Knowledge Management Research & Practice (2011) 9, 305–314
& 2011 Operational Research Society. All rights reserved 1477–8238/11
Market extension and knowledge management
strategies of knowledge-intensive
business services
Marco Bettiol1
Eleonora Di Maria1 and
Roberto Grandinetti1
1
Department of Economics and Management,
University of Padova, Padova, Italy
Correspondence: E. Di Maria, Department
of Economics and Management, University
of Padova, Via del Santo, 33, Padova,
PD 35125, Italy.
Tel: þ 39 04 9827 4069;
Fax: þ 39 04 9827 4211;
E-mail: eleonora.dimaria@unipd.it
Received: 14 December 2010
Revised: 24 August 2011
Accepted: 7 September 2011
www.palgrave-journals.com/kmrp/
Abstract
The paper aims at analysing the relationship between the market extension of
Knowledge-Intensive Business Services (KIBS) and their knowledge manage-
ment strategies. The literature emphasizes the strong relationship existing
between KIBS and their customers in terms of innovation process and
knowledge creation. We argue that the knowledge management strategies –
in terms of knowledge codification, personalization, and knowledge creation –
implemented by a KIBS is related to their geographical market extension. A
quantitative approach is developed based on more than 150 Italian KIBS
specializing in design and communication. The paper enriches the research
framework concerning KIBS by emphasizing also the role of partners other than
customers in KIBS’ knowledge management strategies.
Knowledge Management Research & Practice (2011) 9, 305–314.
doi:10.1057/kmrp.2011.35
Keywords: knowledge-intensive business services; knowledge codification; personaliza-
tion; knowledge production; network; market extension
Introduction
Knowledge-Intensive Business Services (KIBS) received great attention from
scholars and practitioners specifically in the past 15 years (e.g. Gadrey &
Gallouj, 2002; Miles, 2005; Miozzo & Grimshaw, 2006; Muller & Doloreux,
2009). KIBS have been considered to strongly support the knowledge
creation and to have a crucial role in the innovation process of their
clients. Several studies focused their analysis on how knowledge is
developed and exchanged specifically between KIBS and their clients
(e.g. den Hertog, 2000). Scholars identified KIBS as a strategic supplier for
their clients (Pardos et al, 2007) focusing on the exploration and analysis of
this business relationship (e.g. Bettencourt et al, 2002). In addition,
the quality and characteristics of KIBS intellectual capital is one of the
drivers for competitiveness, owing to the intangible value of their offering
(Larsen, 2001).
In this framework, few studies explored the link between KIBS location
and their activity (Doloreux et al, 2010). More specifically, the explana-
tion of the KIBS start-up and growth in specific territorial contexts – such
as metropolitan areas, regional innovations systems, or industrial districts
– is related to the relevance of proximity to clients (Muller & Zenker,
2001). However, a recent review of the literature on KIBS provided by
Muller & Doloreux (2009) highlights that there are alternative explana-
tions on the role of spatial proximity on KIBS’ activity. On the one hand,
many studies stress the need for geographical contiguity between KIBS
306 Market extension and knowledge management strategies
and their customers, as knowledge-intensive services are
distance-sensitive (Andersson & Hellerstedt, 2009),
owing to the high level of service customization and
personal interaction. On the other hand, other scholars
emphasize the role of network technologies in reduc-
ing the need for proximity because of codification
(Antonelli, 1999).
Our research question wants to explore the differences
in terms of knowledge management between KIBS having
local customers, for example within a regional innova-
tion system, and KIBS with a more extended market (at
national or international level) that goes beyond the
regional scale. This question is suggested from some
empirical studies such as the one carried out by Koch &
Strotmann (2006) on KIBS located in three German
regions (Bremen, Munich, Stuttgart); they pointed out
the opportunity of growth for KIBS having customers
outside their location. Other studies highlight the global
nature of such firms, the so-called ‘born global’ (Roberts,
1999; Falay et al 2007); they are characterized by a strong
international market approach to overcome the limit of
the local context or to leverage on the relational
competencies and expertise of the founding teams that
could be better exploit on a global dimension.
The paper aims at analysing the relationship between
the market extension of KIBS and their knowledge
management strategies. Even though the analysis con-
cerning knowledge management processes has been
widely explored in the literature on KIBS (Muller &
Doloreux, 2009), a theoretical and empirical gap still
exists in linking those processes with the spatial dimen-
sion of KIBS activity.
The paper is structured as follows. The next section is
devoted to present the different approaches in the
