Knowledge Sharing Between the Firm and the Supplier in
a Business to Business Context
Master Thesis
Student Janneke Kok
Student number 10728589
Study Msc Business Administration – International Management
Institution University of Amsterdam
First supervisor Lori DiVito Second supervisor Johan Lindeque
2 Statement of Originality
This document is written by Student Janneke Kok who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
3 Index
Abstract 4
Introduction 5
Literature review 8
The definition of knowledge 8
Knowledge sharing 8
Inter-firm knowledge sharing 9
Expected relationships 11
Personal Motivation 11
Interpersonal similarity 12
Trust 12
Gap in the literature 13
Conceptual model 14
Methodology 16
Research strategy 16
Unit of analysis 17
Respondents 17
Strengths and limitations 18
Reliability and validity of this qualitative research 19
Analysis strategy 20
Results 22
Categories of knowledge sharing 22
Individual determinants 26
Personal motivation 26
Trust 27
Interpersonal similarity 28
Summary of the results 31
Discussion 32
The conceptual model 32
Revised framework 34
Practical implications 34
Limitations and future research 35
Conclusion 37
References 39
Appendix 1 – Interview schedule 44
4
Abstract
Numerous researchers have indicated that the organizational value of employee knowledge increases when it is shared. When employees are willing to share knowledge with others like the supplier, organizations can start to manage knowledge resources effectively (Lin 2007). Therefore, determining which factors drive the process of knowledge sharing is important. The research question that states central to this study is: What are the personal drivers of knowledge sharing between the firm and the supplier and how do they influence the
relationship between the firm and the supplier? The data was collected through an in-depth case study at a pharmaceutical company. Twelve interviews were collected with six
respondents. According to the data analysis, personal drivers of knowledge sharing that were found in the research were ‘rewards’ and ‘a match’ which both motivates the respondents to share knowledge. These individual factors eventually lead to a trustworthy relationship which enhances the motivation to share knowledge as well. Rewards can be a win-win situation which means that mutual benefits and reciprocity both enhances the knowledge sharing process. Also more sales can be a reward. A trustworthy relationship is something the respondents indicate as an essential element in order to share knowledge. A match between two persons is needed to build a trustworthy relationship, which takes time. The research has academic and practical implications. A little but important gap within academic business research concerning knowledge sharing between the firm and the supplier is filled. Future research should test the generalizability of these findings. Practically seen the research has managerial implications as well. When managers are aware of the drivers of knowledge sharing they can use them in practice to motivate their personnel. Eventually this will help in the development of sustainable advantages for the firm.
5
Introduction
Today there is a broad consensus in the literature that a MNC is “an international network that creates, accesses, integrates and applies knowledge in multiple locations” (Almeida, Song & Grant 2002, p. 148). This knowledge based view of the firm argues that knowledge is the most important source of a firm’s competitive advantage, because through knowledge a firm can innovate processes, products and services (Nonaka, Toyama & Nagata 2000; Prahalad & Hamel 1990; Nelson 1991; Connelly & Kelloway 2003: Makela, Kalla & Piekkari 2007). The idea that MNCs create value through internalizing knowledge and through knowledge assets like patents, trade secrets and organizational routines can be traced back to the work of Hymer (1976) among others. Since then, much research has been done around this topic of
knowledge in the international business literature. It specifically focuses on how to manage organizational knowledge in an effective and efficient way (Spender & Grant 1996; Hansen 2002; Gagné 2009).
Knowledge sharing within an organization, which is called intra-firm, is an important part of this knowledge based view of the firm. Knowledge sharing is a complex issue that goes much further than just the transfer of knowledge between abstract bodies. Individuals in organizations possess knowledge that must be shared with other individuals in the
organization so that it can be used to advance the goals of the organization. If organizations want to use the knowledge they possess, the organization has to understand how knowledge is created, shared and used within the organization (Ipe 2003). Besides knowledge sharing within an organization, knowledge sharing between organizations gets more important due to the rise of alliances between organizations, which is an important element of contemporary firms’ competitive strategies (Mowery, Oxley & Silverman 1996, Harrigan 1988, Hagedoorn & Schakenraad 1990, Eisenhardt & Schoonhoven 1996).This research is specifically
6 based in Holland. This inter-firm relationship is extremely important because nowadays, the rise of offshore outsourcing is getting a key strategic issue (Alcacer & Oxley 2014). More research into this topic is needed to get a better comprehensive view in the scientific literature. The research question that is central to this study states: What are the personal drivers of knowledge sharing between the firm and the supplier and how do they influence the relationship between the firm and the supplier?
Knowledge sharing in inter-firm relationships is important to both Small Medium Enterprises (SME) and Multi National Enterprises (MNE). As the scientific literature notes, knowledge sharing between firms can be seen as a valuable resource which will eventually contribute to the sustainable competitive advantage of a firm (Hansen 2002; Almeida e.a. 2002). When the drivers and the impediments of the knowledge sharing process between the firm and the supplier are known, it will help firms to manage their knowledge sharing process in inter-firm relationships and therefore improve their relationship with for example the supplier. A better knowledge sharing process leads to more efficiency and more innovative ideas. This eventually will help in the development of sustainable advantages.
This research will contribute to the scientific literature as well. A more comprehensive view of this topic is needed in the scientific literature. Especially the relationship between the supplier and the firm has not been investigated a lot yet. Several researchers did case studies to investigate this relationship between the firm and the supplier, this will be broader
explained in the literature review, but these papers did not dig deep into the drivers or impediments of knowledge sharing between the firm and the supplier. Researchers who are interested in this topic, can use this paper to dig deeper into the subject, or to do a similar research in a different setting, so that the findings will be easier to generalize. In the end, this research will help to get a more comprehensive view in the literature concerning the topic of knowledge sharing in inter-firm relationships.
