The contingent roles of market turbulence and organizational innovativeness on the relationships among interfirm trust, formal contracts, interfirm knowledge sharing and firm performance

Abstract

Purpose Prior research on interfirm collaborations has demonstrated that trust and contract are two central governance mechanisms that influence a firm’s knowledge sharing decision and the subsequent effect on performance. However, we know little about how effective these mechanisms are in different market conditions and levels of organizational innovativeness. This study aims to advance the literature on interfirm knowledge sharing by exploring these contingencies and by providing an alternative explanation of the contradictory effects of knowledge sharing on firm performance. Design/methodology/approach The authors collected 156 firms’ relationships with their suppliers in two batches from 300 firms in the 2017 list of Statistics in the Zhejiang province in China. The authors used unstructured interviews and formal questionnaires to collect data from these firms. Findings Market turbulence served as a boundary condition for the effect of interfirm trust and formal contracts on knowledge sharing. Both interfirm trust and formal contracts, as governance mechanisms, are effective in raising interfirm knowledge sharing only when the firms operate in high turbulent markets. On the contrary, knowledge sharing negatively affected firm performance when firms exhibit low organizational innovativeness. Moreover, a three-way interaction among market turbulence, organizational innovativeness and knowledge sharing revealed that when market turbulence and organizational innovativeness were both low, interfirm knowledge sharing was detrimental to firm performance. Practical implications Based on the results, this study recommends managers consider external (market turbulence) and internal (organizational innovativeness) when firms decide to share knowledge and benefit from such activities. Originality/value This study extends prior research on the determinant of knowledge sharing and clarifies the inconsistent findings of knowledge sharing on firm performance. Thus, strategic organizational leaders need to pay attention to when they need to share information with suppliers to best benefit from those collaborations.

Knowledge management capability and organizational performance: a moderated mediation model of environmental dynamism and opportunity recognition

“…KMC with knowledge transferring to employees, application of experimental knowledge, and creation of administrative policies and procedures for application across practical borders positively relate with determinants of opportunity recognition to get information for new ideas. Regular scans of the environment for commerce opportunity and market potential will identify the opportunity (Soto-Acosta et al, 2018;Sun et al, 2023). This result is in line with the findings of Li et al (2020).…”

“…This can be helpful to enhance efficiency and production. According to Liao et al (2011), Soto-Acosta et al (2018), and Sun et al (2023, KMC is a significant element that effects organizational performance and enables organizations to better understand their customers by gathering and analyzing customer data. This can help organizations anticipate customer needs and provide better customer service.…”

“…The knowledge management capabilities, along with its determinants such as the creation and application of new knowledge, creation of management policies, distribution of knowledge, etc. (Liao et al, 2011), can increase organizational performance more if the organization develops novel knowledge from current knowledge and reprocesses it by learning (Liao et al, 2011;Soto-Acosta et al, 2018;Rossi et al, 2020;Sun et al, 2023). The important indicators of firm performance are return on assets, return on equity, return on sales, market shares, and growth of sales (Soto-Acosta et al, 2018), and they are affected by knowledge management capabilities.…”

“…Knowledge management and opportunity recognition are closely related, and the application of knowledge for increasing sales and asset and equity returns are important parameters for the prediction of organizational performance (Mostafiz et al, 2021). As it is important for a firm to have the best opportunity in the market to expand, at this time, the indicators of KMC (knowledge transferring to employee, application of experimental knowledge) positively relate with determinants of opportunity recognition to avail information for new ideas, regular scanning of the environment for business opportunity, and the potential of the market to identify the opportunity (Soto-Acosta et al, 2018;Caputo et al, 2021;Sun et al, 2023). Furthermore, both these variables are positively linked with social cognitive theory and Saudi Vision 2030.…”

Performance through sharing

“…The work of Sun et al (2022) has looked at the effect of market turbulence and organizational innovativeness on firm performance when interfirm knowledge sharing has occurred. The results of their work have indicated that firm performance is significantly improved when there is interfirm knowledge sharing when markets are turbulent.…”