Do Knowledge Flows Trigger Interfirm Cooperation? Evidence from the Enterprise Software Industry

Abstract

The purpose of this paper is to determine the effect of knowledge flows on the formation of interfirm cooperation. By distinguishing codified knowledge flows from tacit knowledge flows, this paper demonstrates that antecedents of interfirm cooperation lie in codified knowledge flows that precede interfirm cooperation. Two properties of asymmetry in codified knowledge flows, direction and uncertainty, underpin this paper’s arguments and empirical tests. By mapping dyadic firms to a center and a periphery firm within a knowledge network, we theorize that the technological uncertainty of directional codified knowledge flows induces the center and the periphery firms to pursue interfirm cooperation differently. The results show that while uncertainty in codified knowledge flows hinders a center firm from pursuing interfirm cooperation, uncertainty stimulates a periphery firm to pursue interfirm cooperation. A statistical analysis performed on a sample of enterprise software firms between 1992 and 2009 supports the hypotheses of this paper. The findings have implications for the mechanism through which firms form interfirm cooperation. (Keywords: knowledge flow, interfirm cooperation, technological uncertainty, knowledge network, codified knowledge)