Knowledge-based trade, technical change and location environment : the case of small and medium sized enterprises engaged in advanced producer software services in the South East region
Technical change is the driving force behind modern economic competitiveness and the evolution of enterprise and industry. The process, however, is not insular; in particular the location environment is regarded as a key component of how technical change is derived, implemented and diffused. This research study explores this assumption in relation to knowledge-based trade via small and medium sized enterprises (SMEs) engaged in the development of advanced producer service (APS) software in the South East Region (SER), a region that has been identified as being post-industrial in character and knowledge-based. As a result of the intangible nature of technical change associated with knowledge-based trade, the research objective is not only to understand the supply architecture, i.e. the location environment in the context of operation and trade, but also interaction including tacit knowledge transfer. This research study employs an interdisciplinary set of approaches including geography, economics, sociology and organisational management. It also takes a bottom-up research approach via use of a qualitative format to analyse the interrelationship between location environment and technical change. Whilst the evidence gathered suggests that agglomeration economies are important both in terms of demand and supply hierarchy, this also inhibits wider opportunities for technical change within the region. Established firms within the survey knew in general where and how to get appropriate knowledge and skills advice. In fact they were in a far better position than public referral entities because of their involvement and awareness of their own specific technologies and markets. Rather than attempt to go against the entrepreneurial nature found within SER (which is a key driver of endogenous growth and competitiveness), what emerges is the need to facilitate greater knowledge interaction, but in a way that does not seek to directly intervene, to impose unsustainable network or partnership structures. Further, the study suggests that development bodies should take a greater interest in the process of knowledge translations and incorporations, particularly using the ‘actor-network’ theory approach to map regional knowledge dynamics.