The Pathways of Knowledge Spillovers

Knowledge spillovers are unintentional and costless transfers of knowledge from a leader firm to a follower firm. They can occur via three pathways: Observation, imitation, and managerial interaction; Labor mobility; and Value chain upgrading. Knowledge spillovers also affect the follower firm’s performance via competitive pressure imposed by new entrant leader firms. Knowledge spillovers are important to firms because they are a means to gain competitive advantage. In this study we explore the pathways by which knowledge spillovers can occur and effects of competitive pressure on the firm’s performance. We document the experiences of Vietnamese software companies to demonstrate the dynamics of knowledge spillovers.