Research Object: The sector of knowledge-intensive business services (KIBS) in Russia.
Research Purpose: To design and organize the new (sixth) wave of monitoring exercises. The monitoring provides successive development of the database of original quantitative and qualitative information about the Russian KIBS sector, its characteristics, dynamics, supply and demand, interactions between providers and customers, market developments, and policy perspectives. The database helps to develop both theoretical background and empirical studies of the KIBS sector in Russia.
Empirical Base of the Research: The data derives from specialized surveys run each year in Russia during the period from 2007 to 2012, covering about 600 producers of KIBS annually. About 60 to 80 leading Russian-based producers of KIBS in each – the market-making big and middle-sized companies – were surveyed. Executives answered questions on their own companies and on more general market developments. All surveys are anonymous; some firms may be cropped for several surveys (not necessarily successive), but it does not imply the generalized results. The KIBS sectors covered in the surveys are advertising, marketing, auditing, IT services, recruitment, engineering, financial advice, legal advice, property development services, and business design. This choice includes most of the industries described as KIBS in the existing literature.
Research Results: In the first section, we describe data and methodology, allowing for comparability of our data with the studies of Western economies. The second section analyses time series about sector development in 2005-2010. We recognize three stages: the boom in 2005-2007, the sharp recession in 2009-2010, and the depressive recovery going on since 2011. Further, to support our conceptual framework, we provide empirical evidence of and theoretical foundation for the relationships between service standardization, their co-production and innovativeness. We prove that the current recovery attracts inexperienced customers who demand standard services. The decreasing innovativeness of KIBS providers is a relevant response, though the level of co-production surprisingly increases which is a paradox that needs further research. In the fourth section, we discuss the spatial dimension of KIBS production. We prove visible differences between sector performances in Moscow and St. Petersburg vs. other big cities, though regional companies tend to penetrate into interregional markets. The final section discusses policy implications that will be efficient for supporting and improving public and private demand for KIBS.
Implementation of the Research Results: The research results points to the suggestion that a rather non-standard way of stimulating innovative economic development could involve support for the KIBS sector. However, fiscal stimuli that only target KIBS providers would be least efficient. It is doubtful that such strategies of "enforcing" or subsidizing the provision of KIBS by public bodies contributes to the development of the sector as a whole in many cases. Alternatively, policy could target KIBS consumers, creating incentives for them to make use of KIBS suppliers, and to actively engage in coproduction. A lack of experience (or, possibly, an interruption in experience with KIBS) can be an obstacle for effective coproduction, and hence for an improvement in innovativeness. One task of the government is, therefore, to exogenously create such an experience, eg by subsidized KIBS provision.
The public sector, however, can also be a significant consumer of KIBS (to support its own business processes). Another step towards exogenous creation of KIBS experiences could involve outsourcing some public services to KIBS providers; or a more diversified public-private cooperation in the KIBS sector. This will require changes in public procurement procedures, since they tend to emphasize the price factor when selecting service providers. In contrast, the KIBS-providing firms studied in this essay are ones where the price factor is subordinate to concerns about the knowledge-intensity and quality of the outsourced services, when selecting KIBS providers. A straightforward application of competitive price-based selection procedures in the KIBS sector is rarely possible, and thus procurement policies face a strong challenge here.
Finally, there may be roles for public authorities in supporting training and skills development for KIBS provision (and absorption), and assisting with quality control (for example, by promoting standards and professional self-regulation, although there is the danger of professionals erecting entry barriers to defend their interests rather than the more general welfare).
International Partner: Ian Douglas Miles, DSocSci, Manchester Business School, University of Manchester; http://www.mbs.ac.uk/research/people/profiles/ian.miles