7 This thesis starts with a literature review and a theoretical framework, it continues with a research design and the findings, and finishes with a discussion and the conclusion. The literature review will clarify what kind of scientific research is already done around this topic and which gap need to be filled. The theoretical framework proposes a conceptual framework which gives a theoretical answer to the research question. After that, the research design explains the research method adopted in the thesis. The findings discuss the findings of the research that is done. The discussion part of the thesis shows the value of the findings for the research field and will give the limitations and future possibilities of the research. Then finally, the conclusion will summarize the findings of the research.
8
Literature review
The definition of knowledge
What actually is knowledge? It is important to know what is meant by knowledge when talking and writing about it. Knowledge is richer, deeper and broader than just data or information (Davenport & Prusak 2000; Connelly & Kelloway 2003). In this research the following definition of knowledge is used: “Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or
repositories but also in organizational routines, processes, practices, and norms” (Davenport & Prusak 2000, p. 4). This definition tells us that knowledge is not neat or simple. Knowledge is hard to understand completely in logical terms because it is not structured, it exists within people and develops intuitively. Therefore, knowledge assets are harder to concretize than traditional assets (Davenport & Prusak 2000).
Knowledge sharing
Knowledge sharing contains a set of behaviors, that involves the exchange of information or assistance to others, which is different from information sharing. Where information sharing can just be a unidirectional process of for example showing financial statements, knowledge sharing contains an element of reciprocity (Connelly & Kelloway 2003). Knowledge sharing is a complex issue that goes much further than just the transfer of knowledge between abstract bodies. Therefore, relational thinking is an important approach in knowledge sharing,
meaning that individuals or social groups develop knowledge sharing only when in relation to other individuals or social groups (Osterlund 2003). These relations can take place within a firm; intra-firm relationships or between firms; inter-firm relationships. Within firms or
9 between firms, a network provides access to knowledge, resources, markets or technologies (Inkpen & Tsang 2005). Through membership in a network, enduring exchange relationships arise that has potential for knowledge acquisition between those members. Knowledge
transfers are processes in which one member is affected by the experience of another member. A growing body of research argues that organizations are more productive when they are able to transfer knowledge in an effective way (Inkpen & Tsang 2005; Connelly & Kelloway 2003). New knowledge, especially knowledge from outside the firm can be an important element for organizational change or innovation (Alcacer & Oxley 2014; Sako 2004). Gupta and Govandarajan (2000) even argue that the reason why a MNC exists is because of their ability to transfer and exploit knowledge more effectively than through external market mechanisms. Social capital has been positioned in the literature as a key factor in
understanding knowledge creation (Nahapiet & Ghoshal 1998). Social capital can be defined as the interpersonal relationships of a person, as well as the resources embedded in those relationships (McFadyen and Cannella Jr. 2004). Social capital can be seen as a valuable resource, when for example a firm establishes a network tie with a person within another firm, such as a supply contract, this becomes a social capital resource for both firms. Trust develops along the way, which will strengthen the social capital resource (Inkpen & Tsang 2005).
Inter-firm knowledge sharing
An example of an inter-firm relationship is the firm – supplier relationship. Alcacer & Oxley (2014) note the importance of this relationship because the rise of offshore outsourcing changed, due to the globalization of markets, from an operational issue to a key strategic concern. “Through outsourcing, companies can dump operational headaches and bottlenecks downstream, often capture immediate cost savings, and avoid labor conflicts and management deficiencies” (Doig, Ritter, Speckhals & Woolson 2001: 25-26). It has become really
10 investigate the firm – supplier relationship in the mobile telecommunications handset
industry. The writers take the assumption that suppliers have an incentive to move up the value curve to become independent innovators and producers of their own branded product. This process requires more technological and marketing resources. They state that, according to their research, technological learning by supplying is strong and unequivocal. Next to that the writers claim that it matters to whom a firm supplies, it depends on what kind of
capabilities a firm wants to build. Firms should think carefully about what they want to share with their suppliers when investing in supply agreements (Alcacer & Oxley 2014).
Sako (2004) did historical case studies of Toyota, Nissan and Honda in Japan and studied the supplier development. With supplier development Sako means the process of improving the supplier’s capabilities. More specific, it is about the ability the organization has to transfer some of its organizational capabilities across the boundaries of the firm, the ability to replicate a capability, is a capability itself. Continues improvement of the firm is needed to create an environment of supplier development (Sako 2004). The article states that the
transfer of knowledge and organizational capabilities from the customer to the supplier company requires not only financial and resource commitment but also a distinctive organizational and governance structure that facilitates long-term learning (Sako 2004). A corporate governance system states who is making decisions concerning what resources to commit to what investment. According to Sako (2004), corporate governance should be structured in a way that it facilitates long-term learning between the firm and the supplier.
Anand & Khanna (2000) argue that alliances can be viewed as an incomplete contract between firms in the sense that detailed interactions between the firms are rarely fully pre-specified. This is also the case in a firm – supplier relationship. Therefore, alliances are complex organizational forms and knowledge transfers between the firm and the supplier is a process full of ambiguity.
11 Expected relationships
According to the literature, some expected relationships between various concepts concerning knowledge sharing are found. Lin (2007) states that a knowledge sharing culture can be enhanced through directly incorporating knowledge in their business strategy and by changing employee attitudes and behaviors to promote knowledge sharing. Mindsets are incredibly difficult to change, so how do you actually drive employees to share knowledge with their suppliers?
