An Inquiry into the Mechanisms of Secrecy and External Partner Collaboration
J. van Vliet
Student number: s2186535
University of Groningen Faculty of Economics & Business
Supervisor: Dr. Pedro de Faria Co-assessor: Dr. Isabel Estrada
Date of submission: 20 - 06 - 2017
Author information:
Jos van Vliet, student at the University of Groningen, wrote this MSc Thesis as a final assignment for the Master of Science in Strategic Innovation Management. This work aims to reflect a variety of key learning concepts, which have been discussed thoroughly throughout the years.
The thesis has been written under direct supervision of Dr. Pedro de Faria.
Any questions and/or comments can be emailed to the following address:
j.van.vliet.1@student.rug.nl.
Acknowledgements
First of all, I would like to show my gratitude to my supervisor Pedro de Faria, for assisting me and sharing his wisdom over the course of writing this master thesis. Without his assistance, this thesis would not have been the same. Furthermore, I would like to thank all the interviewees for their collaboration and for sharing their ideas to make this research possible. Lastly, I want to thank both Professor Dries Faems and Sten Wennink for giving me the opportunity to analyze the 2016 Innovation Benchmark Survey data.
Abstract
Secrecy is a widely implemented knowledge protection tool; however, research regarding this topic is ultimately incomplete. The purpose of this thesis is to extend on the current literature of secrecy, by exploring firms’ implementation of secrecy mechanisms and its potential relationship with external partner collaboration. Based on interviews with six firms located in the north of the Netherlands, I was able to gain novel and multifaceted insights on secrecy.
After an extensive cross-case analysis, the data revealed several interesting findings. Firstly, firms who frequently collaborate with external partners seem to be more involved with secrecy mechanisms, as opposed to firms typically operating solo. Secondly, despite the frequent use of formal contracts, trust remains the most important factor on which collaborations between firms are built. Thirdly, firms frequently implement secrecy
instruments as a second option to formal protection mechanisms, such as patents. Fourthly, I found that the complexity of a firm’s products does not substitute for the implementation of secrecy. Lastly, the findings show that firms often implement internal knowledge barriers to facilitate employees working with information on a need-to-know basis. This thesis
contributes to existing literature in that it provides an integrative perspective regarding firms’
implementation of secrecy mechanisms and external partner collaboration.
Keywords: secrecy, knowledge, protection, collaboration
Introduction
Knowledge is an important driver for innovation in businesses (Spender & Grant, 1996). Competitive advantages are very often the result of successful knowledge
appropriation (Spender & Grant, 1996). As argued by Coyne (1986), enjoying a competitive advantage allows firms to differentiate themselves from competitors. This, in turn, enables firms to secure a strategic market position and gain customer attractiveness. However, a competitive advantage is only durable if competitors cannot readily imitate the attributes of the firm’s unique products or services (Coyne, 1986). Indeed, Liebeskind (1996) argued that firms need to invest in knowledge protection mechanisms if they want their competitive advantages to be sustainable in the long-term. While research on formal knowledge protection mechanisms such as patents is fairly matured, relatively little is known about the implications of informal protection mechanisms such as secrecy. This might be the result of the inherent nature of secrecy, as opposed to publically available information regarding formal protection mechanisms such as patents. Nevertheless, secrecy mechanisms are used in many occasions by a great variety of industry players for strategic purposes and the development of firm specific advantages (Cohen, Nelson, & Walsh, 2000; Hannah, 2005). Applications of secrecy range from sensitive customer files (Hannah, 2005) to keeping a new pastry recipe a secret from competitors (Pogash, 2015), and many firms even implement a combination of different secrecy applications.
A literature review by Inkinen (2015) showed that researchers have written a great deal on knowledge management practices in firms. To the best of my knowledge, however, less attention is paid to the mechanisms firms can implement to protect their knowledge.
Particularly, literature on the implications of informal knowledge protection mechanisms such as secrecy is incomplete, despite the fact that secrecy is a highly popular protection tool among many different firms (Arundel, 2001). An important aspect of protection mechanisms
in firms and secrecy in particular concerns the balance of withholding and protecting
information, and sharing it. Despite the fact that secrecy is used by many firms as a strategic tool, there is a paucity of literature on the implications of secrecy with regard to a firm’s strategy. Moreover, although Bos, Broekhuizen, and de Faria (2015) do touch upon the subject, it is very rarely documented how firms strategically apply secrecy mechanisms during collaborative efforts with external partners. Laursen and Salter (2014) already pointed out that collaborations can often cause tension when firms feel the need to share and protect their knowledge at the same time. Therefore, to fill the gap, this thesis aims to provide an integrative perspective on firms’ implementation of secrecy and its relationship with external partner collaboration. Exploratory research is carried out on the basis of multiple interviews with firms on their implementation of secrecy mechanisms. A cross-case analysis reveals several novel insights regarding the implications of external partner collaboration, mutual trust, product complexity, and internal knowledge barriers.
The remainder of this thesis is organized as follows: the next section deals with the theoretical foundations of knowledge (protection) management in firms, after which I will elaborate on the specifics of the case study research. Thereafter, the results are documented, followed by a summary and a discussion of the main findings.
Theoretical Framework Appropriating Value from Knowledge
Knowledge is arguably the most important driver for innovation in firms. It is often considered as the key to superior firm performance and the source of competitive advantages (Spender & Grant, 1996). The importance of knowledge in firms is reflected particularly by theories anchored to the resource-based view (RBV). According Penrose (1959), firms create economic value by effectively structuring their resources and capabilities. In turn, this will aid in the process of creating competitive advantages responsible for the growth of firms. In
addition, resources should be valuable, rare, inimitable, and non-substitutable if the
competitive advantages are to be sustainable (Barney, 1991). This is in line with the theory of dynamic capabilities, which focuses on the capacity of firms to renew their competences in an answer to ever-changing business environments (Nelson, 1991; Teece et al., 1997).
Technologies develop quickly and innovation is required to maintain a competitive position on the market.
In an attempt to extend the RBV model, the knowledge-based view (KBV) was proposed by Grant (1996) elaborating on what enables firms to exist in the first place.
According to the KBV, firms exist because they can more efficiently integrate and apply knowledge than markets (Grant, 1996). Furthermore, knowledge is the most important asset of firms which is why firm-level strategy should be concerned with developing, protecting, and transferring knowledge (Liebeskind, 1996). KBV promotes the creation of competitive advantages when there is a capability gap between a firm and its competitors and the latter also cannot readily imitate the superior innovations (Coyne, 1986).
