International Journal of Information Management

International Journal of Information Management 32 (2012) 3549
Contents lists available at ScienceDirect
International Journal of Information Management

journal homepage: www.elsevier.com/locate/ijinfomgt
Knowledge complementarity and knowledge exchange in supply channel

relationships
Kyung Kyu Kim a, , Narayan S. Umanath b,1 , Joo Young Kim a , Fred Ahrens c , Beomsoo Kim a,2
a
b
c
Yonsei University, Seoul, South Korea

University of Cincinnati, 328 Lindner Hall, Cincinnati, OH 45221-0211, United States
Department of Information Systems, University of Cincinnati, Cincinnati, OH 45221-0211, United States
a r t i c l e
i n f o
Article history:
Keywords:
Knowledge exchange
Knowledge complementarity
Supply chain management
a b s t r a c t
Existing literature on knowledge exchange in inter-organizational relationships (e.g., a supply channel)
reveals two opposing forces at work: (1) collaborative behavior and (2) opportunistic behavior. A concurrent assessment of the opposing perspectives and the contingencies under which each is relevant for
supply channel performance can add valuable insights about the dynamics of knowledge exchange. We
juxtapose the two behavior patterns using social capital theory and transaction cost economics (TCE)
respectively as the explicators and employ knowledge complementarity as the contingency to reconcile the opposing behavior patterns. The choice of knowledge complementarity in this role stems from
ample theoretical and empirical support in prior literature about the criticality of this factor in inter-rm
knowledge exchange.
We propose a research model, and use data from a eld study of 82 rms in the Electronics Manufacturing Services (EMS) industry to test our model. Our ndings indicate that overall inter-organizational trust
(a surrogate for social capital) and knowledge complementarity promote knowledge exchange behavior
in a supply channel. The retarding effect of risk of opportunism (a TCE dimension) manifests only when
knowledge complementarity is low. However, when knowledge complementarity is high, contrary to
expectations, inter-organizational trust appears to impede knowledge exchange. Our post hoc analysis of
this intriguing, counterintuitive result leads us to knowledge interdependence and dependence asymmetry as potentially critical antecedents to knowledge complementarity. Implication of our ndings to
academic research and supply chain scenario is also articulated.
2011 Elsevier Ltd. All rights reserved.
1. Introduction
Although knowledge exchange (KE) in inter-organizational
relationships has become increasingly important, few companies
have fully exploited the knowledge resources of their partners.
Organizations in a supply chain require access to partner rms
knowledge (e.g., about markets, products, and raw materials, etc.),
which they consider essential or useful to their operations, providing mutual benets (Barratt & Oke, 2007; White, Daniel, &
Mohdzain, 2005). Knowledge from customer and/or supplier organizations may help improve overall supply chain performance and
their own internal decision making and operating performance
(Mabert & Venkataramanan, 1998). However, academic scholars
(e.g., Bowersox, Closs, & Cooper, 2010) predict that it may be a
Corresponding author. Tel.: +82 2 2123 4525.

E-mail addresses: kyu.kim@yonsei.ac.kr (K.K. Kim), uma.umanath@uc.edu (N.S.
Umanath), chloe19@yonsei.ac.kr (J.Y. Kim), ahrensf@mail.uc.edu (F. Ahrens),
beomsoo@yonsei.ac.kr (B. Kim).
1
Tel.: +1 513 556 7195.
2
Tel.: +82 2 2123 4527.
0268-4012/$ see front matter 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ijinfomgt.2011.05.002
long time before rms cooperate to form a fully collaborative endto-end supply chain. Why can only a few rms benet from the
knowledge of their partners? Scholars in both operations management (OM) and strategic management have researched inter-rm
knowledge exchange, but differences in focus between the various
approaches have left us with an incomplete understanding of what
causes knowledge exchange to occur and how it benets the rms
throughout a supply chain. In one line of research, scholars have
focused on organizational social capital perspectives, asserting that
networks of relationships are valuable resources (i.e., capital) for
an organization and conduits for knowledge exchange. The social
capital view asserts that relational rents are possible when partners
combine or exchange knowledge and/or when they employ effective governance mechanisms that permit the realization of rents
through a synergistic combination of assets, knowledge, or capabilities (Dyer & Singh, 1998). On this view, supply chain partners
are considered the means with which to acquire the complementary resources and capabilities that rms otherwise lack. Thus, from
the social capital view, an effective strategy requires a rm to share
valuable knowledge systematically with its partners in return for
access to their knowledge bases.
36
K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549
In another line of research, in contrast, transaction cost economics (TCE) has focused on rms concerns with transaction risks
when they release their knowledge resources outside the rm
(e.g., Clemons & Hitt, 2004; Madhok & Tallman, 1998). The interorganizational knowledge exchange dilemma is that (1) being a
good partner invites exploitation by partners attempting to maximize their individual appropriation of the joint learning, and
(2) such opportunistic learning strategies undercut the collective
knowledge development in a collaborative relationship (Larsson,
Bengtsson, Henriksson, & Sparks, 1998). An organizations opportunistic behavior may result in gaining more knowledge relative
to its partners in the short-term, but this exploitation is likely to
jeopardize supply-chain relationships and/or cause other partners
to behave opportunistically as well (Park & Ungson, 2001). The
probable result is that neither organization will contribute to the
knowledge exchange process. This relative withholding of knowledge reduces the overall effectiveness of knowledge exchange in
a supply chain, potentially defeating the purpose of knowledge
exchange.
Inter-rm relationships seem necessary for inter-organizational
knowledge exchange to occur, but knowledge exchange may be
hindered by concerns with transaction risk. In order to enhance
our understanding of knowledge exchange among supply chain
partners, a concurrent assessment of opposing theories based on
the social capital perspective and transaction risk perspective and
the contingencies under which each theory is relevant to supplychain performance is crucial. By examining the literature (e.g.,
Stieglitz & Heine, 2007) and the related theories (Milgrom, Qian,
& Roberts, 1991), we have identied an important contingency,
namely, knowledge complementarity (KC), which may help us
understand behavior patterns in knowledge exchange. This study
seeks to explore the contingency effect of knowledge complementarity on knowledge exchange activity among supply chain
partners.
In this paper, we formulate a research model driven by competing theories of social capital and transaction risk and develop and
test appropriate hypotheses, using data collected from purchasing managers at 82 rms in the Electronics Manufacturing Services
(EMS) industry. Specically, the sample rms are intermediate producers in the EMS industry that rely on rst-tier suppliers for their
parts and components. These intermediate producers assemble
low-level parts from rst-tier subcontractors into stable intermediate components. The nal outputs from the intermediate producers
are sold to manufacturers who nally proceed to mount them on
specic models to be sold to nal customers. Intermediate producers do not have access to the nal market for electronics. The
ow of intermediate products in complex industrial activities provides a good context within which to study knowledge exchange
in procurement and supply relationships.
The next section reviews the relevant literature proposing theories about inter-rm knowledge exchange. The third section
discusses the direct effects of social capital and transaction risk
perspectives on inter-organizational knowledge exchange. It also
describes the moderating effects of knowledge complementarity
on the relationship between forces from the transaction risk/social
capital perspectives and knowledge exchange. The fourth section describes our research method, and the fth section presents
empirical results. We conclude with a discussion of our results and
their implications.
2. Inter-rm knowledge exchange

