How do European countries manage their knowledge? - Innovation: Management, Policy & Practice

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How do European countries manage their knowledge?: A cross analysis of investment and performance

Maria Sarabia
Associate Professor, International Strategy Management and Business Management, University of Cantabria, Santander, Spain

Maria Obeso
Department of Business Administration, University of Cantabria, Santander, Spain

Jose Maria Sarabia
Professor of Statistics, Department of Economics, University of Cantabria, Santander, Spain

PP: 129 - 142

Abstract

This paper presents a cross analysis of European countries studying knowledge variables related to investment and performance. The findings of the factor analysis reflects the existence of four key factors (Push&Pull Effect; How what we are like; Education Domino Effect; and Knowledge Employment) which should be taken into account for managing governmental strategies within the European market. According to these factors, four countries' cluster have been identified focusing the case of the first cluster composed by Sweden, Finland, Denmark, Germany, Netherlands and Austria, which has been called "knowledge countries". This paper presents interesting findings about how European countries manage their knowledge and in consequence, how they establish their growth strategies.

Keywords

knowledge management, Government, factor analysis, European clustering

Article Text

Globalization, technological advances and competitive advantages are key elements associated with the new knowledge economy and all these elements contribute to national productivity, competitive advantage and industrial performance (Martinus, 2010; Goldberg, 2006, Orlando and Verba, 2005). This approach has brought to the fore the knowledge component of labour productivity contributing to national productivity of the countries.

Several academicians, such as Lederman and Maloney (2003) or Guellec and Van Pottelsberghe (2001), hold that innovation or the generation of technical knowledge has positive effects the economic and productivity growth. In this sense, Lederman and Maloney (2003), using regressions with data panels of five-year averages between 1975 to 2000 from 53 countries, find that a one-percentage point increase in the ratio of total research expenditure to GDP increases the growth rate of GDP by 0.78 percentage points. Another interesting study by Guellec and Van Pottelsberghe (2001) holds that public and foreign R&D all have statistically significant positive effects on productivity growth.

The growth of a country in terms of knowledge has been analyzed from several points of view. For example, following Jones (2002), growth in any particular country is driven by the implementation of ideas discovered throughout the world. This stock of ideas is proportional a worldwide research effort, which in turn is proportional to the total population of innovation countries. Inputs such as human capital and ideas and outputs such as innovation or knowledge define the new knowledge production function. In this scenario, the key question of this paper is outlined: How do countries manage their knowledge? And in particular, how do European countries manage their knowledge? That is to say, this cross county study attempts to measure the investment variables and result variables related to the knowledge component.

The importance of knowledge management within enterprises is well known and accepted (Villela and Muniz, 2010) but in the case of countries, knowledge is not recognized yet as a key strategy for international competitiveness. In the last decade, some research has suggested that knowledge management could improve administrative efficiency and provide more accurate information (Misra & Hariharan, 2003; Prokopiadou et al., 2004; Saussois, 2003).

The aim of this paper is to try to identify, thanks to a factor analysis, the organizational success parameters which explain the importance of knowledge management in country management. In this way, this paper provides an exploratory study of the European states' knowledge in order to explain how their governmental strategies, based on, for example, expenditures on research and development, could be lead to a better growth position in the European ranking. The contribution of this paper is explained by two points: first, we apply knowledge management to countries' behaviour rather than merely applying it to enterprises and, secondly, we establish a comparison between European countries by taking into account how each one manages its knowledge.

This paper is structured as follows: in Section 2, we describe the methodology for analyzing the knowledge structure in the European countries (data, variables and research method). Section 3 presents the results of the study and preliminary considerations about the factors implied in the analysis. Our findings and discussion are presented in Section 4; and in the final section, the conclusion and future works are presented.

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