Informal Alliances Information Trading Between Firms

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Informal Alliances Information Trading Between Firms
Stephan Schrader
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Take, for example, two firms A and B that compete primarily on product quality and not on product price. Assume firm A possesses information -14.
that could help both firms to simplify the production process but not to improve product quality. Even i£ A provides this information to B, A still benefits from the simplification. In other words, the rent that A expects to draw from this information is largely unaffected by whether firm B also knows the information. Transferring the information crea
...tes few costs for A. 3 Firm B, however, might benefit greatly from receiving the information, creating an obligation to reciprocate information that could benefit A in turn. Thus both firms would gain from trading this type of information.
Third, a firm does not give up an important competitive advantage as long as the receiver could have acquired the same or similar information from another source as well. Often, proprietary know-how can be independently developed by any competing firm that needs it, given an appropriate expenditure of time and resources (Teece, 1986; von Hippel, 1987).


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