literature on KIBS, whereas the subsequent section
presents the hypotheses about the relationships between
KIBS’ knowledge management strategies and market
extension. The two sections after that analyse the
characteristics of knowledge management strategies of
about 150 KIBS specializing in design and communica-
tion, located in the Veneto region in Italy. This sample
was eventually divided into two subsamples: the first one
comprising KIBS that have clients within the regional
market, the second one comprising KIBS that have clients
outside the regional market as well. The penultimate
section discusses the empirical results. The final section
contains conclusive remarks and discussions about future
research activities.
Three key dimensions to understand KIBS:
knowledge, innovation, and spatial proximity
The research on KIBS developed at the beginning of the
1990s, and from that period a large number of theoretical
and empirical studies have been published on that
matter. In a recent literature review, Muller & Doloreux
(2009) identified three critical dimensions to understand
the KIBS’ domain: knowledge, innovation, and spatial
proximity.
Knowledge Management Research & Practice
Marco Bettiol et al
As far as the first dimension is concerned, Muller &
Doloreux (2009) pointed out an evolution in the
perspective of how scholars perceived and analysed the
knowledge content of KIBS activities. Former studies, in
fact, identified in the one-directional transfer of informa-
tion and knowledge to their clients the distinctive
function of KIBS (O’Farrell & Moffat, 1995). Latter
contributors have instead highlighted a more complex
process of interaction and co-production of knowledge
that involves KIBS and their customers, taking into
account the relevance of the tacit dimension of knowl-
edge included in such process (Polanyi, 1966). Specifi-
cally, Bettencourt et al (2002) argued that KIBS offer
highly customized services, where each service is based
on a process of collaborative knowledge-creation between
KIBS and client firms.
The second relevant analytical dimension is innova-
tion, strongly correlated with the earlier one. According
to den Hertog (2000, p. 518), ‘Given their role as co-
producers of knowledge and innovation with client firms,
the rise of KIBS can be seen as contributing to a new
knowledge infrastructure’. Even in the analysis of
innovation, it is possible to observe an evolution in
theoretical studies. In the first phase KIBS have been
perceived as organizations able to support clients’
innovation processes through their services. However,
KIBS’ service provision remains separate from the custo-
mer’s innovation process. In the second phase, instead,
more recent studies highlighted the active role of KIBS in
their interaction with customers for co-production of
innovation.
As far as the spatial dimension is concerned, the idea
that space matters for KIBS remains controversial. On the
one hand, many studies pointed out the strong inter-
active nature of the relationship between KIBS and client
firms – related to the characteristics of knowledge
management discussed before. In this perspective, owing
to such interaction, KIBS service supply is highly
distance-sensitive (Knoben & Oerlemans, 2006). This
issue allows explaining why KIBS developed in territories
characterized by a high density of potential customers,
such as metropolitan areas or regional innovation
systems (Koch & Stahlecker, 2006). On the other hand,
other scholars have a completely different view. In
particular, Antonelli (1999) affirms that – without
denying the relevance of interaction and the role of tacit
dimension in the KIBS activity – Information and
Communication Technologies (ICT) allow firms operat-
ing in remote locations to dialogue and exchange
codified as well as tacit knowledge at a distance.
KIBS’ knowledge management strategies and
market extension
In their final remarks, Muller & Doloreux (2009) stressed
that a relevant advance in the knowledge of the KIBS
domain requires sorting out the relationships between
the three key dimensions they have identified.
 Market extension and knowledge management strategies
On the basis of this suggestion, our study is focused on
the theoretical dimension related to the spatial proxi-
mity, which remains controversial in the literature
(Doloreux et al, 2010). Specifically, from our perspective,
answering to the spatial proximity issue relies on
considering the other two dimensions proposed by
Muller & Doloreux (2009) – knowledge and innovation
– and integrating them into the analysis. In other words,
it is not possible to explain KIBS’ market extension
without examining also the knowledge management
approach adopted by KIBS, whose activity is knowledge-
driven by nature.
Literature identifies different approaches to knowledge
management, by emphasizing the process of how knowl-
edge is created and protected to exploit its value and to
spread it across organizations and individuals, through
codification or personalization (e.g. Leonard-Barton,
