Knowledge protectionin knowledge-intensive

business servicesEttore Bolisani

Department of Management and Engineering, University of Padua,Vicenza, Italy

Marco PaiolaDepartment of Economics and Management, University of Padua,

Padova, Italy, and

Enrico ScarsoDepartment of Management and Engineering, University of Padua,

Vicenza, Italy

Abstract

Purpose – The purpose of this paper is to examine the issue of knowledge protection in knowledge-intensive business services (KIBS). In particular, it addresses four research questions: do KIBS firmsperceive the necessity to protect their knowledge? If so, do they protect it? What method(or combinations of methods) they typically use? What are the main factors affecting the approachesto knowledge protection adopted by these companies?Design/methodology/approach – The paper illustrates and discusses the findings of a survey of471 KIBS companies located in the Northeast of Italy and operating in three different sectors:IT Services, Design and Communication, Professional Services.Findings – The study classifies the types of knowledge protection mechanisms and investigatessimilarities and differences in knowledge protection between KIBS operating in distinct sectors,having different size, and pursuing different knowledge management strategies.Practical implications – The outcomes of the investigation can have some important implicationsfrom a managerial viewpoint. In particular, the study provides food for though to both CEOs of KIBScompanies regarding the mechanisms of knowledge protection, and to policy makers about thepossible public policies that may help companies to protect their competitive knowledge capitalwithout hindering their networks of interaction.Originality/value – The issue of knowledge protection is relatively new in the literature of KIBS, andfindings are quite controversial. In particular, the state-of-the-art research shows that there are someimportant gaps that the paper tries to fill.

Keywords Knowledge management, Data management, Data security,Knowledge-intensive business services, Knowledge protection, Survey, Italy

Paper type Research paper

1. IntroductionThis paper examines the issue of knowledge protection (KP) in knowledge-intensivebusiness services (KIBS). KIBS companies have been regarded as a distinctive trait ofthe knowledge economy and as such they have been the subject of an increasingnumber of studies (Doloreux et al., 2010). In particular, their crucial role in promotinginnovation and development of local economies has been acknowledged since themid-1990s (Pro Inno Europe, 2009; Tuominen and Toivonen, 2011; Corrocher andCusumano, 2012).

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/1469-1930.htm

Received 18 January 2013Accepted 18 January 2013

Journal of Intellectual CapitalVol. 14 No. 2, 2013pp. 192-211r Emerald Group Publishing Limited1469-1930DOI 10.1108/14691931311323841

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According to the extant literature, the functioning and the innovative capability ofKIBS are strictly associated with the cognitive assets they possess (Miles et al., 1995;Strambach, 2008; Muller and Doloreux, 2009). First, their main production factorand outcome consists of knowledge, directly delivered to customers in the form ofconsulting, or embedded in artefacts and services. Second, their activity is mostlybased on the exploitation of the specializations, skills and knowledge of theiremployees. Third, the provision of knowledge-intensive services requires an in-depthinteraction between supplier and user, both involved in cognitive exchanges andlearning processes (Bettencourt et al., 2002). Fourth, the delivery of such servicesinvolves a process of problem solving in which KIBS companies adapt their knowledgeto the specific requirements of individual clients. Fifth, they often act as interfacesbetween global sources of knowledge and end users (Smedlund, 2006). Finally, theirinnovative capability is directly connected to the acquisition, processing, capitalizationand delivery of new knowledge (Amara et al., 2009).

Accordingly, KIBS companies often have to face two contrasting goals that recallthe knowledge sharing – KP dilemma typically related to innovation activities (Olanderet al., 2009): on the one hand, they need to be open to external relationships and tomanage effective knowledge exchanges with suppliers and customers; on the other hand,they have to protect the development and capitalization of internal cognitive assets thatconstitute their core competitive resources. In particular, the latter is a crucial questionsince, in KIBS, innovations are mainly intangible and frequently co-produced withcustomers. This fact has two important consequences. First, imitating and copyinginnovative services may be very easy and rapid (Paallysaho and Kuusisto, 2008a).Second, the intellectual content of services may be difficult to protect by means of formalintellectual property (IP) methods (Amara et al., 2008). Moreover, the small size thatgenerally denotes such companies exacerbates the knowledge sharing – KP dilemma andlimits the possibilities of finding proper countermeasures (Olander et al., 2009).

The literature that deals with the topic of KP generally focuses on the use of formalintellectual protection rights arrangements and especially on patenting activity carriedon by large manufacturing firms (Amara et al., 2008; Bader, 2008; Xu and Tan, 2010).On the contrary, little attention has been devoted to services companies (Candelin-Palmqvist et al., 2012) and to KIBS (Paallysaho and Kuusisto, 2008b). Therefore, thereis the need to shed light onto the ways KIBS firms protect their knowledge, and tounderstand the role that KP activities play in this sector. In particular, since knowledgeis the core resource of those companies, and as such it should be the focus ofmanagement activities, there is the need to investigate how KIBS firms’ adoption of KPmechanisms relates to their knowledge management approaches.

In light of this, the paper addresses the following research questions:

RQ1. How do KIBS firms protect their knowledge?

RQ2. Is there a relationship between structural characteristics (in particular: sizeand sector) and the adoption of KP mechanisms?

