Local Product-Service Innovation Systems: T-KIBS Contribute Most to Local Manufacturing Performance

Abstract

Knowledge-intensive business service firms (KIBS) have been found to be instrumental for the renaissance of local manufacturing sectors. The value-adding role of KIBS to local manufacturing performance is likely to vary according to the functions they fill within the local hybrid value chain. The research objective of the study presented in this paper is to identify whether the positive effect of KIBS on the contribution of manufacturing businesses to the local economy is stronger in regions with a greater technology-based KIBS sector (T-KIBS), as compared to professional-based KIBS (P-KIBS). To reach this objective, we employ regression models and cluster analysis on a database built from two separate sources (Regional Entrepreneurship and Development Index and Eurostat) that includes information for the years 2012-2014 for 121 European Union (EU) regions from 24 countries. The main findings indicate that the territorial presence of an active hybrid value chain composed of a mixture of manufacturing and T-KIBS businesses is associated with greater average manufacturing productivity, in terms of gross-value added (GVA) per worker. Therefore, the local presence of T-KIBS firms pays-off for manufacturers and the territorial product-service innovation system.