Personal Motivation
Motivation has been identified as a key determinant of general and work related behavior. Motivation captures the individual’s willingness to act, the willingness to share knowledge (Siemsen, Roth & Balasubramanian 2008). Motivation can be divided into two types, intrinsic motivation and extrinsic motivation. Previous studies indicate that increased intrinsic
motivation has been associated with increased learning and increased willingness to participate in voluntary knowledge sharing. Extrinsic motivation like rewards or benefits when performing an activity can also stimulate the knowledge sharing process (Lin 2007). Extrinsic motivation is based on a cost-benefit analysis, when the benefits from the
knowledge exchange are expected to be bigger than the cost (effort) involved, it might be worth it. This leads to the reciprocity theory, reciprocity implies that individuals must see knowledge sharing as personally important or worthwhile when reaching a valued collective goal in order to be willing and eager to share (Gagné 2009). Intrinsic motivation refers to engaging in an activity pure out of interest, or for the pleasure of experiencing. The study of Lin (2007) states that reciprocal benefits, knowledge self-efficacy and enjoyment in helping others are significantly associated with knowledge sharing, while expected organizational rewards did not significantly influence employee attitudes and behavior intentions regarding knowledge sharing.
12 Interpersonal similarity
Interpersonal similarity can be defined as ‘a tendency to associate with people like yourself’. There is a central idea that connection is more likely to occur between similar than between dissimilar people. In fact, previous findings suggest that the tendency to interact with similar others may be a driver behind knowledge sharing (Arvidsson 1999; Marshan-Piekkari, Welch & Welch 1999). This can be based on geographical similarity, cultural similarity, genetic similarity and behavioral similarity. Similarity reduces psychological discomfort and reduces the chance of conflicts arising from cognitive or emotional differences (Makela, Kalla & Piekkari 2007). Relative similarity between individuals leads to interaction and influences the choice of interaction partners, which also automatically has an influence on knowledge sharing between individuals. This similarity based connection is important, as increased interaction between two individuals increases knowledge sharing between them (Makela et all 2007). Makela et all (2007) conclude, based on their findings, that national-cultural similarity, like a shared language and similarity of organizational status increases the tendency for interaction between two individuals, for example between the supplier and the employee in the firm. The more the two interact, the higher the tendency that they will share knowledge with each other.
Trust
Trust in organizational settings can be defined as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer, Davis & Schoorman 1995: 712). The academic literature concerning trust and knowledge sharing is vast and varies a lot. Some authors are convinced that trust has a positive influence on knowledge sharing. For example; Lee et all (2010) found out in their research that both the willingness to rely on the team and the willingness to disclose
13 information to the team, had a significant positive influence on team knowledge sharing. Both the willingness to rely on the team and the willingness to disclose information flows out of a relationship based on trust. Nonaka (1994) states that knowledge creation within a team cannot start without mutual trust among members. According to this author, trust is based on shared experiences, this links back to the ‘interpersonal similarity’ part.
Some academics contest the positive relationship between trust and knowledge sharing. For example; Chow and Chan (2008) found out in their research that social trust between individuals had no direct contribution to the attitude of sharing knowledge. Although their research states that a good relationship and social ties between individuals will enhance knowledge-sharing behavior. Investigating the relationship between trust and knowledge sharing can help to clarify part of the ambiguity in the literature concerning the relationship.
Gap in the literature
Increasing the ability to manage knowledge sharing within and across firms or organizations is one of the major challenges that contemporary organizations face (Davenport & Prusak 2000; Tsai 2002). But due to a scarcity of relevant empirical research, until now researchers have not written much about knowledge sharing in the form of an inter-firm relationship as the firm – supplier relationship (Alcacer & Oxley 2014). Some authors investigated the relationship between firm and supplier, as summarized above, but these writers emphasize the environmental factors that have an influence on the knowledge sharing behavior, which are obviously really important. Something that is not investigated yet, are the personal factors that influence the knowledge sharing relationship between the firm and the supplier. Therefore this thesis will investigate this specific relationship in order to fill part of this gap. It will put its emphasis on the personal drivers and impediments of learning in inter-firm relationships. Not the environmental factors, but the factors that come from the people itself are
14 What are the personal drivers of knowledge sharing between the firm and the supplier and how do they influence the relationship between the firm and the supplier?
Conceptual model
The conceptual model below explains the expected relationships between the dependent variables and the independent variables. In this case the dependent variable is ‘knowledge sharing’ and the independent variables are ‘personal motivation’, ‘trust’ and ‘interpersonal similarity’. This study expects, according to the literature described above, that motivation, trust and interpersonal similarity have a positive influence on knowledge sharing between the supplier and the firm. At the same time, the expectation is that a lack of trust, personal
motivation and interpersonal similarity will have a negative influence on knowledge sharing between the supplier and the firm. This research is going to be inductive, therefore no
hypotheses are tested, but the conceptual model below draws expectations on the outcome of the data.
15 Figure 1 The conceptual model
16
Methodology
This chapter discusses the methodology of the research, it will detail how the research objectives are intended to be achieved and will justify the methodological choices.
Research strategy
The research is exploratory by nature, it is mostly about orientation and generating new knowledge because the relationship between an employee and the supplier has not been researched a lot yet. The study is conducted through a single case study. A case study is a research strategy which focuses on understanding the dynamics present within single settings (Eisenhardt 1989). The research will be conducted using primary data; qualitative interviews, in order to investigate the relationship between the supplier and the firm. Knowledge transfer is an intangible and complex phenomenon. In order to get a detailed understanding of the context and the activity that takes place in this context (Saunders & Lewis 2012), qualitative research is needed. This thesis focuses on understanding why managers make decisions concerning knowledge transfers with suppliers in certain ways. The relationship between one employee and five different suppliers is studied. First, an extensive interview with all six people was conducted and after that a second interview with all six respondents was collected via phone. This means in total twelve interviews were collected.