RQ3. Is there a relationship between KP mechanisms used by KIBS companies andtheir knowledge management strategies?

In order to answer to these questions, the paper illustrates and discusses a survey of 471KIBS companies located in the northeast of Italy (more precisely, the Veneto Region)

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and operating in three different industries, namely: ICT services (ICT), Design andCommunication (D&C), Professional Services (PFS). This geographical context hassome features that make its analysis interesting.

First, the average size of Italian companies is among the smallest in the EuropeanUnion: the size of 3.9 employees is significantly low, compared with the average of6.4 employees of European Union’s companies (Eurostat, 2009). In addition, theyare mainly specialized on mature manufacturing sectors. This means that the need forbusiness services and their capability to transfer innovations can be, at least inprinciple, very significant for the Italian economy (Antonietti and Cainelli, 2008).Furthermore, the Veneto Region – which is the focus of this study – well represents theabove-mentioned situation (Corrocher and Cusumano, 2012; Schricke et al., 2012).

On the other hand, as will be clarified later in the paper, the KIBS sector in Venetohas important differences compared to other places in Europe, both regarding theaverage size of companies, and their propensity to use IP mechanisms. Therefore, ananalysis of the Veneto region complements the previous studies that focus on KIBSin other geographical areas, and provides the opportunity to compare and discuss thedifferent results that are obtained.

The paper articulates as follows. The following section gives a brief review of KPmethods used by KIBS, and summarizes the main results of previous studies. The thirdsection illustrates the research rationale, and the next one the method adopted for theempirical analysis. In the fifth section the main findings of the empirical investigationare pointed out and discussed. The last section proposes some conclusive remarks andhighlights the limitations of the study.

2. Mechanisms of KP in KIBSIt is first useful to explain the specific adoption of some terms in this paper. Intellectualcapital is the combination of the intangible assets which enable a company to function(Kitching and Blackburn, 2003). Intellectual capital can be embedded in the firm’sproducts, services, working routines or branding, and can be converted into usableresources to generate competitive advantage (Teece, 2000). Although several formsof intellectual capital have been singled out, it is recognized that knowledge is itsgrounding element (Stewart, 1997). IP can be defined as the set of legal rights whichcan be asserted in respect of intellectual capital and its products. IP is generally appliedto the ownership of ideas (OECD, 2007), including literary and artistic works (protectedby copyright), inventions (protected by patents), signs for distinguishing goods ofan enterprise (protected by trademarks) and other elements. Only some forms ofintellectual capital can be protected as IP, and not all the products or working practicesin which it is embedded can be protected by law.

IP protection and KP are two terms often used as interchangeable. In this paper theauthors prefer to use KP to indicate the set of possible approaches, methods or toolsemployed to protect not only the tangible results of the exploitation of knowledge, butalso knowledge itself. Accordingly, KP is a broader concept that includes IP rightsprotection and also “softer” protection methods that can be used to deal with theintangible nature of knowledge.

Despite its importance, KP is a relatively new research area for services and,particularly, for KIBS. In the following paragraphs the authors will analyse anddiscuss the studies that have dealt with this topic so far.

Paallysaho and Kuusisto (2008a, b, 2011) propose a survey and classification of KPmethods adopted in the service industries and particularly by KIBS. The value of the

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paper is twofold. First, the suggested classification comes “from the practice”, sinceit derives from case studies and a phone survey of 300 small-sized KIBS (averagesize around 18 employees) in different sectors and countries. Particularly important,the paper distinguishes between formal and informal protection methods, wherethe former are based on legal measures and the latter on relationship, trust andorganizational arrangements. The surveyed KP methods are classified in threecategories in accordance to their degree of formality (Figure 1). Second, the authorsprovide useful information about the employment of these methods by distinctcategories of KIBS. In fact, the sample covers different service sectors (SoftwareServices, Business and Management Consulting, Advertising) and different sizeclasses. The main findings of their investigation are the following:

. Informal protection methods are more adopted than formal methods. Amonginformal methods, some are more popular than others (i.e. secrecy, loyaltybuilding within human resources, documentation and fast innovation cycles).

. Companies tend to make simultaneous use of several types of KP methods forachieving a better overall protection.

. There are industry-specific differences, that seem to be related to both the kind ofknowledge used (for instance: high-tech industries such as the software sectorare more familiar with formal methods) and the existing provider-customerrelationships (e.g. business consultants pay less attention to formal protectionbut prefer secrecy and fast innovation).

Knowledge protection

Ipr(formal protection)

Contracts(semi-formal protection)

Informalprotection

Copyright

Source: Päällysaho and Kuusisto (2008a)

Industrial propertyrigths:patentutility modeldesign righttrademark

Non-competitionConfidentialityRecruitement freezeEmployees inventions

SecrecyPublishingRestricted access to infoDatabase and network protectionDivision of dutiesCRMDocumentationFast innovation cycleComplex product designTechnical protectionProductized services packagesStaff rotationTrade organization membershipLoyalty building among personnel

Figure 1.KP methods

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. Size of firms affects KP approaches: the likelihood that a company developsspecific KP plans considerably grows with size; furthermore, the use of formalmethods is double in the largest companies than in the smallest.

. Highly innovative services are more inclined to use systematic KP strategies.