Pervasive electronic networks enable companies to exchange
knowledge far more efciently and effectively than ever before.
This improvement in the economics of knowledge exchange and
transaction costs has caused entire industries to reorganize radically and dramatically, unbundling the traditional value chain
(Hagel & Singer, 1999). Firms are relying more on outside partners to facilitate cost-effective delivery of value to customers,
since the relevant knowledge is often located outside the rms
particular eld (Ye & Agarwal, 2003). Indeed, the proliferation
of inter-organizational collaborative relationships is considered
to be driven by the challenge of growing knowledge intensity
(Adler & Kwon, 2002), which has made knowledge exchange in
inter-organizational relationships ever more important in todays
globalized business environment.
However, many of the challenges stemming from knowledge
exchange arise from barriers between source and recipient rms.
Hsiao, Tsai, and Lee (2003) identify typical barriers to knowledge
exchange, including unwillingness to share important knowledge
(e.g., Nahapiet & Ghoshal, 1998), lack of the recipients absorptive
and assimilation capacity (e.g., Lane & Lubatkin, 1998), obstacles to
effective knowledge search (e.g., Rivikin, 2001), unproven knowledge content (e.g., Szulanski, 1996), technological incompatibilities
(e.g., Weill & Vitale, 2002), knowledge-conversion difculties (e.g.,
Nonaka, 1994), and socio-political issues (e.g., Hayes & Walsham,
2001).
A review of prior studies reveals that these barriers can be
explained according to one of two opposing theories namely,
social capital theory and transaction cost economics which suggest that the forces behind the knowledge exchange phenomenon
may be simultaneously in harmony and at conict. This study further explains the two opposing theoretical perspectives.
Transaction risk, a component of transaction costs, is the
possibility that a trading partner will behave opportunistically
(Williamson, 1985), leading to uncertainty about the level and
division of benets accruing from increased knowledge exchange.
Among the sources of transaction risk frequently cited in the literature (e.g., transaction specic capital, loss of resource control,
and information asymmetries), loss of resource control is particularly relevant to inter-rm knowledge exchange. Loss of resource
control occurs if resources, transferred as part of the relationship,
cannot be returned or controlled during the relationship (Clemons
& Hitt, 2004). Information or know-how is an example of important
resources subject to loss of control. Once knowledge is transferred
and assimilated into the recipients knowledge base, it is difcult, if
not impossible, for the source rm to control access and the subsequent use of that knowledge. The recipient rm may deliberately
use knowledge for its own economic benets at the expense of
the source rm and the entire supply chain perhaps by sharing it
across competing supply channels. In order to manage this transaction risk, supply chain participants may not be willing to share
important knowledge with each other. For instance, the buyer may
consider it necessary to maintain a certain level of information
asymmetry with the supplier, especially regarding the downstream
supply chain data lest the supplier should use the downstream
data opportunistically at the expense of the supply chain performance (i.e., fear of disintermediation) (Bowersox et al., 2010). The
transaction risk perspective can also explain other challenges to
knowledge exchange arising from barriers such as lack of motivation and unwillingness to share important knowledge (Malhotra,
Gosain, & Omar, 2005).
In contrast, social capital theory asserts that networks of relationships constitute a valuable resource for the conduct of social
interactions. Social capital is dened as the sum of the actual
and potential resources embedded within, available through, and
derived from the network of relationships possessed by an individual or social unit (Nahapiet & Ghoshal, 1998, p. 243). The
social capital perspective offers a rationale for cooperative behavior such as knowledge exchange (e.g., Hult, Ketchen, Cavusgil, &
Calantone, 2006). The primary motivation behind the formation
of inter-organizational relationships is to gain access to valuable partner-held resources. Mutual need makes alliances for the
exchange of resources even more likely. For example, sharing
knowledge about ultimate market demand among cooperative supply chain participants is known to be effective for dealing with
the bullwhip effect,3 consequently improving the performance
of the entire supply chain (up/down stream). The bullwhip effect
is said to be a core problem in supply-chain management, because
it distorts demand information transmitted upstream in the supply chain (e.g., Lee, 1997). This supposedly happens when a supplier
forecasts demand patterns on the basis of the order history from its
immediate downstream partner (buyer), instead of on the basis of
sales information from ultimate customers. This line of research has
identied barriers to knowledge exchange between the source and
the recipient as the recipients lack of relative absorptive capacity,
obstacles to effective knowledge search, and unproven knowledge
content.
Table 1 summarizes the barriers to knowledge exchange predicated on social capital theory or transaction risk theory.
In summary, the existing literature on knowledge exchange
among supply chain partners suggests two counteracting forces
underlying knowledge exchange: (1) rms are willing to share
knowledge with supply-chain partners and trust, a social capital,
facilitates such an exchange; and (2) rms want to maintain some
degree of knowledge/information asymmetry to guard against
channel partners opportunistic behaviors.
3. Theoretical framework and research model
3.1. Theoretical framework
Efcient and effective transfer of data and information can
occur via market transactions or through hierarchical governance
structures (Williamson, 1985). However, inter-organizational phenomenon such as knowledge sharing in a supply channel often
requires reciprocal patterns of communication and exchange,
and may be better served by relational/network forms of organizations less guided by a formal structure of authority and
more driven by reciprocity, collaboration, etc. The mold of a
relational/network structure facilitating long-term interactions,
complementarity, reciprocity, collaboration, trust, etc. is used here
to portray exchange behavior in inter-organizational networks.
Social exchange theory (SET) serves as the theoretical umbrella
to model the phenomenon. SET here serves as the meta-theory
providing a robust theoretical base for binding the kernel theories
of social capital, TCE, and the economic theory of complementarity where the kernel theories enunciate the three constructs of
specic interest to the supply channel context, viz., social capital,
opportunism, and network complementarity. The domain of the
theoretical framework is Knowledge (Fig. 1).
Social exchange theory (Kelley & Thibaut, 1978) posits that
social behavior is the result of an exchange process. The purpose of
this exchange is to maximize benets and minimize costs. According to SET, actors in a network evaluate the payoff of a relationship
against the available alternatives; if there are better alternatives or
the costs outweigh the rewards, one or more members of the network will prefer to terminate or abandon that relationship (Blau,
1964). Costbenet analysis and comparison of alternative are the
building blocks of SET (Kelley & Thibaut, 1978).
While there are many reasons for rms to enter into relationships (e.g., joint production, product promotion, etc.), we restrict
3
The bullwhip effect is when the variance of orders may be larger than
that of sales and the distortion tends to increase as one moves upstream (Lee,
Padmanabhan, & Whang, 1997, p. 546).
37
our attention to the intellectual property domain knowledge

