Managing knowledge flows through appropriation and learning strategies
Melbourne Institute Working Paper No. 06/06
Date: March 2006
In this paper, the management of outgoing and incoming knowledge is modelled as part of the firm’s profit-seeking strategy. Firms stem their outflow of commercially-sensitive knowledge through appropriation mechanisms such as patents and secrecy and stimulate inflows of commercially-valuable knowledge through networking, attending conferences and other forms of external interaction. It is probable, however, that some learning styles undermine some appropriation mechanisms. For instance, recent research on the “paradox of openness” highlights the conflict between firms’ openness and their ability to appropriate innovation profits. We use survey data from over 600 Australian firms to examine this paradox and other effects of firms’ management of knowledge flows such as the complementarity between patents and secrecy.