The interviews were semi structured which means that the researcher had a list of topics to be covered and questions to be asked, although the order in which the researcher asked them varied according to the conversation. The interviewer may choose to omit some topics and ask additional questions as appropriate (Saunders & Lewis 2012). This semi structured way of interviewing is useful as the interviews are interested in more depth, therefore the researcher has to be able to dig deeper into particular questions to find out further details. See the interview schedule that is used at appendix 1.
17 Unit of analysis
The single case study is done at a large pharmaceutical company. This is an international company providing pharmaceuticals, medical devices and related care services. The company has operations in multiple countries including the USA and the Netherlands, the company employs over 7000 people. The core activities of the company can be divided into three activities. The first one is direct home deliveries of medical devices and pharmaceuticals. The second one is concerned to sell, market en deliver medical services to hospitals and the last core activity is to sell pharmaceutical products. The pharmaceutical industry is a knowledge intensive industry which makes it interesting for this particular research. Access to this organization is organized through the personal network of the researcher. As the company offers different products, this research focused on one specific product range, which is incontinence materials. Examples of incontinence products are absorbing materials and catheters. The customers of the unit of analysis are mostly businesses, they deliver their products to hospitals and medical specialists. This research is interested in the B2B
relationship between the company and the suppliers of that company. The personal network of the researcher asked the specific persons if they were willing to join the research. After they have confirmed to be willing to participate, the respondents were approached by email through the researcher, to make a first appointment.
Respondents
In order to get the right information it is important to interview the right persons. The
researcher conducted a total of twelve interviews with six persons. The respondents consisted of one employee of the company and five different suppliers, see figure 2. These respondents were chosen because it is interesting for the research to see how the different suppliers and the employee influence each other and how this relationship causes different drivers and
18 extensive semi-structured interview of about an hour. In this interview the indicators
according to the conceptual model of the three drivers of knowledge sharing were analyzed. The interviews were recorded. After that, the researcher called all six respondents after a couple of weeks for a short interview via telephone. In this short interview via telephone, respondents updated the researcher about any progress/issues of the last two weeks
concerning the employee-supplier relationship. These short interviews via the phone lasted for about approximately 15 minutes.
Figure 2
Strengths and limitations
As every research design, this research design has strengths and weaknesses. Because this case study focuses on a single unit, the issues with generalizability seems to be larger than with other qualitative studies that focus on more cases at the same time. A qualitative case study is limited through the interpretation of the researcher, who is the primary instrument of data collection and analysis (Merriam 2014). Therefore it is really important that the
researcher analyzes the data as objectively as possible by transcribing and coding the data. However, the positive elements outweigh the negative ones as much can be learned from one particular case. This case study offers an opportunity to study a complex social situation consisting of multiple variables like personal motivation, interpersonal similarity and trust,
19 which are of potential importance in understanding the phenomenon. Anchored in a real life situation, this case study results in a rich and holistic approach (Merriam 2014) of the relationship between an employee and different suppliers. In order to reduce biases a second person coded the data. This is called inter-rater reliability, which is a quality indicator of reproducibility. Two readers who give the same codes to the same transcripts will improve the credibility of the research (Gwet 2001).
Reliability and validity of this qualitative research
“Without rigor, research is worthless, becomes fiction and loses its utility” (Mors et all 2002). As qualitative research lack hard numbers and p values, it has to find another way to improve the value of qualitative work as much as possible. Therefore it is important to check some criteria concerning the validity and reliability of the research. There is always
discussion among scientists about the value of qualitative work (Denzin 2009). This
conversation turns on issues surrounding the politics and ethics of evidence, and the value of qualitative work in addressing matters of equity and social justice (Lather 2006; 789). Guba (1981) substituted reliability and validity with the parallel concept of “trustworthiness” which contains four aspects; credibility, transferability, dependability and confirmability. These four criteria have been fundamental to evaluate the quality of qualitative research (Mors et all 2002).
Credibility - Credibility replaces the quantitative concept of internal validity, which means that it is important to seek truth in the findings of the research. It focuses on the degree of which the findings make sense. In order to seek truth in the findings of this research, all the interviews were transcribed and coded, so that the own interpretation of the researcher is limited. Besides that an inter-rater reliability check has been done, which means that the transcribes has been coded twice. Three codes were coded differently and discussed to clarify interpretation and coding errors. The first two codes that were coded differently were
20 ‘intrinsic motivation’ and ‘extrinsic motivation’. After discussion the two codes were changed into one general ‘motivation’ code. The third code ‘types of knowledge sharing’ changed into ‘categories of knowledge sharing’.
Transferability - Transferability replaces the concept of external validity. It is important to provide a detailed description of the setting in which the research is conducted. The aim is to give the readers enough information to judge the applicability of the findings to other settings. This thesis tries to give the reader as much information as possible by describing extensively how the research is done.
Dependability – This concept refers to the concept of reliability. Researchers should provide an audit trail which can be laid open to external scrutiny, think of documentation, methods of the research, decision of the researcher, which is also done in this thesis.
Confirmability – Confirmability should replace the concept of objectivity. This should also invoke auditing as a means of demonstrating quality. The researcher should be self reflective concerning the methodology used in the research. This is done through the strength and limitations section above.
