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Monitoring of Knowledge-Intensive Business Services (KIBS) Sector Development, Comparative Studies of KIBS Development in Russia and Other Countries

2011
The project has been carried out as part of the HSE Program of Fundamental Studies.

The empirical study of KIBS in Russia was pioneered by the Institute of Statistical Studies and Economics of Knowledge (ISSEK) of the National Research University - Higher School of Economics. In 2011 we continued the series of surveys that have been conducted on an annual basis since 2007. Our main purpose was to develop the empirical data sets and to use them for theoretical and applied research. Empirical studies precede conceptual studies as a source for guesswork, and follow them as a source of data for their verification.

Empirical data in 2011 was obtained via mass surveys of 607 leading KIBS providers from 10 major KIBS sectors (marketing, advertising, auditing. IT-consultancy, engineering, recruitment, business design, property development, financial and legal advice) and of 624 KIBS firms. Respondents were directors, deputy directors, and heads of profile departments. We adopted a stratified sampling approach in order to obtain samples that were representative of size, age and geographical location.

We used structured survey instruments where most questions were multiple-choice, but there were open questions as well. Generally the questions for providers and for consumers were symmetric.

Some topics cover traditional business variables characterising turnover and its dynamics, employment profile, customer base, share of innovative output etc. But most questions aimed to generate original variables. These variables supply us with quantitative measures of personality intensity, level of customer involvement, customer expertise, absorptive capacity, outsourcing activities, the impact of KIBS on innovation activities etc. We elaborated these variables especially for our monitoring because they represent core service characteristics, but are lacking in current statistics.

In 2011, the monitoring showed moderate post-crisis recovery in terms of turnover and number of customers. The qualitative shifts in consumer demand are nevertheless less optimistic. Before the crisis, the KIBS sector was a unique domain where customised production generated half the output and two thirds of revenue. The users of bespoke services are mostly practised customers who have experience in consuming different KIBS from different providers. The crisis removed many of them from the market, and the current recovery has attracted inexperienced newcomers who fail to recognise the heterogeneity of KIBS and treat them as ordinary standard goods. The difference between experienced and inexperienced customers is our basic conceptual hypothesis.

The homogenisation of demand implied the simplification of supply. The share of personalised services reduced dramatically, the number of services provided to an average customer declined, and the price competition crowded out the competition of quality.

We expect further research to show whether the changes are temporary or permanent. Today, the future trend is not yet obvious because the perspectives of general post-crisis development are vague. Within the KIBS sector we identified at least three groups of providers with different economic sentiments and different crisis expectations. We labeled them “optimists” (those who reported positive dynamics of post-crisis recovery), “realists” (those who report that the market has stabilised, but not yet started its recovery) and “pessimists” (those who believe the crisis to be continuing or that it will return soon).

The analytical study revealed a close relationship between entrepreneur sentiments with the variables describing KIBS segment; company and market revenue flows; innovativeness of KIBS providers and customers; dynamics of the client base. Here are the sources of significant differences between optimists, realists and pessimists. These variables may further be used for market forecasts because entrepreneurial expectations are often treated as a good forward-looking indicator of market developments.

Pessimistic expectations of some service providers kept them away from innovations, and the share of innovative output on the whole market declined. This pessimism is not, however, shared by KIBS consumers who report strong external benefits from their participation in the co-production of services. By generating reciprocal knowledge flows,  co-production improves customers’ expertise and makes them more innovative. KIBS consumers estimate the impact of their experience with service co-production and use on their innovation activities as strongly positive. Though perfect co-production is never achieved, it upgrades customers’ abilities to deal with all types of innovations.

In 2011 we launched two new topics that seem promising from both a theoretical and practical point of view. The first one is the study of the spatial dimension of the KIBS sector. The current allocation of KIBS is uneven; they are concentrated in few Russian regions who are barely exchanging KIBS with each other. Despite new communication technologies, spatial proximity remains one of the strongest determinants of demand for KIBS in Russia. Meanwhile European experience shows that interregional flows of KIBS improve the surrounding business environment, thus providing external benefits for the whole regions. We identified basic factors of distant demand for KIBS, and expect that out future research will find out how to use these factors as incentives for interregional KIBS exchanges.

Finally, we passed to another new topic, which is government regulation of the KIBS sector. Having in mind numerous strategic documents issued by both federal and regional authorities that aim at post-industrial progress along with the industrial one, government incentives for the development of the service sector are most welcome. The nature of KIBS however makes them insensitive to direct government interference. We expect better results from indirect stimulus of the Keynesian type, particularly public purchases. Unfortunately, the current public procurement legislation is incongruent to the specifics of the KIBS sector. We used our empirical studies to identify basic mismatches and proposed a number of measures for their elimination.

Publications:


Дорошенко М. Е. О переходе к четвертичному сектору // В кн.: Консалтинг в России: от истории до инновационных практик. Иркутск : Иркутский государственный университет, 2012. С. 4-8.