Finally, and in addition to the facet of knowledge transfer by Liebeskind (1996), research has shown that internal knowledge sharing is one of the most crucial innovation drivers of businesses (Tsai, 2001; Estrada, Faems, & De Faria, 2016). Sharing and
appropriating knowledge helps to provide a collaborative environment which facilitates the development of various types of innovation. Knowledge management has the responsibility to provide an atmosphere in which individuals can effectively create, retain, and transfer
knowledge (Liebeskind, 1996; Argote, McEvily, & Reagans, 2003). Hence, managers play an important role in maintaining an adequate internal knowledge flow, so as to provide a climate that boosts innovation performance.
Knowledge Protection
Now that the importance of knowledge appropriation for firm performance has been discussed, it is critical to elaborate on how this key resource can be successfully sustained.
With the constant risk of others attempting to appropriate value from the firm’s knowledge assets and thereby effectively lowering the rents gained from commercializing innovations (Teece, 1996; Katila, Rosenberger, & Eisenhardt, 2008), knowledge protection is critical.
Indeed, Liebeskind (1996) also argued that without substantial protection mechanisms, firms risk unintended knowledge spillovers that can endanger the sustainability of their competitive advantages. Hence, effectively protecting knowledge assets is key to a firm’s long-term survival.
Knowledge protection mechanisms roughly fall into two categories: formal protection- and informal protection mechanisms (Rammer, 2002). The former deals with intellectual property rights such as patents and trademarks characterized by a potential punishment on the imitator. In contrast, the latter category encapsulates protection mechanisms aimed at
avoiding imitation in the first place, such as secrecy, speed to the market, and complex design.
Formal knowledge protection mechanisms. In order to effectively protect their knowledge, firms can make use of formal protection mechanisms. According to the World Intellectual Property Organization (WIPO) intellectual property rights refer to creations of the mind and include patents, trademarks, industrial designs, and geographical indications
(WIPO, 2017). Patents give their owner the exclusive right to commercialize an invention;
typically a new product or solution. Trademarks on the other hand, are characterized by the protection of a unique sign identifying the value of certain products or services (e.g. the McDonald’s logo). Furthermore, industrial designs cover the protection of ornamental and
aesthetic designs and, lastly, geographical indications refer to the sign on products indicating a geographical origin reflecting certain qualities or reputations (e.g. Roquefort cheese).
Intellectual property rights (IPR) have earned themselves a place at the top of many firms’ agendas. IPR are an effective mechanism to overcome problems of external knowledge spillovers (Thomä & Bizer, 2013), and are seen as of great importance for a firm’s innovation performance (Ritala & Hurmelinna–Laukkanen, 2013). Formal knowledge protection
instruments can aid in the process of defining knowledge boundaries and mitigate the risks associated with unintended knowledge spillovers (Estrada et al., 2016). Furthermore, research shows that in coopetion climates where firms have a similar knowledge base and strategy, knowledge sharing mechanisms significantly boost innovation performance, but only when working jointly with formal knowledge protection mechanisms (Park, Srivastava, &
Gnyawali, 2014; Estrada et al., 2016). Firms should thus not only ensure an effective flow of knowledge, but simultaneously be able to protect this very knowledge. Developing a
knowledge base is a costly activity and without the proper protection mechanisms, other firms are able to appropriate value from the knowledge as well. However, the effectiveness of formal protection mechanisms (e.g. patents) is not unanimous across firms. Particularly, due to their high costs, the requirements for patent applications are often difficult to meet for small firms (Walker, 1995). Moreover, some firms are reluctant to disclose any technical details of their innovations in the form of patents (Arrow, 1962; Liebeskind, 1996). Arrow (1962) argued that after the disclosure of technical details, the relevant knowledge becomes a public good giving an opportunity to the receivers of that knowledge to appropriate value from it as well, without adequate compensation to the innovator. Therefore, often in favor of secrecy, firms should think twice before deciding to make use of formal mechanisms to protect their innovations. Hence, many firms implement informal protection mechanisms as an alternative.
Informal knowledge protection mechanisms. Where the literature on formal protection mechanisms is fairly matured, relatively little is known about the informal instruments companies can put to use in order to protect strategic assets. Notwithstanding, informal protection mechanisms are very popular especially among SME’s, for they typically lack the necessary resources to implement formal protection mechanisms (Katila et al., 2008;
Neuhäusler, 2012; Milesi, Petelski, & Verre, 2013). Informal knowledge protection
mechanisms include, but are not limited to, speed to the market, complex design, and secrecy.
Speed to market is the process of trying to stay ahead of competition by being the first to introduce new products or services. Complex design implies that products are made with a certain complexity, to make it difficult for competitors to copy it. Secrecy is defined by James, Leiblein, & Lu (2013) as “…the firm’s efforts to protect the uniqueness of an innovation by withholding its technical details from public dissemination.” As long as the secret encapsulates economic value and the firm makes sufficient efforts to adequately protect it, secrecy provides legal protection for firms’ innovations (James et al., 2013).
As argued by Bos et al. (2015), certain firms can make particularly good use of secrecy, depending on the business context in which they operate. First of all, process innovations are better suited for secrecy protection than product innovations, because they tend to contain more tacit knowledge and are often hidden within the boundaries of the firm (Bos et al., 2015). This is in line with Rivkin (2000) who argued that complex innovations that are difficult to replicate or reverse-engineer, tend to be more suitable for secrecy
instruments due to their inherent barrier of imitation. Secondly, a smaller firm is more likely than a larger firm to embrace secrecy mechanisms for the protection of strategic assets.
Patents require a considerable amount of capital due to their high costs, something smaller firms generally lack (Walker, 1995). Thirdly, secrecy is particularly effective in industries that did not reach their maturation stage yet. Products in the introduction or development
stage are less substitutable and it provides firms with the opportunity to modify their designs before entering the market. Particularly when a firm has a first-mover advantage, secrecy helps to avoid negative knowledge spillovers and facilitates the development of competitive advantages before the competition is able to react (Lieberman & Montgomery, 1998). Formal protection mechanisms usually take over when an industry is at its maturation stage. Fourthly and lastly, the effectiveness of secrecy is dependent on the formal protection regime of a particular country or region. Secrecy mechanisms become more valuable when legal protection mechanisms are weak (i.e. patents are difficult to obtain).
