Advertisement

Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Asymmetric information as a barrier to knowledge spillovers in expert markets

Abstract

This paper investigates barriers to effective knowledge spillovers for markets in which the product can be characterized as a credence good, i.e. its complexity impedes the evaluation of quality by customers both ex-ante and ex-post. We focus on the German market for energy efficiency consultants, as an emerging and subsidized sector in which the service offered has strong credence good properties. Based upon in-depth interviews with stakeholders, we analyze the determinants and barriers to knowledge spillovers. We find that the incentive to foster spillovers to increase suppliers’ knowledge is limited by the difficult commercialization of additional capabilities. The implementation of a public certification scheme has failed to increase the sectoral knowledge spillovers. By contrast, the participation in formal knowledge networks has been more effective in prompting companies to foster knowledge spillovers, which has also led to a higher degree of specialization. We conclude that access to certification schemes should be further restricted to increase market transparency and private networks should be supported to achieve the aim of increasing knowledge spillovers.

This is a preview of subscription content, log in to check access.

Notes

  1. 1.

    For recent extensive literature reviews on the results of the KSTE, see Acs et al. (2013) and Ghio et al. (2015).

  2. 2.

    To our knowledge, EECs have been only analyzed according to their function as an economic policy instrument. The results mainly highlighted the low effectiveness of increasing the rate of retrofit (e.g. Mahapatra et al. 2011; Palmer et al. 2013; Virkki-Hatakka et al. 2013).

  3. 3.

    In one case, recording was not possible due to technical problems. Therefore, an extensive memo was written immediately after the interview.

  4. 4.

    Most interviewees emphasized that misconceptions are widespread and that false information is used and willfully spread in the EEC-market, as: “in some parts, even outright misinformation is going on” (interviewee #B). Interviewees connected the obvious uncertainty on the customer side to this diffusion of false information.

  5. 5.

    The connection of these problematic factors often leads to misinformed choices on the customers’ side, which is emphasized by most interviewees. Consequently, inappropriate retrofit choices are made, based on substantially limited knowledge by customers who fail to acknowledge relevant pieces of information. As interviewee #H states: “Of course, the energy efficiency consultant is only contacted afterwards, once they have their problem with mold. Then I always say ‘well, why didn’t you make a proper ventilation concept beforehand, you would have needed to figure out what would happen once you seal your windows!’ Of course, that’s how it works.

  6. 6.

    Upon receipt of the certificate, the access to subsidies is granted via a public web list. To be included in the web list, a minimum of 70 h of training and 16 h of additional training every two years is required (KfW 2014).

  7. 7.

    As interviewee #H stated: “There is of course some difference between energy efficiency consultants who just call themselves as such and those that are listed. The ones on the lists at least have to show some very basic minimum levels of quality.” This statement can be considered a representative view among interviewees: certification does provide some information, but is still considered as a very low threshold of expert knowledge without substantial additional information.

  8. 8.

    In this context, interviewee #P, employed in an EEC-network, emphasizes that “energy efficiency consultants, if they are serious and are doing their business properly, are building and using networks”. Across interviews, there is a widespread understanding that quality is a major concern for the existing private networks.

  9. 9.

    Interviewee #J sums up this policy by stating “In our region, we do know each other somewhat, you know, you participate in the network and if you know about someone who does EEC work but has messed up a couple of projects and things regularly go wrong with him, we just wouldn’t let him into the network.” Further, the same interviewee states that “the network is also working as a kind of quality-network, so that only firms with quality can get in. And if one can provide references, to which the board says ‘yes, this is good’, only then can one get in.”

  10. 10.

    The increase in information spillovers is acknowledge by most interviewees; as one network representative puts it: “And through the network, we offer the opportunity for each energy efficiency consultant to learn and improve in his work” (Interviewee #J).

  11. 11.

    The increased cooperation can be illustrated by one consultant’s statement, who – in response to a question about the occurrence and advantages of cooperation in situations of unplanned overcapacities – states that: “I always try to react with colleagues, using our network. I can always find someone there, I initiate an appeal for help and that’s why we’re organized, among other things. Maybe there is one or another who says, you know, I just happen to have a shift in my plans here, I can help you out.” (Interviewee #I)

  12. 12.

