Knowledge spillover effect in German Knowledge-Intensive Industries

Abstract

It is widely assumed that firms collaborating in R&D activities benefit from knowledge spillovers. This paper examines the role of three types of knowledge spillovers, namely internal, market and institutional. We demonstrate that German knowledge-intensive firms prefer internal knowledge transfer and market R&D collaboration, respectively. The empirical evidence shows that these tools promote innovation performance. We thus provide justification for this strategy. We also show that public financial support represents an effective measure for establishing R&D collaboration based on knowledge spillovers generated in the communication within the firm, in the market and with public institutions. The support of market and institutional R&D collaboration seems to be particularly important.