Analysis strategy
All twelve interviews were recorded and after each interview, the qualitative data was
subsequently transformed into transcripts to prepare them for analysis. As the interviews were conducted in Dutch, the transcripts and analysis of the interviews are Dutch as well, but the used quotes for the results section are translated to English. See appendix 2 for summaries of the interviews. The data is analyzed using the program Nvivo, Nvivo is a program that is used to code interviews in order to structure the data, all twelve interviews have been analyzed using this program. The thematic coding approach is a key technique to analyze interviews. The objective is to understand a particular phenomenon and to find patterns within the data by identifying and investigating themes (Ryan & Bernard 2003). In this study, based upon the
21 theoretical framework and conceptual model, the following codes were identified for
analyzing:
- Categories of knowledge sharing - Difficulties with suppliers/buyers - Motivation
- Trust elements in a relationship - Interpersonal similarity
This approach of coding ensures that all important themes related to the research question were identified. After coding, the finalizing part of the data analysis was the searching for quotes that best supported the findings, as quotes support the trustworthiness of the results (O”Dwyer 2004).
22
Results
The results of the analysis of the qualitative data will be presented in this section. No conclusions of the results will be made yet. This results section has been divided into two main themes. The research question that states central to this study is: What are the personal drivers of knowledge sharing between the firm and the supplier and how do they influence the relationship between the firm and the supplier?
Before searching for drivers or impediments of knowledge sharing it is important to
understand the context within this case study, so therefore this research section starts with the first theme ‘categories of knowledge sharing’ where is explained what kind of knowledge is actually shared between the supplier and the employee, think of different subjects that the supplier and employee talk about and issues that the employee and the supplier have. The second theme is called ‘individual determinants’, this part tells more about the individual characteristics and preferences of building and maintaining long lasting relationships between the firm and the supplier. Individual determinants can be split up in motivation, trust and interpersonal similarity.
To simplify; ‘Product Manager’ is the employee of the buying firm that buys products from the different suppliers. The different suppliers are numbered from 1 to 5.
Categories of knowledge sharing
All six respondents indicated that they think it is important to share knowledge between the supplier and the firm. It is essential to know what kind of knowledge is being shared between the suppliers and the firm and to know what kind of subjects are usually discussed. The type of knowledge that is being shared can be split within three categories. The first category is ‘products’, the second is ‘information about market trends’ and the third category is named ‘supply issues’.
23 An example of the first category can be made clear through the following quote. Supplier 3: “What do clients like about this product, what don’t clients like about it, what are we going to improve and what does not need to be improved? That is actually what we
discuss with each other.” Product manager: “It is our responsibility to have a critical look at the quality that the supplier offers, do they actual deliver the value that the supplier says it does? We discuss about that.” These discussions can be about absorbing products, for
example when clients complain about incontinence materials, the product manager refers back to the supplier with the complaint and they discuss about it. A complaint can be that
customers get rash from the incontinence materials, the customers indicate this to the account managers or product manager and the product manager discusses the complaint with the supplier.
Besides sharing knowledge about the products, information about market trends is something that is seen as critical information, but is shared sometimes depending on the relationship. Product manager: “We also share information about market trends. What are other parties doing? For example I look at other medical specialists and he looks at other suppliers, so we can both help each other.” Topics that are discussed are current market situations; as companies that are for sale or will be for sale, financial indications of companies and the cooperation of companies with other companies.
The firm and the supplier also experience difficulties sometimes, which is categorized under ‘supply issues’. In order to get to know more about the knowledge sharing process, it is crucial to investigate what kind of issues exist between the supplier and the firm. Delivery problems, pricing problems, product problems and products that are out of stock are some obstacles that happen frequently. Supplier 6: “We evaluate the product complaint and try to find a solution. Some problems are cause of a machine error and other problems are related to wrong use of the product.” Other examples can be that a delivery does not arrive at the
24 agreed time, or wrong products arrived. Supplier 3: “We do have discussions about the
logistics and sometimes things go wrong, but that is usually quiet easy to solve.” According to the interviews, causes of these problems mostly lie within the relationship or within the communication. Product manager: “A certain supplier did not join the price level of the market, after several negotiation sessions the relationship got slowly worse, so we ended up converting to another supplier.” Respondents suggest that problems that have to do with delivery or logistics can be quiet easily resolved, although problems concerning prices and products, sometimes take more effort and time to solve, or in some unique situations, are not able to be solved anymore. In the last case, the relationship is so badly damaged, that the collaboration might be terminated. When issues between the firm and the supplier are easy to resolve and it happens in a proper way, it does not damage the relationship. But when these difficulties are not treated in the proper way through the supplier, this can damage the relationship. Product manager: “Through these difficulties, the relationship with the supplier got worse and worse, at one point we step in, which means converting.” To get a more general overview of the answers of the respondents concerning the categories of knowledge sharing, see table 1 at page 25.
Table 1 Categories of knowledge sharing
Categories of knowledge sharing Supporting interview quotes Products
Product manager: “It is our responsibility to have a critical look at the quality that the supplier offers, do they actual deliver the value that the supplier says it does? We discuss about that.”
Product manager: "I like to challenge the supplier; he can tell me that product innovations happened, but I always ask for evidence, is there any research that proves it?"
Supplier 3: “What do clients like about this product, what don’t clients like about it, what are we going to improve and what does not need to be improved? That is actually what we discuss with each other.”
Supplier 5: "We share product innovations via e-mail, newsletters or by phone. When there are complaints or big changes in the products, we usually meet face-to-face to discuss it."
Information about market trends
Product manager: “We also share information about market trends. What are other parties doing? For example I look at other medical specialists and he looks at other suppliers, so we can both help each other.”
Supplier 4: "What happens at the health insurance? What happens at the hospitals in the market? It is good to discuss these things, although I always keep in mind all the different interests that play a role."