The cited investigation is a worthy piece of systematic analysis, although is not thefirst study on the topic. Earlier empirical investigation (Miles et al., 2000; Miles andBoden, 2000) had already examined similar aspects, but the sample was biasedtowards larger firms which may explain some differences in the findings. The surveyincluded more than 150 companies belonging to three different sectors (accountancy,architecture, environmental engineering), and investigated the use of both formal andinformal KP methods. This study highlighted that:

. the high specificity of KIBS-client relationship is an indirect form of KP itself:in fact, relational specificity may limit the risk of imitation of knowledgegenerated in a specific project or with a particular client, since it reduces thecommercial relevance of that knowledge for others;

. scale differences exist, but inter-industry differences can be more important interms of both intensity of KP use and variety of methods adopted; and

. with the exception of services involving the production of material artefacts(e.g. written documents, diagrams, software – for which copyright and similar legalprotections can be important), formal KP methods are largely seen as irrelevant.

This last point is confirmed by Xu and Tan (2010). Their multiple case studyresearch compared KP methods used by manufacturing and service companies, andshowed that services are harder to imitate than products. This might explain whyformal protection is not as important in services as secrecy and other informalmethods. In general, the more intangible a service, the less likely the adoption of formalprotection methods.

As regards the relationship between size and adoption of KP methods, particularlyinteresting are the findings of a multiple case study analysis made by Olander et al.(2009) who investigated KP in SMEs (seven of their eight case studies concernedsmall-sized KIBS ranging from two to 50 employees). The authors summarized theirfindings in four propositions, as follows:

. the limited resources of SMEs simultaneously cause: a need to disclose theirknowledge to various partners and impediments to using expensive andcomplex KP mechanisms;

. human resource management is an essential protection mechanism for SMEs;

. the industry matters: the more competitive and information-specific the businessthe more emphasis is put on protection; and

. SMEs protect innovation by concentrating on safeguarding innovative inputs,rather than on defending innovation as an output.

All the above-cited studies help to clarify the issue of KP in KIBS, but treat therelationship between KP and knowledge management strategies only marginally.A paper that addressed this topic (although only among other issues) is Amara et al.(2008). The authors investigated how KIBS firms combine several KP methods andwhat factors affect their KP strategies. Eight KP mechanisms adopted by companies

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with at least 15 employees in three KIBS industries (Engineering Services, ComputerSystem Design Services, Management Consulting Services) were analysed. Somefindings of their analysis are summarized as follows:

. Similarly to the above-mentioned studies, the survey confirms that KIBScompanies mostly use informal KP methods.

. KIBS firms make use of various alternative methods, seen as complementaryand reinforcing each other. The authors explained this by arguing that theintangible nature of KIBS activities can induce these companies to rely on acombination of methods.

. A correlation between KP protection and R&D intensity was found.

. There are some significant differences between the various industries. Forexample, Computer Services companies were found to use KP mechanisms moreintensely than the other two sectors.

. Exploitation of KP methods increases along with size, especially in the case offormal protection mechanisms (like copyrights, patents, etc.).

Particularly relevant to its purposes, this study considered different behaviours interms of knowledge management, in particular as regards: strategies of knowledgedevelopment (especially related to human resource development); external knowledgesharing with research organizations; external knowledge sharing with suppliers,clients, competitors; and internal knowledge sharing. The authors declared theirintention to relate these aspects with the adoption of KP methods, but while somefindings are notable, others appear controversial:

. different types of knowledge management behaviours are related to the useof different types of KP methods;

. the degree of knowledge codification and tangibility influences the selection anduse of KP methods; it has however, to be noted that this aspect was analysedindirectly, in relation to the industry where a company operates (some industriesare considered as being more based on tacit knowledge than others, and so arethe companies in these industries); and

. one of the authors’ hypotheses (i.e. a positive correlation between the degree ofinnovativeness and knowledge production with the necessity to use KP methods)was, in the end, not clearly verified.

To sum up, the findings of these studies are partially controversial and sometimescounterintuitive. Some crucial questions still remain open, and they represent researchgaps that this paper aims at filling: first of all, the influence of structural characteristics(like size or sector) on KP is not completely clear; in addition, the relationship betweenknowledge management approaches and adoption of KP methods by companies hasbeen scarcely examined.

3. Rationale and research questionsIn light of the above-mentioned literature gaps and the research questions, this studypursues a twofold goal. First, it aims at verifying how structural characteristics ofKIBS companies influence the adoption of KP methods, and in what direction. Thismakes it possible to compare the results of this investigation with the findings of theprevious studies.

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Second, it aims to investigate the influence of knowledge management approacheson the adoption and use of KP methods by companies. This topic is rather overlookedin the literature, so its investigation can provide a better understanding of the use ofKP methods by KIBS firms.

As the reader can see in the following sections, structural and cognitivecharacteristics are examined in their influence on both the use of KP methods (theauthors will refer to it as “propensity”) and the variety of KP methods adopted,intended as the different types of KP mechanisms simultaneously used by firms.

3.1 Structural characteristicsAs mentioned, two structural features have been investigated as elements that canaffect the KP approaches of KIBS companies: firms’ industry and firms’ size.