    For studies providing an overview and critical assessment of the contemporary German labor market with regard to wage and hiring rigidity, we refer to Moeller (2010); Eichhorst (2015); Burda (2016).

References

  1. Acosta, M., Coronado, D., & Flores, E. (2011). University spillovers and new business location in high-technology sectors: Spanish evidence. Small Business Economics, 36(3), 365–376.

  2. Acs, Z. J., & Audretsch, D. B. (1988). Innovation in large and small firms: an empirical analysis. American Economic Review, 78(4), 678–690.

  3. Acs, Z. J., & Plummer, L. A. (2005). Penetrating the ``knowledge filter” in regional economies. The Annals of Regional Science, 39(3), 439–456.

  4. Acs, Z. J., Anselin, L., & Varga, A. (2002). Patents and innovation counts as measures of regional production of new knowledge. Research Policy, 31(7), 1069–1085.

  5. Acs, Z. J., Audretsch, D. B., Braunerhjelm, P., & Carlsson, B. (2004). The missing link: the knowledge filter and endogenous growth (discussion paper). Stockholm: Center.

  6. Acs, Z. J., Braunerhjelm, P., Audretsch, D. B., & Carlsson, B. (2009a). The knowledge spillover theory of entrepreneurship. Small Business Economics, 32(1), 15–30.

  7. Acs, Z. J., Plummer, L. A., & Sutter, R. (2009b). Penetrating the knowledge filter in “rust belt” economies. The Annals of Regional Science, 43(4), 989–1012.

  8. Acs, Z. J., Audretsch, D. B., Braunerhjelm, P., & Carlsson, B. (2012). Growth and entrepreneurship. Small Business Economics, 39(2), 289–300.

  9. Acs, Z. J., Audretsch, D. B., & Lehmann, E. E. (2013). The knowledge spillover theory of entrepreneurship. Small Business Economics, 41(4), 757–774.

  10. Agarwal, R., & Shah, S. K. (2014). Knowledge sources of entrepreneurship: firm formation by academic, user and employee innovators. Research Policy, 43(7), 1109–1133.

  11. Agarwal, R., Audretsch, D., & Sarkar, M. B. (2007). The process of creative construction: knowledge spillovers, entrepreneurship, and economic growth. Strategic Entrepreneurship Journal, 1(3–4), 263–286.

  12. Aghion, P., Bloom, N., Blundell, R., Griffith, R., & Howitt, P. (2005). Competition and innovation: an inverted-U relationship. The Quarterly Journal of Economics, 120(2), 701–728.

  13. Amara, N., & Landry, R. (2005). Sources of information as determinants of novelty of innovation in manufacturing firms: evidence from the 1999 statistics Canada innovation survey. Technovation, 25(3), 245–259.

  14. Arrow, K. (1962). Economic welfare and the allocation of resources for invention. In R. Nelson (Ed.), The rate and direction of inventive activity (pp. 609–626). Princeton: Princeton University Press.

  15. Audretsch, D. B. (1995). Innovation and industry evolution. Cambridge, Mass: MIT Press.

  16. Audretsch, D. B., & Belitski, M. (2013). The missing pillar: the creativity theory of knowledge spillover entrepreneurship. Small Business Economics, 41(4), 819–836.

  17. Audretsch, D. B., & Keilbach, M. (2007). The theory of knowledge spillover entrepreneurship. Journal of Management Studies, 44(7), 1243–1254.

  18. Audretsch, D. B., & Keilbach, M. (2008). Resolving the knowledge paradox: knowledge-spillover entrepreneurship and economic growth. Research Policy, 37(10), 1697–1705.

  19. Audretsch, D. B., & Lehmann, E. E. (2005). Does the knowledge spillover theory of entrepreneurship hold for regions? Research Policy, 34(8), 1191–1202.

  20. Audretsch, D. B., & Stephan, P. E. (1999). Knowledge spillovers in biotechnology: sources and incentives. Journal of Evolutionary Economics, 9(1), 97–107.

