The dynamics of knowledge stocks and knowledge flows: Innovation consequences of recruitment and collaboration in biotech

To extend the knowledge-based view of the firm, we examine how managing the dynamic balance that a firm must undertake between applying knowledge stocks and accessing knowledge flows may determine innovativeness. We found that while the effect of scientist's recruitment and alliances as two sources of knowledge flow decay overtime, high degrees of human and social capital stock reduces the speed of new assets erosion. Failing to account for the interactions between knowledge stocks and flows, as well as the underlining causalities associated with each knowledge source, will result in an incomplete picture of the relationship between knowledge development efforts and innovative success. We test our assumptions on a longitudinal event history data set of the complete US biotech population of 857 firms founded during the period 1973-1999.