However, even in favorable business contexts, implementing secrecy also has its downsides. By adhering to strong secrecy mechanisms, firms limit effective internal knowledge sharing, learning processes (James et al., 2013), and its R&D efficiency which subsequently hampers innovation developments (Liebeskind, 1996; Winter, 2000; Argote, McEvily, & Reagans, 2003, Bos et al., 2015). This limitation is particularly prevalent in strong collaborative relationships, since these types of relationships are typically
characterized by intensive knowledge sharing (Slowinski, Hummel, & Kumpf, 2006;
Päällysaho & Kuusisto, 2011). As argued by Bos et al. (2015), a high degree of secrecy during external knowledge search will impede firms’ reciprocity, hampering effective collaborations. In addition, secrecy can establish a climate in which some employees are ‘in the know’, whereas others are not (Costas & Grey, 2016). This can cause tension and emotional suffering among workers who feel left out (James et al., 2013). Firms ought to know how to deal with these effects and preferably avoid them as much as possible, to guarantee a safe and just atmosphere. Surprisingly, in an article about project networks, researchers found that secrecy does not necessarily hamper important knowledge exchanges per se (Solli-Saether, Karlsen, & Oorschot, 2015). Contractual agreements can limit the negative effects of secrecy, while at the same time clearly indicating the contributing factor of
each party. This way, businesses benefit from knowledge sharing experiences while still enjoying effective knowledge protection.
External Knowledge Search and Secrecy
Now that light has been shed on the importance of internal knowledge creation and protection, it is interesting to see how firms can also appropriate value from external sources.
As argued by Cohen & Levinthal (1989), firms can create new knowledge trough endogenous efforts, but also adopt value from existing technologies. Indeed, according to Chesbrough (2003), firms ought to make use of external knowledge sources to create new products and services and further develop existing technologies. Hence, in order to survive in today’s dynamic business environments, firms need to recognize, assimilate, and apply external knowledge responsible for the development of innovations (Cohen & Levinthal, 1990). The ability of firms to successfully manage this process is dependent on their so-called absorptive capacity (Cohen & Levinthal, 1990). It is generally accepted that firms with considerable absorptive capacity achieve better innovation performance and are more successful in terms of R&D activities and, in turn, new product (and service) development (Cohen & Levinthal, 1989). Indeed, external knowledge of technical expertise combined with internal R&D support, was found to foster the success of a firm’s innovations and aid in the process of developing competitive advantages. (Freeman, 1991).
Furthermore, internalizing external market knowledge can be particularly interesting for firms characterized by a deep knowledge base, as opposed to firms with broad knowledge base (Zhou & Li, 2012). It is argued that, in order to achieve radical innovation, firms with a deep knowledge base should focus on market knowledge acquisition, so as to expand the scope of information search. Breakthrough ideas, which are arguably the most important component of radical innovation, often cannot be developed from within the current
knowledge base of a firm (Zhou & Li, 2012). Hence, to survive in today’s dynamic business environment, firms ought to search for external sources of knowledge as well.
This paper focuses particularly on the relationship between secrecy mechanisms and external partner collaboration. Since secrecy implies a certain degree of withholding
information or knowledge, this can pose difficulties when effective collaboration requires the opposite (i.e. sharing information). Laursen and Salter (2014) refer to this problem as the
‘Paradox of Openness’, arguing that firms often need a certain openness in order to innovate but are simultaneously required to protect their knowledge in order to commercialize their innovations. The authors found that a stronger focus on appropriability resulted in a concave relationship with external search- and collaboration breadth, especially concerning formal collaborations. In other words, firms that focus too much on appropriating knowledge and creating positive spillovers, are likely to be of limited openness during a collaboration, hampering the effectiveness of the partnership. A more balanced approach (i.e. disclose some knowledge and protect certain knowledge at the same time) would therefore be more ideal in terms of effective partner collaboration. Furthermore, the authors state that working with competitors is positively related to strong appropriability strategies because firms try to avoid negative spillovers of knowledge. The causal direction of this relationship is, however, unknown. Appropriability regimes can be the result as much as the cause of a firm’s knowledge portfolio, depending on whether or not (many) competitors are involved.
Similarly, research showed that firms tend rely more strongly on patents as opposed to secrecy when engaging in collaborative relationships (Leiponen & Byma, 2009). Besides the fact that secrecy tends to hamper effective knowledge sharing, patents also provide a more observable form of progress reflecting the quality of the (collaborative) activities of the firms.
Moreover, patents contain very specific information making them more suitable for the selective sharing of information. The negative side of patenting, however, is reflected by its
inherent disclosure of valuable information, which is why some firms do in fact prefer secrecy over patents (Arrow, 1962; Liebeskind, 1996; Milesi, Petelski, & Verre, 2013).
In a different light, by means of a non-disclosure agreement firms can also build on trust and avoid unintended spillovers (Tuunainen & Miettinen, 2012). One could call this a collective secrecy barrier, because it ensures a degree of secrecy on the knowledge shared during the collaboration. The authors argue that it is a necessary step for firms to move from one collaboration phase to another. A similar finding was reported in research on
collaboration between firms and suppliers, in that secrecy and lead time strategies could help firms to work together with suppliers without having to fear for unintended knowledge spillovers (Henttonen, Hurmelinna-Laukkanen & Ritala, 2016). Although a non-disclosure agreement entails a different mechanism than the secrecy implications as discussed by Laursen and Salter (2014), it does show that secrecy mechanisms are used in different ways by firms and sometimes seem to have different effects. In addition to this, as was mentioned before, secrecy mechanisms can be a particularly effective tool for firms operating in
countries with weak intellectual property regimes (Bos et al., 2015), in spite of having to cooperate with external partners. The same principle holds for firms that lack sufficient capital to apply for and defend patents, and one would expect that this would be no different in a collaborative situation.
In sum, competition seems to have a positive effect on the use of secrecy mechanisms to protect firms from leaking their valuable knowledge to external players. However, during strong collaborative relationships, research indicates that many firms tend to favor patents over the use of secrecy mechanisms. Nonetheless, the literature is not consistent on the matter and lacks specific research on the use of secrecy in the light of external partner collaboration.
One could argue for instance, that firms who engage in collaborations create internal knowledge barriers as well, so as to avoid unintended spillovers to departments outside the
secrecy agreement. However, this line of reasoning, among others, remains to be researched.
