Drivers of Knowledge Exchange from Indian Universities: The Role of Signaling under Asymmetric Information

This paper explores the key drivers of knowledge exchange from Indian universities which are associated with high degrees of information asymmetry between them and potential users of their research. Such asymmetries result in typical adverse selection and moral hazard problems afflicting knowledge markets in emerging nations. This motivated us to identify specific organizational characteristics, which may ameliorate this situation by acting as “signals” of quality and intention, in the absence of more direct mechanisms common in developed contexts. This paper addresses a gap in the literature on the nature of the relationship between university research and knowledge exchange in emerging nations and examines the direct and indirect role of university specific signals on this relationship. We find that basic research output and the strength of signaling from a university are positively associated with its knowledge exchange performance, but the marginal impact of signaling is far higher than research output itself. Also, each signal directly impacts a single channel of knowledge exchange only, and this depends on the specific signal being considered. Signal strength negatively moderates the research-knowledge exchange link, implying that universities for which signals are strong, knowledge exchange activities develop a degree of self-sufficiency, and for the rest, creating an appropriate research base is important to begin with.