Knowledge Networks and Markets : Towards a conceptual framework

KNOWINNO Workshop, Alexandria

14-15 November 2011

Fernando Galindo-Rueda (OECD)

Gili Greenberg (OECD)

Outline of presentation

1. Introduction. A taxonomy for the conceptual framework for KNMs

2. Developing the taxonomy

3. Validating the taxonomy

4. Concluding remarks and questions

KNM definition • OECD Innovation Strategy 2010:

“arrangements which govern the transfer of various types of knowledge, such as intellectual property, know-how, software code or databases, between independent parties”.

• Mechanisms for knowledge sharing and co-creation are also included in the OECD definition.

• Rationale for interest in the concept. Gains from trade and specialisation.

• Innovation systems approach still lacks a framework for representing and measuring linkages and flows.

• Develop a common language, interpret new phenomena, inform discussion, help set priorities – Businesses, academics, policy-makers

• Focus analysis and measurement: “If you cannot measure it, you can not improve it”. (Lord Kelvin)

• A taxonomy as a tool to improve the conceptual framework

Why a conceptual framework?

Why a broad view for the framework? • Data, information and knowledge

• Innovation activities > R&D

• Innovation outcomes > patentable K

• Markets for knowledge appear to be strong substitutes at the margin. What drives choice? – E.g. patent auctions (Nortel) vs company

acquisition (Motorola Mobile)

– E.g. expert consultancy and labour markets

Desired properties of conceptual framework and taxonomy

• Clarity and simplicity

• Avoidance of ambiguity

• Encompassing full range of phenomena

• Focused on economic relationships

• Subject to expert validation

• Potentially subject to empirical validation, through existing and new data

• Relevance to questions about what enables and prevents knowledge creation and circulation

1. Introduction. A taxonomy for the conceptual framework for KNMs

2. Developing the taxonomy 1. KNM concepts

2. Relevant features

3. Taxonomies

3. Validating the taxonomy

4. Concluding remarks and questions

What can is meant by KNM arrangements? Different possible objects of analysis under OECD

definition: I. Knowledge exchange agreements: Agreements between

parties to exchange / create knowledge

II.Knowledge exchange enabling mechanisms: The mechanisms, platforms, marketplaces, tools that support or enable those agreements

III.Internal arrangements to build capability to source and deploy knowledge and use of internal mechanisms.

IV.Knowledge exchange institutions and policies. The institutional “infrastructure” that support the above.

All relevant to the question:

How is knowledge transferred?

I. Knowledge Exchange Agreements: KEAs • Focus on agreements between unrelated parties

– The agreement is the basis to the consensual K transfer.

– Agreements can incorporate arrangements to prevent K circulation. E.g. limited use rights, NDAs, non-compete clauses…

– Emphasis on consent. Spillovers can also arise from activities such as industrial espionage, imitation or reverse engineering.

• Examples of KNM agreements: – IP ownership transfer, IP licensing, agreements to disclose info, to provide

data, IP pooling, M&A of IP intensive firms, M&A of tacit intangible intensive-firms, spin off, angel/VC deals, contract research, agreements to award prizes, consultancy, secondments, agreements to co-develop, collaboration, RJVs, strategic alliances, OEM agreements to supply knowledge, risk-sharing agreements, network membership, …

II. Knowledge Exchange Enabling Mechanisms

• Enable the definition and implementation of Knowledge Exchange Agreements between parties.

• Transformational impact of ICTs and globalisation. • Emergence of new mechanisms. • Examples:

– IP auction and clearing houses, online social and professional networks, recruitment agencies, co-creation platforms

III. Internal arrangements • Within organisations, the arrangements to

facilitate the flows of knowledge. – Organisations can deploy KNM mechanisms in

house.

• Development of capability to enter into knowledge exchange agreements. – Absorptive capacity

– Outbound capacity

• Strong policy relevance as innovation becomes more open.

