Report: Inter-organization Knowledge Sharing in Global Supply Chain

This report delves into the critical role of inter-organization knowledge sharing within global supply chains. It begins by defining key concepts such as supply chains and global supply chains, emphasizing the importance of knowledge as a competitive asset. The report explores the value of knowledge sharing in enhancing supply chain performance, improving coordination, and enabling faster market entry for new products. It also discusses the requirements and determinants of effective knowledge sharing, including contextual factors like trust, interdependency, and culture, as well as organizational factors such as intention to learn, absorptive capacity, and ICT infrastructure. Finally, the report examines the nature of knowledge and its impact on the sharing process. The report highlights the benefits of knowledge sharing in overcoming supply chain challenges, such as out-of-stocks and inventory issues, while acknowledging the motivational and cognitive limitations that can hinder the process. Overall, the report provides a comprehensive analysis of inter-organization knowledge sharing and its significance in today's global business environment.

Inter-organization knowledge sharing, Global supply chain
Abstract
Inter-organization knowledge sharing is identified as a significant predictor in
improving the performance of the business. This paper studiedhow theinter-organization
knowledge sharing of global supply chain can enhance the performance of the
partnership, build stronger supply chain in global marketplace and build close customer-
supplier relationship through study the inter-organization knowledge transfer
requirements and determinants, the value of knowledge sharing in supply chain and the
benefits of the knowledge sharing.
Keywords: Inter-organization knowledge sharing, Global supply chain
1.0 Introduction
Knowledge is regarded as the most important competitive asses for companies as
well as a major source of competitive advantage. The new knowledge is acquired not
only form internal knowledge resources but also from resources outside the
organizational boundaries. Many of organizational relationships have been created to
transfer knowledge. Supply chain partnership is a special type of inter-organizational
knowledge that is highly knowledge-intensive. Acquiring knowledge from a supply chain
partners can help an organization to overcome many failure in supply chain.
Knowledge sharing can help an organization to improve their inter-organizational
coordination and product quality. Thus, inter-organization knowledge sharing among the
supply chain partners has become a common practice as it enhances the competitive
advantage of the supply chain.
Knowledge sharing improves the coordination between the global supply chain
processes to enable the material flow and reduces inventory cost. It also leads to high

level of global supply chain integration by enabling the organization to introduce
products to the market quickly.
2.0 Related Concepts
2.1 Definition of Supply Chain
There are a lot of definitions of supply chain. At present, there has not been a
united one, either.
Handfiled& Nicholas define it as: a supply chain includes all the activities
relevant to the flows of goods and information from the raw material stage to that in
which the goods are delivered to the user [1].
S.H. Ma thinks that the supply chain is not only a substance chain, an information
chain and a capital chain, which connect from supplier to the user, but also a value-added
chain. The value of the substance in the supply chain is added because of the process of
purchasing, packing, shipping, etc. benefiting the enterprises concerned [2].
2.2 Definition of Global Supply Chain
The global supply chain is made up of the interrelated organizations, resources,
and processes that create and deliver product and services to end customers. In the
instance of global supply chains, it is extended around the world. The goal is to deliver a
company’s products and services quickly and at the least cost possible.
2.3 Inter-organizational knowledge transfer
Knowledge transfer between two or more actors (individuals or organizations) can
be defined as the process which the knowledge of one actor is acquired by another [3].
The knowledge transfer process can take place by various means ranging from electronic
exchange of information to personnel co-working e.g. working in a project.