  21. Audretsch, D. B., Lehmann, E. E., & Warning, S. (2005). University spillovers and new firm location. Research Policy, 34(7), 1113–1122.

  22. Audretsch, D. B., Keilbach, M., & Lehmann, E. E. (Eds.) (2006). Entrepreneurship and economic growth. Oxford: Oxford University Press.

  23. Audretsch, D. B., Hülsbeck, M., & Lehmann, E. E. (2012). Regional competitiveness, university spillovers, and entrepreneurial activity. Small Business Economics, 39(3), 587–601.

  24. Auriol, E., & Schilizzi, S. G. (2015). Quality signaling through certification in developing countries. Journal of Development Economics, 116, 105–121.

  25. Bartiaux, F., Gram-Hanssen, K., Fonseca, P., Ozoliņa, L., & Christensen, T. H. (2014). A practice–theory approach to homeowners’ energy retrofits in four European areas. Building Research & Information, 42(4), 525–538.

  26. Beck, A., Kerschbamer, R., Qiu, J., & Sutter, M. (2014). Car mechanics in the lab––investigating the behavior of real experts on experimental markets for credence goods. Journal of Economic Behavior & Organization, 108, 166–173.

  27. Bonaccorsi, A., Colombo, M. G., Guerini, M., & Rossi-Lamastra, C. (2013). University specialization and new firm creation across industries. Small Business Economics, 41(4), 837–863.

  28. Bonroy, O., & Constantatos, C. (2008). On the use of labels in credence goods markets. Journal of Regulatory Economics, 33(3), 237–252.

  29. Braunerhjelm, P., Acs, Z. J., Audretsch, D. B., & Carlsson, B. (2010). The missing link: knowledge diffusion and entrepreneurship in endogenous growth. Small Business Economics, 34(2), 105–125.

  30. Brounen, D., & Kok, N. (2011). On the economics of energy labels in the housing market. Journal of Environmental Economics and Management, 62(2), 166–179.

  31. Burda, M.C. (2016). The German Labor Market Miracle, 2003–2015: An Assessment. SFB 649 Discussion Paper 2016–005.

  32. Cappelli, R., Czarnitzki, D., & Kraft, K. (2014). Sources of spillovers for imitation and innovation. Research Policy, 43(1), 115–120.

  33. Carlsson, B., Acs, Z. J., Audretsch, D. B., & Braunerhjelm, P. (2009). Knowledge creation, entrepreneurship, and economic growth: a historical review. Industrial and Corporate Change, 18(6), 1193–1229.

  34. Cho, I. K., & Kreps, D. M. (1987). Signaling games and stable equilibria. The Quarterly Journal of Economics, 102(2), 179–221.

  35. Cooke, P., & Leydesdorff, L. (2006). Regional development in the knowledge-based economy: the construction of advantage. Journal of Technology Transfer, 31, 5–15.

  36. De Silva, D. G., & McComb, R. (2012). Research universities and regional high-tech firm start-up and exit. Economic Inquiry, 50(1), 112–130.

  37. Diefenbach, N., Cischinsky, H., Rodenfels, M., Clausnitzer, K.-D., 2010. Datenbasis Gebäudebestand: Datenerhebung zur energetischen Qualität und zu den Modernisierungstrends im deutschen Wohngebäudebestand (neue Ausg.). Wohnen und Umwelt, Darmstadt.

  38. Dranove, D., & Jin, G. Z. (2010). Quality disclosure and certification: theory and practice. Journal of Economic Literature, 48(4), 935–963.

  39. Driffield, N., & Love, J. H. (2005). Who gains from whom? Spillovers, competition and technology sourcing in the foreign-owned sector of UK manufacturing. Scottish Journal of Political Economy, 52(5), 663–686.

  40. Driffield, N., Love, J. H., & Yang, Y. (2014). Technology sourcing and reverse productivity spillovers in the multinational enterprise: global or regional phenomenon? British Journal of Management, 25, 24–41.