As regards the industry, the studies cited in the previous section suggest that somebusinesses are more inclined to using KP methods, due to the kind of their knowledgebasis and the nature of client-provider relationships. High-tech industries aregenerally deemed to be more familiar with formal methods, while professional KIBSare expected to prefer secrecy and other informal methods. This allows us to advancetwo research propositions:

P1. There is a relation between the industry and the propensity to use KP, inparticular:

P1a: High-tech industries use KP mechanisms more intensely; and

P1b: Different industries prefer different KP mechanisms.

P2. There is a relation between the industry and the number of different KPmethods adopted.

Size is also considered to play an important role in the adoption of KP methods:particularly, larger companies are deemed to invest more resources in KP activities.Therefore, size is generally expected to impact on both the propensity of use of KP andon the variety of used methods. This leads to two additional propositions:

P3. There is a positive relation between firm’s size and the propensity to use KP.

P4. There is a positive relation between firm’s size and the number of different KPmethods adopted.

3.2 KM-related factorsAs said, this study assumes that KP mechanisms employed by KIBS companiescan be related to their knowledge management strategies. To delineate thesestrategies a number of factors were selected, referring to the nature of KIBS asacquirers, processors and deliverers of knowledge. Such factors are: externalknowledge sharing (with suppliers, clients and business partners) and internalmanagement of knowledge.

As regards external knowledge sharing, the literature assumes that a greatercognitive openness to the external environment can require more intense KP (Amaraet al., 2009). Here, the degree of external knowledge sharing was measured byasking the companies to indicate: the importance of suppliers as sources of

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knowledge; the importance of clients as knowledge sources; the resort to networkingwith partners operating in the same or different sectors. This leads to the followingpropositions:

P5. There is a positive relation between the importance of suppliers and clients asknowledge sources and the propensity to use KP.

P6. There is a positive relation between the importance of suppliers and clients asknowledge sources and the number of different KP methods adopted.

P7. There is a positive relation between networking and the propensity to use KP.

P8. There is a positive relation between networking and the number of differentKP methods adopted.

External openness may also be measured in relation to the geographical extension offirms’ markets. Hence two other propositions emerge:

P9. There is a positive relation between the market extension and the propensityto use KP.

P10. There is a positive relation between the market extension and the number ofdifferent KP methods adopted.

As regards internal management of knowledge three aspects were investigated: level ofknowledge reuse, nature of delivered services and level of innovativeness.

The reuse of existing knowledge for delivering services to new clients may imply adefinition of standard bundles of services that can become easier to imitate in the longrun and hence require to be protected. It was thus investigated how the level of reuse ofknowledge already produced or employed for delivering services to new clients affectsthe employment of KP methods. The following propositions are addressed:

P11. There is a positive relation between the level of knowledge reuse and thepropensity to use KP.

P12. There is a positive relation between the level of knowledge reuse and thenumber of different KP methods adopted.

The nature of delivered services can be considered another (indirect) indicator of thekind of knowledge basis possessed by the firms, and hence of their KM strategy. In thisstudy a distinction is made between standardized services (i.e. with little differencefrom a client to another), and ad hoc services (namely, with significant variations).In particular, it is presumed that standardization can allow the codification ofknowledge and this can make knowledge easier to copy, which calls for moreprotection. Two propositions emerge:

P13. There is a relation between the nature of service (i.e. customized orstandardized) and the propensity to use KP.

P14. There is a relation between the nature of service and the number of differentKP methods adopted.

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Lastly, as previous studies suggest, the level of innovativeness of a company can beassociated with a greater production of knowledge (Leiponen, 2006), which is expectedto influence the use of KP methods. This raises two propositions:

P15. There is a positive relation between the level of innovativeness and thepropensity to use KP.

P16. There is a positive relation between the level of innovativeness and thenumber of different KP methods adopted.

4. Collection of empirical data: method and sample descriptionData were drawn from a quantitative analysis on KIBS firms in the Veneto region(northeast of Italy), conducted in July 2009. The study was part of a broader researchproject aimed at analysing entrepreneurial dynamics, strategic models, organizationsand forms of governance of KIBS belonging to three industries: ICT, D&C, PFS.

The sample was based on information drew from two sources: the general list ofcompanies registered at the Italian Chambers of Commerce, and the records of theAssociation of Professional Accountants (for the firms not registered in the previouslist). The research group randomly extracted 2,984 firms out of the 7,049 KIBS firmsoperating in the areas of activity relevant to this research in the Veneto region in 2009.

A questionnaire composed of 36 multiple-choice questions was designed by theresearch group and used by a specialized survey company that contacted the identifiedfirms for the interviews. The survey company was trained on how to do the interviewsby members of the research group, who spent a workday with the interviewersanalysing the questionnaire in depth in order to avoid any possible misconception andmisunderstanding on the meaning of the questions. In addition, the first 30 interviewswere done by the interviewers with the assistance of one senior member of the researchgroup, in order to manage any further unforeseen problem with the questions. Theinterviewee was the entrepreneur/owner or a top manager, in any case the mostknowledgeable informant available. A single informant was chosen instead of multipleinformants due to the very small size of the firms.

Eventually, the firms interviewed were 512, with a response rate of about17.2 per cent. The data collected were cleaned, eliminating mistakes and incompletequestionnaires from the database, obtaining a final sample of 471 observations,that is representative of the universe of KIBS firms in the region and accuratelymirrors the actual structure of the industries. Afterwards, the data were codedand prepared for statistical elaborations with a standard statistical software package(SPSS 18).