sharing in a supply channel. Thus, our research framework (Fig. 1)
models exchange behavior in the knowledge domain transpiring in
the context of inter-organizational networks informed by SET.
Pursuant to the SET conceptualization, payoff in an interorganizational relationship is essentially value generated less the
cost incurred in the relationship. At the outset, we posit that the
social capital of the inter-organizational relationship creates the
value to promote exchange behavior, while opportunism including the consideration of alternatives constitutes the cost capable of
retarding the exchange behavior.
Risk of opportunistic behavior is an inherent threat in any interorganizational relationship e.g., supply channel. To the extent a
dyadic relationship entails knowledge exchange between participating partners the very exchange process is vulnerable to this risk.
This is the case in point motivated by self-interest in any dyadic
exchange scenario the self-interest case. TCE (Williamson, 1985,
1991) tackles the issue along the lines of managing opportunism
using governance structures a cost component. Alternatively, the
very need to work together can spontaneously induce mutual trust
in the dyad in order to reduce the risk of opportunism simply
because trust can make knowledge exchange less costly (Zaheer,
McEvily, & Perrone, 1998) the risk reduction case.
While data and information exchange may ourish through
routine market transactions (Kim & Umanath, 2005), knowledge complementarity is almost always a necessary condition for
knowledge exchange (Hamel, Doz, & Prahalad, 1989). Knowledge
complementarity refers to the characteristic of the knowledge that
may determine its value as a tradable commodity. It is the effect
resulting from combining two distinct bodies of knowledge whose
agglomeration is super-additive i.e., the combined knowledge set
has more embedded knowledge than the simple additive values of
the parts. This is ratied by the economic theory of complementarity which shows that the mathematical relationship between
a system of complementary variables, and the returns and costs
are super-modular and sub-modular respectively (Milgrom et al.,
1991). Here, super-modularity means super-additive value synergies, while sub-modularity means sub-additive value synergies
(Tanriverdi & Venkatraman, 2005). Knowledge complementarity
often serves as the compelling reason for the dyad in a supply
channel to work together and exchange knowledge despite the
inherent threat of opportunistic behavior by either partner, simply
because the benet accrued by the supply channel partners collectively and/or individually outweighs the expected cost due to risk of
opportunism the risk tolerance case. In essence, where is the incentive for two parties to enter into a relationship at all to exchange
knowledge unless they possess complementing knowledge?
In short, our theoretical framework juxtaposes social capital
and opportunism as the principal opposing forces value and cost
respectively in the payoff structure enunciated in the SET in the
exchange scenario. Network complementarity is introduced as the
common denominator that promotes exchange behavior by accruing benets (contribution to the payoff) that makes it worthwhile
to tolerate the risk of opportunism a compensatory mechanism
even at low levels of social capital. As a consequence, we would
expect a collective effect of social capital and network complementarity enhancing exchange behavior, since they mitigate threat of
opportunism in different, possibly cumulative ways.
3.2. Research model
Our research model (Fig. 2) is predicated on the broader theoretical framework presented in Fig. 1. Here, we juxtapose impact
of organizational trust and risk of opportunism on knowledge
exchange in terms of the opposing viewpoints of social capital
theory and TCE respectively. Social capital theory views inter-
38
Table 1
Barriers to knowledge exchange.
Social capital related barriers
Transaction risk related barriers
1. Lack of the recipients absorptive and assimilation capacity (e.g., Lane &
Lubatkin, 1998)
2. Knowledge-conversion difculties (e.g., Nonaka, 1994)
3. Obstacles to effective knowledge search (e.g., Rivikin, 2001)
4. Unproven knowledge content (e.g., Szulanski, 1996), Technological
incompatibilities (e.g., Weill & Vitale, 2002)
5. Socio-political issues (e.g., Hayes & Walsham, 2001).
1. Unwillingness to share important knowledge (e.g., Nahapiet & Ghoshal,

1998)
2. Concerns about Knowledge Poaching (e.g., Clemons & Hitt, 2004)
3. The source rms lack of motivation (e.g., Gupta & Govindarajan, 2000)
4. The source rms unfavorable access to knowledge (e.g., Hsiao et al., 2003)
6. Loss of resource control (e.g., Williamson, 1985)
Fig. 1. Research framework based on social exchange theory.
organizational trust as a source of competitive advantage for supply

chains, whereas, from the TCE perspective, the intimacy necessary to realize the potential of the relationship exposes rms to
risk of opportunism (Madhok & Tallman, 1998). Likewise, resource
complementarity among the supply channel partners facilitates
Inter-Organizational
Trust
(T)
H1
H4
H3
Knowledge
Complementarities
(KC)
Knowledge
Exchange
(KE)
H5
cooperation for obtaining mutual benets; and to the extent

knowledge is an organizational resource, knowledge complementarity promotes the cooperative knowledge exchange behavior. The
simultaneous impact of inter-organizational trust and knowledge
complementarity on knowledge exchange is hypothesized as an
interaction effect. As a contrast, we also examine the collective
effect of risk of opportunism and knowledge complementarity on
knowledge exchange.
IT infrastructure as a research variable may be relevant for data
and information exchange (e.g., EDI). In a knowledge exchange
context, IT infrastructure often remains a part of the context (e.g.,
supply channel). The inclusion of IT infrastructure in our research
model is more for partialling out any residual effect due to its
presence (e.g., inadvertent presence of explicit knowledge in the
exchange). Therefore, our research model portrays IT infrastructure as a control variable rather than a hypothesized effect. The
individual hypothesis development follows.
H2
Risk of
Opportunism
(RO)
Control Variable
IT Infrastructure
Fig. 2. Research model.
3.2.1. Direct effects of social capital and the risk of opportunistic

behavior
(1) Organizational trust as an enabler of knowledge exchange
Social capital theorists have focused much attention on the
structural properties of relationships (Adler & Kwon, 2002), such
as tie strength at the dyadic level. While strong ties are important conditions of knowledge exchange, Levin and Cross (2004)
assert that the relational dimension of social capital, i.e., organizational trust, mediates the relationship between tie strength and
knowledge exchange. Tsai and Ghoshal (1998) also nd that at the
department level the structural dimension of social capital stimulates trust and perceived trustworthiness, which, in turn, allow
departments to exchange more resources (including knowledge).
As described above, the previous literature suggests that organizational trust mediates between knowledge exchange and other
dimensions of social capital (e.g., relationship structure). Therefore,
we have chosen to focus on the organizational trust dimension of
social capital.
Moreover, the trust literature (see Mayer, Davis, & Schoorman,
1995 for reviews) provides considerable evidence that trusting
relationships lead to greater knowledge exchange. Morgan and
Hunt (1994) dene organizational trust as conviction about the certainty and honesty of a trading partner, while Zaheer et al. (1998)
dene trust as the collective trust that every member of an organization puts into another trading partner. If supply chain partners
trust each other, they are more likely to share certain types of
knowledge (Modi & Mabert, 2007). For example, tacit and abstract
knowledge are susceptible to exploitation by partners (Dyer &
Nobeoka, 2000). Consequently, an organization shares tacit knowledge only when it really trusts that its partners will use it for the
benet of the partnership.
For the receiving organization, trust makes knowledge transfer less costly (Zaheer et al., 1998) by reducing conicts and the
need to verify information. As a consequence, knowledge-seeking
organizations in a trusting relationship are readily willing to absorb
partners knowledge (Mayer et al., 1995). Furthermore, knowledge
seekers are vulnerable to the benevolence of the knowledge source
(Lee, 1997) and mutual trust tends to facilitate such benevolence.
Knowledge seekers who trust a sources competence to make suggestions and inuence their thinking are more likely to heed and
take action on that knowledge. Trusting a knowledge source to be
benevolent and competent should increase the likelihood that the
knowledge receiver will benet from the interaction.
In summary, in high-trust relationships, organizations are apt
to be more open to the potential for value creation through the
exchange and combination of resources. Social capital in the form
of high trust enables supply-chain participants to engage in more
social exchange and to take action that would usually be considered
risky in such exchanges (Putnam, 1993). From these facts we derive
the following hypothesis:
Hypothesis 1. Inter-organizational trust positively inuences
knowledge exchange behavior among supply-channel partners.
(2) Risk of opportunistic behavior as an inhibitor of knowledge
exchange
Inter-organizational relationships are inherently temporal,
unstable, and disfavored (Williamson, 1991). The stability of
inter-organizational relationships is affected by such factors as
opportunism, complexity in monitoring behaviors, and difculty
in coordination among partners (Park & Ungson, 2001). These
characteristics are relevant to knowledge exchange between
supply-chain partners and affect the success of the cooperative
relationship. Depending on the participants private incentives,
inter-organizational relationships may generate either cooperative or competitive behaviors between partners (Gulati, 1995).
Cooperative inter-organizational relationships may fail due to
opportunistic hazards that arise as each rm pursues its own
individual interests rather than collective interests. Opportunistic
behavior may allow for immediate gratication of short-term goals
of a partner without the need to face the uncertainty of long-term
returns. The vulnerability due to a partners self-interested behav-
39
ior is exacerbated in situations in which the relevant resources and