1995; Nonaka & Takeuchi, 1995; Davenport & Prusak,
1998; O’Dell & Grayson, 1998; Brown & Duguid, 2000,
2001; Pfeffer & Sutton, 2000; Apostolou et al, 2007).
In their article on knowledge management strategies,
Hansen et al (1999) identified two opposite strategies that
firms can adopt to manage and share the knowledge created
within the organization. On the one hand, the authors
emphasize the codification strategy (people-to-document),
where the knowledge is codified not only to increase the
opportunity to store it, but also to transfer it more easily,
independently from the persons in which the knowledge is
embodied in. On the other, firms can choose the persona-
lization strategy (people-to-people), specifically to transfer
complex knowledge: through interaction the knowledge
can be shared overcoming the problems of stickiness (von
Hippel, 1994; Szulanski, 2000). Each of these strategies has
advantages and disadvantages and the issue becomes
balancing an efficient exploitation of the knowledge
available – within the organization and beyond its bound-
aries – by avoiding the perils of reducing the richness of the
knowledge to be transferred.
This trade-off is crucial for KIBS. Several scholars
described KIBS as economic players with a fundamental
role as co-producers of innovation, based on an intense
knowledge exchange with customer clients. Customer
proximity supports KIBS’ capability to transfer and share
knowledge with them, but also with other key actors such
as suppliers or other organizations (i.e. universities
located in the regional innovation system). Moreover,
KIBS’ services are usually highly customized compared
with other services (Tether et al, 2001) and this customi-
zation calls for knowledge exchange through personali-
zation. However, other studies also consider the
opportunity for KIBS to codify their knowledge in order
to increase the level of knowledge exploitation even
beyond the relationships with close customers (Antonelli,
1999; Grandinetti, 2011).
In their studies on KIBS specializing in product develop-
ment in India, Ajith Kumar & Ganesh (2011) show that
codification and personalization are two integrated strate-
gies that mutually reinforce. KIBS invested in knowledge
Marco Bettiol et al 307
codification through technological solutions (i.e. database
of drawings), but, at the same time, through face-to-face
interaction employees are able to share additional knowl-
edge that sustained their creativity and new product
development processes. The different approaches to codi-
fication and personalization and their intersection have
been described also in other studies on KIBS, showing that
knowledge codification can be obtained without nullifying
the role of persons in the process of service provision,
specifically in professional KIBS (e.g. Grimaldi & Torrisi,
2001; Morris, 2001; Apostolou et al, 2007).
Despite those studies, research on KIBS lacks in
including in the analysis the spatial dimension of KIBS’
activity, namely the relationship between knowledge
management strategies and KIBS’ market extension.
Our general hypothesis is that KIBS with different
geographical market extension show alternative
approaches to knowledge management, considered in
terms of knowledge production, codification, and
personalization (that some authors, e.g., Apostolou
et al, 2007, name socialization). As regards this research
approach, it is necessary to take into account two
important points: on the one hand, because cognitive
process involves inter-organizational relations, atten-
tion has to be paid not only to the relationships
between KIBS and customer clients, but also to all the
relationships between KIBS and the value chain they
belong to (Koschatzky, 1999; Freel, 2006; Grandinetti,
2011); on the other hand, production of knowledge can
be considered as both a cooperative process that
involves KIBS and other subjects (co-production), and
an autonomous process that takes place within KIBS
(den Hertog, 2000; Amara et al, 2008).
The hypotheses we want to explore through our
empirical analysis are as follows:
Hypothesis 1: The KIBS’ capability to codify knowledge has
a positive relationship with KIBS’ market
extension.
Hypothesis 2: The KIBS’ capability to interact with custo-
mers and other actors of the value network
(personalization) has a positive relationship
with KIBS’ market extension.
Hypothesis 3: The KIBS’ capability to produce knowledge
autonomously or in collaboration with cus-
tomers or other organizations has a positive
relationship with KIBS’ market extension.
(Figure 1)
Research methodology
We developed a quantitative analysis to test our research
hypotheses. A survey has been carried out during July 2009
on KIBS specialized in design and communication and
located in the Veneto region in the North Eastern part
of Italy. The selection of this region is based on the
evolutionary trends that occurred in the local economic
system, in terms of a growing demand of knowledge-based
Knowledge Management Research & Practice
308 Market extension and knowledge management strategies Marco Bettiol et al

