Growth in Knowledge-Intensive Business Services: Evidence from Lombardy

This paper studies the growth patterns in knowledge-intensive business services (KIBS) in Lombardy on the basis of original firm-level survey data. The aim is to investigate in particular the role of and interplay between age and size of firms and the modes of innovation in the process of growth. Our findings indicate that younger firms tend to outperform incumbents for sales growth and that larger firms tend to grow more than smaller companies. However, the effects of firm size and age vary substantially according to the firm's specific pattern of innovation. In particular, highly innovative firms tend to outperform competitors regardless of their age or size, while for conservative KIBS, size is a prerequisite for growth. Investment in human capital and the service distribution network are important drivers of competition for growing KIBS.