behavior are not readily transparent (Park & Ungson, 2001).
In TCE, opportunism or opportunistic behavior means selfinterest seeking with guile, involving some kind of deliberate deceit
and the absence of moral restraint (Williamson, 1985). It could
involve deliberately withholding or distorting information, performance shirking, or failing to fulll promises and obligations.
It occurs in business transactions especially where performance
measures are ambiguous, and where goals of trading partners
are incongruent (Ouchi, 1980). Because the risk of opportunistic
behavior is ever present, rms must have recourse to safeguards.
Mechanisms such as optimal contract structures (e.g., Williamson,
1991), the alignment of incentives (e.g., Dyer & Singh, 1998), and
governance structures (e.g., Williamson, 1985) may decrease the
risk of opportunism. However, a relationship dominated by protection against opportunism makes rms reluctant to form unilateral
and voluntary commitments outside the terms of the contract
and therefore tend to perceive a greater need to take costly and
elaborate safeguards (Madhok & Tallman, 1998). This tendency
diminishes the level of value created and realized through the relationship.
In the automobile industry, for example, an automakers strategic knowledge in specic domains may be diffused to competitors
through shared suppliers. According to Takeishi (2002), some suppliers intentionally transfer technological knowledge learned from
one automaker to another, and some automakers try to learn new
technology and effective practices from others through common
suppliers. As a result, the strategic knowledge of an automaker
becomes public knowledge because of its suppliers opportunistic
behavior. Concerns about this kind of transaction risk may inhibit
supply-chain participants from exchanging knowledge. Hence, the
following hypothesis:
Hypothesis 2. The risk of opportunistic behavior does not facilitate knowledge exchange behavior among supply channel partners.
3.2.2. Contingency effect of knowledge complementarity
When competing theories are available, any behavior pattern
can always be substantiated one way or the other. Does this require
acceptance of one theory and refutation of the other? Only repeated
empirical trials with regular and reliable results can support such
an inference. However, it is likely that two different patterns predicted by two competing theories may both be detected under
different circumstances. In other words, no theory is ever proven
or rejected, and repeated failure to falsify a theory strengthens a
theory. Evidence of falsication should be carefully evaluated to
seek out violations of any assumption(s) behind the theory in the
study and/or contingencies that may explain the effect. This spirit
of enquiry guides the following contingency analysis.
Although a trusting relationship has the potential to positively
inuence knowledge exchange, as predicted by Hypothesis 1, the
mere presence of a conducive relationship need not necessarily
promote knowledge exchange. Likewise, even when rms discern
transaction risk in knowledge exchange, they may be willing to
exchange knowledge if the expected benets from the exchange
signicantly exceed the expected costs of transaction risk. The
effect of one or the other of the two conicting forces may govern
knowledge exchange contingent on other factors. We posit that
knowledge complementarity is such a contingent factor. Supply
chains are often characterized by knowledge complementarity and
our theoretical framework (Fig. 1) proposes that knowledge complementarity in a dyad promotes knowledge exchange behavior.
When knowledge is exchanged between supply chain partners, the
knowledge must be useful and effectively integrated into the supply chain. We posit that effective integration requires that at least
some knowledge possessed by the two rms be complementary.
40
According to the strategic management literature, complementarities represent an enhancement of resource value and arise when
a resource produces greater returns in the presence of another
resource than by itself (e.g., Chung, Singh, & Lee, 2000; Milgrom
et al., 1991). Applying the denition of complementarities to
knowledge complementarity, it refers to knowledge resources that
collectively generate greater rents than the sum of those obtained
from the individual knowledge of each partner (Dyer & Singh,
1998). Hamel et al. (1989) suggest that mutual gains are possible
if partners individual strengths can complement each other since
each partner in an alliance should be able to access the complementary capabilities of its partner. For instance, in the context of an
inter-organizational relationship in the EMS industry, intermediate
producers have expert manufacturing knowledge and architectural knowledge (how to coordinate various components for a
product). Meanwhile, suppliers have component-specic knowledge, that is, knowledge about particular components, including
technology, raw materials, and manufacturing process (Takeishi,
2002). Firms participating in a supply chain collectively develop
situation-specic knowledge by creating new combinations of
complementary knowledge. For example, intermediate producers
may devise new ways of manufacturing components by considering the strengths and weaknesses of raw materials used by
suppliers. Productivity gains in the supply chain (e.g., time to
market, responsiveness to changing environments, overall product
quality) are possible when participating rms adjust their activities
according to partnership-specic knowledge.
Since supply chain partners can create more synergistic knowledge by combining their complementary knowledge, the likelihood
of voluntary knowledge exchange will increase. Malhotra et al.
(2005) nd that the value of a partners knowledge affects knowledge exchange in supply chain relationships. Other studies (e.g.,
Gupta & Govindarajan, 2000) likewise assert that the perceived
value of a partners knowledge is an important antecedent to
inter-rm knowledge exchange. Hence, we propose the following
hypothesis:
Hypothesis 3. Knowledge complementarity positively inuences
knowledge exchange behavior among supply channel partners.
Knowledge complementarity refers to knowledge stocks that
have the capacity to collectively generate synergistic value resulting from the interactions among complementary knowledge
components (Kim, Shin, & Lee, 2010). The synergistic value is feasible only when both the partners complementary resources are
present and accessible. Hamel et al. (1989) assert that mutual gains
are possible if partners can complement (i.e., compensate for) each
others weaknesses since each partner in an alliance can access the
complementary capabilities of its partner. Thus, the potential gains
from knowledge complementarity will be realized when the accessibility of partners knowledge is allowed through the cooperative
relationship engendered by mutual trust. Since high knowledge
complementarity between supply-chain partners offers the potential for signicant mutual gains through knowledge exchange,
mutual trust which fosters exchange presents a winwin situation when knowledge complementarity is high. On the other hand,
opportunistic behavior by either party, when knowledge complementarity is high, is detrimental to both parties since the partners
run the risk of jeopardizing a difcult-to-replace relationship (a
looseloose situation) which often outweighs possible short-term
gains of opportunism. Thus, under high knowledge complementarity partners self-interests guide them toward mutual trust
enjoined by the social capital perspective rather than opportunistic
behavior suggested by the transaction risk perspective. In addition, opportunities exist for high-trusting relationships to integrate
complementary knowledge creatively so as to increase value for the
supply chain partners. On the contrary, when the knowledge being
exchanged is not complementary and thus not expected to create synergistic effects, supply chain partners do not see any value
of knowledge exchange, even in relationships with a high level of
trust. Therefore, we hypothesize:
Hypothesis 4. The interaction between knowledge complementarity and inter-organizational trust inuences knowledge
exchange behavior in the supply channel.
Hypothesis 4a. When knowledge complementarity in the supply channel is high, increase in inter-organizational trust positively
inuences knowledge exchange behavior among supply channel
partners.
Hypothesis 4b. When knowledge complementarity in the supply channel is low, increase in inter-organizational trust does not
inuence knowledge exchange behavior among supply channel
partners.
When the knowledge possessed by supply chain partners is not
quite complementary, the collective good of knowledge exchange
becomes insignicant, no matter the level of trust. The only possible motivation for knowledge exchange in this case is to selectively
aggrandize the partners knowledge for ones own good rather
than the collective good of the supply chain. Consequently, when
complementarity in the supply channel is low and therefore not
expected to create synergistic effects, supply chain partners do not
see any value in knowledge exchange, and concerns about transaction risk dominate over the social capital perspective. The effect of
concerns about transaction risk on knowledge exchange intensies,
as the knowledge to be exchanged becomes less complementary.
On the contrary, when knowledge complementarity is high,
opportunistic behavior by either party is detrimental to both parties
since the partners run the risk of jeopardizing a difcult-to-replace
relationship (a looseloose situation), which often outweighs
the possible short-term gains of opportunism. Basis resourcebased view (RBV) and TCE, Conner and Prahalad (1996) assert
that strategic alliances provide the more valuable, opportunismindependent knowledge (p. 489). The opportunism-independent
knowledge encompasses both knowledge substitution and exibility effects. When knowledge complementarity is high, the benet
of opportunism-independent knowledge that an alliance provides
through knowledge exchange ought to outweigh short-term gains
of opportunism. In other words, gains from opportunistic behavior
may be too trivial to outweigh the loss of valuable, opportunismindependent knowledge. This supports the following hypothesis:
Hypothesis 5. The interaction between knowledge complementarity and the risk of opportunism inuences knowledge exchange
behavior in the supply channel.
Hypothesis 5a. When knowledge complementarity among supply channel partners is low, increase in the risk of opportunistic
behavior negatively inuences knowledge exchange behavior
among supply channel partners.
Hypothesis 5b. When knowledge complementarity among supply chain partners is high, increase in the risk of opportunistic
behavior does not inuence knowledge exchange behavior among
supply channel partners.
3.2.3. Control variable: inter-organizational IT infrastructure
When organizations are connected through electronic networks, inter-organizational IT infrastructure can facilitate knowledge exchange. Inter-organizational IT infrastructure encompasses
the underlying inter-organizational system resources that can be
harnessed to exploit resources held by supply chain partners. In
particular, it refers to IT resources such as database, software, and
networks for an inter-organizational relationship (Weill & Vitale,
2002). Compatible infrastructure channels help reduce the costs