3.0 The Value of Knowledge in Global Supply Chain
Hau Lee, a professor of operations, information and technology at Stanford
University had found out that the top-performing supply chain had three distinct
characteristics [4]. First, they are agile enough to react readily to sudden changes in
demand or supply. Second, they adopt over time as market structures and environmental
conditions change. The last one is they align the interests of all members of the supply
chain network in order to optimize the performance. These three characteristics only
possible when partners promote knowledge flow in the supply chain relationships. The
knowledge sharing enables the supply chains create a chain value for all the stakeholders.
The current trend of the global supply chain had switch from push-oriented to the
demand-driven which focus on identifying and understanding the present and future
needs of the customers and building the supply chain based on the actual demand levels
as opposed to demand forecasts. This can help an organization provide a higher level of
service to customer which on-time deliveries and accuracy of the order placement and
lead to increase the customer loyalty level. The higher level of service helps supply chain
becomes more efficient and effective, less need for overnight deliveries to compensate
for slow turn-around and fewer dissatisfied customers.
Supply chain will become more transparent and giving everyone a better look at
the customers need and value proposition through the knowledge sharing among the
partnership. For example, the more knowledge about the customer needs and demands
throughout the supply chain will increased the demand visibility and more accuracy of
demand forecast which also increase perfect order rates dramatically. The knowledge
about the customer and overall market also can provide a better understanding of market
trends, resulting in better planning and product development.
Many research had consistently shows that the most common factor lead to failure
of the supply chain including out-of-stocks, new product failure rates and excess
inventories. These issues can be solving throughout the knowledge flow in the supply
chain. However, there are still some supply chains members are reluctant to participate in
the knowledge-sharing activities.

4.0 Inter-organizational Knowledge Sharing Requirement
There are two major requirements must be met before knowledge sharing can take
place. These requirements are: (i) intention to share knowledge, and (ii) ability to share
knowledge. These requirements are met as result of overcoming motivational and
cognitive limitations toward knowledge sharing. The notion of cognitive and
motivational limitations toward knowledge state that inadequate transfer of knowledge is
due to two sets of limitations namely, motivational limitation and cognitive limitations.
Cognitive limitations are mainly associated with the ability to share knowledge.
Motivational limitations on other hand are related to the intention to share knowledge. By
overcoming these limitations organizations will have the ability to share knowledge.
When an organization does not intend to share knowledge then it highly unlikely
to devote any time and other resources to it. According to theory of motivation,
individuals intensify sharing their expertise when they are provided with incentives for
doing so. Motivational limitations are related to disincentives such as risk and uncertainty
that inhibit sharing of knowledge. Since effective knowledge sharing cannot be
mandated, there should be enough motivation that results in intention to share knowledge.
In addition to having intention to share knowledge, organizations and individuals
should be able to share their knowledge. Ability to share knowledge is related to
capabilities of both organizations involved in knowledge sharing process to share and
absorb the knowledge. As it is discussed, cognitive limitations cause difficulties in
knowledge sharing and as result it has impact on the ability to share knowledge.
Cognitive limitations inhibit sharing of knowledge and are associated with the way
experts store, process and state their knowledge. These factors are important in
understanding why knowledge is sometime difficult to share and communicate. By
overcoming these limitations organization will have the ability to share knowledge.

5.0 Determinants of Inter-organization Knowledge Sharing
There are three groups of factors affecting inter-organization knowledge transfer
were identified and are depicted in Figure 1 and are briefly discussed below.
Figure 1 Three sets of factors affecting Inter-Organization Knowledge Sharing
5.1 Contextual Factors
Contextual factors basically relate to the properties of the relationship and include
factors such as trust, interdependency, uncertainty, culture and shared values.
5.1.1 Trust
Trust can be interpreted as beliefs, faith, reliance, and confidence in supplier
partners. It is simply abelief that one organization acts in a consistent manner and will
perform in accordance withexpectations and intentions. It is highly related to the risk and
protectiveness ofknowledge. Lower inter-organizational trust will result in higher risk of
losing critical knowledge dueto leakage or opportunistic behavior of the partner. Trust
will cause actors to actively share theirknowledge, being sure that the knowledge will not
be used against its goals, will be compensated, andwill earn considerable benefit in
return. Trust has positive impact on inter-organizational knowledge sharing intention.
5.1.2 Interdependency
This concept is highly related to the distribution of power between two partners.
Based on the resource dependency theory, dependency on an organization partner is
actuallydependency on partner’s resources. Highlevel of interdependency will reduce the