Knowledge codification  entrepreneurial processes and organization;

H1
capability  services and relations: competitive position of KIBS,
+
characteristics of services provided and level of stan-
dardization, sources of knowledge and knowledge
Interaction (personalization) H2
KIBS market extension management systems, network of collaboration, and
capability +
innovation orientation.
H3
Knowledge production Firms were randomly selected from a data set of KIBS,
+
capability specializing in design and communication and located in
the Veneto region. The list of KIBS was extracted from the
Figure 1 The conceptual framework. catalogue of firms registered with the system of Italian
Chambers of Commerce and according to the areas of
specialization of interest to our research (total popula-
tion: 3014 firms). The total number of firms interviewed
services. The Veneto region is among the more developed
was 155 out of 3014 (5.15%). The sample was balanced in
regions in Europe in terms of rate of employment and GDP
order to reflect the different areas of specialization
per capita (Source: European Innovation Scoreboard).
included under the heading of ‘design and communica-
Moreover, according to the OECD classification, in 2008
tion services’. The industry codes of specialization used
Veneto had the third largest share of manufacturing firms
for the sampling process are included in Table 1. We stress
with a high-technology content (about 9.3% of Italy’s
the fact that our sample is rather homogeneous in terms
total, third region in Italy).
of both the territorial dimension of KIBS location and
Veneto is a region characterized by the presence of many
service demand and the specialization of KIBS (NACE rev.
industrial districts. These are a form of production
2 industry classification in its Italian version – ATECO
organization whose constitutive elements are a specific
code). This is an important element to consider in order
territory, a certain product specialization (within low- and
to test our hypotheses, as few studies suggest that there
medium-tech industries, e.g. furnishing and home pro-
are significant differences among KIBS specializations as
ducts, mechanics, fashion), a population of SMEs and a
far as the domains we want to explore in our study are
high degree of inter-firm division of labour (Becattini et al,
concerned (Tether & Hipp, 2002).
2009). District’s enterprises, which were once specialized
As discussed in the theoretical section, literature has
almost exclusively in manufacturing activities, have shifted
referred to the regional scale – by focusing on regional
their attention to value chain activities such as R&D,
systems of innovation – as one of the main markets for
design, quality management, marketing, and logistics, in
KIBS, also including more limited geographical (sub-
order to increase the value of the product (e.g. Alberti et al,
regional) areas such as industrial districts or metropolitan
2008). Although this process was started in the last decade,
areas. Our sample shows the following market extension
especially by leading firms, in recent times it has become
(average values): 73.6% of customers located in the Veneto
more evident and is accelerating for a larger group of SMEs
region (90% the median value), 23.2% located in other
(e.g. Camuffo & Grandinetti, 2011). As a consequence, the
Italian regions (10% the median value), and 3.1% located
service demand generated by these activities has increased,
abroad (0.0% the median value). To address our research
giving KIBS opportunities to start-up and develop. In
question, we created a dummy variable that counts 0 if
particular, KIBS operating in design and communication
KIBS have only a regional market (100% of turnover related
play a crucial role in supporting SMEs’ product innovation
to the Veneto region) and 1 if the KIBS serves a national or
strategies, as well as their market positioning and customer
international market (that is the KIBS has at least 1% of
relationship management (CRM) (i.e. Verganti, 2009). The
turnover achieved in other Italian regions and/or abroad,
numerous SMEs in the Veneto region have represented the
no matter what their regional customer base was). The
main market for local KIBS. However, this demand is also
threshold of 1% was selected to verify whether even a
of interest to KIBS operating outside the local context. In
limited percentage of non-regional market could be related
fact, manufacturing firms are attracted by KIBS operating
to specific knowledge management strategies. We obtained
in design and communication located in other Italian
similar results than those discussed below by using a
regions (in particular in the metropolitan area of Milan)
threshold of 10% of national market (median value)
and also abroad.
(results not shown in the paper). Consequently, two
The analysis was based on a semi-structured ques-
independent groups have been identified. The first group
tionnaire consisting of 36 multiple-choice questions
is formed by 55 KIBS (regional KIBS), whereas 97 firms
(implemented through phone interviews targeted to
belonged to the second one (national KIBS). The following
entrepreneur-owner of KIBS) and whose purpose was to
analysis will refer to the two groups in order to describe
gather information on the following topics:
their knowledge management strategies.
 business characteristics: types and profiles of employ- Knowledge management strategies have been evalu-
ment, level of turnover and dynamics over time, ated by considering the three hypotheses presented at the
drivers of competition, and performance indicators; end of the previous section. Specifically, the following

