Knowledge-based interactions that happen in a region create knowledge flows because these interactions lead to knowledge transmission and diffusion. Entrepreneurs can benefit of knowledge flows available in their region by interacting with regional actors, i.e. individuals who were involved during the development of the knowledge or already possess it, and also benefit by understanding the determinants of knowledge flows. Thus, it is important to understand knowledge flows as they can increase the capacity of organisations to innovate.
Knowledge flows can be tacit or codified. The more tacit it is, the more difficult it is propagated. The more novel it is, the more expensive it will be to convert it into innovation. Moreover, excludability mechanisms (eg. patents and secrecy) prevent entrepreneurs to obtain the knowledge.
What determines knowledge flows?
Depends on different aspects:
•The extent to which knowledge is codified or tacit, i.e. how easy it can be transferred to other parties.
•Excludability, i.e. the ability to prevent other parties from using knowledge. Partial excludability is a characteristic of tacit knowledge and knowledge that requires considerable expertise to understand. It can happen through enforcement of IP rights, but also by other means such as secrecy, agreements or social norms.
•The extent to which knowledge already exists or has a prospective nature, i.e. whether knowledge is yet to be developed.
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