Project leaders: Bert van der Knaap
Postdoc researcher: Frank Neffke (Harvard University)
Duration: 2010 - 2012
The linkages between the cognitive frameworks of industries are studied by investigating cross-industry labor flows. The knowledge and skills of the workforce are among the most important assets of modern-day economies. In the industrialized world, employees in almost all industries have invested many years in the development of their human capital, as much through formal education as through working experience. Therefore, if employees are able to use their skills in different industries, this indicates that the cognitive frameworks in these industries overlap. Following this reasoning, cross-industry labor flows should reflect the network of cognitive overlap among industries.
A number of interesting results have been found so far. First, at the corporate level, skill-relatedness strongly affects firms’ diversification decisions. Firms are vastly more likely to diversify into industries that are strongly skill-related to their core activities than into industries that are not. Diversification probabilities are even over a factor 100 higher, which is a far stronger effect than we observed for value chain linkages between industries.
Second, we find similar effects of skill-relatedness at the level of local economies. New plants, whether set up by pre-existing firms or entrepreneurs both tend to belong to industries that are skill-related to the industries in which a municipality is over-specialized.
So far, all analyses have been based on data from Sweden for the period 2004-2007. In the next stage of the project, starting in May 2010, industry spaces will be created for Germany between 1975 and 2006 allowing both for cross-country comparisons and longitudinal analyses.
In parallel, we study the task-profiles of a sample of about 20,000 German employees and assess the effect of task-similarity on labor flows. This sheds light on the limitations of using labor flows to study skill-relatedness between industries. Furthermore, in order to compare skill-relatedness to other types of relatedness, we also develop relatedness indicators using other data and methodologies.
Neffke F., Henning M. (2013). Skill relatedness and firm diversification. Strategic Management Journal 34(3): 297-316. (EMAEE best paper award, DRUID most imaginative paper award).
Neffke F, Henning M., Boschma R. (2011). The impact of ageing and technological relatedness on agglomeration externalities: a survival analysis. Journal of Economic Geography, 12(2): 485-517.
Neffke F., Henning M., Boschma R. (2011). How do regions diversify over time? Industry relatedness and the development of new growth paths in regions. Economic Geography 87(3):237-265.
Neffke F., Henning M., Boschma R., Lundquist K.J. & Olander L.O. (2011). The dynamics of agglomeration externalities along the life cycle of industries. Regional Studies 45(1): 49-65.