Supplier 1: "It is important to share more information about current market situations. Where are we now? What does it do to the supplier, to the firm, the health insurance, the government? It is crucial to share the whole market situation, which we do in strategic sessions. It is sensitive information which you normally don't share easily, but within a strategic partnership, we do."
Supply issues Supplier 2: "There are always product complaints. Clients who are not satisfied."
Supplier 3: “We do have discussions about the logistics and sometimes things go wrong, but that is usually quiet easy to solve.”
Product manager: “A certain supplier did not join the price level of the market, after several negotiation sessions the relationship got slowly worse, so we ended up converting to another supplier.”
Product manager: "Sometimes we do have problems with backorders, a back order is when a product is out of stock at the moment, it is annoying to sell no to clients and when the deadline get extended and
Individual determinants
After interviewing the respondents, evidence suggests that several individual determinants play a significant role in building and maintaining relationships. The individual determinants can be divided into motivation, trust and interpersonal similarity. It is important to notice that all three determinants influence each other as well. For example; the more trust in the
relationship, the more motivation to share knowledge. Personal motivation
According to the literature motivation should lead to more knowledge sharing (Lin 2007). The analysis of the data shows that a win-win situation motivates all six respondents to share knowledge. The analysis of the data suggests that the win-win situation is stimulated through reciprocity and mutual benefits.The following quote emphasizes the importance of the mutual benefits; Supplier 3: “The core of sharing knowledge lays within the mutual benefits. Both parties need to have a win-win situation, otherwise the relationship, especially after a while, will feel unfair. This win-win situation creates motivation that is based on a cost-benefit analysis, when the cost-benefits from the knowledge exchange are expected to be bigger than the cost (effort) involved, it might be worth it (Lin 2007). Supplier 4: “Mutual benefits are crucial, both parties need to have a win-win relationship, otherwise it gets just a social talk, which doesn’t last for long. He asked me a while a go to look up some things and numbers which were not important to me at all, it took me about half an hour to search for these, but I know next time when I need something from him he will help me as well, it is all about the win-win situation. Besides the creation of a win-win situation, rewards can also lead to motivation for sharing knowledge. These rewards can be financial or for example the innovation of a new product. Supplier 2: "Yeah, the company will certainly get rewarded for sharing knowledge. For example we are now testing two new products and share a lot of
27 information with each other. Other competitors do already have these products so we have clear incentives to innovate in collaboration with the seller. If it works out, we will get rewarded in financial terms as well." Not all respondents got rewarded for sharing
knowledge. Supplier 3: “No, I don’t really get rewarded for sharing knowledge.. It’s more the relationship that gets further, but knowledge sharing never led to direct rewards”. To get a more general overview of the answers of the respondents concerning the motivation, see table 2 on page 29 and page 30.
Trust
Analysis of the data suggests that responsibility for knowledge sharing is not equally shared, some respondents focus more on the win-win relationship than others do, which depends on the relationship, this is emphasized in the following quote:Supplier 1: “Yes,
I think you need to share knowledge, I feel responsible for sharing knowledge, although I know that there are playing interests of many different parties. It also depends on the
relationship”. Product manager: “I only feel responsible for sharing knowledge when I have a good relationship with the supplier”. The evidence suggests that a trustworthy relationship between two people is essential when sharing knowledge. Trust between the firm and the supplier is seen as an important element by the respondents. Only when the relationship is based on trust, knowledge sharing will be enhanced. The product manager: “To be honest, with some people I share more than with other people. Sometimes I am more transparent and easier in giving information. This has to do with the relationship and the trust I have within a person.” The product manager: “I strongly believe that 80% of the relationship is based on trust and the other 20% of the relationship is based on the content.” Trust seems to be a vague concept and respondents have different opinions on how to build trustworthy
relationships. Being consistent in appointments and proper business proposals are arguments that came back several times. Supplier 3: “To have the idea and the feeling, you know, that a
28 person is trustworthy, that he does what he promises, this feeling is not something you build within months, it takes time”. Product manager: “Someone can offer you a lot but if there is no match between me and the person it gets really hard when negotiating.” The interviews imply that trust can be build throughout the relationship but only when there is a ‘match’ between the two persons at first sight. To get a more general overview of the answers of the respondents concerning trust, see table 2 on page 29 and page 30.
Interpersonal similarity
According to the interviews, interpersonal similarity is sometimes seen as a factor that enhances the knowledge sharing process between firm and supplier. Though not all
respondents agreed with this. Supplier 2: “In knowledge sharing it is even more interesting when personalities are not the same because often different viewpoints create strong ideas.” This respondent suggests that it is important that individuals will be challenged in their relationship because it will enhance the creativity. Other respondents actually claim that a similar personality enhances the knowledge sharing process. Supplier 2: “Sometimes we make choices based on the personality of the buyer, I have an example of someone who is really old fashioned and traditional, then I ask an account manager who has a better connection with such a person if he can be the contact person.” Some respondents state that they are not sure if interpersonal similarity enhances the knowledge sharing between the firm and the supplier, they emphasize the importance of the relationship itself. The relationship itself is, according to them, the most important aspect, which they think is independent of the interpersonal similarity. To get a more general overview of the answers of the respondents concerning interpersonal similarity, see table 2 on page 29 and page 30.
Table 2 Individual determinants
Individual determinants Supporting interview quotes Motivation
Product manager: "When a supplier gives me valuable information, I have to give something back at a certain time. Return the favor".
Supplier 1: "The market moves to a situation where in it is more relevant to share knowledge, I think it is an added value to do that instead of just negotiating about price and that's it.
Supplier 2: "I don't really feel responsible, it just depends on the win-win relationship, and I know in this relationship there is a lot to win".