Knowledge Management Research & Practice

 Market extension and knowledge management strategies Marco Bettiol et al 309

Table 1 Sample characteristics by area of specialization

a
ATECO code Areas of specialization Population Sample

N % N %

73.11.01 Development of advertising campaigns 1230 40.8 66 42.6

74.10.10 Activities of fashion design and industrial design 627 20.8 30 19.4
74.10.30 Activities of technical designers 463 15.4 21 13.5
74.10.21 Activities of web page graphic designers 291 9.7 14 9.0
70.21.00 Public relations and communication 118 3.9 6 3.9
74.10.90 Other design activities 27 0.9 1 0.6
74.10.29 Other activities of graphic designers 72 2.4 5 3.2
63.12.00 Web portal 11 0.4 3 1.9
71.12.00 Activities of engineering studios and other technical studios 38 1.3 2 1.3
71.11.00 Activities of architectural studios 10 0.3 0 0.0
71.12.20 Services of integrated engineering planning 91 3.0 5 3.2
73.11.02 Implementation of marketing campaigns and other advertising services 36 1.2 2 1.3

Total 3014 100.0 155 100.0

a
Italian ATECO code of classification (Italian Institute of Statistics) – NACE Rev. 2.

variables have been used to measure the KIBS’ capability
to codify knowledge:
 percentage of employees with master or graduate
degrees;
 intellectual property strategy, or rather presence of
registered patents, designs and models, trademarks;
 degree of knowledge exchange within the firm mea-
sured in terms of intensity of online file sharing and/or
document exchange (scale 1–5: 1 ¼ never, 5 ¼ always);
 investments in network technologies and specifically
in the following technology solutions: presence of
Enterprise Resource Planning (ERP), Groupware, Cus-
tomer Relationship Management (CRM).
The second knowledge management strategy, that is, the
KIBS’ capability of personalization or socialization, has
been measured through the following variables:
 degree of interaction with customers measured in
terms of frequency of face-to-face meetings to develop
the service and monitor the service’s delivery (scale
1–5: 1 ¼ never, 5 ¼ always);
 frequency of personnel transfer from KIBS to their
customers during the service provision process (scale
1–5: 1 ¼ never, 5 ¼ always);
 presence of a web-based CRM as a form of online
interaction between KIBS and client firms;
 use of clients as source of learning, measured in terms of
the following elements: intensity of KIBS recourse to
clients for R&D, product development, process efficiency,
market development (scale 1–5: 1 ¼ never, 5 ¼ very often);
 use of suppliers as source of learning measured in terms
of the following items: intensity of KIBS recourse to
suppliers for R&D, product development, process
efficiency, market development (scale 1–5: 1 ¼ never,
5 ¼ very often);
 intensity of collaboration with other organizations in
the service’s production. The variable is defined in
terms of sporadic collaboration (value 0) if the KIBS
refers only on internal resources to provide services or
occasionally on external collaborators. The variable has
value 1 (systematic collaboration) if KIBS belong to a
network formed by other organizations – of the same
industry or related industries.
The KIBS’ capability to produce knowledge autono-
mously (in relation to clients and other subjects) was
measured by the following variables:
 characteristic of the start-up process: the dummy
variable one founder/group of founders measures if a
single entrepreneur or a team has founded the KIBS;
 intellectual property strategy: presence of registered
patents, designs and models, trademarks. This variable
measures knowledge production as an autonomous
process of KIBS as well as knowledge codification.
Instead, in order to measure knowledge co-production
capability we adopted some variables, which are also used
for measuring knowledge personalization capability, that
is, use of clients/suppliers as source of learning and
intensity of collaboration with other organizations in the
service’s production.
Variables concerning internal knowledge exchange,
face-to-face interaction with customers, and personnel
transfer have been redefined on a dichotomous scale,
valuing 1 if the phenomenon occurs often or always, 0 in
case of lower rates of occurrence. Variables concerning
the external sources of learning have been redefined on a
dichotomous scale, valuing 1 if the client (supplier) is
considered a source often or very often in one or more of
the considered elements, 0 in the other cases.

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310 Market extension and knowledge management strategies Marco Bettiol et al

Table 2 Knowledge management strategies

a
Variables National KIBS Regional KIBS Average sample P-value

Percentage of employees with master degree (means) 5.1 0.0 3.2 0.060
Percentage of employees with graduate degree (means) 24.8 13.1 20.4 0.043*
Patents (% of firms) 11.3 1.9 7.9 0.032*
Designs or models (% of firms) 16.5 0.0 10.6 0.001**
Trademarks (% of firms) 30.9 16.7 25.8 0.040*
Within-firm exchange of codified knowledge (% of firms) 63.9 30.9 52.0 0.000**
Web-based CRM (% of firms) 42.3 20.0 34.2 0.004**
Groupware (% of firms) 12.4 10.9 11.8 0.505
ERP (% of firms) 5.2 3.6 4.6 0.504
Interaction with customers (% of firms) 62.9 45.5 56.6 0.028*
Personnel transfer to clients (% of firms) 44.3 25.5 37.5 0.015*
Customers as knowledge source (% of firms) 54.6 50.9 53.3 0.392
Suppliers as knowledge source (% of firms) 59.8 41.8 53.3 0.025*
Systematic collaborations within the value network (% of firms) 43.3 25.5 36.8 0.021*
Sporadic collaborations within the value network (% of firms) 56.7 74.5 63.2 0.021*
One founder (% of firms) 53.6 80.0 63.2 0.001**
Founding group (% of firms) 46.4 20.0 36.8 0.001**
Total turnover (means, thousand h) 284.3 119.7 228.7 0.020*
Employees (means) 3.9 2.1 3.2 0.001**
Year of foundation 1999 1997 1998 0.210
a
No. of regional KIBS ¼ 55; No. of national/international KIBS ¼ 97.
*Po0.05; **Po0.01.