By means of a case study research, the aim of this thesis is to provide answers to this deficiency by investigating how secrecy mechanisms are put to use by firms and how this process is potentially affected by external partner collaboration, during which mutual knowledge sharing is critical. Ultimately, the goal is to develop propositions that provide insights into how firms implement secrecy mechanisms and whether external partner
collaboration plays a role in this. Managers in turn, can make use of these insights to embrace new ideas of structuring and exploring secrecy mechanisms in their firm, aimed at pursuing strategic goals and developing competitive advantages. The following research question has been formulated: How do firms implement secrecy mechanisms and how is this
implementation affected by external partner collaboration?
Methodology
Literature on firm’s use of secrecy mechanisms and its effects on external partner collaboration is limited and inconsistent. It is still unclear what some of the implications of secrecy are, and how businesses aim to make effective use of these protection mechanisms while also pursuing collaborative efforts. Therefore, this thesis attempts to explore these phenomena in more detail to provide answers to the existing literature gap.
Data Collection Method
Since existing literature with regard to the use of secrecy mechanisms is limited and our knowledge regarding this phenomenon is far from satisfactory, the research carried out for this thesis is qualitative and exploratory in nature. This means that the focus of the research lies on identifying and explaining relationships between variables, as opposed to testing them.
The goal is to extend upon current literature on firms’ secrecy mechanisms, by identifying associations between variables. This will be done in the form of case studies, in which a total
of six semi-structured interviews (see Appendix 1) will be held with experts in a managerial or executive position from six different companies located in the north of the Netherlands.
In 2016, research was carried out by Professor Dries Faems of the University of Groningen, focusing on innovations in firms located in the north of the Netherlands. By means of an innovation benchmark survey, covering a broad range of topics on innovation and knowledge protection, data was collected from 422 different firms. Fortunately, I was given the opportunity by Prof. Dries Faems to analyze this data for my own research as well.
Hence, the data resulting from the survey was the starting point for the data collection process of this thesis. An extensive data analysis revealed multiple variables being worthwhile
investigating with regard to the research question.
Specifically, I was interested in variables that were concerned with secrecy and external partner collaboration, both of which were dealt with in the survey. Since the survey data was tied to individual firms, I was able to contact those firms who I considered to be most valuable for my case study research. Ultimately, 15 firms have been selected on the basis of four criteria covered by the survey. These criteria are selected for their usefulness in providing insights to answer the research question. The first criterion is that the firm has to have experience with secrecy applications. Since we are interested in a wide range of secrecy applications, any form of secrecy, including the use of a non-compete clause and/or a non- disclosure agreement, is sufficient. After filtering out the other firms, 155 cases remained.
Secondly, the firm must have indicated that between 2013-2015 it had developed or introduced a new product-, service-, or process innovation. Secrecy is applied to a firm’s innovations, making these candidates more interesting for this research. After excluding the others, 66 firms remained in the dataset. Thirdly, the developments of the innovation(s) must have been driven mostly from within the firm. It is interesting to see how firms implement secrecy mechanisms to protect their own innovations, as opposed to innovations developed by
other firms. After filtering out the others, 58 candidates remained in the list. Regarding the fourth and last criterion, most of the firms in the dataset can be considered small in size, with an average of approximately 20 full-time employees (FTE’s) per firm. To assure a certain degree of homogeneity among the cases and to further narrow down the list, only firms with a maximum of 15 FTE’s were selected. After doing so, 32 firms remained in the dataset which were still too many to interview. Hence, by carrying out of a descriptive analysis, I searched for similarities among the cases regarding the other variables in the survey (inter alia total annual R&D investments and total annual revenue), to assure the final set of firms to be as homogeneous as possible. I ended up emailing approximately 15 interview requests to firms, of which purposefully about half collaborated with external partners and the other half did not. Nine firms either did not respond at all or indicated that they were not able to find an opening in their agenda for an interview. In the end, I managed to get interviews with six different firms. Three of these firms collaborated with external partners on a regular basis. By making use of these selection criteria, an adequate analysis can be made regarding firms’ use of secrecy and between collaborating and non-collaborating firms.
The steps of the research process roughly follow the Process Building Theory as proposed by Eisenhardt (1989). After the research question has been formulated, cases will be selected from which to draw information. Thereafter, the actual data collection process takes place, followed by a thorough analysis of all the information gathered, initiated by a coding process. The latter will take place to code all the relevant information, so as to label it and sort it in different categories. This will make it easier to identify relevant patterns in the data and will create a better overview of all the information gathered. Moreover, findings will be compared both within- and between cases, as well as with existing literature. The last stage of the research process involves the shaping of propositions, reflecting the main findings of the case study research.
Three concepts play an important role in establishing high quality research:
controllability, reliability, and validity. The controllability prerequisite entails that a study should be described in a manner that ensures the possibility of adequate replicability. One way to make this study more controllable is to structurally write memos concerning the research activities carried out (Corbin & Strauss, 1990). These memos and other documents provide an extra means for the evaluation of the study. Moreover, in addition to these written memos, the research results should be described as clearly and as detailed as possible
(Swanborn, 1996). Lastly, all six interviews were recorded to be able to listen to the interview again and reduce the risk of potential errors.
Reliability entails that the results of a research are independent of any specific characteristics present during that study (Yin, 2003; Swanborn, 1996). In other words, a replication of the study should yield similar results to those of the original study. Four potential sources of bias can hamper the reliability of a research: the researcher, the
respondents, the measuring instruments, and the specific situation. These case studies should yield results independent of these four factors. To enhance the inter-rater reliability, the coding of the data will be evaluated by a second researcher. This will decrease the likelihood of distorted data due to hot- or cold biases (Aken, Berends, & Bij, 2012). Moreover, a certain degree of standardization is achieved by making use of a semi-structured interview, so as to provide a certain consistency during the analysis of the data. This will also make it easier to code relevant information into categories and will enhance the reliability of the study. As for the respondents, the aim is to create a representative sample to make the results more reliable and externally valid. Despite the rather small sample size of the study (six respondents, six interviews), the goal of this case study research is to gain novel insights on secrecy and extend upon the limited literature currently available. If future research were to test our propositions and base theories on them, a larger sample size would be desirable to limit the
respondents bias. Lastly, with regard to the situation, it is difficult to say whether or not the circumstances offered an adequate degree of reliability. Due to the busy agendas of the interviewees, interviews were held on different times on different days, which could pose threats to the reliability of the study. Also the specific situation in which the data will be collected and the environment in which the interviews will take place varied between the firms. However, with only six respondents and a research that is solely based on exploring the topic of secrecy by looking for new patterns and insights, it is unlikely that these
circumstances will pose any serious threats with regard to the usefulness of the research results.