of knowledge exchange and leverage appropriate resources during
the knowledge exchange process (Colombo & Mosconi, 1995), leading to more condence and receptive attitudes toward knowledge
exchange.
Meanwhile, a shortage of system resources has been found to
inhibit the assimilation of incoming knowledge. Zhu (2004) asserts
that rms with poor IT infrastructure (e.g., stand-alone, proprietary
systems) often have difculties in connecting to their customers,
suppliers, and business partners, causing delays in collecting and
exchanging market information among supply chain participants.
Electronic connectivity creates the potential for developing a
response-based business model (in contrast to an anticipatory business model),4 which seeks to reduce forecast reliance through joint
planning and the rapid exchange of knowledge between supply
chain participants. When all members of the supply chain synchronize their operations, they can reduce overall inventory and
eliminate costly redundancies. Thus, the presence of an appropriate
inter-organizational IT infrastructure inuences supply chain performance primarily by facilitating knowledge exchange between
supply chain partners.
The research model is presented in Fig. 2.
4. Method
4.1. Sample
While this study involves the dyadic exchange relationships of
Electronic Manufacturing Services (EMS) companies and their suppliers, we examine the phenomenon from the buyers perspective.
The data required for this study were collected from managers and
buyers responsible for supplier relationships in intermediate producers in the EMS industry. The sample frame consisted of the 550
companies that participated in a national electronics show. Among
these rms, we asked 400 EMS manufacturers if they were interested in participating in our research. If the rms agreed, they were
asked to provide contact information about the rms purchasing
managers so that we could collect data about the research variables.
The purchasing managers were asked to respond to the instrument
in the context of an ongoing relationship through which an important component for their production process was being sourced. For
the questions about which the purchasing managers did not have
enough knowledge, they were encouraged to contact appropriate
experts inside the rm such as manufacturing, R&D, and information technology. Two follow-up emails were sent ve and ten days
after the initial contact. Participants emailed completed questionnaires to the researchers. Eighty-ve responses (21.3% response
rate) were received within 14 days. Among those, three were eliminated because they were incomplete, resulting in a nal sample
of 82 EMS rms. With the exception of a few large corporations,
most rms were small to medium. The annual sales of the sample
rms for the year 2007 were as follows: 76.8% made less than U$10
million, 19.5% made between U$10 million and U$100 million, and
3.7% made over U$100 million.
To evaluate any systematic differences for non-responses,
ANOVAs were performed on all independent variables between
early responses and late responses, i.e., after the follow-up emails.
No statistically signicant differences occurred between the two
groups at the 0.05 level of signicance.
4
In the response-based business model, the sequence of events is initiated by
a sale followed by material purchase, custom manufacturing, and direct customer
delivery. By contrast, the typical stages of the anticipatory business model include
forecasting, purchasing materials, manufacturing, lling warehouses, selling, and
then delivering goods.
41
4.2. Measures
We adapted most of the survey items (see Table 2) from preexisting scales in the literature. Main adaptations were made in the
wording of the measurement items in order to reect the supply
chain research context. Though instruments to measure the key
constructs in our hypotheses are available, a few measures require
either modication or development.
Knowledge exchange is the process through which one supply
chain member is affected by the experience of another (Argote &
Ingram, 2000). For this construct, we measure the extent to which
the supply chain partners exchange knowledge in engineering,
production, raw materials, and new product development. These
measures were constructed by modifying instruments developed
by Kotabe, Martin, and Domoto (2003) and Pham (2006).
Inter-organizational trust was measured on the basis of two
dimensions, proposed by Bensaou and Venkatraman (1995): (1) the
degree of mutual trust between the two rms; and (2) the degree
of comfort in sharing sensitive information with the supplier. For
opportunistic behavior, respondents were asked to describe the
potential of their partners behaving opportunistically. Opportunistic behavior was dened to include distorting information, failing
to fulll promises or obligations, appropriation of the partner rms
technology, and delivering substandard products (Parkhe, 1993).
Knowledge complementarity refers to the extent to which the
knowledge stocks of supply chain partners collectively generate
greater rents than the sum of those obtained from the individual knowledge stock of each partner. In an upstream supply chain,
buyersupplier relationships involve ongoing mutual adjustment
between the buyers and the suppliers design and production operations (Kotabe et al., 2003). Takeishi (2002) asserts that buyers in
general have expert knowledge in manufacturing such as a higher
level of architectural knowledge (how to coordinate various components for a product), while suppliers have component-specic
knowledge. Specically, the buyers knowledge comprises three
different areas production, product design, and component relationships in its products. The suppliers knowledge also covers
three domains, namely, raw material characteristics, the technical
strengths of its products, and technical constraints of its products.
The authors developed an instrument of nine items to measure
knowledge complementarity between the three dimensions of
buyers manufacturing knowledge and the three dimensions of suppliers component knowledge.
Interorganizational IT infrastructure refers to shared technology
and technology services across supply chain partners. Following the
work of Weill and Vitale (2002), we adapted six items: hardware
compatibility, data consistency, common application interface,
network connectivity, data security, and the interpretability of electronically transferred data.
4.3. Survey administration