In addition to the described variables the analysis also
considers KIBS’ size (measured in terms of employees and
turnover), KIBS’ age (year of foundation), and the degree
of service customization.
Findings
The results shown in Table 2 confirm all our hypotheses.
Considering the first variable used as a measure of knowl-
edge codification capability, national KIBS have a higher
stock of intellectual capital than regional KIBS, expressed in
terms of graduated employees. Moreover, a remarkable
output refers to national KIBS investments in intellectual
property rights compared with regional firms: 11.3% of
national KIBS have patents (1.9% of regional ones), 16.5%
of them have designs or models (compared with 0.0% of
regional KIBS), whereas 30.9% have registered trademarks
(compared with 16.7% of regional KIBS). In addition,
national KIBS are generally better able to codify internal
knowledge into hard and digital documents exchanged
within the organization in order to support service
development and delivery (63.9 vs 30.9%, respectively). In
terms of network technologies (ERP, Groupware, and CRM),
only the presence of a web-based CRM has a statistically
significant difference between the two groups (42.3 vs
20.0%, respectively). If we consider other ICT tools,
regional and national KIBS present the same low rate of
ERP and groupware adoption, a result that can be related to
the average small dimension of KIBS in our sample.
National KIBS interact systematically with their cus-
tomers (62.9 vs 45.5% of regional ones). Moreover, they
have stable personnel transfer to the client (44.3 vs
25.5% of regional KIBS). This practice reinforces the
connection with the market, specifically in case of
customers, which are at a distance as it is in the case
of national KIBS. This is also related to the different size
and therefore to the different organizational structure of
national and regional KIBS as we can see in Table 2;
although KIBS of our sample, on average, have a small
dimension, regional KIBS are even smaller; on average,
regional KIBS have 2.1 employees, whereas national
KIBS have 3.9 employees. As we have seen, national KIBS
often use web-based CRM in order to interact with their
clients (as an alternative to face-to-face interaction): the
diffusion of this technology among national KIBS is
more than double the regional KIBS. In relation to the
other variables of the personalization strategy, it is
important to stress that national KIBS have also devel-
oped more intense and regular relationships with
business partners within the value network than regio-
nal KIBS: 43.3% of them have systematic collaboration
within the value network (25.5% of regional KIBS). Most
importantly, 59.8% of national KIBS consider suppliers
as relevant sources of knowledge in their innovation
process (41.8% of regional KIBS). Also clients are
considered a relevant source of learning by the majority
of national KIBS, although, in this case, the difference
with regional KIBS is statistically not significant (54.6 vs
50.9%, respectively).
In relation to knowledge production, there are im-
portant differences between national and regional KIBS.
Those differences clearly emerged in the analysis of the
investments in intellectual property rights, which, in our