IV. Arrangements as K Exchange institutions and policies

• Incentives to parties to undertake knowledge exchange activities

• Enforcement external to the parties

• Provision of public goods/services to facilitate knowledge exchange, reduce transaction costs

• Regulation of the marketplace for the enabling mechanisms. – Some reasons why: Market power, agency risk…

Some clarification examples KNMs as Agreements

KNMs as Enabling Mechanisms

Internal arrangements for capability

Policy / institutions

R&D Collaboration (RJV)

Company networks, web directories, …

Organisational capabilities for cooperation

Public incentives for collaboration

Transfer IP ownership (patent sale)

IP market (Patent auction house)

Management understanding of strategic implications

Enforcement by courts; examination by patent offices

Know how transfer through OEM

Supplier-user business networks

Internal staff training, adoption of organisational changes

Public provision of standards, and regulatory requirement. Network support

Some real estate agreements

Science parks, incubators

Business location decisions

Public support, location choices for res. Institutes

Four principal dimensions for approaching the taxonomy of KNMs

1. What is exchanged, in particular what types of knowledge?

2. Who are the parties to the K exchange? How can they be best characterised?

3. How do enabling mechanisms facilitate K circulation? What services do they provide?

4. How and by whom is the use of enabling mechanisms controlled?

Attributes for taxonomy - 1 1. Type of knowledge exchanged

– Existing (ex-post) /prospective K (ex-ante: creation and co-creation)

• Performance vis a vis moral hazard and adverse selection (Arora & Gambardella, 2010)

– Direct / indirectly transferred – what else is exchanged?

• Goods, services, risk, control

• Complementarities and separability

– Explicit/implicit. Transferability and expertise (Grant 2007 , Polanyi 1958, von Hippel 1994).

– Excludable/non-excludable. Technical, legal and organisational given social norms and laws.

– K inter-modularity in K creation, e.g. software.

Attributes for taxonomy - 2 2. Type of parties to the exchange

– Can adopt standard classification criteria: • Profit-seeking / non profit-seeking

• Independent / Government-controlled

• In territory / abroad

• Organisations / individuals, i.e. consumers, employees

• Main economic activity (sectors) , size,…

– Numbers and relationships do also matter: • One to one, communities, crowds, …

• Horizontal versus vertical.

– Relevant for identifying new and missing participants.

Attributes for taxonomy - 3

3. Types of exchange enabling services provided by the KNM

– Data, information, knowledge repository

– Search and matching

– Quality assurance, valuation, price formation

– Codification, standard-setting, assurance and credentials to third parties

– Financing of knowledge exchange or creation and risk allocation

– Other reduction in contracting, licensing and other transaction costs through specialisation

Attributes for taxonomy - 4

4. Nature of control over and access to KNM – The parties themselves or intermediaries?

• Parties: e.g. pools (all parties), corporate-owned user platforms (one side only)

• Intermediaries operating on own account or not: dealers vs brokers

– Rationing of access: • Will often vary according to provider/user of K

• Open and free, criteria-based membership, open but price mediated, exclusiveness, etc…

A full and linked taxonomy for KNMs I. K exchange agreements

– Primarily type of knowledge and parties

II. K exchange enabling mechanisms – Primarily enabling services and control

III.Internal arrangements can be treated as the above

– Internal capability is a very relevant but distinct object of analysis

IV.Institutions and policies share features with KNMs

I. Taxonomies for KNMs as K Exchange Agreements

• Draw primarily on: – Types of knowledge exchanged

• Complement / expand with: – Types of parties

– The nature of associated transfers

Examples of KE agreements

• VC agreement: – VC investor provides finance, risk-bearing,

innovation expertise, network connections

– In return for entrepreneurs’ rights on existing and future K, degree of control over decisions.

• Consultancy: – Ctant agrees to provide a K product (and rights

to it) as solution to task set out by client

– Financial compensation in return for services.

– Ctant may retain some ownership of resulting K.

KNMs

Arrangements/agreements between independent parties to transfer, exchange or co-create knowledge

Agreements on transfer or access to existing knowledge Agreements to create new knowledge

Directly

transferred Indirectly transferred One-sided

Multi-sided

Agreements to

transfer and allow access to existing knowledge and related rights

Agreements to transfer

ownership and control over the

entities with rights to the knowledge

Agreements to transfer goods

and services that provide

access to knowledge

Agreements to create and provide

new knowledge

Agreements to create new knowledge

Knowledge exchange agreements

II. Building a taxonomy of KNMS as Knowledge Exchange Enabling Mechanisms

A long list of possible examples: - IP auctioneers: e.g. Ocean Tomo.

- Patent bundlers: e.g. MPEG.

- Licensing facilitators: IPXI, clearing house, lic brokers s.a. yet2.com

- IP own account dealers: e.g. Intellectual Ventures

- Commercial data repositories and synthesisers: e.g. ORBIS, Scopus, …

- Open data repositories: e.g. clinicaltrials.org , examples in http://oad.simmons.edu/oadwiki/Data_repositories

- Platforms and tools for user applications: Apple-Store, Biobricks foundation, Sage Bionetworks, DNA registry at Biobricks.

