Inter-Firm Knowledge Spillover Failure
RCTClinical Trial
Manufacturing innovations and modern management techniques fail to diffuse spontaneously across competing independent firms within industry clusters.
Picture this
Think of two competing bakery owners; even if one invents a superior bread-baking workflow, the secret stays behind closed doors because the owners do not share their internal recipe books or allow rival managers into their kitchens to inspect operations.
What the evidence says
Spillovers from outside firms accounted for only 2.2% of practice upgrades in control firms and 0.7% in treatment experimental plants between 2011 and 2017, demonstrating minimal organic cross-firm management adoption compared to intra-firm diffusion.
- Who was studied
- 28 manufacturing plants across 17 family-owned cotton textile firms near Mumbai, India (averaging 270 workers per firm).
- How
- Randomized Controlled Trial (RCT) tracking management adoption across experimental and control plants over a 9-year panel (2008–2017).
What to do
Establish formal industry benchmarking consortiums or structured peer-learning networks to facilitate cross-company observation and management practice transfer.
From the source
"...while few management practices had demonstrably spread across the firms in the study, many had spread within firms, from the experimental plants to the non-experimental plants, suggesting limited spillovers between firms but large spillovers within firms."
Do-Management-Interventions-Lasts_Bloom-et-al_June2018.pdf