Lastly, Aken et al. (2012) argued that “…a research is valid when it is justified by the way it is generated.” Construct and internal validity is provided by making use of theoretical triangulation to ensure a complete conceptual view on secrecy, complemented by an
assessment of the survey by another researcher. To increase the external validity (i.e. the generalizability of the research results), interviews were held with six different firms.
Results
The aim of this thesis is to provide insights into how firm apply secrecy mechanisms and how these applications are affected by external partner collaborations. Since the literature on this topic is still incomplete, exploratory research was conducted to get a better
understanding of secrecy and to discover patterns in the data that could reveal interesting and novel insights. By means of six case studies, selected on the basis of information from the 2016 innovation benchmark survey, data was collected and analyzed in order to develop propositions aimed at answering the research question: How do firms implement secrecy mechanisms and how is this implementation affected by external partner collaboration? All selected firms have in common that they apply some form of secrecy to their innovations, have no more than 15 FTE’s, and are all located in the province of Groningen. The main
difference between the firms lies in their involvement with external partners. Four of the selected firms collaborate with external partners, whereas the others do not, making the data pool eligible for a cross-case analysis regarding the effect of external partner collaboration on the implementation of secrecy.
Below, the main content of every interview is provided according to a specific
structure. Firstly, I will elaborate on the firm’s implementation of secrecy followed by a brief description of their potential use of formal knowledge protection mechanisms. Thereafter, the relationship between secrecy and external partner collaboration is discussed, concluding with the main findings of the interview.
Firm 1
This first case study concerns a firm specialized in a range of micro-biology
applications. I spoke with one of the owners of the company. Secrecy is very important for the survival of this firm, because it makes their strategic advantages firm specific and mitigates the risks of unintended knowledge spillovers. Hence the interviewee argued that “…secrecy is responsible for the very existence of my firm. It might not be a perfect protection mechanism, but it forms the basis of my income”. An interesting addition to this is the fact that many of the firm’s products and processes are rather complex, creating a primary barrier for other firms to develop similar products. To illustrate, the interviewee argued on their application of fungi to break down hydrocarbon during oil drillings. “I transformed these fungi to be able to live underwater, which was a very difficult and long process of trial and error. Even if one were to know the exact type of fungus I used, they will not be able to keep them alive
underwater.” Secrecy is thus used in combination with the inherent complexity of the product to provide an adequate degree of knowledge protection.
Besides the occasional use of non-disclosure agreements, the firm did not implement any formal protection mechanisms. Patents for example, are not ideal because of the
enormous amount of different fungi that exist. Patenting only a few would not be interesting financially, as it covers only a fraction of these micro-organisms. On the other hand, applying for many different patents so as to cover a greater amount of fungi species would be
extremely expensive. Moreover, “…there is always a possibility that another firm is able to work around the patent, making them less ideal in this industry”. The interviewee also explained that using patents would require a great deal of time and effort, which would take away part of the fun and excitement of the job itself.
The firm in question also collaborates with large external partners to develop certain products together. The knowledge depth of the firm on the applications of micro-organisms, is ideal for certain projects in combination with the capital and knowledge breadth of the larger firm. The interviewee explained that secrecy in the form of non-disclosure agreements are critical for these collaborations and are very often requested by the larger partner.
Notwithstanding the use of these formal contracts, mutual trust remains the most important factor on which the collaboration is built. In addition, collaborations work because of a common goal (one firm delivers and one firm pays) or because of a win-win situation (both firms stand to gain or lose together). Moreover, collaborations characterized by a strong relationship also share more information than firms with a less strong bond.
To conclude, this firm implements secrecy to further protect an already very complex product and process innovation. Formal protection mechanisms such as patents are not ideal in this type of industry, but the firm does make use of non-disclosure agreements during collaborations with external partners.
Firm 2
The next case concerns a firm specialized in promotion and marketing applications, such as webdesigns. I spoke with the operational manager of the firm. Secrecy is used at this firm to avoid unintended knowledge spillovers and particularly to keep the production process
of web designs and other marketing products a secret. Since the firm collaborates with clients to jointly develop products, secrecy is also implemented to limit the vertical knowledge appropriation of these clients. Hence, the client or customer only receives the finished product, albeit they do have a say in what the end products should look like. “You wouldn’t ask a bakery chef how he makes his bread; you just buy the final product. The same goes for the marketing products that we deliver”. Hence, customers are not familiar with the
production process, resulting in better knowledge protection. On the topic of internal barriers, the interviewee explained that employees work with information on a need-to-know basis, a process which developed rather organically as their place in the firm became more clear.
However, no strategic intentions underlie this construction, since it is more about securing sensitive personnel data than it is about the development of innovations. Furthermore, all employees need to sign a non-compete clause, because the client portfolio is arguably the most valuable asset of this firm. Therefore, they cannot risk having an ex-worker profit from this knowledge by working for a competitor in the same region.
The formal protection mechanisms are encapsulated by the contractual agreements (non-compete clause and non-disclosure agreement) and legal copyright protection. Since the costs are exorbitant, patents are not implemented at this firm.
This marketing firm rarely collaborated with external partners, but when they do, their relationship is built on trust and no formal contracts are signed (different from the previous case). Trust is again partly the result of a common goal or a win-win situation.
To conclude, secrecy is implemented to avoid knowledge spillovers to clients who could otherwise harm their unique know-how. Moreover, the client portfolio itself is also informally protected to maintain an adequate degree of clients and in turn, a source of income.
Besides the more widely used non-disclosure agreements, non-compete clauses and the legal copyright protection, this firm does not actively implement any formal protection
mechanisms. Lastly, in the rare occasion of external collaboration, the firm fully relies on trust and does not sign any formal contracts.
Firm 3
The third interview took place with a firm specialized in dairy technologies, and related product innovations. Secrecy is very important to avoid unintended knowledge spillovers, but the complexity of their product technologies is arguably the most important barrier for unintended knowledge spillovers. The secrecy mechanisms implemented are mainly reflected by the fact that no technical information is allowed to leave the firm’s boundaries whatsoever. Also, the employees have to sign a contract in which they state to never disclose firm specific knowledge. Internal barriers are automatically implemented by the IT systems of the firm, which allows for some employees to access certain technical information that other workers cannot access. By providing access to technical details selectively, the manager aims to provide even better knowledge protection. Lastly, it is
interesting to note that the firm withdraws products from the marketplace if there is any doubt regarding their complexity. Products that are relatively easy to reverse-engineer or show signs of other vulnerabilities are recalled to avoid unintended knowledge spillovers.
