sophistication effects
throughout industry” (Lundvall, 1992; Lorentz. et al., 2007)
Dynamic nodes of knowledge–related networks, “bridges of innovation” (Czarnitzky and
Spielkamp, 2000), “brokers” (Thomi and Böhn, 2003), interacting with the manufacturing
sector
(“Unrightfully”) left out of RIS3 discourse
Reported virtues of KIBS for industrial competitiveness –
Research angles from which KIBS receive attention
Quid presence and uptake of KIBS by Basque industry &
impact on international competitiveness?
Presence and composition of KIBS in the Basque Country v-à-v peers
2010 Percentual labour breakdown
Basque Country Spain EU-15
Whole economy
100 100 100
KIBS as a whole
7.3 6.4 7.4
Computer programming / IT services 1.4 1.2 1.5
Legal, accounting and corporate management
services
2.3 2.3 2.8
Architectural, engineering and technical essay
activities
1.9 1.6 1.4
R&D services 0.6 0.1 0.4
Advertising and market research 0.5 0.6 0.6
Other professional service activities 0,6 0,6 0,6
Quid presence and uptake of KIBS by Basque industry &
impact on international competitiveness?
KIBS employment has grown well above average, increasing by 12,06% between
2004-2010 versus 1,82% for total employment in Basque Country in same period
Notably engineering and architectural activities
Weight of KIBS employment on total grew by 10% between 2004-2010
Providing a solid basis to support industry and provide an alternative to regular S&T
circuits
Up to par with EU average, although below hotspots like Greater London, Brussels
Metropolitan area, Ile de France, CA de Madrid, …
? Who makes use of it; what explains growth: regional demand or foreign trade ?
Quid presence and uptake of KIBS by Basque industry &
impact on international competitiveness?
Use of KIBS by local industry
Largely local sales story – little use of KIBS from abroad? Difficult to export KIBS?
Higher export shares of user sectors indicates leverage effect of KIBS?
Year Domestic sales (inside BC) D Basque sales Spanish sales Export
2004 522,387 45.63% 49.09% 5.28%
2009 800,366 53% 66.67% 30.31% 3.02%
2004 846,548 76.85% 21.66% 1.49%
2009 1026,379 21% 85.38% 12.70% 1.92%
2004 192,599 46.50% 46.55% 6.95%
2009 605,511 214% 58.44% 13.23% 28.33%
2004 886,834 57.87% 33.96% 8.17%
2009 1275,914 44% 57.53% 27.22% 15.25%
2004 116,414 62.09% 28.42% 9.49%
2009 251,521 116% 71.66% 20.14% 8.20%
2004 427,565 74.37% 25.12% 0.51%
2009 412,042 -4% 64.36% 22.20% 13.44%
2004 373,293 33.44% 30.79% 35.77%
2009 242,887 -35% 80.61% 10.69% 8.70%
2004 3365,64 55.43% 33.85% 10.72%
2009 4614,62 37% 66.41% 21.62% 11.97%
2004 100 29%
2009 116,875 17% 25%
Other professional service
activities
TOTAL KIBS
Gross interior demand Basque
Economy
Computer programming / IT
Legal and accounting services
Holding activities and management
consultancy
Architectural, engineering and
technical essay activities
R&D services
Advertising and market research
Testing for correlation between « use of KIBS » –
« (international) competitiveness »
Methods / Sources:
Input-output tables 2000-2012
Regional accounts per sector on turnover and exports
KIBS:
Servicios informáticos y de información
Publicidad y marketing
Investigación y desarrollo
Arquitectura e ingeniería
Rationale/hypothesis for research:
If: KIBS are good for competitiveness of firms & industries
Then: the consumption of KIBS should have an impact on sectoral performance /
competitiveness indicators of those sectors consuming KIBS, a.o. measured in
terms of their turnover and export figures
Testing for correlation between « use of KIBS » –
« (international) competitiveness »
Industrial sectors:
● Madera y corchopán
● Industria del papel
● Refino de petróleo
● Química básica
● Química final
● Productos de caucho y plástico
● Fabricación de minerales no metalicos
● Siderurgia y producción de metales no férreos
● Molinos de hierro y acero
● Automoción
● Máquina Herramienta
● Equipamiento de ferrocarril
● Montacargas y grúas
Choice of sectors:
Dynamism
Export profile
Relevance to Basque
economy (employment-
wise; GAV-wise)
Testing for correlation use of KIBS – international
competitiveness Results
Spearman correlation (non parametric, small samples)
Average of correlations for the period 2000-2012
x y 0 year delay 1 year delay 2 year delay
kibs_total exports 0.680 0.676 0.667
kibs_total turnover 0.818 0.802 0.797
kibs_sh exports_sh_turnover 0.314 0.308 0.307
kibs_sh exports_growth 0.082 0.009 0.173
kibs_growth exports_growth 0.313 -0.045 -0.019
Variables
kibs_total: sector kibs consumption in thousand €
kibs_sh: share of kibs in total consumption of sector
kibs_growth: growth of kibs consumption in sector
exports: sector exports in th. €
turnover: sector turnover in th. €
exports_sh_turnover: share of exports on turnover
exports_growth: sector exports growth
Quid presence and uptake of KIBS by Basque industry &
impact on international competitiveness?
KIBS as underpinner for (international) competitiveness?
0
50000
100000
150000
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350000
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450000
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5000000
10000000
15000000
20000000
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30000000
35000000
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45000000
turnover kibs
Source: Eustat Note: All units in € thousands
Quid presence and uptake of KIBS by Basque industry &
impact on international competitiveness?
KIBS as underpinner for (international) competitiveness?
Source: Eustat Note: All units in € thousands
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
0
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exports kibs
Implications/Postulations
A strong industry benefits from a sound KIBS basis
Re-industrialization/revitalization of industry (also) requires KIBS
If economies with a strong industrial basis are resilient in the wake of crisis, it is
not just because they resisted a shift to tertiarization
“Instead”, it may be because they developed a supportive KIBS sector to underpin
industrial development
Allowing them to move into more sophisticated product territory (and PSS)
Stay on the cutting edge of their field
Undertake smart specialization at territorial level
KIBS can thus contribute to avoid footlooseness theses
Lot of local-for-local b2b relationships going on
Implications/Postulations
The relation seems proportional, though
Not necessarily multiplier-wise
(reverse) causality may be in play
1st law of H.H. Gossen:
diminishing marginal utility
Saturation may be at play
Implications/Postulations
The relation R&D expenses-growth is not linear and there are alternatives to
S&T-oriented innovation (cfr. DUI modes)
KIBS are highly interaction and high encounter-based and as such our work-in-
progress provides endorsement to think that an alternative or parallel road to support
industrial competitiveness exists
Optimum KIBS uptake ratio?
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
KIBS / Total inter-mediate consum-ption
3,8% 3,8% 3,6% 3,7% 3,7% 3,3% 3,3% 3,3% 3,3% 3,4% 3,8% 3,9% 3,7%
Limitations
Tested at level of single region only
Bias towards dynamic sectors
although some in decline: paper
Aggregated results: breakdown needed, also to corroborate results
Quantitative exercise to benefit from qualitative analyses
see whether subjects of study agree with derivations from figures
and can help to shed light on causal mechanisms and on direction between
(in)dependent variables
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