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.
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In one case, recording was not possible due to technical problems. Therefore, an extensive memo was written immediately after the interview.
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.
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.”
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).
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.
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.
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.”
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).
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)
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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.
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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
- Credence goods
- Knowledge spillover theory of entrepreneurship