Knowledge Acquisition And Partner Opportunism In Inter-hospital Alliances

This paper investigates some critical knowledge management issues in strategic alliances in Chinese healthcare industry. In current competitive environments, knowledge has become one of the most important strategic resources that organizations can obtain and own. The ability to acquire, exploit and protect knowledge has become an effective means for organizations to obtain competitive advantage. In order to learn and acquire external knowledge and skills, more and more organizations have been engaged in strategic alliances. However, while organizations acquire knowledge from their partners, they may also be exposed to specific risks: the partners are likely to act opportunistically to make use of the asymmetric or incomplete information and misappropriate their critical skills and core technologies. Therefore, the partnering organizations may take the risk of knowledge leakage and loss. This dilemma has been identified as boundary paradox in the alliance literature. This paradox suggests that the partnering organizations should be able to achieve a balance between knowledge acquisition and knowledge protection. This paper was designed to address the above issues. We aimed to find out an appropriate governance mechanism for partnering organizations to achieve the objective of maximizing knowledge acquisition and detering from opportunism, simultaneously.We propose in this paper that trust and contracts are two of the most important mechanisms in dealing with the boundary paradox issue. Trust has generally been viewed as an important mechanism that has many positive effects, such as reducing transaction costs, decreasing opportunistic behaviors and improving information exchange. In recent studies on alliances, two types of trust have been emphasized: goodwill trust and competence trust. We propose here that these two types of trust may help us properly resolve the paradox. However, trust must be maintained at a moderate level. Under or above a certain threshold, trust may not be in its optimal effects on the inter-partner relationships. In face of insufficient or excessive level of trust, partners need to jointly adopt another alliance coordination mechanism, i.e., contractual control, so as to deal with the paradox identified. Based on the above analysis, this paper develops and empirically investigates an integrated model concerning the relationships among trust, contracts, knowledge acquisition and partner opportunism. On the basis of previous studies and our fieldwork, we designed the questionnaire and developemtn measurement items for the variables shown in this paper, and collected data from the partnering hospitals in the medical industry in China. One hundred ninety complete and valuable responses are received. By using these 190 samples, we not only tested the direct effects of goodwill trust, competence trust and contractual control but also their interaction effects on knowledge acquisition and partner opportunism. As a result, nine out of ten hypotheses were supported.In general, the proposed conceptual model and hypotheses are supported by the surveyed data. Our findings also provide sufficient implications to the practical issues. And this study has filled the research gaps identified, offered some new opinions and views to extant literature, provided empirical evidence to some theoretical questions, furthered some existing theoretical perspectives, and therefore achieved the expected research purpose.In summary, we draw the following conclusions, which also constitute the contributions of this paper.First, hospitals with goodwill trust will be willing to provide knowledge and technologies for sharing according to the agreed-on cooperative agreement, and they will also be apt to reduce their opportunistic behaviors in the collaborative process. However, it does not mean that too much goodwill is a good thing. In contrast, there is an optimal level of goodwill trust. Once beyond this level, a hospital may trust its partners blindly and it will therefore pay little attention to protect its valuable technologies. As a result, too much goodwill trust leads to an increased level of partner opportunism. These analyses constitute our first set of research findings that goodwill trust is positively associated with knowledge acquisition and has a U-shaped relationship with partner opportunism.Second, competence trust is an organization's perceptions of the existing knowledge stocks and professional expertise of its partners. It is assumed that when an organization has a high level of accumulated knowledge stocks, it will possess a high level of abilities to transfer and absorb knowledge. In this sense, a hospital with a high level of competence trust will enjoy a high extent of knowledge sharing. That is, there is a positive relationship between competence trust and knowledge acquisition. However, our findings show that there is no statistically significant relationship between competence trust and partner opportunism. This finding suggests that competence trust has no direct impact on partner opportunism.Third, transaction cost analysis emphasizes the positive effect of formal contracts on curbing opportunism. Usually, formal contracts set forth the rights and responsibilities of each partner. These partners will be enforced with strict monitoring and punishing mechanisms. With detailed contracts, hospitals can monitor the behaviors of their partners. Once the opportunistic behaviors occur, they will adopt detailed terms to punish the unexpected behaviors. Moreover, formal contracts regulate the scope and spectrum of knowledge sharing, thus prompting the acquisition of knowledge. But on the other hand, some studies have argued that there will be negative effects when hospitals pay too much attention to detailed contractual terms. In some instances, design of detailed contracts may be regarded as distrust by the partners, leading to the fact that these partners will not be willing to provide more knowledge and skills for sharing. Therefore, contractual control is negatively related to partner opportunism, and has an inverted U-shaped relationship with knowledge acquisition.Finally, the existing literature has still controversies regarding the relationship between trust and contracts. Empirical studies provide support both to the complementary and to the substitute relationships between them. Based on our research purpose and approach, we posit that the interactions between different types of trust (but not the general trust concept) and contractual control should be investigated. Our findings suggest that goodwill trust and contractual control are substitutes while competence trust and contractual control complement each other in dealing with the boundary paradox issue.