Supplier 1: "It is really important to create a win-win relationship, we have to take the responsibility to create optimal profit maximization".
Supplier 5: "Yes absolutely, I think as a supplier that is an obligation and I feel I need to share what I know".
Supplier 2: "Yeah, the company will certainly get rewarded for sharing knowledge. For example we are now testing two new products and share a lot of information with each other. Other competitors do already have these products so we have clear incentives to innovate in collaboration with the seller. If it works out, we will get rewarded in financial terms as well."
Trust
Product manager: "I only feel responsible to share knowledge with suppliers whom I have a good relationship with".
Product manager: “To be honest, with some people I share more than with other people. Sometimes I am more transparent and easier in giving information. This has to do with the relationship and the trust I have within a person.”
Supplier 3: “To have the idea and the feeling, you know, that a person is trustworthy, that he does what he promises, this feeling is not something you build within months, it takes time”.
Product manager: “I strongly believe that 80% of the relationship is based on trust and the other 20% of the relationship is based on the content.”
Supplier 2: "When I like someone, I share knowledge more easily and trust comes along the way. There must be a match."
30 Interpersonal similarity
Supplier 2: “In knowledge sharing it is even more interesting when personalities are not the same because often different viewpoints create strong ideas.”
Supplier 1: “Sometimes we make choices based on the personality of the buyer, I have an example of someone who is really old fashioned and traditional, then I ask an account manager who has a better connection with such a person if he can be the contact person.”
Supplier 3: "I don't think that it does matter if they have a similar personality, the most important thing is that they never absued the trust I gave them.
Product Manager: "You know there are some people that are in my allergic zone, I really cannot collaborate with them, but it is not that someone have to be exactly the same as I am to have a good relationship with that person."
Summary of the results
Knowledge sharing between the firm and the supplier depends on many factors. One thing all respondents agreed up on is that knowledge sharing between the firm and the employee is important in order to create innovative products and compete in the market. The respondents all emphasized that the trust-relationship between the product manager and the supplier is very important. The respondents indicate that the better the trust in the relationship, the more knowledge will be shared. Besides that, all respondents claim that it is very important to create a mutual benefit when sharing knowledge, the so called win-win situation. This mutual benefit is crucial in order to enhance knowledge sharing. If interpersonal similarity enhances the knowledge sharing process remains unclear according to the respondents. Impediments of knowledge sharing are appointed by the respondents as unclear pricing strategies, not
delivering on promises and bad communication which are causes of problems within the relationship.
32
Discussion
This chapter discusses the data analysis that has been done. What kind of relationships are uncovered and how does this relate to the conceptual model? Implications of the findings for the academic literature and practitioners will be considered. After that the limitations of the research will be discussed which leads to ideas for future research around this topic.
The conceptual model Figure 1 Conceptual model
This initial conceptual model (figure 1) refers back to the literature research and shows the expected relationships between the constructs. The data analysis suggests that the
relationships within this model are not the same as in this research and therefore the model should be revised.
Evidence states that motivation seems to be one overarching driver of knowledge sharing, as the data analysis suggests that rewards, a trustworthy relationship and a match between respondents all lead to motivation to share knowledge.
33 Individual factors that enhance the motivation to share knowledge are rewards and a match between respondents. A win-win situation can be a reward, but also more sales is an example that respondents give of rewards they can get when sharing knowledge. The respondents were uniform about the win-win situation that can be created within knowledge sharing. The data analysis suggests that a win-win situation arises from mutual benefits and reciprocity and both ensure that more knowledge will be shared. A match between
respondents has been proven to be really important in order to enhance the motivation to share knowledge. This match is something different than the interpersonal similarity between persons. There can also be a match between two persons without a lot of similarity. Evidence claims that some sort of a match with someone is more important than the interpersonal similarity. This match results in likeability which motivates the respondents to share more knowledge.
Trust, which is seen in the research as something that is based on long term, can be called the output of the relationship, which also leads to motivation to share
knowledge. Evidence suggests that it is not just trust that enhances the motivation for the knowledge sharing process, the relationship itself, which is obviously based on trust appears to be at least as important. Respondents all emphasize that a good relationship between the supplier and the firm is needed to enhance the motivation for knowledge sharing. This trustworthy relationship is based on long term and all respondents emphasize that delivering on promises is one of the most important things to do in order to build this trustworthy relationship.
34 Revised framework
Figure 3 Revised framework
The revised framework (figure 3) shows the reconceptualization of the conceptual model according to the evidence of the research. To summarize; a match and rewards both lead to motivation that enhances knowledge sharing between the firm and the employee, together with a trustworthy relationship. Which we can call the three drivers of knowledge sharing between the firm and the employee. The individual factors as a match and rewards both lead to a trustworthy relationship as well. This revised framework expands to the extant literature about knowledge sharing between the firm and the supplier.
Practical implications
The findings of this research indicate that knowledge sharing between the firm and the supplier is highly valuable. When some of the drivers of knowledge sharing between the firm and the supplier are known this has practical implications for the field as well. Both suppliers and firms can improve the knowledge sharing process using the drivers that are known. When the knowledge sharing process can be improved it will help firms to manage their knowledge
35 sharing process in inter-firm relationships and therefore improve their relationship with the supplier. The relationship with a supplier is getting more important as the rise of offshore outsourcing is a key strategic issue nowadays. An improved knowledge sharing process can lead to more efficiency and more innovative ideas. For example; a strategic partnership between the firm and the supplier, as the data suggests, leads to more discussion about the products itself, which can lead to product improvement. Besides that, a trustworthy relationship increases the chance of negotiation about the prices of the products. When managers are aware of these drivers of knowledge sharing they can for example reward their personnel for sharing knowledge with the supplier or give them more time to invest in the relationship. This eventually will help in the development of sustainable advantages for the firm.