  41. Dulleck, U., & Kerschbamer, R. (2006). On doctors, mechanics and computer specialists: the economics of credence goods. Journal of Economic Literature, 44(1), 5–42.

  42. Dulleck, U., Kerschbamer, R., & Sutter, M. (2011). The economics of credence goods: an experiment on the role of liability, verifiability, reputation, and competition. American Economic Review, 101(2), 526–555.

  43. Edmondson, A. C., & McManus, S. E. (2007). Methodological fit in management field research. The Academy of Management Review, 32(4), 1155–1179.

  44. Eichhorst, W. (2015). The unexpected appearance of a new German model. British Journal of Industrial Relations, 53(1), 49–69.

  45. Eisenhardt, K. (1989). Theories from case study research. The Academy of Management Review, 14(4), 532–550.

  46. Eisenhardt, K., & Graebner, M. E. (2007). Theory building from cases: opportunities and challenges. Academy of Management Journal, 50(1), 25–32.

  47. Feldman, M. P. (1999). The new economics of innovation, spillovers and agglomeration: a review of empirical studies. Economics of Innovation and New Technology, 8(1–2), 5–25.

  48. Feser, D., Proeger, T., 2015. Knowledge-intensive business services as credence goods -- a demand-side approach. Journal of the Knowledge Economy. doi:10.1007/s13132-015-0320-1.

  49. Friege, J., & Chappin, E. (2014). Modelling decisions on energy-efficient renovations: a review. Renewable and Sustainable Energy Reviews, 39, 196–208.

  50. Ghio, N., Guerini, M., Lehmann, E. E., & Rossi-Lamastra, C. (2015). The emergence of the knowledge spillover theory of entrepreneurship. Small Business Economics, 44(1), 1–18.

  51. Gittleman, M., Klee, M.A., Kleiner, M.M. (2015). Analyzing the labor market outcomes of occupational licensing National Bureau of Economic Research Working Paper No. w20961.

  52. Glaser, B. G. (1965). The constant comparative method of qualitative analysis. Social Problems, 12(4), 436–445.

  53. Glaser, B. G., & Strauss, A. L. (2008). The discovery of grounded theory: strategies for qualitative research. Princeton, NJ: Recording for the Blind & Dyslexic.

  54. Gram-Hanssen, K., Bartiaux, F., Jensen, O. M., & Cantaert, M. (2007). Do homeowners use energy labels? A comparison between Denmark and Belgium. Energy Policy, 35(5), 2879–2888.

  55. Guerrero, M., & Urbano, D. (2014). Academics’ start-up intentions and knowledge filters: an individual perspective of the knowledge spillover theory of entrepreneurship. Small Business Economics, 43(1), 57–74.

  56. Hayter, C. S. (2013). Conceptualizing knowledge-based entrepreneurship networks: perspectives from the literature. Small Business Economics, 41(4), 899–911.

  57. Howden, C., & Pressey, A. D. (2008). Customer value creation in professional service relationships: the case of credence goods. The Service Industries Journal, 28(6), 789–812.

  58. Howells, J. (2006). Intermediation and the role of intermediaries in innovation. Research Policy, 35(5), 715–728.

  59. Huggins, R., & Thompson, P. (2015). Entrepreneurship, innovation and regional growth: a network theory. Small Business Economics, 45(1), 103–128.

  60. Huggins, R., Johnston, A., & Thompson, P. (2012). Network capital, social capital and knowledge flow: how the nature of inter-organizational networks impacts on innovation. Industry & Innovation, 19(3), 203–232.

  61. Jahn, G., Schramm, M., & Spiller, A. (2005). The reliability of certification: quality labels as a consumer policy tool. Journal of Consumer Policy, 28(1), 53–73.

  62. Karnani, F. (2013). The university’s unknown knowledge: tacit knowledge, technology transfer and university spin-offs findings from an empirical study based on the theory of knowledge. The Journal of Technology Transfer, 38(3), 235–250.

