Knowledge Diffusion and Innovation

Knowledge Diffusion and Innovation

Modelling Complex Entrepreneurial Behaviours

Piergiuseppe Morone and Richard Taylor

Modern economies are described as ‘knowledge based’. This book investigates the meaning of such a statement, assessing the relevance of knowledge and the channels through which knowledge is exchanged, both from a theoretical and an empirical perspective.

Chapter 3: Modelling Knowledge and its Diffusion Patterns: A Pathway Towards Complexity

Piergiuseppe Morone and Richard Taylor

Subjects: economics and finance, economics of innovation, evolutionary economics, innovation and technology, economics of innovation


The basic assumptions of most neoclassical economic models are perfect information and homogeneous technology. These imply that all economic agents (for example producers) possess at any moment in time the same identical information upon available technologies and produce with the same production function.1 From these hypotheses it follows that information, which in this context encompasses knowledge, is a public good (that is, non-rival and nonexcludable) freely available to all in the economy. However, these assumptions have failed empirical tests. Jaffe et al. (1993) showed quite clearly that knowledge spillovers (measured by patents citations) are geographically localized and that geographic localization fades over time very slowly. This implies that the diffusion process of knowledge follows specific patterns and is not at all an automatic and instantaneous process.2 In this chapter several knowledge diffusion models are presented, commencing with models in which the diffused knowledge is equated with information about new technology (that is, innovation), and proceeding to review more recent models where knowledge is considered and modelled as a complex concept. REVIEWING INNOVATION DIFFUSION MODELS As discussed in Chapter 2, most of the learning processes occur among neighbouring agents, given that knowledge is, at least to some extent, persistently and inherently local in nature. Pioneering studies on diffusion investigated the patterns through which new technologies are adopted and spread in social systems (see, for instance, Rogers 24 Modelling knowledge and its diffusion patterns 25 2003 [1962]; Hägerstrand 1967; Casetti and Semple 1969; Bernhardt and MacKenzie 1972; Sahal 1981). Such investigations...

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