Formal protection mechanisms such as patents are not used because of their extremely high costs and the time required to apply for and defend them. “We deliver products all over the world which would make patent protection extremely expensive. Even if we did patent our innovations, large firms can always try to imitate them and since we are a small firm, it will be very difficult to stop them from doing so. Moreover, our innovations are already so complex that we have no problem with sending our products to China for example.”
Surprisingly, when I asked the interviewee if patents would become more interesting if the costs did not play a role, he argued: “Potentially, yes. A competitor of ours once obtained a patent granting the exclusive right to use a particular measuring method. This patent
prevented us from being able to use this method as well, forcing us to search for other alternatives. Thus, patents can be helpful.”
Regarding collaborations with external partners, non-disclosure agreements are signed, but trust is again the most important factor. The interviewee explained that the presence of a common goal or the fact that the other company does not compete on the same market is extremely helpful and can be the main reason to collaborate with that particular partner in the first place.
To conclude, secrecy is implemented to limit the chances of unintended knowledge spillovers, but the strongest protection is offered by the inherent complexity of their innovations. Besides certain contractual agreements, the firm does not make use of formal protection mechanisms mainly due to its high costs. Lastly, trust is again the most important factor on which external collaborations function.
Firm 4
The fourth case study concerns a manufacturer of wood constructions to function as building material for houses. I spoke with the manager of the firm, responsible for the day-to- day operations and human resources. Secrecy is not a frequently used knowledge protection mechanism at this firm. The government obliges the firms to operate under strict regulations regarding the building materials and the way the wooden constructs are to be handled and processed, allowing for little unique variation. Due to these involuntary standardizations, secrecy is of very limited value in this type of industry. Instead, the firm competes on three different factors: price, quality, and delivery time. In order to stand out from the competitors, the operational manager aims for a more efficient delivery process and better internal
logistics. Furthermore, the interviewee explained that “…our client portfolio is very important for the firm. One of our employees maintains many client relationships, which enables us to enjoy a consistent growth in product demand.” On the topic of internal barriers, the manager
explained that access to sensitive personnel information and financials is only accessible for management positions, but that no strategic intentions underlie this decision.
Formal protection mechanisms are not implemented at this firm, mainly because very little variation is allowed as a result of the government regulations. Moreover, investing money and time in patents would also take up too much work, which could have been spend more effectively according to the manager.
Lastly, the firm had little to do with external partner collaborations, except for the delivery service which was outsourced to a transport company. Since this company is not a competitor, again, secrecy plays no role here. The collaboration is, just like the other cases, mostly based on informal agreements and trust.
To conclude, competition in this type of industry is based on the price, delivery time, and product quality. Due to the strict government rules, secrecy as well as formal protection mechanisms are not implemented at this firm. Similar to firm 2 and 3, external partner collaboration relies on trust and informal agreements.
Firm 5
The fifth interview was held with a small firm specialized in medical technologies and improvements of medical processes. I spoke with the owner of this relatively new company, overseeing and participating in all the day-to-day operations. Regarding the implementation of secrecy mechanisms, this firm aims to protect its knowledge by keeping all the technical details of their innovation within the boundaries of the firm (similar to firm 3). No details of their innovations are disclosed and research documents (e.g. in the case of internships) are not allowed to leave the firm nor will be published online.
Formal protection mechanisms in the form of patents are implemented in this firm, albeit their application is not initiated by the firm itself. Rather, patents are requested by partner firms since they request a certain assurance that the innovation will be formally
protected thereby increasing the potential to capture economic rents. “They want to be sure that the innovation cannot be copied easily, but is also feels good for us since we did spend several years of hard work on developing our innovations.”
With regard to external partner collaboration, this firm collaborates with a partner that manufactures the medical products for them. In other words, the development of the products takes place inside the firm, but the actual production is done by the partner firm. The fact that these firms operate in different markets ensures that negative knowledge spillovers are not an issue, making it an effective partnership. Therefore, secrecy in this case does not have a relationship with external partner collaboration. The implementation of secrecy mechanisms solely has to do with avoiding potential spillovers to other firms (outside of the collaboration agreement).
To conclude: this firm implements secrecy by keeping all the technical documents within the boundaries of the firm. Aside from this, there are no strict measures to prevent knowledge spillovers. Furthermore, the firm does make use of patents but mainly due to the requests of a larger partner during collaborations.
Firm 6
The last interview was held with the owner of a firm specialized in coatings for many different materials. These coatings are used, among other purposes, to make materials last longer, make them water-proof or more resistant to fire. I spoke with the owner of this relatively young firm (established in 2010) who is also one of the experts on the
developments of their innovative coating technologies and training programs. Secrecy is very important in this type of business and is applied mainly to the formulas of the chemical coatings. As long as the formulas are hidden from competitors or potential imitators, it is virtually impossible to reverse engineer their innovations due to the complexity of the products.
With regard to formal knowledge protection; patents are not implemented because the disclosure of technical details will be detrimental to the firm’s strategic position in the
marketplace. Innovations regarding the development of unique chemical coatings are at the heart of the firm’s competitive advantage. Hence, by disclosing valuable details of the formulas in the form of patents, other firms can appropriate knowledge from the patents as well, resulting in a loss of competitive advantage. Alternatively, other formal protection mechanisms such as non-disclosure agreements are very important. Since this firm deals with partners and clients all over the world, the only way to protect each other’s know-how is to sign formal contracts. In contrast to the previous interviews, trust is regarded as subordinate to formal agreements and contracts.
Lastly, the firm heavily collaborates with partners all over the world. Many European firms but also 17 firms outside of Europe are trained and licensed to work with the coatings of this relatively small firm. This wide array of operations makes secrecy and formal contracts an inevitable necessity in order to maintain a competitive advantage: “The first thing we do when we collaborate with a new partner is signing a non-disclosure agreement. Especially when we are co-developing products.”
To conclude, this firm implements secrecy to avoid knowledge spillovers of the chemical formulas of their coatings, which is also why using patents is strategically unwise.
Due to the enormous amount of international partners with whom the firm collaborates, non- disclosure agreements are key in order to maintain a firm specific advantage.
General Findings: A Cross-case Analysis
Now that descriptions and insights of the six interviews have been provided, it is interesting to see what knowledge can be gained from a cross-case analysis. In the light of secrecy mechanisms, a comparison will be made between firms who collaborate and firms
who do not collaborate with external partners. Finally, the findings will be compared to the existing literature.