Preliminary testing of the research instrument involved structured interviews. Pretests of the instrument were performed in two
companies, and three focus group interviews were conducted with
respondents to ensure that the target informants understood the
researchers wording. Multiple-structured interviews were conducted with the managers of purchasing divisions to test the face
validity of the instrument. The respondents were asked to indicate
their responses to questions on a seven-point scale with bipolar
adjectives of the form, Not at all Very much so. On the basis of
responses to these interviews, a few questions were rephrased to
better reect industry-specic situations and to improve clarity.
The two companies that participated in the pretests of the research
instruments were not a part of the nal sample.
42
Table 2
Operationalization of the constructs.
Construct
Assessment
References
Knowledge exchange
The extent to which an organization exchanges knowledge

with its supply chain partners
Degree of mutual trust between the two rms and degree of
comfort in sharing sensitive information with the supplier
The potential for the partners behaving opportunistically
The extent to which knowledge stocks of supply chain
partners collectively generate greater rents than the sum of
those obtained from the individual knowledge of each partner
Shared technology and technology services across the supply
chain partners
Pham (2006) and Kotabe et al. (2003)
Inter-organizational trust
Risk of opportunistic behavior
Knowledge complementarity
Inter-organizational IT Infrastructure
5. Results
5.1. Measurement properties of constructs
Since we made minor wording changes to the original questions
to customize the instrument to a supply chain setting, principal
component analysis was performed on the data to ascertain the
integrity of each dimensionality. Table 3 provides standardized
parameter estimates (factor loadings) of the items for the underlying dimensions. We used a conservative cut-off value of .60 for the
factor loadings, in contrast to the often cited rule of thumb for the
cut off value for factor loadings, which is .50 (Nunnally & Bernstein,
1994).
Five factors with eigen-values greater than 1, which accounted
for 70.63% of the variance in the data set, were extracted. All items
were loaded together on the intended factors. One item (KE1) was
discarded from subsequent analyses since it was loaded on two
factors and its loading was lower than the cut-off value of 0.6.
The pattern of observed loadings indicates that the multi-item
scales measure independent constructs, thereby further supporting the unidimensionality and discriminant validity of the scales.
Each multi-item measure was obtained by computing the average
score provided by the respondent across the relevant items. We
assessed multicollinearity among the variables by using variance
ination factor (VIF) values from the SPSS regression module. The
results show that the VIF scores for constructs were well below the
threshold of 10, indicating that multicollinearity was not a problem in this study. Descriptive statistics (e.g., the number of scale
items in each measure, the mean, the standard deviation, the range
of values, and reliability coefcients) and the simple correlations
among the research variables appear in Table 4.
5.2. Hypotheses testing
A multivariate general linear model using SPSS 15.0 was conducted to assess the hypotheses. If the theoretical interpretation
suggests that knowledge exchange is most likely when two factors,
such as trust and high knowledge complementarity, are present
(or, knowledge exchange is least likely when both the risk of opportunism and low knowledge complementarity are present), then the
functional form of the interaction is multiplicative (Blalock, 1965).
Since a product term is a legitimate way to express an interaction
in the multiple regression procedure, we viewed our problem as a
multiple regression model, as presented in Table 5, using Type 3
analysis.5
The research hypotheses were tested by examining the size and
signicance of the model coefcients. Table 5 shows the unstandardized coefcients and model statistics for the analyses. While
5
Type 3 analysis computes the sum of squares for each effect after partialling out
the effects due to all other variables in the regression model.
Bensaou and Venkatraman (1995)

Parkhe (1993)
Developed by the authors
Weill & Vitale (2002)
standardized coefcients (beta coefcients) provide an estimate

of the effect of a variable relative to others in the model, such an
estimate is not accurate for interaction terms and is therefore not
interpretable (Frazier, Tix, & Barron, 2004). Consequently, we have
used unstandardized coefcients to interpret the results.
The results show that inter-organizational trust signicantly
inuences knowledge exchange between supply chain partners,
thus supporting H1 (t = 1.961, p = 0.054). Knowledge complementarity also has a signicant direct effect on knowledge
exchange (H3, t = 2.647, p = 0.010). Further, the interaction between
knowledge complementarity and inter-organizational trust (H4,
t = 2.914, p = 0.031) turns out to be signicant. Also, the risk
of opportunism does not facilitate knowledge exchange behavior between supply chain partners (H2, t = 0.519, p = 0.605). The
interaction between the risk of opportunism and knowledge complementarity (H5, t = 0.461, p = 0.646) is not signicant either.
Inter-organizational IT infrastructure does not show any signicant
associations with knowledge exchange.
In order to gain deeper insight into the contingency hypotheses (interaction effects), H4 and H5, sub-sample analyses were
performed.6 The sub-hypotheses of H4 and H5 essentially indicate
that when knowledge complementarity is high, the social capital perspective will prevail over transaction risk concerns. When
knowledge complementarity is low, we expect the opposite. To test
these drill-down contingency hypotheses, we divided our sample
into two as follows. Before the sample split, in order to check the
normality assumption of KC, the ShapiroWilk test was performed
to nd that the data came from a normally distributed population.
Then, sample rms within one standard deviation (1.026) around
the mean value (4.757) of knowledge complementarity (KC) were
dropped because they are neutral in terms of KC. Firms with KC
values higher than one half standard deviation (0.513) from the
mean were classied as the high KC group (24 rms, mean = 5.92,
SD = 0.603), whereas rms with KC values lower than one half standard deviation from the mean were classied as the low KC group
(25 rms, mean = 3.53, SD = 0.528). One way ANOVA test reveals
that these two groups were signicantly different in terms of KC
(t = 12.947, p = 0.000). Table 6 presents the results of the split sample
analysis.
The results show that for the group with low knowledge
complementarity, the risk of opportunism shows a signicant negative relationship with knowledge exchange, thus supporting H5a
(t = 2.529, p = 0.020), whereas the impact of trust on knowledge
exchange (H4b, t = 0.410 p = 0.686) is, as expected, not signicant.
6
Given that the hypothesized interaction (H5), (knowledge complementarity x
risk of opportunism), is not statistically signicant in the main model (see Table 5),
one may question the appropriateness of sub-sample analysis in evaluating this
interaction. However, since the two sub-sample analyses are necessary to evaluate the other signicant interaction between knowledge complementarity and
inter-organizational trust, we carried out sub-sample analyses. Nevertheless, interpretations of H5a and H5b in the sub-sample analyses are tentative.
43
Table 3
Factor analysis results.
Variables
Factors
1
Opportunism (Oppor)
Oppor1
Oppor2
Oppor3
Oppor4
Trust1
Trust2
IT infrastructure (Infra)
Infra1
Infra2
Infra3
Infra4
Infra5
Infra6
Knowledge complementarity (KC)
KC1
KC2
KC3
KC4
KC5
KC6
KC7
KC8
KC9
Knowledge exchange (KE)
KE1
KE2
KE3
KE4
KE5
KE6
KE7
KE8
Variance explained (%)
.174
.260
.070
.085
.139
.188
.111
.292
.123
.000
.109
.070
.788
.700
.828
.748
.043
.100
.043
.129
.030
.062
.045
.086
.117
.005
.067
.013
.838
.849
.111
.178
.019
.101
.226
.132
.067
.029
.048
.046
.122
.067
.838
.853
.837
.677
.709
.730
.129
.078
.005
.105
.059
.165
.029
.090
.133
.003
.227
.111
.822
.869
.872
.883
.863
.851
.827
.871
.882
.045
.180
.087
.186
.303
.270
.250
.167
.141
.104
.124
.080
.058
.099
.100
.124
.135
.105
.058
.069
.037
.044
.079
.022
.174
.141
.086
.246
.160
.175
.160
.102
.024
.212
.150
.096
.421
.309
.155
.186
.009
.115
.301
.288
32.846
.528
.773
.805
.837
.671
.731
.651
.665
12.191
.051
.050
.027
.013
.241
.330
.063
.072
10.707
.016
.045
.159
.045
.054
.041
.180
.019
8.758
.034
.039
.061
.099
.079
.095
.002
.131
6.129
Extraction method: principal components analysis.