risk of opportunistic behavior because both parties willrecognize the importance of each
other to perform the supply chain activities.Thus, the moreinterdependent the
organizations are to one another, the more will be the intention to share knowledgeamong
them.
5.1.3 Culture Proximity and Share Value
Culture is referred as a set of parameters such as assumptions, values, beliefs, and
interpretations ofevents shared by social collectives such as groups, nation and
organizations. Twoorganizations have cultural proximity when they share the same or
close culture based on factorsincluding language, norms, values, meanings, and beliefs.
Cultural proximity facilitates knowledge as it removes the barriers for understanding
partners. These barriersinclude the lack of fluency in the language that results in
knowledge ambiguity and causes evencodified knowledge remains inaccessible. Cultural
proximity and shared vision as cognitivedimension of social relationship facilitate
knowledge sharing by promoting mutual understandings andby providing common vision
and crucial bonding mechanism between two parties. When organizational cultures are
similar, organizations are expected to interact moreeasily and with better results without
any need to explicate difficult interpretations. As a result, theability to share knowledge
will be increased and the process of trust building will be enhanced.
5.1.4 Tie Strength
Tie strength reflects the closeness of the current and previous relationship
between partners. Positiveprior experience leads to an expectation about positive future
interactions so the frequency ofinteractions and communication will be increased and will
result in creating strong tie betweenpartners. Close relationship between partners will
lead to greater knowledge sharing.

5.2 Organizational Factors
There are factors that are related to the features and characteristics of
organizations which either shareknowledge with, or acquire knowledge from, other
organizations. Factors such as intention to learn,absorptive capacity, ICT supports, Age,
Size and geographical location of organizations indicatedifferent characteristics of source
and recipient organizations. So, they are referred as organizational factors.
5.2.1 Intention to learn
Intention to learn is viewed as an important factor in acquiring an external
knowledge .The organization with more intention to learnfrom external recourses would
provide any type of resource that is required and create an appropriateenvironment for
knowledge sharing. As a result, learning intent facilitates the ability to shareknowledge.
5.2.1 Absorptive Capacity
Absorptive capacity is presented as an organization’sability torecognize the value
of new external knowledge,assimilate it and apply it tocommercial end. Organization’s
absorptive capacity on its ability to understand new knowledge held by its partner.Similar
knowledge base in both source and recipient organizations will result in easier
interactionsrelated to the knowledge sharing due to the common understandings of shared
knowledge. Thus,absorptive capacity facilitates the ability to share knowledge between
organizations.
5.2.3 ICT Infrastructure
ICT support in the form of extranet, web service and intranet play major role in
bridging gaps of timeand space between members of knowledge communities.The
challenge of capturing, organizing, and disseminating knowledge in IO contextscan be
facilitated by effective ICT support.ICT not only provides quick and accurate access
todatabases and stored data but also it creates a link between organizations increasing the
connectivitybetween them by providing internet-based discussion groups or electronic
meetings that may finally lead to knowledge sharing. Thus, that ICT have positive effect

oncreating strong tie and link between organizations and also will increase the ability to
shareknowledge.
5.2.4 Geographical Proximity
Geographical proximity refers to the geographical distance between two
organizations. Organizationsin the same city or area have more geographical proximity.
Geographical proximity fosters the face to-face communication and brings companies
together. Thus it has positive effect on creating stronger tie and link between
organizations that result in high levels of richness in interactions and facilitate the
exchange of especially tacit knowledge. Thus geographical proximityincreases the ability
to share knowledge.
5.3 Nature of knowledge
Nature of knowledge refers to the tacitness or explicitness of knowledge. The
nature of knowledge isregarded as a variable that influences knowledge sharing. Tacit
knowledge inparticular is embedded in the individual’s mind, and does not have a
numerical or linguistic form.Sharing this type of knowledge is more complicated than
explicit knowledge. The knowledge sharing is positively affected by the tacitness
ofknowledge, and that explicit knowledge is transferred in a more effective way than tacit
knowledge. Explicitness of knowledge provides easier way to transfer and communicate
knowledge. Thus, explicitness of knowledge will facilitate the ability to share knowledge.