Several insights can be gained from cross-analyzing the data of the case studies. First of all, and with regard to the research question, secrecy is an important mechanism to mitigate the risks of unintended knowledge spillovers during external partner collaborations. This is particularly due to the fact that business partners, as opposed to customers, get to know some of the knowledge and processes of the firm in order for the collaboration to be effective. This finding is in line with much of the existing literature, also stressing the importance of mutual knowledge sharing (and its risks) for the success of a firm’s innovations (Cohen &
Lenvinthal, 1989; Freeman, 1991; Chesbrough, 2003; Laursen & Salter, 2014; Estrada et al., 2016). However, despite that secrecy mitigates the risks of external knowledge spillovers, trust does, in many cases, remain to be the cornerstone on which collaborative relationships are built. The data suggests that the implementation of secrecy does not substitute for a lack of trust in business partners. The same principle holds for the complexity of innovations.
Technologically advanced products are already partly protected due to the extreme complexity. Nonetheless, secrecy is still implemented at these firms and is therefore not substitutable by the complex product strategy. Instead, secrecy functions as an extra safety barrier on top of the complexity of products and trustworthiness of external partners.
Furthermore, the data suggests that building strong relationships with other firms tends to increase the degree of knowledge that is shared allowing for a more effective collaboration.
Firms allegedly require a strong collaborative relationship before they are completely willing to mutually share their expertise. Also, I found that certain differences are indeed present between firms that do and firms that do not collaborate, regarding the application of secrecy mechanisms. For instance, most of the firms that collaborate with external partners seem to be more aware of the risks of negative knowledge spillovers, and are therefore more often
involved with setting up and signing non-disclosure agreements. Many interviewees indicated that partner firms, as opposed to customers or clients, get to know some of the firm’s
production processes. Hence, a stronger need is felt to make use of secrecy instruments during collaborations. Despite these differences and contrary to my expectations, two firms argued instead that external partner collaboration did not play a major role in the implementation of their secrecy mechanisms. These firms would continue to implement secrecy even if they would no longer collaborate with others, since their secrecy strategy mostly acted as a knowledge barrier to potential future competitors.
Secondly, I found that secrecy is very often accompanied with formal contracts such as non-compete clauses or non-disclosure agreements, the latter which is often requested by larger firms during external collaborations. These contracts, together with the implementation of secrecy instruments, further narrow down the chances of unintended knowledge spillovers.
Non-disclosure agreements extend the knowledge boundaries of the firm, while simultaneously shielding valuable knowledge (not part of the contract) from others.
Surprisingly, many interviewees pointed out that signing these contracts reflect more of a formal practice, and legal action is rarely undertaken when one party would breach the contract. Again, trust and informal agreements remain the most important ingredient for an effective collaborative relationship. Moreover, firms select their partners carefully and focus on external partners who do not compete on the same market, or at least choose partners with whom they share a common goal. In any case, a good partner fit helps to mitigate the risk of unintended knowledge spillovers during external partner collaboration. In addition, one of the managers explained that they occasionally implement secrecy together with patent protection.
The larger partner very often requests a patent, as it ensures a certain exclusiveness to capture economic rents from the innovation.
A third finding is that many of the firms interviewed implement secrecy as an
alternative to formal protection mechanisms such as patents. In accordance to literature on knowledge protection, small firms generally lack the capital to afford patents which is why they often apply cheaper informal protection instruments (Lerner, 1995; Bos et al., 2015).
Yet, the data reveals that a lack of capital is not the only reason firms implement secrecy mechanisms. Some managers explained that other firms could easily circumvent patent violations by adjusting only some minor details to the innovation, making patents not very cost-effective. In addition, many interviewees argued that spending time on legal matters would negatively impact their general job satisfaction. Therefore, many small firms choose not to spend time and money on the application and defense of formal protection mechanisms.
Fourthly and lastly, the interviews have indicated that some firms (especially those with over five FTE’s) implement internal barriers to facilitate an atmosphere in which employees work with information on a need-to-know basis. Sensitive personnel files, and financial records are found to be the most common type of information that is often shielded from employees. Sometimes this can hamper internal communications, for example when workers need certain technical information on a particular innovation which they cannot access by themselves. Few firms, however, seem to apply internal barriers with strategic intentions; to avoid employees from knowing the details of innovations and thereby increasing the risk of negative spillovers.
Below, table 1 provides an overview of the main findings for each firm.
Table 1
Summary of the Main Findings
Findings
Firm Secrecy Collaborations Formal Protection Complexity Int. Barriers 1a Frequent use of Trust is more Not very effective: Provides an Not applicable
NDA’s b, often important than “There is always a initial
requested by contracts possibility that another knowledge
large partners firm is able to work barrier
around the patent…”
2 To limit the Based on trust, Copyright protection is Not applicable Employees vertical knowledge no contracts deemed to be sufficient work with
appropriation of are signed information on
clients a need-to-
know basis
3 No technical details Trust is more Patents are too Complexity Technical allowed to leave the important than expensive. “Larger provides initial information firm. Vulnerable contracts firms can always try to knowledge is provided products are recalled imitate innovations.” barrier to employees
and NDA’s are key selectively
4 Only applicable to Purely based Not applicable due to Not applicable Employees the client portfolio on informal strict government work with
agreements regulations information on
a need-to- know basis
5a No technical details Trust is more Patents are requested Provides an Not applicable allowed to leave the important than by larger partner firm initial
firm contracts knowledge
barrier
6a Formulas are kept Contracts are Too expensive and Provides an Not applicable secret. NDA’s are more important not very effective initial
a standard procedure than trust knowledge
barrier
a Frequently collaborates with external partners
b Non-disclosure agreement
Furthermore, in the appendix, a table is included grouping similar interview findings across firms by using identical background colors (see appendix 2).
Discussion & Conclusion
This thesis provides an integrative perspective on firms’ implementations of secrecy mechanisms. To extend on current literature, six different firms were interviewed on their use of secrecy and its relationship with external partner collaboration. My research highlights the implications of external partner collaboration, mutual trust, product complexity, and internal knowledge barriers. Based on the findings reported in the results section and as an answer to the research question of this thesis, I present the following propositions with regard to the implementation of secrecy mechanisms in small firms:
1) Firms that participate in external partner collaboration, as opposed to those who do not, more frequently implement secrecy mechanisms to protect their knowledge.
2) Notwithstanding the frequent use of formal contracts, trust remains the most important factor by which external partner collaborations are initiated and developed.