- Public/private research consortia: Innovative medicines initiative, biomarkers consortium, University Innovation Centres…

- Standards setting bodies: e.g. NIST (US) , BSI(UK), OECD, ISO

- Accreditation and certification bodies: e.g. ANAB (US), UKAS (UK), COFRAC (FRA)

More examples - Internet search engines: e.g. Google, Yahoo, Bing

- Academic publishers:

- Model research, licence and collaboration agreements: Lambert toolkit, Sci Commons, Creative Commons.

- R&D and innovation outsourcing platforms: Innocentive, innoget, science exchange, Ninesigma, P&G's connect and develop

- Competition and prize mechanisms: Topcoder, prize4life, jovoto

- Trade fair circuits:

- Equity trading mechanisms: e.g. listed stock exchanges,

- Professional conferences:

- Angel and VC networks:

- Incubator facilities: e.g. Plug and Play Tech center

- Generic online information sharing mechanisms: Yahoo answers, wikipedia

- Online shared interest communities: e.g. patients like me, specific wikis,

- Corporate user communities: e.g. for software products

- Generic online social network platforms: e.g. Facebook, LinkedIn,…

- Crowd-sourcing corporate platforms: Lego, Ideas4unilever, Nokia ideas

And still more… - Crowd-sourcing non profit platforms. NY library digitisation project

- Collective intelligence platforms. E.g. tripadvisor, prediction markets…

- Online professional networks: matchtech

- Consultant registers

And on the policy/institutional side: - Incentives for research collaborations, e.g. for particular actors

- Support for academic placements in business

- Patent examination and publication

- Security trading legislation

- IPR enforcement

- Competition law exemptions for pre-competitive research joint ventures

- Legal requirement of standards

- Legal constraints on non-compete clauses

- Research procurement

- IP research exemptions

How do we make sense of these mechanisms?

• Straightforward alignment of mechanisms to the types of KE agreements they enable.

Knowledge exchange agreements and relevant mechanisms

Data repositories and search

Private Incubators

Markets for corporate control

VC networks

Expert networks

IP marketplaces

Matching for K services

Standards and accred

Consortia mechanisms

IP bundlers

User platforms

How do we make sense of these mechanisms?

• Straightforward alignment of mechanisms to the types of KE agreements they enable.

• Additional typification on the basis of how they do it? – What services?

– Control and access?

• But complex to visualise the multiple dimensions in a simple taxonomy, even through clustering and MDS techniques

Some implications • Search/match broadly relevant

• Quality assurance less common

• Apparently few intermediaries enabling collaboration – Area of substantial and increasing policy

interest and activity

– Open source communities are de-facto collaboration mechanisms for members. E.g. OSS.

A simplified view of KNMs?

Proprietary

Open

Intermediated

Parties controlled

Search/ match focus

Quality assurance focus

Crowd

Small world

Creation

Exchange

Direct / disembodied

Indirect

A KNM scorecard? Proprietary

Open

Intermediated

Parties controlled

Search/ match focus

Quality assurance focus

Crowd

Small world

Creation

Exchange

Direct / disembodied

Indirect

Both? Both?

IP auctioneersIP own account dealers

Patent bundlers (pools)

Licensing facilitators

Standard setting bodies Acredditation and certification bodies

Academic peer review

Academic publishing

Internet search engines

Commercial data repositories and synthesisers

Open data repositories

Platforms and tools for user applications

Public private research consortia

Public incentives to research collaboration

Model research collaboration and licensing agreements

Private R&D AlliancesJoint research ventures

R&D and innovation outsourcing platforms

Competition and prize mechanisms

OEM platforms

Trade fairs and business conferences

Professional conferences

Academic conferencesEquity trading mechanisms

Independent VC networks

Angels networks

Incubator facilities

Generic online information sharing mechanisms

Online shared interest communities

Corporate user communities

Online social networks

Crowd-sourcing corporate platforms

Crowd-sourcing non-profit platforms

Collective intelligence platforms

Incentives for technology-focused networks

Online professional networks

Incentives for academic placement in firms

Public IPR granting and enforcing institutions

Recruitment agencies

Govt vocational training programmes

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Illustrative 2D mapping of KNMs based on attribute-based distances

Illustrative example of KNM clustering based on attribute based distances

IP_auctioneersIP_own_account_dealers

Equity_trading_mechaniPatent_bundlers_(pools

Licensing_facilitatorsR&D_and_innovation_outCrowd-sourcing_corporaCompetition_and_prize_

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Incubator_facilitiesPrivate_R&D_Alliances_Joint_research_venture

OEM_platformsIndependent_VC_network

Angels_networksIncentives_for_technol

Incentives_for_academiGovt_vocational_traini

0 .1 .2 .3 .4 .5KNM dissimilarity measure

Weighted-average linkage clustering

Preliminary observation of KNM groups • IP marketplaces providing matching and valuation services

for existing K

• ICT-intensive, “free” repositories and problem solving search and matching platforms.