  63. KfW, (2014). Die aktuellen KfW-Programme – was gibt es Neues? KfW-Regionalkonferenzen für die Wohnungswirtschaft 2014 https://www.kfw.de/PDF/Download-Center/F%C3%B6rderprogramme-%28Inlandsf%C3%B6rderung%29/PDF-Dokumente/Wohnungsunternehmen/Regionalkonferenz_Pr%C3%A4si_Merzbach.pdf).

  64. Kleiner, M. M. (2000). Occupational licensing. The Journal of Economic Perspectives, 14(4), 189–202.

  65. Klepper, S. (2007). Disagreements, spinoffs, and the evolution of Detroit as the Capital of the U.S. automobile industry. Management Science, 53(4), 616–631.

  66. Laursen, K., & Salter, A. J. (2004). Searching low and high: why do firms cite universities as a source of innovation? Research Policy, 33, 1201–1215.

  67. Laursen, K., & Salter, A. J. (2006). Open for innovation: the role of openness in explaining innovative performance among UK manufacturing firms. Strategic Management Journal, 27, 131–150.

  68. Laursen, K., & Salter, A. J. (2014). The paradox of openness: appropriability, external search and collaboration. Research Policy, 43(5), 867–878.

  69. Lundvall, B.-A. (Ed.) (1992). National Systems of innovation: towards a theory of innovation and interactive learning. London: Pinter Publishers.

  70. Maennig, W., & Ölschlaeger, M. (2011). Innovative Milieux and regional competitiveness: the role of associations and chambers of commerce and industry in Germany. Regional Studies, 45(4), 441–452.

  71. Maennig, W., Ölschlaeger, M., & Schmidt-Trenz, H. J. (2015). Organisations and regional innovative capability: the case of the chambers of commerce and industry in Germany. Environment and Planning C: Government and Policy, 33(4), 811–827.

  72. Mahapatra, K., Nair, G., & Gustavsson, L. (2011). Swedish energy advisers’ perceptions regarding and suggestions for fulfilling homeowner expectations. Energy Policy, 39(7), 4264–4273.

  73. Mayring, P. (2004). Qualitative content analysis. In U. Flick, E. von Kardoff, & I. Steinke (Eds.), A companion to qualitative research (Vol. 1, pp. 266–269). London: Sage.

  74. McCluskey, J. (2000). A game theoretic approach to organic foods: an analysis of asymmetric information and policy. Agricultural and Resource Economics Review, 29(1), 1–9.

  75. Moeller, J. (2010). The German labor market response in the world recession – de-mystifying a miracle. Zeitschrift für ArbeitsmarktForschung, 42(4), 325–336.

  76. Mueller, P. (2006). Exploring the knowledge filter: how entrepreneurship and university–industry relationships drive economic growth. Research Policy, 35(10), 1499–1508.

  77. Muench, S., Thuss, S., & Guenther, E. (2014). What hampers energy system transformations? The case of smart grids. Energy Policy, 73, 80–92.

  78. Nelson, R. R. (Ed.) (1993). National Innovation Systems: a comparative analysis. New York: Oxford University Press.

  79. Palmer, K., Walls, M., Gordon, H., & Gerarden, T. (2013). Assessing the energy-efficiency information gap: results from a survey of home energy auditors. Energy Efficiency, 6(2), 271–292.

  80. Pinto, H., Fernandez-Esquinas, M., & Uyarra, E. (2012). Universities and knowledge-intensive business services (KIBS) as sources of knowledge for innovative firms in peripheral regions. Regional Studies, 1–19.

  81. Plummer, L. A., & Acs, Z. J. (2014). Localized competition in the knowledge spillover theory of entrepreneurship. Journal of Business Venturing, 29(1), 121–136.

  82. Rogers, M. (2004). Networks, firm size and innovation. Small Business Economics, 22, 141–153.

  83. Romer, P. M. (1986). Retruns and long-run growth. Journal of Political Economy, 94(5), 1002–1037.

  84. Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic Perspectives, 8(1), 3–22.

