Knowledge on wheels: new lessons from the tire industry

submitted for consideration for the DRUID 2002 Summer Conference. “Industrial Dynamics of the New and Old Economy – who is embracing whom?” We would consider the paper relevant to either Theme B (“Production and Use of Knowledge in the Old & New Economy”) or Theme A (“Technical Change, Corporate Dynamics & Innovation”). The current debate of the ‘New Economy’ is largely dominated by approaches that focus on the sources of knowledge. Hence, the attention devoted to ranking industries by R&D; intensity, and other indicators that captures the contribution of an industry in terms of knowledge production. Similarly, countries are ranked according to the share of their GNP that is generated by the most R&D; intensive sectors (OECD, The Science, Technology and Industry Scoreboard 2001). The weakness in these approaches is that, by focusing on the strict source of knowledge (and often more specifically the holder of the proprietary rights), they ignore knowledge at the point of application. We argue in this paper that to focus strictly on the sources of knowledge is to treat knowledge effectively as information, easily transferred and virtually ready-packaged in fully developed form. Decades of empirical studies have warned us against such a naïve view of knowledge, highlighting instead the capabilities required to unlock the potential of knowledge and how firms vary in such capabilities. Knowledge applied to an industry is better described as a system than a set of discrete elements. Such as system is likely to cut across industry boundaries as defined by SIC or NACE classifications. Given the growing complexity in the knowledge base relevant to firms’ innovative activities, firms rely on wide networks of suppliers of both physical equipment and specialised knowledge (Granstrand, Patel and Pavitt, 1997; Brusoni, Prencipe and Pavitt, 2001). Firms and other organisations operating in this knowledge system play different roles in the development and deployment of knowledge in accordance with their frames or cognitive maps (Acha, 2002), capabilities, their market interests and their opportunities. In particular, it is essential to consider the role of firms that play the specific role of filtering, coordinating and integrating specialised bodies of knowledge that are developed outside the boundary of the final user industry. A good deal of research exists that focus on these issues in a number of engineering intensive, Corresponding author intermediate industries (Prencipe, 1997; Davies, 1999; Brusoni, 2001). However, few studies focus on the knowledge dynamics of mature industries that manufacture for the consumer markets. To provide some empirical weight to the bare bones of our argument, we explore the knowledge base of the tire manufacturing industry. The tire manufacturing industry has evolved along with the automotive industry over the past century into a highly technology-intensive industry, although the traditional innovation measures suggest otherwise. Although the product market is substantially ‘commoditised’, the technologies used in the process to raise quality, performance and cost-effectiveness have become increasingly important. As this study demonstrates through quantitative analysis and case studies, the tire industry applies and integrates knowledge from a wide range of fields, and the role of the tire manufacturer as knowledge integrator is key to the process. For example, advances in information and communication technologies (ICTs) are applied to the core market objective to produce higher quality tires of superior design and safety in a low margin market through the use of sophisticated simulation technologies. Novel techniques in microelectronics are equally harnessed for better sensor systems. We conclude the paper by qualifying the relevance of the distinction between ‘new’ and ‘old’ economies. In fact, to make the distinction between ‘old’ and ‘new’ economies is to muddle an interpretation of technology, product and industry life cycles. Surely, the pervasive effects of ICTs are precisely the mechanisms by which so-called the ‘old’ economy advances and is renewed. Freeman has argued this view of technoeconomic paradigms persuasively, and he is joined by many others, including von Tunzelmann and Sutton. While their research focused on the emergence of the new leading industry or technology (e.g. ICTs), this paper makes the point that more research should be devoted to understand the specific mechanisms through which leading sectors contribute to the rejuvenation of more traditional industries. We begin the paper with a discussion of the systemic knowledge base of an industry,developing in particular the distinction between sources, users and integrators ofknowledge and the contributing capabilities. We then develop this approach by applyingit through empirical analysis to the tire manufacturing industry over the period 1990 to2000. From this fuller account of the scale, scope and distribution of the knowledge base,we consider the validity in the portrayal of the tire manufacturing industry as ‘oldeconomy’ and, moreover, the value in making the distinction between ‘old’ and ‘new’economies. ReferencesAcha, V. L. (forthcoming 2002) “Framing the Past and Future: The Development andDeployment of Technological Capabilities by the Oil Majors in the UpstreamPetroleum Industry.” Unpublished Ph.D thesis, University of Sussex at Brighton,UK. Brusoni, S. (2001) “The division of labour and the division of knowledge: Theorganisation of engineering design in the chemical industry.” Unpublished Ph.D.thesis, SPRU, University of Sussex at Brighton, UK. Brusoni, S. Prencipe, A. and K. Pavitt (2001) Knowledge Specialization, OrganizationalCoupling, and the Boundaries of the Firm: Why Do Firms Know More Than TheyMake? Administrative Science Quarterly, December Issue. Davies, A. (1999) “Innovation and competitiveness in Complex Product Systems: Thecase of mobile phone systems.” In S. Mitter and M. Bastos (eds.), Europe andDeveloping Countries in the Globalised Information Economy: 107-125. London:UNU Press. Granstrand, O., P. Patel, and K. Pavitt (1997) “Multitechnology corporations: Why theyhave ‘distributed’ rather than ‘distinctive core’ capabilities.” CaliforniaManagement Review, 39(4): 8-25. OECD (2001), The Science, Technology and Industry Scoreboard, Paris. Prencipe, A. (1997) “Technological capabilities and product evolutionary dynamics: Acase study from the aero engine industry.” Research Policy, 25: 1261-1276.