A general picture of the surveyed firms is given in Table I. As the table shows, thesample is almost uniformly subdivided over the three industries, and it is mainlyformed by small and very small-sized enterprises: the average size of firms is 5.2employees. There are some dimensional differences among industries, given that D&Ccompanies are the smallest ones (average size 3.34 employees), while ICT are thelargest (average size 7.06 employees).

Since the average size is very small, the sample used in this study differs from theones used in other empirical investigations already published in the literature (see theprevious section), where surveyed companies are generally much larger.

As regards the nature of the delivered services, two-thirds of the investigatedcompanies offer customized services, but the situation is different from one industry to

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another (see Table II). While personalization prevails among D&C companies, thingsappear more balanced among ICT firms, with PFS firms lying in between.

Companies mainly serve local markets: for the great majority of them (63.8 per cent)the most part of sales (75 per cent or more) comes from the regional market. Only 10.8per cent of the companies export their services, and for a relatively small part of theirrevenues (25 per cent or less).

5. Empirical findings5.1 Structural characteristics and KPThe general picture of KP methods used by companies, classified in terms of size andindustry, corresponds only partially to what emerged in previous studies. Similarly tothe findings of previous investigations, it is confirmed that: the rate of usage of KPmethods is generally low (only 32.3 per cent of companies use at least one method); thisrate largely varies from one sector to another (Table III); and trademarks are the mostused mechanism (21.3 per cent of the surveyed companies). Instead, one point where

KIBS industrySize class (no. of employees) ICT D&C PFS Total

1-4 87 120 85 29256.5% 75.0% 54.1% 62.0%

5-9 37 31 54 12224.0% 19.4% 34.4% 25.9%

X10 30 9 18 5719.5% 5.6% 11.5% 12.1%

Total 154 160 157 471100.0% 100.0% 100.0% 100.0%

Average size 7.06 3.34 5.25 5.19

Table I.Sample composition(absolute values and

percentages)

KIBS industryType of services delivered ICT (%) D&C (%) PFS (%) Total (%)

Customized 46.8 87.5 65.6 66.9Standard 53.2 12.5 34.4 33.1

Table II.Types of services

delivered by KIBS sector

KIBS industryProtection method ICT (%) D&C (%) PFS (%) Total (%)

Trademarks 14.9 27.0 21.7 21.3Patents 7.1 8.2 5.1 6.8Design rights 0.0 10.1 3.8 4.7Copyrights 1.3 9.4 3.2 4.7Secrecy 4.5 7.5 3.2 5.1Others 1.9 7.5 4.5 4.7At least one method 22.7 45.9 28.0 32.3Average number of methods 1.31 1.52 1.48 1.46

Table III.Use of KP methods

by KIBS industry

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this survey differs from previous studies is in the scarce use of informal methods (likee.g. secrecy). One possible explanation may be – as affirmed by Paallysaho andKuusisto (2011) – that informal protection practices are extremely heterogeneous andmay not be regarded as a deliberate KP method but just a “usual attitude”. This is aninteresting point that may deserve more thorough analysis in future studies.

Another point where this survey differs from previous studies is that the mostactive industry in KP is not necessarily a “high-tech” one (in this case, the ICT sector):the research shows D&C as the most knowledge-protecting industry (nearly halfof these companies make use of KP), followed by PFS, while ICT is lagging third.Industries also differ regarding the methods adopted: design rights and copyrights aremostly used by D&C companies but not by ICT firms and trademarks are mostly usedby D&C companies, rather than PFS and ICT. These differences can be explainedconsidering the cognitive features of the provided services and, in particular, thepossibility to embed knowledge in an artefact (e.g. a document, a logo, a drawing) thatcan be protected by using legal mechanisms.

It is also worth to note that companies use a combination of methods very rarely:the average number of used methods per firm is about 1.46. This value is substantiallythe same across the three industries, but ICT companies show the lowest value (1.31used methods on average): this, again, contrasts with the results of previous studies(Miles et al., 2000; Amara et al., 2008; Paallysaho and Kuusisto, 2008a, b).

As regards size, there is a straightforward relationship between size and KP.A higher propensity to protect knowledge in larger companies was found, as may beexpected (Table IV), even if there is a significant number of very small-sized companies(one to four employees) which make use of KP methods. This can be explainedconsidering that most D&C companies, which use trademarks extensively, fall in thissize class. Hence, the data confirm the findings of others scholars on the relevance ofsize but also confirms that inter-industry differences are more significant than size inexplaining KP behaviour (Miles et al., 2000). In addition, the average number of usedmethods does not change substantially with size, and this is in contrast with the resultsof previous studies.