6.0 The Benefits of Knowledge Sharing
Knowledge sharingplays an important role in improving the performance of the
company. However the term ‘performance’ is wide enough to require specification: who
can we measure performance and its improvements. In this paper, the performance of a
company is measured through recognize the increase in market share, increase in sales,
sales on return and return on investment.
Information sharing and knowledge integration enhance the performance. For
example, information sharing contributed to profitability and operating efficiency,
benefiting buyers and sellers in cross-national collaboration. The frequent process
adjustment and evaluation between partners based on information sharing also led to
improved performance. In particular, knowledge sharing about market structure,
customer preferences, technological innovation and financial resources helped everyone’s
bottom line. This was especially important for supply chain partners operate globally, due
to complexity of oversea markets and the difficult of obtaining reliable information on
their own. For example, some industry constantly faces regulatory changes and new
safety requirements in oversea markets, without cooperation and knowledge sharing from
overseas customers, manufacturers would have difficultly responding to these challenges
in a timely manner.
It seems clear that knowledge has definitely a positive influence on performance.
However, the benefit for buyers and sellers are not always equal as suppliers receive
significantly greater benefit than buyers. This is because the predominance of demand-
driven supply chains in today’s global marketplace and the fact that suppliers have more
room for improvement than buyers.
Knowledge sharing between supply chain partners occurs with the expectation
that both buyers and seller will gain some benefits. For example, knowledge sharing
activities helped reduce costs, increase product quality, enhance delivery performance
and improve relationship between the partners through the communication.

7.0 Current trends on knowledge and technology transfer
Following are the current trends in knowledge and technology transfer.
1. RFID - It brings numerous benefits in supply chain of a firm, such as automatic
recording of incoming stock, improved price accuracy, automatic monitoring of
shipments, locating stock in warehouses, securing high-volume and theft-prone
items, assisted re-ordering and provides transparency. Example: Wal-Mart
2. EDI - Electronic Data Interchange is the backbone of the automated supply chain,
in terms of technology and knowledge transfer. Currently firms are using
outsourced EDI solutions to connect with their global trading partners and in
return they are achieving the continuous growth in B2B integration services.
Example: General Motors
3. Internet technologies - The Internet has created a tremendous impact on the field
of supply chain management.Firms are using Internet technologies successfully to
lower costs and add value to their businesses. Example: Cisco and Dell.
4. ERP - It achieves a high level of integration by utilizing a single data model,
developing a common understanding of what the shared data represents and
establishing a set of rules for accessing data. Example: Siemens healthcare
The other trends on knowledge and technology transfer in supply chain are
Collaborative Planning Forecasting and Replenishment (CPFR), and Knowledge
Management etc.

8.0 Conclusion
In the competitive landscape of global supply chain, knowledge sharing between
the buyers and suppliers has never been more critical. Although there supplier may
benefit the most from knowledge sharing, the research shows that knowledge sharing can
benefit both buyers and supplier. If supply chain managers can understand that some gain
is better than no gain at all, then both parties will gain the benefit.

References
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[3] R.S. Cutler, A comparison of Japanese and U.S. high technologytransfer practices,
IEEE Transactions on EngineeringManagement 36(1) (1989) 17–24.
[4] H.L. Lee, “The Triple-A Supply Chain,” Harvard Business Review(October 2004):
102-112.
[5] Hinds, P.J., and Pfeffer, J. "Why organizations don’t “know what they know”:
Cognitive and motivationalfactors affecting the transfer of expertise," Sharing expertise:
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