Knowledge Dynamics in a Network Industry

In this paper, we model the impact of networks on knowledge growth in an in-novatingindustry. Specifically, we compare two mediums of knowledge exchange;random interaction, and the case in which interaction occurs on a fixed architec-ture.In a simulation study, we investigate how the medium of knowledge exchangecontributes to knowledge growth under di fferent scenarios related to the industry’sinnovative potential. We measure innovative potential by considering the extent towhich knowledge can be codified, and the available technological opportunities. Ourresults tend to support the conjecture that spatial clustering generates higher longrun knowledge growth rates in industries characterized by highly tacit knowledge,while the opposite is true when the degree of codification is important.Key Words: Network, Network Industry, Clustering, Innovation, Knowledge.