  85. Seefeldt, F., Offermann, R., Duscha, M., Brischke, L. A., Schmitt, C., Irrekt, W., Ansari, E., & Meyer, C. (2013). Marktanalyse und Marktbewertung sowie Erstellung eines Konzeptes zur Marktbeobachtung für ausgewählte Dienstleistungen im Bereich Energieeffizienz, Berlin, Heidelberg, Mühlheim a.d. Ruhr, downloaded from: http://www.bafa.de/bfee/informationsangebote/publikationen/studien/bafa_marktanalyse_endbericht.pdf. Downloaded on 15 Jan 2015.

  86. Schiller, D., & Diez, J. R. (2010). Local embeddedness of knowledge spillover agents: empirical evidence from German star scientists. Papers in Regional Science, 89(2), 275–294.

  87. Schmidt, S. (2015). Balancing the spatial localisation ‘tilt’: knowledge spillovers in processes of knowledge-intensive services. Forthcoming: Geoforum.

  88. Shapiro, C. (1986). Investment, moral hazard, and occupational licensing. The Review of Economic Studies, 53(5), 843–862.

  89. Shu, C., Liu, C., Gao, S., & Shanley, M. (2014). The knowledge spillover theory of entrepreneurship in alliances. Entrepreneurship Theory and Practice, 38(4), 913–940.

  90. Smith, H. L., Romeo, S., & Virahsawmy, M. (2012). Business and professional networks: scope and outcomes in Oxfordshire. Environment and Planning A, 44(8), 1801–1818.

  91. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.

  92. Spencer, J. W. (2001). How relevant is university-based scientific research to private high-technology firms? A United States–Japan comparison. Academy of Management Journal, 44, 432–440.

  93. Stam, E. (2013). Knowledge and entrepreneurial employees: a country-level analysis. Small Business Economics, 41(4), 887–898.

  94. Stenholm, P., Acs, Z. J., & Wuebker, R. (2013). Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity. Journal of Business Venturing, 28(1), 176–193.

  95. Stieß, I., & Dunkelberg, E. (2013). Objectives, barriers and occasions for energy efficient refurbishment by private homeowners. Journal of Cleaner Production, 48, 250–259.

  96. Tang, J. (2006). Competition and innovation behaviour. Research Policy, 35(1), 68–82.

  97. Tether, B. S., & Tajar, A. (2008). Beyond industry–university links: sourcing knowledge for innovation from consultants, private research organisations and the public science-base. Research Policy, 37(6–7), 1079–1095.

  98. Thomä, J., & Bizer, K. (2013). To protect or not to protect?: modes of appropriability in the small enterprise sector. Research Policy, 42(1), 35–49.

  99. Vega-Jurado, J., Gutiérrez-Gracia, A., Fernández-de-Lucio, I., & Manjarrés-Henríquez, L. (2008). The effect of external and internal factors on firms’ product innovation. Research Policy, 37(4), 616–632.

  100. Virkki-Hatakka, T., Luoranen, M., & Ikävalko, M. (2013). Differences in perception: how the experts look at energy efficiency (findings from a Finnish survey). Energy Policy, 60, 499–508.

  101. White, M. D., & Marsh, E. E. (2006). Content analysis: a flexible methodology. Library Trends, 55(1), 22–45.

  102. Wilson, C., Crane, L., & Chryssochoidis, G. (2015). Why do homeowners renovate energy efficiently? Contrasting perspectives and implications for policy. Energy Research & Social Science, 7, 12–22.

  103. Yang, H., & Steensma, H. K. (2014). When do firms rely on their knowledge spillover recipients for guidance in exploring unfamiliar knowledge? Research Policy, 43(9), 1496–1507.

Download references

Acknowledgments

Financial support for conducting the interviews from the iENG project (grant number 03EK3517A), funded by the Federal Ministry of Education and Research, is gratefully acknowledged.

Author information

Correspondence to Till Proeger.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Feser, D., Proeger, T. Asymmetric information as a barrier to knowledge spillovers in expert markets. Int Entrep Manag J 13, 211–232 (2017). https://doi.org/10.1007/s11365-016-0404-9

Download citation

Keywords

  • Credence goods
  • Knowledge spillover theory of entrepreneurship
  • Network

JEL Classification

  • D21
  • D82
  • H41
  • K23
  • L14