12 December 2018

Research pick: A little give and take in China - "The knowledge protection paradox: imitation and innovation through knowledge sharing"

In order to trade with markets in China, multinational corporations in the “West” have to share knowledge with their Chinese partners. This, warns a Norwegian team writing in the International Journal of Technology Management, leaves those corporations open to their products being copied. The corporations must share knowledge within a realm in which the familiar copyright and trademark laws that protect them in the West are not applicable.

Kim Van Oorschot and Jan Terje Karlsen of the BI Norwegian Business School, Hans Solli-Sæther of the Norwegian University of Science and Technology, in Oslo, have analysed the strategic paradox of knowledge sharing and knowledge security. They have taken the ship-building industry as a case model for their research and looked at the long-term effects of a protection-based and a sharing-based knowledge strategy.

Fundamentally, while sharing knowledge leads to more illicit imitation, the long-term success of protecting knowledge from the Chinese markets is more detrimental as it simply undercuts trust of the multinationals among the Chinese suppliers. Moreover, the team found that protection irreparably reduces innovation rates. By contrast, sharing knowledge with Chinese partners encourages continuous reciprocity between those partners and the Western companies in a way that simply does not happen if trust is lost. “Innovation boosts the potential to keep sharing new and interesting knowledge in the future, thereby feeding this continuous reciprocity phenomenon,” the team reports.
The team adds that, “Our simulation shows that giving is a better strategy than taking, which appears counterintuitive, especially in the context of the competitive Chinese market, with its reputation for active imitation.” However, they suggest that Western management style wherein “giving” is a rare action, must be modernized to allow both sides to engage positively in the growing Chinese markets.

Van Oorschot, K.E., Solli-Sæther, H. and Karlsen, J.T. (2018) ‘The knowledge protection paradox: imitation and innovation through knowledge sharing’, Int. J. Technology Management, Vol. 78, No. 4, pp.310-342.

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