Knowledge Intensive Business Services (KIBS) and regional development : some implications for de-industrialised regions

In a modern, learning economy the primary task of industrial and innovation policies should be to promote innovative interactions between economic sub-systems, organisations and individuals. KIBS are particularly important in these processes, not only because of the significance of their own growth and innovativeness, but also because of their systemic role in influencing the innovation activities of client firms. A number of studies also show that the expertise provided by KIBS is associated with economic growth and can therefore be treated as a factor of production alongside capital and labour. Since most previous research has focused on globalised KIBS located in metropolitan regions, there has been a dearth of studies of KIBS SMEs located in de-industrialised regions. This thesis examines their structural role (in terms of tradability and support to customers) and their systemic role (as innovators and facilitators of knowledge and expertise across space). One of the main contributions of this research is that it improves understanding of the role KIBS play in regional economic development. The results of the survey are the key novelty as well as theoretical contribution which relates the literature on knowledge bases to KIBS. Findings indicate that in de-industrialised regions local markets constitute a more important source of demand compared to metropolitan regions such as London. In addition, the results indicate that characteristics of intermediate demand vary across different KIBS sub-sectors, with engineering KIBS being relatively more reliant on the manufacturing base. For them, further de-industrialisation may pose survival challenges and regional policies therefore need to support them through technological upgrading based on old industrial formations. The majority of KIBS depend largely on other services, hence there would seem to be a scope for devising separate, service oriented policies. For those KIBS that largely depend on government contracts and consumer demand, however, prospects remain uncertain and bleak. This research shows that KIBS innovation is supported by engagement in various external knowledge networking within and outside their respective regions but the results indicate that in order to reap the benefits form external knowledge, firms’ capacity must be built. Also, KIBS sub-sectors vary with respect to their role as knowledge agents as some are associated with the analytic knowledge base (Engineering and Architecture and R&D and Technical ) and some with the symbolic knowledge base (Computer and related and Management consultants).The issue of transferability of knowledge is particularly important for KIBS as they act as knowledge facilitators and findings suggest that some types of knowledge (e.g. analytical) are indeed easier to transfer across space. KEY WORDS: KIBS, de-industrialised regions, regional development, innovation, external knowledge, knowledge base