Knowledge sharing allows trading partners to orchestrate the operation of supply chain and capture positions of advantage. Yet, lack of knowledge sharing has been consistently found to be the most critical failure factor in supply chain management. This paper intends to study the factors affecting trading partners’ entering knowledge sharing ties. Drawing upon transaction cost economics and socio-political theories, we developed our research framework. The hypotheses derived were tested by data collected with six medium-sized companies. Data analysis showed that socio-political factors were more robust in affecting the focal firm’s decision on whether to share knowledge with a particular partner. In particular, trust towards the partner and the partner’s power were the primary factors leading the firm to enter the knowledge sharing ties. In contrast, asset specificity did not play an important role in affecting the firm’s knowledge sharing decision. Theoretical contribution and practical implications are discussed.
As a society moves from the industrial to the knowledge age, knowledge is brought to the forefront as a factor of production and identified as the asset fundamentally responsible for organizational success [24] and [34]. Sharing knowledge allows the participating organizations to integrate their knowledge, detect the window of opportunities in the marketplace and capture positions of advantage [20], [40], [58] and [64]. In particular, sharing knowledge between trading partners may enable the firms to orchestrate activities in the supply chain, such as concerted demand forecasts and replenishments. Nevertheless, the great potential benefits of knowledge sharing do not lead most firms, especially small and medium enterprises (SMEs), to enter such cooperative relationships. Lack of knowledge sharing with trading partners has been consistently found to be the most critical failure factor in supply chain management [16]. Our interest in the phenomenon of insufficient knowledge sharing in supply chains motivated our research reported in this paper.
There is an extensive literature on interorganizational knowledge sharing, besides that in popular press and magazines (e.g., [9], [21], [41] and [62]). The extant literature has been focused on whether to share knowledge and how to manage the sharing relationship. It does not provide enough cues to decide with whom firms should share knowledge and how knowledge can or should be shared. The purpose of this reported study was to address the first question by examining the antecedents of knowledge sharing in a dyadic context. In particular, we focus on knowledge sharing between trading partners through Internet-based computing and communications means. Our research questions are the following: (1) What are the factors affecting the organization’s predisposition to share knowledge with a particular partner? (2) How do these factors affect the organization’s decision on whether to share knowledge with this partner?
In this study, we integrate transaction cost economics [75] and socio-political theories [52] to develop a research framework. These two schools have different assumptions about the firm and offer different explanations for interorganizational cooperation. Drawing on these theories, we derive hypotheses on how economic and socio-political factors affect the organization’s predisposition to share knowledge with a particular partner. The theoretical model was tested by data collected from six medium sized organizations sharing knowledge with some of their trading partners in Singapore.
The rest of the paper is organized as follows. The second section describes the theoretical background of our study. In the third section, we present our conceptual model by drawing upon transaction cost economics, socio-political and information systems theories. Section four is the discussion about our research methodology. The fifth and sixth sections present our research findings, and discussion and conclusion.
This study reveals that socio-political factors are more
robust in affecting the firm’s decision on whether to share
knowledge with a particular partner than economic factors.
In particular, trust towards the trading partner, the part-
ner’s power over the focal firm, and the magnitude of inter-
dependence between the dyadic firms are found to be the
major factors leading the firm to share knowledge with this
partner. By contrast, asset specificity does not play an
important role in affecting the firm’s knowledge sharing
decision. Also, partnership uncertainty’s effect is attenu-
ated by the focal firm’s trust towards the partner. Our find-
ings are consistent with some extant research on inter-
organizational cooperation. For example, in his buyer-
seller relationship in US and Japanese automobile indus-
tries, Bensaou
[7]
found that relational factors are more
robust predictors of cooperation than economic factors.
Similarly, Pilling and his colleagues suggest that the guard
against opportunism is not due to economic safeguards but
due to each party’s appreciation of the past transactions
and anticipation of future exchange
[53]
.
The incompetence of TCE factors in affecting the firm’s
knowledge sharing decision can be explained by as follows.
TCE proposes that a firm’s decision on whether to cooper-
ate with partners is based on an evaluation of transaction
costs. From a strategic point of view, organizations choose
to manage the supply chain through a cooperative initiative knowledge sharing. By sharing knowledge with its trad-
ing partner, the firm aims to obtain better knowledge about
the market requirements and the operation of the supply
chain. The objective of saving transaction costs and achiev-
ing efficiency of transaction is replaced by serving customer
needs better and gaining stronger competitive advantage
[4]
. While the hallmark of TCE is to compare the efficiency
of different governances, it may not be appropriate in pre-
dicting the firm’s cooperation if the firm has goals other
than reducing transaction costs. Hence, TCE cannot pro-
vide the appropriate guidelines for knowledge sharing deci-
sion-making.
In addition, the firm is well aware of the difficulties in
monitoring, evaluating and predicting the partner’s
knowledge sharing behavior. Without trust, firms need
to spell out a long list of terms and conditions for the
entire contract term ex ante. Given the difficulties of mea-
suring the partners’ knowledge sharing behavior, such a
contract is very costly to craft, if not impossible. By con-
trast, in the case that the firm trusts its partner, the par-
ticipating firms can define a general process of periodic
renegotiations to adjust details on what to share and
how to share, rather than exploring and stipulating
responses to every possible event before they set up the
knowledge sharing relationship. It is considerably simpler
than drafting contingent claim contracts, yet at the same
time remains flexible in the face of changing circum-
stances. Moreover, formal contracts may even undermine
the firm’s capacity to develop a knowledge sharing rela-
tionship. A formal contract may signal distrust toward
the trading partner and by undermining trust, encourage,
rather than discourage, opportunistic behavior
[17,22]
.
Thus, the firm prefers to have trust to serve as substitutes
for contracts
[1,8,10,23,68]
. The managers perceive that
trust and its underlying normative behaviors, operating
as a self-enforcing safeguard, are most effective and least
costly alternative. Indeed, Larson’s
[37]
study of an
inter-firm exchange relationship reveals TCE’s limited
ability to explain a hybrid form of organization when
there is a lack of control and monitoring devices between
firms. By contrast, socio-political theories emphasize the
influence of relational factors and fill the gap of TCE,
which make these theories robust in predicting a firm’s
knowledge sharing decision making.
Our research makes important contributions both theo-
retically and practically. Specifically, through the deductive
test, our study finds that TCE cannot be used to explain
why firms share knowledge with certain partners but not
the others. Hence, the antecedents of interorganizational
cooperation offered by TCE are not valid factors leading
the firm to enter knowledge sharing ties. Our study also
indicates that the conditions conducive to interorganiza-
tional cooperation offered by socio-political theory are
more powerful in explaining what leads firms to share
knowledge with each other. In addition, by unveiling how
these factors affect the firm’s knowledge sharing decision,
we offer practitioners clear guidelines about what factors should be managed properly to promote knowledge shar-
ing among firms.
There are also several limitations of this study. Given
that reasonable candor from the interviewees and access
to essential data
[6]
are critical, we selected only the firms
that had confidence in us. In addition, all the firms under
study were located in a Chinese culture. Hence, our
research findings should be applied to other contexts with
caution. Future research involving a large number of com-
panies, such as survey study, is required to test our find-
ings. Another concern involves the measurement of
knowledge sharing, in terms of both its quality and quan-
tity. Since we could not access the actual knowledge shared
by the firms, the data collected suffer the measurement
error from the self-report study. More precise measurement
of knowledge shared and future studies conducted with
firms in other industries and/or in different cultures are
important to extend our understanding of knowledge shar-
ing between trading partners.