Cross-functional Knowledge Integration, Patenting and Firm’s Performance

Internal knowledge integration and patenting are both reckoned to increase the productivity of human capital and the profitability of the firms implementing them. The combined e↵ect of a joint use is in many ways ambiguous since those practices pursue di↵erent objectives in terms of managing the flow of knowledge and information within the firm’s boundaries. The presence of informational spillovers in situations of high technological rivalry could deteriorate the positive impact of knowledge integration. We investigate empirically di↵erent channels of interactions between patenting and knowledge integration and we find that they are substitutes in terms of economic profitability; consistently with our theory, the e↵ect is exacerbated by high technological rivalry and scarce e↵ectiveness of secrecy. Our empirical analysis is conducted using a cross-section database with detailed firm-level information on U.S. manufacturing firms.