Inter‐organizational relationships management as a knowledge strategy: A simulation approach

Abstract

Firms absorb knowledge from their partners, make it their own, and use it for innovation. The knowledge performance of a firm embedded in an inter‐organizational network can vary depending on how concentrated its ties are and the number of direct ties. This study used an agent‐based model and the organizational learning curve theory as basis to show that the knowledge performance of firms can be modified by the way in which the structural factors of an ego network are managed. In particular, the concentration of tie strength decreases the average level of a firm's knowledge profile; that is, a firm's knowledge level decreases when it has strong ties with a particular firm and weak links with others. The number of direct ties, the so‐called node degree, increases the diversity of knowledge in the long run. The cumulative knowledge reduction effect of the concentration of tie strength varies depending on the network type. In a random network, the average knowledge reduction effect is mitigated by a high absorptive capacity, whereas the reduction effect is strengthened in a scale‐free network. A knowledge strategy is presented to assist firms in effectively accumulating knowledge toward sustainable growth.