Knowledge Management Research & Practice

 Market extension and knowledge management strategies
study, are used as proxy variable of both codification
strategy and KIBS capability of autonomous knowledge
production. One should stress, especially, the result on
designs and models (16.5% of national KIBS compared
with 0.0% of regional KIBS), as we analysed KIBS
specializing in design and communication services where
the output of their innovation effort is usually related to
aesthetics. As regards the autonomous production of
knowledge, we refer also to the human capital at the
start-up stage, which can be related to one or more
persons who have different knowledge assets. On average
in 63.2% of the cases only one entrepreneur gave birth to
KIBS. However, this rate grows to 80.0% for regional KIBS.
Many national KIBS (46.4%) show to follow a different
start-up process, based on a team of founders who
invested in the new firm.
As we have seen earlier, two out of three variables used
for measuring the capacity of knowledge co-production
(and, at the same time, of the capacity of interaction
within the value chain) presents statistically significant
differences between the two groups. They are the
intensity of KIBS recourse to suppliers as source of
learning and the intensity of collaboration with other
organizations in the service’s production.
We have to underline that, on average, KIBS of the
sample were founded in 1998. In particular, national
and regional KIBS have the same age; this result shows
that market extension is not necessarily based on
KIBS’ age (a variable generally used as proxy of KIBS’
expertise). On the contrary, national KIBS are bigger
than regional ones and this fact helps in understanding
the differences related to several variables of knowledge
management.
The approach to service delivery is almost the same
between the two groups. Both regional and national KIBS
offer largely customized services, with very limited
attention to service modularity and the standardization
of their offer (Table 3). As to be expected, the category of
KIBS analysed, which is specialized in design and com-
munication, offers mainly customer-tailored services.
This implies a strong interaction between KIBS and client
firms. As we know, national KIBS have a more intense
interaction with their clients than regional KIBS.
Despite the similar approach to service provision taken
by both groups in terms of high customization, compre-
hensive analysis of the variables considered shows that
Table 3 Standardization degree of service offering
a
Percentage of the total offering National KIBS
Fully customized services 84.6
Modular services 6.6
Standard services with limited customization 5.7
Fully standardized services 3.1
Total 100.0
a
No. of regional KIBS ¼ 55; No. of national/international KIBS ¼ 97.
*Po0.05; **Po0.01.
Marco Bettiol et al 311
national KIBS have stronger capabilities in knowledge
production, codification, as well as in the relational
dimension of knowledge management.
Discussion
Our research offers insights in the perspective outlined by
Muller & Doloreux (2009) of better comprehending the
relationships between knowledge, innovation, and spa-
tial proximity.
First, we have to outline that in our sample – formed by
KIBS specialized in design and communication operating
in a region with a high density of manufacturing SMEs –
a large number of KIBS has overcome the ‘appearing’ tie
of the spatial proximity and extend their market beyond
the regional boundaries. This result is consistent with
other empirical analyses on KIBS (Koch & Strotmann,
2006; Corrocher et al, 2009).
Moreover, in such KIBS – that we simply named
national KIBS – the customers’ research and retention
beyond the regional market is associated with more
advanced knowledge management strategies and cap-
abilities than regional KIBS. We summarize below the
main traits that distinguish national and regional KIBS
from a cognitive perspective in the general theoretical
debate discussed in the second and third sections of the
paper.
A first element worthy of attention is knowledge
codification. National KIBS show a stronger effort and
capability in knowledge codification than regional KIBS
do. Hence, we observed a crucial trait of the knowledge
management strategies of those KIBS, consistently with
inputs emerging from other theoretical frameworks
(Muller & Zenker, 2001; Strambach, 2001). Nevertheless,
the process of knowledge codification that KIBS are able
to develop and manage has been partially neglected by
studies on KIBS, usually focused on inter-organizational
relationships – specifically with clients – and on the
cognitive nature of such ties.
A further important element that characterizes knowl-
edge management of national KIBS refers to their super-
ior capability in leveraging on relationships with
customers and other subjects of their value network in
order to absorb and transfer knowledge (personalization).
Variables representing such knowledge strategy and
distinguishing national KIBS are as follows: the degree
of interaction with customers in terms of meetings to
Regional KIBS Average sample P-value
85.3 84.4 0.896
3.8 5.5 0.390
8.2 7.2 0.498
2.7 2.9 0.880
100.00 100.00
Knowledge Management Research & Practice
312 Market extension and knowledge management strategies
develop the service and monitor the service’s delivery,
human resources transfer from KIBS to their customers
during the service provision process, presence of a web-
based CRM, use of suppliers as sources of learning, and
systematic collaborations within the value network.
Concerning this second trait, we stress the fact that
relationships with cognitive impacts do not include only
KIBS’ clients. On the contrary, we observed that those
relationships also involve suppliers of technologies and
services and other partners such as universities and
research centres or other KIBS with whom the focal KIBS
can collaborate usefully. This is a remarkable result as
studies on KIBS focused instead on customer relation-
ships, even though there are some exceptions (e.g.
Koschatzky, 1999; Freel, 2006) that in particular analysed
cooperative relationships of KIBS with clients, competi-
tors, other service providers, and research institutions.
Among the personalization variables, attention
should be paid to the personnel transfer from KIBS to
their customers, a choice systematically adopted by
almost half of national KIBS. From this perspective, our
research confirms the importance that several scholars