3) When formal knowledge protection mechanisms are no option, secrecy is used as an alternative protection mechanism.
4) The complexity of products does not substitute for the implementation of secrecy.
5) Internal knowledge barriers are characterized by information provision on a need-to- know basis.
The most important deeper explanation of the findings presented above, lies in the fact that the case studies in this research were based on very small firms, with an average of approximately 8 FTE’s per firm. For instance, with regard to point 2, small firms generally lack the capital required for the implementation of formal knowledge protection instruments.
Hence, secrecy is used as an affordable knowledge protection alternative. Regarding point 4, small firms typically rely more on informal collaboration practices, resulting in a partnership characterized more strongly by mutual trust. Instead, larger firms are often more formally
organized and bureaucratic, which is why these businesses generally focus more heavily on contractual agreements before engaging in a collaborative relationship.
Furthermore, as can be taken away from the interviews, the protection offered by the complex product strategy is ultimately limited. Even though product complexity provides a barrier to imitation, other firms can often still reverse-engineer products and try to appropriate value from the innovations. Firms are aware of this shortcoming, which is reflected by their application of secrecy to even their most complex products. Firm six, specialized in coatings, serves as an adequate example here. Despite the profound complexity of their chemical solutions, the corresponding formulas are kept very secret. The product complexity serves as an initial barrier, which is why the firm often sends out samples of their solutions if asked for by other firms. The firm is confident enough that other firms will not be able to replicate the substance, as long as they are not familiar with the original formula.
Contribution of the Thesis
The literature gap presented earlier is characterized by a lack of understanding on the various implications of secrecy mechanisms and their potential effect on external partner collaboration. Hence, by means of six case studies, an exploratory research was conducted to gain a deeper understanding of these topics. The findings of this thesis are complementary to the existing literature in that they extend our current knowledge on the aspects of secrecy.
Greater insights are provided regarding the effects of external partner collaboration on the implementation of secrecy mechanisms. These mechanisms are found to be more popular in firms who collaborate extensively with external partners. Furthermore, light has been shed on the importance of mutual trust as opposed to formal agreements regarding collaborations between firms. Also, in line with existing literature, I found that small firms very often implement secrecy as an alternative to more expensive formal protection mechanisms. The findings also add to existing literature streams on the complex product strategy, in that the
complexity of products alone cannot be regarded as a sufficient knowledge barrier. Therefore, I would suggest scholars henceforth to regard the complex product strategy and secrecy as complementary knowledge protection mechanisms, as opposed to stand-alone instruments.
Lastly, the frequent implementation of internal knowledge barriers reflects one of the many implications of secrecy and external partner collaboration. This specific topic is still in its infancy, and I hope that my initial findings can serve as a starting point for other research on the matter.
Implications for Practice
In today’s dynamic business environment, firms are increasingly concerned with effective knowledge appropriation for the development of competitive advantages. However, these firm specific advantages are only sustainable if the underlying knowledge can be successfully protected. This can be a major challenge during collaborations, particularly for small firms who lack the capital necessary to implement formal knowledge protection mechanisms such as patents.
My research data suggests that, to protect valuable knowledge, firms can implement secrecy as a more affordable alternative to patents. Moreover, implementing secrecy
mechanisms is very often less time-consuming than drafting patent applications (let alone defending them in court), while still offering similar strategic benefits. The data also suggests that product complexity and formal contracts are considered to be subordinate to the
implementation of secrecy and the importance of trust, respectively. Even though complex products inherently provide a barrier to imitation, secrecy is nonetheless implemented to avoid unintended knowledge spillovers. Similarly, despite the frequent use of formal contracts, trust remains the most important factor on which effective collaborative relationships function. Selecting business partners carefully thus appears to be key for effective collaborative relationships. Regarding these implications, one must bear in mind
however that this research was mostly exploratory in nature and that future quantitative research on secrecy will in all probability provide better insights in how firms should organize themselves with regard to the implementation of secrecy.
Limitations
I would like to point out several limitations of this thesis. First of all, due to the limited time frame, the research sample with only six interviews was fairly small and potentially hampers the reliability of the data. Interviewing more firms and thereby collecting more data could greatly increase the reliability of this research and possibly even lead to new insights on the implementation of secrecy in firms.
Secondly, since smaller firms generally do not have the financials to apply for patents, secrecy is often implemented as an inevitable second option. If one were to interview larger firms, better insights could be gained on why firms choose the qualities of secrecy over the application of patents, aside from the financial reasons. Moreover, because larger firms are generally characterized by a formalized organizational structure, more information could be obtained on the implementation of internal knowledge barriers.
Thirdly, although my aim was to also analyze firm specific documents to better triangulate my data sources, I was unable to fulfil this task. By combining primary and secondary data collection, the grounding of theory is substantiated, a practice which is commonly referred to as triangulation (Eisenhardt, 1989; Yin, 2003). Due to the
aforementioned limited amount of time, analyzing firm documents next to the interview data would not have been adequately possible. Furthermore, small firms are usually not
accustomed to keeping an extensive file room, containing, for instance, documents on their knowledge protection mechanisms. Lastly, and perhaps most importantly, firms are reluctant to share documents containing valuable information on the implementation of their secrecy strategy, due to the very nature of the information residing in these documents.
Fourthly and lastly, although my goal was to interview three firms who do and three firms who do not collaborate with external partners, this distinction was not so strongly reflected by the interview data. Namely, all of the firms had at least some experience with external partner collaboration, albeit some of them more extensively than others. Due to this deficiency, the reliability of the results is potentially lower than was aimed for.
Future Research
I would suggest the following directions for future research. The most important suggestion is to investigate not only small firms but also medium-sized and large firms, to gain a more diverse understanding on the various topics. For instance, I suspect that larger, formalized firms, are more strongly involved with implementing internal knowledge barriers with strategic intentions, something which makes less sense for firms with very few FTE’s.
Also, in larger firms, the importance of trust could be subordinate to formal agreements regarding external partner collaboration. In a similar vein, it would be interesting to see why some larger firms choose to implement secrecy over formal protection mechanisms, despite the fact that sufficient capital is available to afford it. Furthermore, future research could also focus on other forms of informal protection mechanisms (e.g. lead time and complex product strategy), to gain a more diverse understanding of the various knowledge protection
instruments implemented by firms. Lastly, it would be interesting to see how firms with multiple (international) subsidiaries manage and implement secrecy. Different legal contexts and cultures potentially result in firms applying different solutions and strategies in the light of secrecy.
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