The impact of unintentional knowledge leakages and spillovers on the longevity of inter-firm relationships

Cottam, Ed and Galvin, Peter (2013) The impact of unintentional knowledge leakages and spillovers on the longevity of inter-firm relationships. In: British Academy of Management Annual Conference (BAM 2013), 10-12 September 2013, Liverpool.

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Abstract

Research suggests that forming strategic alliances and cultivating networks promotes learning and can help firms gain economic rents (Uzzi & Gillespie, 2002; Lavie, 2006). However, such ties can leave organisations susceptible to knowledge spillovers, defined as the unintended transfer of knowledge to a partner (Inkpen, 1998). If a firm inadvertently transfers valuable knowledge, especially to a competing firm, this could undermine its competitive advantage, as rare knowledge is made available to others. This paradox of openness has been highlighted in the growing literature on open innovation (Huang, Rice & Galvin, 2012). Some literature suggests that it is in the firm’s interests to endeavour to capitalize on incoming spillovers from a collaborative relationship, and attempt to limit the amount of outgoing (outbound) knowledge, spilled out to the partner firm (Cassiman et al., 2002; Martin, 1999; Amir et al., 2003, Carrie & Lokshin, 2004 in Belderbos, Lavie, 2006). Consequently, some research recommends firms establish stringent protective measures to shut off their proprietary knowledge from partners (Sammarra & Biggiero, 2008). Following on from the logic of Lavie’s (2006) spillover rents concept, that any significant, outgoing knowledge spillover should be of growing concern to a firm, if an organisation cannot effectively mitigate against this eventuality, it would be in their interest to terminate the relationship in order to protect their key knowledge. However, this reasoning may be too simplistic and overlook key contextual variables which may impact management’s judgement to end or maintain an inter-firm relationship, especially in an increasingly open business environment where the sharing of firm resources is encouraged (Chesbrough, 2003).This ongoing research investigates the impact knowledge spillovers have on the longevity of inter-firm relationships. Are ties severed, or diluted, once managers become aware their organisation is unwittingly transferring more than they intended? Or is it possible for a relationship to become stronger, or at least maintained, despite the fact that outbound knowledge spillover is occurring? Our objective is to explore some of the conditions which might act as a catalyst to these respective outcomes. The research project takes place within an open innovation context where sharing discrete sets of knowledge are standard.

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