have given to the temporary geographical proximity
(Gallaud & Torre, 2005; Torre & Rallet, 2005; Knoben &
Oerlemans, 2006). In the article that analyses the
differences between types of proximity, Knoben &
Oerlemans (2006) affirm that the temporary geographi-
cal proximity implies that ‘actors need not be in
constant geographical proximity when collaborating,
but that meetings, short visits, and temporary co-
location might be sufficient for actors to build other
forms of proximity (such as organizational), which
subsequently allow collaboration over large geographi-
cal distances’ (p. 74). In such case, actors do not belong
to the same geographical space, but to the same space of
relations (Oerlemans & Meeus, 2005).
National KIBS are specialized in production of new
knowledge and innovation. First, such function is carried
out in cooperation not only with customers, but also
with other partners. This result is a contribution for
enlarging the perspective beyond the traditional relation-
ship between KIBS and their customers that characterizes
the literature on this subject. Our study shows a wider
and more complex framework of knowledge creation and
innovation activities in KIBS and the actors involved in
such processes.
However, we also observed that national KIBS create
knowledge and develop innovations independently,
consistently with the study of Tether & Hipp (2002).
This capability is evident from the frequency of
registration of patents, designs or models implemented
by KIBS. This is a consistent phenomenon (although
selective) in the case of national KIBS, it is almost absent
in the case of regional KIBS. Consequently, another key
trait of the knowledge management strategies of
national KIBS is their autonomous production of
knowledge and innovation. Following the knowledge-
based perspective, this trait suggests us to look also
Knowledge Management Research & Practice
Marco Bettiol et al
within the KIBS organization, going beyond its network
relationships. On the basis of a deep case study, Larsen
(2001) discusses the same concept: the author proposes
the idea of interpreting KIBS as a distributed knowle-
dge system, where interaction among KIBS’ human
resources play a crucial role in the production of
knowledge (in addition of cooperation with external
colleagues). In such perspective of internal personaliza-
tion, an additional aspect to consider is the presence of
a founding team instead of a single entrepreneur in the
KIBS start up process; in small companies, this is a good
indicator of the presence of people within the KIBS
organization that interact to produce knowledge,
specifically in case of different and complementary
cognitive assets.
Conclusion and future research
The paper presents an original empirical analysis on the
knowledge management strategies of KIBS and their
relationship with market extension. We identify three
knowledge management strategies and corresponding
capabilities: knowledge codification, personalization and
knowledge production, in turn divided into autonomous
production and coproduction. We hypothesize a positive
relationship between each of these strategies and market
extension. The empirical results confirmed all three
hypotheses.
From a theoretical point of view we enrich the
literature by outlining an integrated view of knowledge
management strategies of KIBS that takes into account
the suggestion by Muller & Doloreux (2009) of better
understanding the interdependent dimensions of knowl-
edge, innovation, and spatial proximity.
Along the same perspective, the results of our quanti-
tative research are the starting point for future explora-
tion. Further research should be devoted to comparing
KIBS specialized in services other than design and
communication. Moreover, in order to validate our
hypotheses, further research could focus on extending
the analysis to KIBS embedded in diverse economic
systems in order to identify similarities or differences in
their market approach and knowledge management.
A relevant contribution of our research is related to the
possibility to develop a more complex interpretative
framework of the relation between knowledge manage-
ment strategies and market extension using both quanti-
tative and qualitative research methods. From this point
of view, it could be identified in a more analytical way the
strategies and the processes of knowledge management,
distinguishing, for instance, between the cognitive inter-
action within the KIBS organization (internal personali-
zation), and the cognitive interaction between the KIBS
and its customers or other network partners (external
personalization). In addition, it should analyse the
differences between local and distant clients. Finally, an
important future issue is to identify the interdependen-
cies between the strategies of codification, personaliza-
tion and knowledge creation. Let’s take into account, for
 Market extension and knowledge management strategies
example, KIBS personnel transferred to the client.
According to our results, many national KIBS exploit this
opportunity that allows them to interact with distant
customers. This is also consistent with the practices of co-
production management described by Bettencourt et al
(2002). At the same time, it is hard to imagine that such
personnel are able to operate within the client’s organiza-
tion and far from the KIBS office without any codified
knowledge developed by the headquarter and that
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About the authors
Marco Bettiol is an Assistant Professor of Business
management at the University of Padova, Department
of Economics and Management. His research focuses
on the relationship between design, innovation
and firm competitiveness; design and knowledge
management; information technology, and marketing
strategy.
Eleonora Di Maria is an Assistant Professor of Business
management at the University of Padova, Department
of Economics and Management. Her research focuses on
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the evolution of business models and local economic
systems related to internationalization, innovation and
network technologies, as well as on KIBS and innovation
processes.
Roberto Grandinetti is a Full Professor of Business
management at the University of Padova, Department
of Economics and Management. His main areas of
research are the evolutionary paths of Italian industrial
districts, the inter-firm relationships, and the evolution
of marketing in a relational sense.