As this research is done in the pharmaceutical industry, the question remains if the findings can be generalized to other industries. Some expectations about other industries can be easily made, but future academic research must show if these drivers of knowledge sharing are applicable in other industries as well.
Limitations and future research
Limitations of this research can mainly be found in the generalizability. The sample used in this study is limited, twelve interviews with six people. Second, the case in this study operates in a specific industry, namely the pharmaceutical industry. The investigated drivers of
knowledge sharing might be different for businesses in other industries. Another limitation is that this research is done in one particular country. From an institution and culturally based perspective, outcomes of this research might be different in other countries which are characterized by another culture and different institutions. Finally, the data of this research can be biased through socially desirable answers given in the interviews. It is possible that respondents provided biased answers as the own interest of respondents are into play. Besides
36 that knowledge sharing can be a touchy subject, which can cause socially desirable answers as well.
In order to overcome the limitations of this research, further research is needed. Future research should create a bigger sample size and test the drivers of knowledge sharing between the firm and the supplier in multiple industries. Furthermore, when several Dutch industries are being investigated, going abroad to do the same research in different cultures will be very interesting as well. Besides working on the generalizability issue, it would be very interesting to examine the organizational factors more thoroughly. An interesting question would be: What kind of organizational factors/context enhances or impedes knowledge sharing?
37
Conclusion
Prior research has indicated that knowledge sharing is an extremely important phenomenon nowadays in doing business. Although previous research highlighted the importance of inter-organizational knowledge sharing, little systematic research has been done around this topic. This research addressed the gap in the literature by conducting an in-depth case study within a pharmaceutical company. This thesis investigated the drivers of knowledge sharing between the firm and the supplier. The research question that states central to this study is: What are the personal drivers of knowledge sharing between the firm and the supplier and how do they influence the relationship between the firm and the supplier? The data was collected through twelve interviews with six people, one product manager and five different suppliers.
Findings of this research indicate that both the suppliers and the product manager state that knowledge sharing is extremely important within a firm-supplier relationship. A so called strategic partnership can lead to innovation of products, less supply issues and more general information about market trends. According to the data analysis, the knowledge that is being shared can be categorized within three categories; ‘products’, ‘information about market trends’ and ‘supply issues’. Personal drivers of knowledge sharing that were found in the research are ‘rewards’ and ‘a match’ which both motivates the respondents to share knowledge. These individual factors eventually lead to a trustworthy relationship which enhances the motivation to share knowledge as well. Rewards can be a win-win situation which means that mutual benefits and reciprocity both motivate to share knowledge. But also more sales can be a reward. A trustworthy relationship is something the respondents indicate as an essential element in order to share knowledge. Building a trustworthy relationship takes time and the respondents indicate that a match between two persons is needed.
The research has academic and practical implications. The first step towards academic research concerning knowledge sharing between the firm and the supplier is made, future
38 research will test the generalizability of the findings. Practically seen the research has
managerial implications as well. When managers are aware of the drivers of knowledge sharing they can use them to motivate their personnel, this eventually will help in the development of sustainable advantages for the firm.
39
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44
Appendix 1 – Interview schedule
Interview schedule for the extensive interview (supplier/employee) Company A = Supplier
Company B = Employee Introduction
- Introduce myself
- Give a short summary of the research - Ask for allowance to record the interview
- Tell that the interviews are going to be completely anonymous General questions
- How long have you been working at company A/B?
- How long have you been working together with …… from company A/B? - How intensive do you work together with ……? (how many times per week) - How do you share knowledge with him?
Motivation
- Responsibility/Commitment
o Do you feel responsible to share product information with …..? Why? - Rewards
o Do you get rewarded when sharing knowledge with ….. from company A/B? - Benefits
o Are there any reciprocal benefits when sharing knowledge with ……? Examples?
- Enjoyment/pleasure/satisfaction/Interest
o Do you like it in general to share complex information with others? Why? Trust
- Comfortable
o Do you feel comfortable when talking about critical information with …….? - Information
o Do you trust that critical information is safe with …….? o Do you trust that …….. does what he says he does? Inter-similarity
- Personality
o How would you, shortly, describe your own personality concerning collaboration with others?
End
- Thank you
- Give him something small as a little thank you
- Make an appointment for the phone call in about 2 weeks time
45
Appendix 2 – Summaries of the interviews
The product manager - Interview & short interview by phone
The first interview was with the product manager of the company. He works together with 5 different suppliers which the researcher all interviewed. The product manager works 2,5 years at the company and he is responsible for all the contact with the suppliers concerning the absorbing materials. From prices, buy in to the quality of the products. This work varies from strategic level to detailed level. He says he feels responsible to check if the quality that the suppliers deliver really fits the desired level. Sometimes he experiences some difficulties with the suppliers, these difficulties vary from simple delivery problems to bigger quality or
pricing problems. Most of the times these problems are quiet easy to solve, he can only tell me of one situation in which the problem led to converting to another supplier. This problem was about the pricing of products, he felt that the supplier did not want to listen to the pricing of the market at that moment, after several negotiation sessions without success this led to converting to another supplier. This obviously had a very negative impact on the relationship between him and the supplier. He tells in the interview that he sometimes feels responsible to share knowledge depending on the relationship. When the relationship is good, he feels that he is responsible to share knowledge concerning market trends or product developments. This relationship is depending on a certain match he has with some suppliers. He thinks it is really important that suppliers always adhere to appointments and that they should make contracts as easy as possible. His slogan is: “keep it simple”. According to him, this helps strengthening the relationship between him and the supplier.
