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Knowledge-Intensive Business Services as Credence Goods—a Demand-Side Approach

Abstract

Knowledge-intensive business services (KIBS) constitute a major source of innovative knowledge for small- and medium-sized enterprises. In regional innovation systems, KIBS play a crucial role in distributing innovations and improving the region’s overall innovative capacities. While the specific properties and effects on client firms and sectors have been comprehensively discussed, the internal perspective of client firms, i.e., the processes and problems in selecting, using, evaluating, and recommending KIBS, has been neglected to date. Using a qualitative approach, we describe the internal mechanisms and problems of SMEs cooperating with various KIBS and discuss the implications for regional innovation systems from a policy-making perspective. We find that all stages of cooperation of SMEs and KIBS are characterized by strong information asymmetries, distrust, and uncertainty about the effects of using external know-how, which yields the interpretation that SMEs perceive KIBS as credence goods. While informal networks are used to reduce information barriers, they regularly prove counterproductive by disseminating worst-case examples. Regional policy aiming at developing instruments for fostering innovative cooperation could thus strengthen formal networks that primarily create trust between KIBS and SMEs to systematically reduce mutual suspicions and information asymmetries.

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Notes

  1. 1.

    Miles et al. (1995) provided the seminal definition of KIBS as the part of the service sector with a higher share of academic employees (above 11 % of employees with academic degree or more than 4.5 % of employees with academic degrees in Science or Engineering) providing professional business-to-business services. KIBS constitute a rather heterogeneous sector, which can be divided into two subgroups: professional (p-), include marketing, legal, and accounting services; and technological; while (t-) KIBS include information and communication technology services (ICT), engineering, architectural, and technical consulting services. Both t- and p-KIBS actively influence knowledge-changing processes in client firms by transferring and implementing know-how (Strambach 2008). KIBS thus play a major role in innovation processes, which has been broadly discussed in the literature, e.g., by Castaldi et al. (2013), Doloreux and Laperrière (2014), Muller and Doloreux (2009), and Tödtling et al. (2006).

  2. 2.

    In the following, we use the Eurostat definition of SMEs, i.e., below 250 employees overall, medium-sized between 50 and 250, small 10 to 49 employees, and micro firms below 10 employees.

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Acknowledgments

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

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Correspondence to Till Proeger.

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Feser, D., Proeger, T. Knowledge-Intensive Business Services as Credence Goods—a Demand-Side Approach. J Knowl Econ 9, 62–80 (2018). https://doi.org/10.1007/s13132-015-0320-1

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Keywords

  • Credence goods
  • Knowledge-intensive business services
  • Regional innovation system
  • Small and medium enterprises