5.2 KM strategies and KPTo measure their cognitive openness, companies were asked to indicate the importanceof suppliers and customers as sources of knowledge for improving technical/technological competence, new services development, production processes and theability to enter new markets. A five-step Likert scale was used to measure the perceived

Size classesProtection method 1-4 (%) 5-9 (%) X10 (%)

Trademarks 18.2 22.1 35.1Patents 5.8 6.6 12.3Design rights 5.1 4.1 3.5Copyrights 5.8 2.5 3.5Secrecy 5.1 4.9 5.3Others 3.8 7.4 3.5At least one method 29.6 33.6 43.9Average number of methods 1.49 1.41 1.44

Table IV.Use of KP methodsby firms’ size

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importance of clients and customers as sources of the above-mentioned four kindsof knowledge, and firms were grouped in three different classes based on the totalscores given to the importance of the external sources of knowledge (namely: 4-9¼ lowimportance; 10-15¼medium importance; 16-20¼ high importance). As concernssuppliers, 38 per cent of companies indicated that they are of little importance assources of knowledge (L), 45 per cent of medium importance (M) and 17 per cent of highimportance (H). In the case of customers, indicators shift to higher values on average,with 29 per cent of respondents indicating low importance, 45 per cent mediumimportance and 26 per cent high importance. This result is consistent with the nature ofKIBS as is generally described in the literature (Bettencourt et al., 2002; Kuusisto, 2008):KIBS companies have a strict connection with their customers, which not only act asrecipients of knowledge delivered by KIBS but also as precious sources of knowledge, inorder to designing and implementing new services. According to the present survey(Tables V and VI), companies that resort to KP mechanisms are especially those thatconsider clients and/or suppliers essential sources of knowledge. This occurs with all themethods (with the exception of the category “others”). In addition, companies thatconsider suppliers and/or client as very important sources of knowledge are more likelyto use a combination of methods. On the whole, findings seem to indicate that a greateropenness to the external environment calls for efforts in protection, probably because itcan raise the risk of leakages of precious knowledge.

This is confirmed when analysing the link between the use of KP methods andnetworking activities, where this term refers to collaboration with external businesspartners other than clients or suppliers. The questionnaire asked the companies to

Importance of suppliersProtection method L (%) M (%) H (%)

Trademarks 19.3 20.6 28.2Patents 4.0 7.2 11.5Design rights 1.7 5.3 10.3Copyrights 2.3 5.3 9.0Secrecy 2.3 5.7 9.0Others 3.4 5.7 3.8At least one method 23.9 35.9 41.0Average number of methods 1.38 1.39 1.75

Table V.Use of KP methods by

importance of suppliersas sources of knowledge

Importance of clientsProtection method L (%) M (%) H (%)

Trademarks 16.2 21.5 26.0Patents 4.4 7.2 8.9Design rights 2.2 5.3 6.5Copyrights 2.9 4.3 7.3Secrecy 2.9 5.3 7.3Others 7.4 3.3 3.3At least one method 25.7 34.0 36.6Average number of methods 1.40 1.38 1.62

Table VI.Use of KP methods by

importance of clients assources of knowledge

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indicate if – in order to deliver their services – they employ internal resources withoutnetworking with other companies (with the exception of occasional collaborators), orthey count on some assistance by business partners in the same or another industry.

Most of the companies (63.3 per cent) declared to be “self-sufficient”, i.e. they do notresort to external collaborations. For those that declare they network with partners,the use of KP methods is much more widespread (Table VII), thus confirming thatopenness to external environment calls for an adequate protection of knowledge.The average number of methods is the same in the two groups.

As regards the influence of market coverage on KP, the sample was subdivided intwo groups: companies whose sales mainly pertain to local/regional market (i.e. “local”)and those that prevalently serve national and international markets (i.e. “non-local”).By comparing the exploitation of KP mechanisms by these two groups (Table VIII), itcan be noted that local companies are less interested in adopting protection measures,as can be reasonably expected. These results are in line with previous studies, andespecially with Amara et al. (2008) who found a direct relationship between exportand KP. Also in this case, the average number of methods adopted by the companies isnot affected by the extension of their market.

An intriguing question concerns the link between the level of knowledge reuse andits protection. As is well known, a popular topic of knowledge management is thatcompanies often re-use the knowledge they possess for new projects or clients.Especially in the services sector (and in KIBS particularly), there is often the need toprovide customized solutions for any new client, but these solutions are moreeffective and less costly if the company is able to capitalize on the experience made in

NetworkingProtection method No (%) Yes (%)

Trademarks 17.8 27.8Patents 5.7 8.9Design rights 4.4 5.3Copyrights 3.0 7.7Secrecy 3.4 8.3Others 3.4 7.1At least one method 25.9 44.4Average number of methods 1.45 1.47

Table VII.Use of KP methods bynetworking relations

MarketProtection method Local (%) Non-local (%)

Trademarks 17.1 32.2Patents 4.6 13.2Design rights 3.5 8.3Copyrights 4.3 5.0Secrecy 3.2 10.7Others 3.2 9.1At least one method 24.9 52.1Average number of methods 1.44 1.51

Table VIII.Use of KP methodsby market extension

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past projects. Therefore, it may be expected that the more KIBS re-use and exploittheir experience, the more intensely they resort to KP methods. Data are controversial(Table IX), and do not allow to derive a clear connection between these two elements.

Another point that, in principle, might influence the resort to KP is the characteristicsof the services provided. Here, the authors classified services into two categories:customized services, i.e. tailored to fit the specific needs of a client (the majority of thesample in this study, 66.9 per cent of companies) and standard services, namely designedwith general features.