Rotation method: Varimax with Kaiser normalization.
Table 4
Descriptive statistics of the research variables.
Opportunism (Oppor)
IT Infrastructure (Infra)
Inter-organizational trust (Trust)
Knowledge Complementarity (KC)
Knowledge Exchange (KE)
No. of items
Mean (SD)
Min
Max
Cronbachs Alpha
Oppor
Infra
Trust
KC
4
6
2
9
8
3.234 (1.136)
4.130 (1.256)
4.955 (1.228)
4.757 (1.026)
4.514 (0.949)
1.00
1.00
1.50
2.33
2.13
6.25
6.83
7.00
7.00
6.50
0.775
0.881
0.707
0.966
0.892
1
0.013
0.052
0.036
0.085
1
0.086
0.271**
0.178
1
0.015
0.095
1
0.485***
N = 82.
**
p < 0.05
***
p < 0.01.
Likewise, for the group with high knowledge complementarity, the impact of opportunism (H5b, t = 0.103, p = 0.919) is, as
hypothesized, not signicant. While inter-organizational trust in
the context of high knowledge complementarity signicantly inu-
ences knowledge exchange, the direction of the relationship is

diametrically opposite to what is hypothesized, as reected in the
signicant negative coefcient of 0.401 (H4a, t = 2.702, p = 0.014)
an unexpected result that is further scrutinized in Section 6.1. A
Table 5
Results of regression analyses (the dependent variable is knowledge exchange).
Variables
Unstandardized coefcient
Opportunism (Oppor)
Knowledge Complementarity (KC)
Infrastructure (Infra)
Oppor * KC
Trust * KC
R2
Adj. R2
F81,6
0.275
0.783
1.498
0.009
0.050
0.172
0.519
1.961
2.647
0.109
0.461
2.914
0.294
0.237
5.195 (p = 0.000)
0.605
0.054
0.010
0.913
0.646
0.031
N = 82.
44
Table 6
Results of regression analyses (the dependent variable is knowledge exchange).
Model 1: high complementary group+
Model 2: low complementary group++
Variables
Standardized coefcient
Standardized coefcient
Opportunism (Oppor)
Trust
IT Infrastructure (Infra)
R2
Adj. R2
F
0.020
0.401
0.164
0.368
0.274
3.890 (p = 0.024)
0.103
2.702
1.072
0.919
0.014
0.296
0.489
0.079
0.101
0.289
0.188
2.850 (p = 0.062)
2.529
0.410
0.538
0.020
0.686
0.596
+
++
N = 24
N = 25.
summary of the ndings for the hypothesized effects appears in

Table 7.
Finally, we examined the potential for our results to be
explained by common method variance. Two types of statistical
analyses were conducted to assess the threat of common methods bias: (a) Harmans one-factor test (Podsakoff, MacKenzie, Lee,
& Podsakoff, 2003), and (b) Lindell and Whitneys (2001) marker
variable test. First, in Harmans one factor test, the emergence of
a single factor that accounts for a large proportion of the variance in factor analysis suggests a common methods bias (Podsakoff
et al., 2003). No such single factor emerged and the ve factors
in Table 3 accounted for 32.8%, 12.2%, 10.7%, 8.7%, and 6.1% of
the variance, respectively for the total 70.6% variance. Second, the
LindellWhitney (2001) marker variable test uses a theoretically
unrelated (marker) variable to adjust the correlations among the
models principal constructs. Because a marker variable does not
have a theoretically expected relationship with the studys principal constructs, a high correlation would indicate common methods
bias (Malhotra et al., 2005). For robustness, the test was performed
with one otherwise unused variable for which there exists little
theoretical basis for a relationship (supplier asset specicity). The
average correlation of the studys principal constructs with supplier
asset specicity (r = 0.101, t = 0.397) was low and not signicant,
providing no evidence of common methods bias.
6. Discussion and conclusions
6.1. Discussion
Our study focuses on the crucial yet long overlooked question
of why partners sometimes hesitate to share knowledge despite the
apparent benets from knowledge sharing. This led us to a concurrent
assessment of opposing viewpoints one based on the social capital theory and the other informed by transaction risk perspective.
Since no theory is ever proven or refuted, exploration of contingencies under which each theory is relevant is a valuable theoretical
contribution. Our examination of the literature and related theories (e.g., Chung et al., 2000; Hamel et al., 1989; Kim et al., 2010;
Milgrom et al., 1991; Tanriverdi & Venkatraman, 2005) suggests
that knowledge complementarity is an important factor by which
to understand the challenges of knowledge exchange in an interorganizational relationship.
Ratication of H1 (trust promotes knowledge exchange behavior) and H2 (opportunism impedes knowledge exchange behavior)
in a supply channel context essentially contributes to the reinforcement of both the social capital theory and the TCE perspective
respectively. That is, trusting partners in a supply chain are predisposed to greater openness to the potential for value creation
through the exchange and combination of knowledge resources,
while, in the presence of inter-organizational trust, risk of opportunism is irrelevant to knowledge exchange behavior.
An implication of greater signicance though is the ratication
or refutation of any contingency that claries the conditions under
which the opposing theories become relevant. Since the role of
knowledge complementarity in an inter-organizational context has
been theorized (Milgrom et al., 1991; Tanriverdi & Venkatraman,
2005) and empirically tested (Chung et al., 2000; Hamel et al., 1989;
Kim et al., 2010), examination of knowledge complementarity as a
possible contingency capable of explaining the opposing conceptualizations of social capital theory and TCE perspective is in itself
a contribution to academic research. Ratication of H3 (knowledge
complementarity promotes knowledge exchange behavior) bolsters our thesis that mutual gains are possible if partners individual
strengths can complement each other. Further, it reinforces prior
research ndings in yet another context i.e., a supply channel.
Next, our contingency analysis reveals two ndings hitherto
not reported by prior research. First, notwithstanding our broad
nding that opportunism impedes knowledge exchange behavior
Table 7
Results of hypotheses testing.
Hypothesis
Support
Yes
H1
H2
H3
H4
H4a
H4b
H5
H5a
H5b
Inter-organizational trust Knowledge exchange

Risk of opportunism does not facilitate knowledge
exchange
Knowledge complementarity knowledge exchange
Interaction between knowledge complementarity and
inter-organizational trust knowledge exchange
Under high KC, inter-organizational trust Knowledge
exchange
Under low KC, inter-organizational trust has no inuence
on knowledge exchange
Interaction between knowledge complementarity and risk
of opportunism knowledge exchange
Under low KC, risk of opportunism knowledge exchange
Under high KC, risk of opportunism has no inuence on
knowledge exchange
p-Value
No
*
*
0.054
0.605
*
*
0.010
0.031
*
0.686
*
*
*
0.014 (opposite effect)
0.646
0.020
0.919
(H1), when knowledge complementarity is low, a stronger effect

