Complexity, networks and knowledge flow

Olav Sorenson

Because knowledge plays an important role in the creation of wealth, economic actors may attempt to skew the flow of knowledge in their favor. Managers of a firm may seek to spread knowledge widely within their organization but prevent its diffusion to rivals. Regional planners may strive for rapid diffusion of knowledge within a local economy but not beyond it. We ask, "when will knowledge developed in one area of dense social connections such as a firm, a geographic locale, or a technological community tend to diffuse to the edge of that area but not further?" Marrying an understanding of social networks with a view of knowledge transfer as a search process, we argue that the degree of knowledge inequality across social boundaries depends crucially on the nature of the knowledge at hand.