The results show that companies providing customized services employ KPmechanisms more frequently than the others (Table X). Similarly, the average numberof different KP methods adopted by companies that offer personalized solution isgreater than that of the others. These findings clearly contrast with both expectationsand results obtained in previous studies (Xu and Tan, 2010), according to which servicepersonalization is an adequate measure of KP itself, since it makes servicesless imitable.

Finally, the relation between the level of innovativeness (measured in terms ofnumber of service and process innovations introduced in the recent years) and KPwas investigated. The survey is only partial (data about innovation in the D&C sectorwere not collected) but the findings are, however interesting. As can be expected, apositive relation between innovativeness and KP was found (Table XI), confirming theresults of other studies: highly innovative KIBS companies are more inclined to use KPmethods (Paallysaho and Kuusisto, 2008b).

Level of knowledge reuseProtection method 0-24 (%) 25-49 (%) 50-74 (%) X75 (%)

Trademarks 20.6 24.1 14.1 26.8Patents 6.0 6.9 7.2 9.9Design rights 6.4 1.7 2.9 2.8Copyrights 5.2 3.4 2.9 5.6Secrecy 6.0 5.2 4.3 2.8Others 6.7 1.7 1.4 2.8At least one method 34.4 31.0 21.7 35.2Average number of methods 1.48 1.39 1.53 1.44

Table IX.Use of KP methods by

knowledge reuse

Type of serviceProtection method Standard (%) Customized (%)

Trademarks 19.2 22.3Patents 5.1 7.6Design rights 0.6 6.7Copyrights 1.3 6.4Secrecy 1.9 6.7Others 1.9 6.0At least one method 25.0 36.0Average number of methods 1.21 1.55

Table X.Use of KP methods by

service delivered

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6. ConclusionThis study aimed at investigating how KIBS companies protect their knowledge. It isa crucial issue that, until now, has received insufficient attention in the literature:particularly, empirical evidence about KP methods used by KIBS firms is stillscarce, and this research can contribute to a deeper understanding of this topic. This isalso necessary in order to develop useful indications both for managers of KIBScompanies and policy makers interested in promoting and sustaining the developmentof the sector.

6.1 Implications for researchA first goal of this analysis was to complement and verify the studies previouslyconducted. The picture that the present investigation depicts is partly consistent withearlier findings, but is partly in contrast. Table XII summarizes the findings of theauthors’ analysis and proposes a comparison with the results of earlier studies.

On the whole, the survey shows that the use of KP approaches, and especiallyformal methods, is infrequent in KIBS. To some extent, this may recall the argument ofXu and Tan (2010), who affirm that services are more difficult to imitate and thereforeneed less KP than manufacturing companies.

The authors’ findings confirm that the level of use and the kinds of KP methodsadopted substantially vary across industries, but with some differences compared topast analyses. In particular, while the studies by Miles et al. (2000), Amara et al. (2008)and Paallysaho and Kuusisto (2008a, b) show that high-tech KIBS, and particularlyICT, are the most intense users of KP methods, in the present study these companiestend to protect less their knowledge. Instead, data confirm that larger companiesare generally more inclined to use KP methods, while the variety of methods useddoes not change with size, and in general is much lower than the one emerged inprevious investigations.

Here, two important factors may play a role: first, the relatively small size ofcompanies can limit the resort to KP methods, due for instance to the lack of resourcesand the higher importance of interpersonal trust in these companies, as observed inprevious investigations (Scarso and Bolisani, 2012); second, some country-specific orregional-specific factors may produce unexpected effects; for instance, some studieshave highlighted the prevalence of traditional industries in the Italian economy as afactor affecting the development of KIBS (Unioncamere, 2009).

Previous studies were mainly focused on larger KIBS located in countries where thebusiness service sector is more developed than in Italy (Eurostat, 2009), and this can be

Level of innovativeness(number of innovations introduced in the last 3 years)

Protection method 0-1 (%) 2-9 (%) X10 (%)

Trademarks 10.9 31.9 31.1Patents 2.9 10.1 10.0Design rights 1.7 2.9 8.9Copyrights 3.4 2.9 5.6Secrecy 2.1 4.3 7.8Others 2.9 5.8 5.6At least one method 18.9 42.0 45.6Average number of methods 1.27 1.38 1.51

Table XI.Use of KP methodsby innovativeness

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literature

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an important difference. In terms of research, this leads to an interesting conclusion:there is the need to conduct cross-national studies to identify specificities andpeculiarities of the single environments.

As a second goal, the study attempted to investigate the relation between knowledgemanagement in companies and their need for KP. Some results appear logical and in linewith previous studies, namely: companies that are cognitively open to the externalenvironment perceived a greater need to protect their knowledge; and companiesintroducing innovations at a high rate tend to employ protection methods more frequently.

Other results are counterintuitive (i.e. companies with customized services have agreater propensity to use KP than those with standard services) or ambiguous (namely,the relationship between the rate of knowledge reuse and use of KP). Consequently,there is the need to provide deeper insight into the relation between the cognitiveprocesses underpinning the delivery of a knowledge-intensive service and the waysKIBS companies protect their knowledge. A comparative case-study analysis of themechanisms of knowledge management and KP in different companies ad sectors canbe helpful here.

6.2 Implications for management and policy makingThe study may indicate that KIBS firms are little aware of alternative informal KPmethods, that they probably use these methods unconsciously, and that they often lackthe capability of using a combination of methods. On the whole, KIBS companies seemto be lacking a planned KP strategy, and this can reduce the overall effectiveness of KP.

