Study on the Asymmetric Information Problems in Knowledge Alliance

Abstract

Knowledge alliance is currently attracting much interest among academics, consultants and in commercial organizations because it has become widely recognised as a new strategic model adaptation to increasingly competitive environment. Therefore organizations are increasingly participating knowledge alliance to improve the share and creation of knowledge. But how do they 'succeed' in these processes? This paper examines the conditions for successful knowledge sharing and creating in knowledge alliance. We present two asymmetric information problems, moral hazard and adverse selection, which influence on the 'successful' knowledge sharing and creating in knowledge alliance where members cooperate. Further this paper establishes theoretical models and focuses on the way of knowledge alliance overcome moral hazard and adverse selection problem for encouraging knowledge exchange and innovation within organizations. The result shows that if there's a balanced contract arrangement under certain conditions, it will enable members of knowledge alliance to share their common knowledge and make efforts to create new knowledge.