– Private KNMs viable in large networks, sustained by bundling of free knowledge with ads

– Public involvement in KNMs for smaller, expert communities.

• Payment-based repositories and problem solving platforms.

• Networks and enablers for proxy-markets for implicit forms of knowledge and collaboration

• Standard setting bodies, codifying implicit into explicit knowledge and providing assurance

Additional observations • Rapid convergence of pool/search with quality

assurance, based on usage metrics

• Adoption of markets within public domains, and open mechanisms within private domains, subject to ability to sustain a business model (e.g. through bundling)

• Most KNMs still fail to meet Roth’s 2008 market design test. (Gans and Stern 2010)

• Dependencies on public policies in some domains.

1. Introduction. A taxonomy for the conceptual framework for KNMs

2. Developing the taxonomy

3. Validating the taxonomy

4. Concluding remarks and questions

Validation of taxonomy – existing sources • Is the grouping of KNMs (as K Ex Agreements)

reflected in patterns of usage amongst innovating organisations?

• Innovation surveys (CIS-type) contain information on K sources for innovation active firms:

– Sources of info for innovation

– Acquisition of knowledge activities

– Collaboration and with whom?

• Lack of outbound activities. Only K protection activities

• Demonstration of approach using UK IS data

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Multidimensional scaling of kowledge sources in business: Product and process innovators, UK Innovation Survey

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"Commercial" sources of information

Public sector collaborations and sources of information

R&D-based sources of knowledge

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IntraR&D_commercial info Information intensive Low external engagement Acquisition focused market info Collaboration active

Clustering of companies

Findings • Observed modes of knowledge sourcing and

collaboration reveal (for the UK example): – Collaboration as a compact group, acquisition as

more diverse.

– Core market-based information cluster with non R&D, non IP innovation investments

– External R&D and IP closely tied and linked to market collaborations. Distinct from internal R&D.

– Public sector dimension for info and collaboration

– Compact group of “open” sources of data and information

What more on knowledge sources?

• Extension of exercise to other countries. – Within framework of OECD project on Modes

of innovation in firms, complement to Frenz & Lambert.

• Observed impact of modes of K sourcing on innovation outcomes, by size and sector

• Set agenda for improving quality of questions on linkages and collaboration

Validation of taxonomy of KNMs as enabling mechanisms

• Interested to hear comments on possible approaches.

• One possible approach: – Ask experts to rate relevance of attribute to a

given KNM.

– Map similarities between KNMs on the basis of expert responses.

• Issues – Level of detail. Ask about generic or specific

mechanisms?

Model questionnaire

Validation of taxonomy

• Organisation or sector-based approach.

• Ask respondents to identify usage of KE enabling mechanisms in the organisation, or prevalence within sector.

1. Introduction. A taxonomy for the conceptual framework for KNMs

2. Developing the taxonomy

3. Validating the taxonomy

4. Concluding remarks and questions

Concluding remarks - findings

• Two distinct types of KNMs. Agreements and enabling mechanisms

• Added relevance of internal capabilities and institutions and policies.

• Possible to define relationships between them

• Proposed set of 4 defining features

• Proposed conceptual taxonomies for KNMs (as agreements and enabling mechanisms)

Concluding remarks - findings • Enabling services and control the most important

attributes for KNMs as enabling mechanisms

– Respond to market inefficiencies and trans costs

– Multiple configurations

– Constant evolution and adaptation

• But type of knowledge cannot be ignored. Mechanisms harder to find for some types of agreements, esp. collaborations where effort is hard to verify.

– KNMs can provide commitment devices, subject to participation constraint. Difficult trade offs, difficult to generalise.

Next steps

• Finalise comprehensive list of mechanisms and subject to internal and external scoring

• Observe emerging clustering of mechanisms and assess coherence within and across clusters.

• Synthesise the rationale for the type of mechanism and assess limits to its effectiveness

Concluding remarks – Policy analysis

• Policy dual role: – As Knowledge exchange enabling mechanism

where KNMs are missing.

– As a regulator of the KNM marketplace.

• And implications for KNM metrics?