Thus, managers of KIBS companies should pay attention to the different KPmechanisms that are available for them, both formal and informal. They shouldcarefully analyse their cognitive processes and the subjects involved, along with theirKM practices in order to identify their weaknesses; then they should identify theformal or informal KM methods that can be really useful for them, and compose themin a coherent strategy (KP plans). In substance, since companies are different (and soare their cognitive processes) each company formulates and implements an explicitKP strategy that is suitable for its particular purposes. This is particularly true forsmall firms, where KP may be overlooked or neglected due to different circumstances:the misperception of the risk associated to the loss of information; the cost of itsactivities; the need of competences that are not available within the firm. With regardto this, the authors have to underline that KP is an imperative also in small-sized KIBScompanies. Given their strategic importance, and the little number of people presentin the firm, KP activities are therefore likely to be directly in the hands of theentrepreneur, in case with the support of external consultants and experts.

As regards policy makers, the analysis suggests that, for supporting practices of KPin KIBS, new approaches should be defined, more specifically targeted to the effectivecognitive processes of these companies. In other words, as well stated by some studies(Pro Inno Europe, 2009; Thoma and Bizer, 2012), simply encouraging KIBS firms tomake a wider use of KP may not be so effective. It can be more useful to help them inrecognizing the weaknesses of their cognitive processes, for example by providingindustry-specific training and counselling activities, or by inspiring legislative activitythat is more targeted to the actual demands of companies.

6.3 Limitations of the studyFinally, it is worth to point out some specific features of the study that have to becarefully considered when interpreting the results. First, the survey focused on a

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specific region. The sample well mirrors the universe of KIBS in that region, andconsequently the results appear to be a good representation of the “real picture”, but atthe same time findings may change when other regions or nations are considered.Cross-national studies should be therefore conducted to draw more generalconclusions. A second problem regards the composition of the sample: data pertainto three specific industries that have peculiar cognitive features, so they cannot bedirectly generalized to other KIBS.

A third issue regards the methodology. A statistical survey, as the one adopted inthis study, is an appropriate method to draw a “general” picture that well representsthe overall reality of an entire category of companies in a bounded geographical area.In addition, this method provides the opportunity to make comparisons with thefindings of similar studies. However, the authors are aware that the current research ofKIBS grounds on both quantitative data, deriving from statistical surveys andqualitative data, drawn from case studies (Candelin-Palmqvist et al., 2012). In thissense, the usefulness of the study presented here is that it allows to underlinesignificant issues that can be analysed more deeply by using qualitative research.

In particular, there is the need for a thorough analysis of the knowledgemanagement strategies implemented by single companies and their impact on KPmethods adopted on a case-by-case basis. In addition, the present study shows the needfor a further investigation regarding an important but still controversial topic, that isthe use of KP in technological KIBS. Some new evidence emerged in this study, namelythe effect on KP practices of – the level of knowledge re-use; the level of industrializationof the service; and the increasing recourse to networking with partners. These are allimportant and interesting topics may be the object of investigation of future studies.

Finally, as previously mentioned, it would be important to closely investigate theuse of informal KP methods in the single company. While informal KP methods stillrepresent an essential approach for KIBS, their impact on operational processes andtheir relationships with knowledge management practices is still little studied.

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About the authors

Ettore Bolisani (Laurea “Electronic Engineering” and PhD “Innovation Studies” – PaduaUniversity), after being an EU “Marie Curie” research fellow at PREST (University ofManchester) and a researcher at the Universities of Trieste and Padua, is now AssociateProfessor at the Faculty of Engineering of the University of Padua. His research centres on ICTmanagement and knowledge management. He has participated in various research projectsfunded by the EU, Italian Institutions, and private organisations. He was Chair of the EuropeanConference on Knowledge Management (University of Padua, 2009) and Editor of Building the

Knowledge Society on the Internet: Sharing and Exchanging Knowledge in Networked

Environments (IGI Global, Hershey, PA, 2008).Marco Paiola is Assistant Professor of Business Management at the University of Padova.

He received his PhD in Business Strategy at Bocconi University, Milan. His current researchinterests are in the areas of service management and innovation, manufacturing into servicetransformation processes, innovation in knowledge intensive business services. He has writtenseveral journal articles and books chapters and has been involved in national and internationalresearch projects on these topics. He has published in Industrial Marketing Management,Industry & Innovation, International Journal of Quality and Service Science, Managing Service

Quality and Journal of Business-to-Business Marketing. He has also presented various papers onhis areas of research at some of the most important international conferences. Marco Paiola is thecorresponding author and can be contacted at: marco.paiola@unipd.it

Enrico Scarso is Associate Professor of Engineering Management at the Department ofManagement and Engineering, University of Padua (Italy). He received his PhD degree inIndustrial Innovation from the University of Padua. His current research interests are in the areaof technology and knowledge management, with a particular focus on the role of knowledge-intensive business services in local innovation systems. He has published in Technovation,International Journal of Technology Management, International Journal of Electronic Commerce,Journal of Knowledge Management, Management Decision, International Journal of Operations

& Production Management and has presented various papers at international conferences. He ismember of IAMOT (International Association for Management of Technology) and IEEE.

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