Sharing Knowledge to an Entrant for Production Investment Confronting COVID‐19: Incentive Alignment and Lose–Lose Dilemma

Abstract

Facing the urgent demand of medical devices for COVID-19 treatment, many automakers have recently begun manufacturing ventilators, even though they are inefficient in production and uninformed of demand variability. To help them, some incumbent ventilator manufacturers have chosen to share knowledge, such as production techniques and demand information. Clearly, the incumbent ventilator manufacturers are fulfilling social responsibility, but is their knowledge sharing rewarding, especially when the automakers are entrant rivals? If possible, are win-win situations in the sense of social responsibility and firms' profitability identifiable? In this work, we develop a game-theoretic model in which an incumbent and an entrant ventilator manufacturer engage in two-dimensional competition in production investment and sales volume. We examine the incumbent manufacturer's profitability with and without knowledge sharing by formulating the tradeoffs among supply expansion, intensified competition, and the entrant's production efficiency improvement and demand variance reduction. We identify both "win-win" and "lose-lose" situations for the two competing manufacturers. Specifically, we find that free knowledge could be harmful for the entrant manufacturer, but the incumbent manufacturer benefits from knowledge sharing when market competition is intense, or when market competition is mild but the production investment efficiency varies.

Global systemic risk and resilience for novel coronavirus in postpandemic era

“…Investment strategies Niu et al (2021) develop a game-theoretic model in which existing and incoming ventilator manufacturers compete in two dimensions in terms of production investment and sales.…”

“…Niu et al. ( 2021 ) develop a game‐theoretic model in which existing and incoming ventilator manufacturers compete in two dimensions in terms of production investment and sales. The authors test the profitability of existing manufacturers with and without knowledge sharing by formulating trade‐offs between supply expansion, increased competition, the increased production efficiency of entrants, and reduced demand variance.…”

Investigating the Effect of Trust, Motivation, and Reward on the Desire to Share Knowledge through Social Networks by Shiraz University of Medical Sciences Staff

“…This KS has been associated with loyalty among customers on the online platform. In another study, Niu et al (2022) investigated data sharing in a company that was active in the fight against COVID-19. Their research showed that the current ventilator manufacturers are influenced by incentives or motivation and benefit from KS.…”

Research on the Tournament Incentive Mechanism of the Safety Behavior for Construction Workers: Considering Multiple Heterogeneity

“…Hypothesis 5: The output utility function of workers with heterogeneous ability. We use the worker’s cost coefficient of safety input to describe the heterogeneity of worker abilities ( Halisah et al, 2021 ; Niu et al, 2021 ). When α i > 1, it means that when the safety investment is the same, the worker i needs to pay more, that is, the ability of worker i is lower.…”