Estimating productivity from an approximation to quantifying the knowledge flow in the Spanish industry

This study introduces a methodology to quantify knowledge flow in Spanish manufacturing firms, utilizing data from the Enterprise Strategy Survey (ESEE). A composite index is created through a structural equation model (SEM) featuring latent variables, which removes any subjectivity in weighting the dimensions. The analysis encompasses seven critical dimensions concerning innovation, R&D, work organization, and the Internet. Results indicate that dimensions linked to R&D significantly influence knowledge flow and, consequently, business productivity. The combination of R&D investment and the implementation of new organizational approaches in the workplace shows a positive and statistically significant correlation with enhanced productivity. These findings emphasize companies' need to embrace strategies that merge technological advancement with organizational innovation. In this regard, the knowledge flow index highlights the importance of incorporating both elements. This method provides a statistically sound tool for evaluating business competitiveness, emphasizing the necessity of integrating technology and organizational innovation within corporations’ strategies.