Study On The Impact Of Knowledge Intensive Business Services On Innovation In Manufacturing Industries

Innovation ability is crucial either for entrerptises or for macroeconomy.In comparison with developed countries,there still remains a huge gap about China's innovation ability.So it has been the concern how to improve China's innovation ability.In the national innovation system,Knowledge intensive business services(KIBS)are playing an increasing role.KIBS have attracted the attention of researchers in innovation studies from the nineties.This dissertation examines the impact of KIBS on innovation in manufacturing industries.There are three critical issues are concerned.The first issue relates to the development of KIBS in China.The second issue is what the exact contribution of KIBS to innovation in manufacturing industries is made up of.The third issue concerns whether the provision of KIBS affect the innovation in manufacturing industries significantly in China and what the extent is if the answer is yes.There are five conclusions from the theoretical study and the empricial study:Firstly,data are presented about the development of China's KIBS in recent years.It is shown that the growth of service industries is notable in comprison with other industries in China.Nevertheless,the productivity of service industries has fallen behind.Among the service industries,the growth of KIBS has been more notable from the year 2004.From the data of intermediate demand rate in the year 2002 and 2007,we can conclude that it is the consumer services who contributed most to the growth of KIBS.As intermediate goods industries,KIBS did not play it's full role in meeting the growing demands of manufacturing industries.The development of KIBS has obviously been uneven across provincial regions in China.The location quotient(LQ)index of KIBS shows that the majority of KIBS are clustered in developed regions such as Beijing,Shanghai,and etc.Secondly,this dissertation analyzes the contribution of KIBS on innovation in manufacturing industries using some formal models.It is concluded that there are three aspects of benefits.The first is specialization effect,which concerns the benefit to innovation from specialization of KIBS and manufacturing industries.With the deepening of division between KIBS and manufacturing industries,the market of manufacturing industries is extended,its output increasing,and its production cost decreasing,which sequentially resultes in the increase of demands for innovative products and the promoting of innovation efficiency in manufacturing industries.The specialization effect is made up of five aspects of effects,which are the effect of market extending,the effect of learning by doing,the effect of bureaucratic costs and coordination cost lowering,the effect of human capital saving,and the effect of transaction costs lowering.The second is knowledge transferring effect,which concerns the benefit to innovation from the knowledge transfer between KIBS and manufacturing industries.Owing to the two-way and circular knowledge transfer between KIBS and manufacturing industries,the knowledge stock of manufacturing enterprises increases,and thus their innovation ability and innovation effiency are improved.The third is embedding effect,which means that KIBS add its R&D expenditure to manufacturing industries indirectly through its intermediate goods sale,and thus the innovation outputs of manufacturing industries increase despite their direct R&D expenditure remaining.Thirdly,a formal model of knowledge transferring is used to examine the impact of some facts about knowledge transfer on the innovation in manufacturing industries.The results indicate four aspects of innovation.The first is that the improvement of knowledge transferring efficiency and the rise in number of KIBS firms can reduces the expected innovation introduction date.The second is that the relationshiop between innovation efficiency and the number of manufacturing firms appears as inverted U shape when the manufacturing firms buy the services they need.In concrast,when they make the services themselves,the relationship between the two is monotone decreasing.The third is that the knowledge stock of manufacturing firms increases with the improvement of knowledge transfer efficiency,which in turn improves the innovation efficiency.The forth is that when the numbers of manufacturing firms is above a certain threshold value,the innovation efficiency will be better when they buy service instead of making themselves.Then,two methodologies from demand-side and supply-side respectively are employed to evaluate the product-embodied R&D diffused by KIBS.It is shown that KIBS input to manufacturing industries increases slightly or decreases except science and technology services,which implies that the externalization and the specialization of KIBS lags behind the development of manufacturing industries.Among KIBS,the product-embodiedd R&D diffused by finacial services is lower as its R&D intensity is inferior to other services.In contrast,the product-embodiedd R&D diffused by business services is greater as its intermediate sale to other industries is greater and its R&D intensity is superior to other services.It is also found that the product-embodiedd R&D diffusion per unit of output by KIBS decreases.Among KIBS,the total product-embodied R&D diffused by science and technology services increases rapidly,but total product-embodied R&D diffused by three other services increase slowly in comprison with that of manufacturing industries.To be briefly,the product-embodied R&D to manufacturing industries diffused by KIBS is low,which is due to three reasons,the first is lack of innovation in KIBS,the second is low intermediate input by knowledge intensive business services,the third is less development of knowledge intensive business services.The empirical estimation is based on a balanced panel data-set taken from 30 Chinese regions for the period of 2003-2010.It is found that the contribution of KIBS to innovation is considerable,which is consistent with the theory.When the variable of invention patent applications is used to measure innovation output,the contribution is greater,which proves further the contribution of KIBS to innovation.The regression results also reveal that there are some problems existed about innovation.The first is that the elasticity of innovation output to capital is greater than the one to labor input,which means that China still lacks innovation talents.The second is state-owned enterprises are still ineffient in comparision with private enterprises,so the ratio of state-owned enterprises has a negative and significant effect on innovation output.The third is,there is no evidence that average years of schooling affect the innovation output,which means that there are some problems existed in China's education system and education belief.Although the average years of schooling grow,innovation ability does not improve accordingly.At last,some policy suggestions are given about how to improve the innovation ability of the manufacturing industries in China through the support to KIBS development.