• Become an SSTI Member

    As the most comprehensive resource available for those involved in technology-based economic development, SSTI offers the services that are needed to help build tech-based economies.  Learn more about membership...

  • Subscribe to the SSTI Weekly Digest

    Each week, the SSTI Weekly Digest delivers the latest breaking news and expert analysis of critical issues affecting the tech-based economic development community. Subscribe today!

Recent Research: Related Knowledge Boosts Manufacturing Productivity

January 10, 2005

Just what makes firms productive? Economists continue to refine their thinking on the interactions that enhance productivity. Knowledge capital and knowledge relatedness play an active role in increasing firm competitiveness, especially in large, high-tech manufacturing sectors, according to a study presented at a recent conference of the Groupe de Recherche en Economie.

In Knowledge and Productivity in the World's Largest Manufacturing Corporations, Lionel Nesta of the University of Sussex studies the productivity and technology relatedness of the world's top manufacturing companies. Nesta correlates patent and financial data from international sources for more than 150 multinational companies. He then refines and tests these data using different econometric models. Since Nesta's study uses data related mostly to the most research-intensive sectors, the findings relate mostly to large, technologically advanced firms.

Nesta examines the relationships between output, physical capital, labor and three types of knowledge: knowledge investments, knowledge diversity and knowledge relatedness. While all the factors contribute significantly to productivity, Nesta focuses on the knowledge measures.

Nesta finds that companies realize greater productivity gains from coordinating related knowledge bases than divergent pieces of knowledge. Integrated knowledge bases cost less to coordinate, he says. He also finds strong productivity gains from knowledge investments -- the ability to assimilate and exploit new technology in the production process.

Nesta suggests companies seeking to diversify their products and production should build on their core competencies. Thus, companies can maintain productivity while broadening their product lines.

Knowledge and Productivity in the World's largest Manufacturing Corporations is available at: http://www.idefi.cnrs.fr/manifs/textes/Lionel_Nesta.pdf

International