of opportunism on knowledge exchange behavior manifests a
statistically signicant negative coefcient, implying reduction in
knowledge exchange behavior as opposed to the irrelevance of
opportunism to knowledge exchange behavior when knowledge
complementarity is high (statistically insignicant positive coefcient).
The contingency effect of knowledge complementarity on interorganizational trust (social capital) is thought provoking. When
knowledge complementarity among supply chain partners is high,
our result shows that the social capital perspective does indeed
best explain rms behavior. However, this effect is contrary to
the predicted positive direction (H4a). In other words, in situations of high knowledge complementarity, our data indicate that
inter-organizational trust retards knowledge exchange. This counterintuitive nding challenges the conventional wisdom that a
trusting relationship among supply chain partners is a precondition for knowledge exchange and opens the doors for investigating
second order contingencies under which, in a situation of high
knowledge complementarity, inter-organizational trust may be
irrelevant to knowledge exchange behavior or even retard knowledge exchange behavior. The rst step, however, in the post hoc
analysis of this unexpected nding is to examine carefully the
assumptions and controls underlying this study. Such an examination follows below.
Our rst suspicion was that while the measure (instrument)
for knowledge complementarity strictly follows the denition
based on the resource-based view (Dyer & Singh, 1998), extraneous factors may have inuenced the measurement (e.g., subjects
responses). For instance, Kumar, Scheer, and Steenkamp (1995)
propose that interdependence or mutual dependence in a dyadic
relationship can enhance trust and thereby performance, and
dependence asymmetry or the imbalance between the partners
dependence as a dysfunctional force that can destabilize trusting
relationships by creating conicts. Our study has not explicitly controlled for knowledge interdependence/dependence asymmetry,
and it is conceivable that our subjects response to the measure of knowledge complementarity may have been inuenced
by thoughts about knowledge interdependence/dependence asymmetry. If knowledge interdependence among supply chain partners
is high, the stakes are high, and inter-organizational trust alone
may be insufcient to promote knowledge exchange. Perhaps when
trust is bolstered by behaviors like mutual commitment among
supply chain partners it may promote knowledge exchange. On the
contrary, excessive trust with insufcient commitment may also
trigger the limiting of knowledge exchange as a precaution. This
condition may be exacerbated if dependence asymmetry among
supply chain partners plagues knowledge complementarity, that
is, if one party is more dependent on another party in the supply chain for complementary knowledge. Accordingly, given that
knowledge complementarity promotes knowledge exchange (H3)
and inter-organizational trust promotes knowledge exchange (H1),
the only way the interaction among two partners can negatively
impact knowledge exchange is when such a negative dimension
(perhaps the knowledge interdependence/dependence asymmetry component) exists and manifests in the interaction term. In
the Type 3 analysis reported in Tables 5 and 6, the interaction
term represents only the effect not captured by the independent
effects of the two variables. In other words, in hindsight, we are
inclined to conclude that after the positive effects of knowledge
complementarity and inter-organizational trust are partialled out
through the main effects (H1 and H3), the negative effect triggered
by perhaps knowledge interdependence/dependence asymmetry
and trust will manifest in the interaction effect (H4a). To verify
this inference, we examined a restricted regression model without the main effect terms of knowledge complementarity and
45
inter-organizational trust [Full model: KE = f (Trust, KC, Trust * KC);

Restricted model: KE = f (Trust*KC)] and, as expected, the interaction term of these two variables yielded a signicant positive
effect (t = 1.75, p = .043)that is, the relatively mild negative component of the interaction is obscured by the dominant positive
effect resulting from the additive independent effects of knowledge complementarity and inter-organizational trust. Clearly,
these post hoc explanations are speculative and can be conrmed
or refuted only by empirical testing a springboard for future
research.
An alternative explanation of this counterintuitive nding is
predicated on challenging the conventional wisdom that interorganizational trust is always conducive to knowledge exchangeeven in an environment of high knowledge complementarity. For
instance, the moderating effect captured by the interaction term
(knowledge complementarity inter-organizational trust) is susceptible to misperception as a complementing effect (H4a) since
that is the popular stance in prior work (Siggelkow, 2002). Two variables are said to interact as complements when the marginal benet
of each variable increases in the level of the other variable. However, there is another type of moderation, i.e., substitution. When
two variables interact as substitutes, the marginal benet of each
variable decreases in the level of the other variable (Siggelkow,
2002). Given a positive baseline effect of organizational trust as
well as knowledge complementarity on knowledge exchange (H1
and H3), a substitution effect where the marginal benet of trust
decreases when knowledge complementarity is high ought to entail
an insignicant positive or a signicant negative interaction (T * KC)
effect as seen in H4a. In other words, our empirical nding is
amenable to an interpretation as a substitution effect since the
main effects of both inter-organizational trust (H1) and knowledge complementarity (H3) are signicantly positive, whereas their
interaction is signicantly negative. The theoretical rationale for
this position again relies on the role of knowledge interdependence and dependence asymmetry in this mix (Palmatier, Dant,
& Grewal, 2007). First, knowledge complementarity is possible
without any knowledge interdependence. However, knowledge
interdependence is impossible without the existence of complementing knowledge between the supply channel partners. In other
words, knowledge interdependence is essentially a sub-construct
of the multi-dimensional construct of knowledge complementarity
i.e., knowledge complementarity subsumes knowledge interdependence (Palmatier et al., 2007). In a supply chain relationship, the
presence of interdependence in design, production and technical
knowledge may preclude the need for inter-organizational trust;
in other words, the partners may have no choice but to exchange
knowledge because of knowledge interdependency. By not sharing
knowledge they risk failure, a risk, perhaps higher than trusting an
untrustworthy or potentially opportunistic partner in the supply
chain. They may be able to curb opportunistic behavior by instituting governance mechanisms (Williamson, 1991), though they may
not succeed without access to complementary knowledge. Organizational trust therefore need not always be a precondition for
knowledge exchange, and, under certain conditions (e.g., substitution by knowledge complementarity), may even be irrelevant
to knowledge exchange (H4). For instance, simply the absence of
mistrust may be sufcient when there are other exogenous factors motivating knowledge exchange (Bakker, Leenders, Gabbay,
Kratzer, & Engelen, 2006) e.g., knowledge complementarity or
its subconstructs, knowledge interdependence and/or dependence
asymmetry. In fact, compelling reason to work together can occur
even in mistrusting relationships (Ahlstrom, Lamond, & Ding,
2009).
Another avenue to explore for clarifying the counterintuitive
nding of H4a is based on the process and content dimensions
of knowledge (Hass & Hansen, 2007). Process refers to the efforts
46
involved in adapting knowledge obtained for a task; while, content refers to the quality of knowledge i.e., the substantiveness
dimension. It is conceivable that even in situations with high trust
and high knowledge complementarity, the supply channel partners
may not share substantive knowledge if, for instance, high dependence asymmetry punctuates the relationship; a power imbalance
implicit in dependency asymmetry may be responsible for this
behavior pattern in the dyad. In other words, one or both partners may simply go through the motions of knowledge exchange
by sharing knowledge without much value.7
Interorganizational IT infrastructure exhibits no signicant
impact on knowledge exchange behavior. A plausible explanation for this result would be that the nature of knowledge to
be exchanged in this research context is either inappropriate for
exchange through the IT infrastructure or actually impossible to
be exchanged through this medium. Knowledge can be classied into two types: (1) explicit knowledge (i.e., know-what) and
(2) tacit knowledge (i.e., know-how) (Hildreth & Kimble, 2002).
Explicit knowledge refers to easily codiable knowledge that can
be transmitted without loss of integrity once the syntactical rules
required for deciphering it are known (Kogut & Zander, 1992: 386).
Meanwhile, know-how refers to knowledge that is tacit, situation
specic, and difcult to codify (Dyer & Singh, 1998). Since knowhow is tacit and difcult to codify, it is difcult to transfer through
inter-organizational IT infrastructure. Complementary knowledge
that is exchanged between supply chain partners is often tacit, situation specic, and difcult to codify. For example, they exchange
professional and expert knowledge about raw materials or manufacturing processes, ideas about new product development, and a
trial experimentation of new knowledge when they develop a new
market or new product. These types of knowledge often include
non-codiable, tacit components and thus, may not be appropriate
to exchange through interorganizational IT infrastructure.
The unexpected ndings in this study not only open up opportunities for future research, but also serve as a precautionary guidance
for other researchers trying to study knowledge complementarity.
From a managerial perspective, one approach to partnership
management (e.g., McCarter & Northcraft, 2007) holds that managing the inherent tension between cooperation and competition
in inter-rm relationships is essentially a social dilemma. To realize the potential for joint value creation, partners must exchange
knowledge and make investments that are specic to the relationship (Zeng & Chen, 2003). However, fullling these basic
requirements of alliances renders the valuable investments and
proprietary knowledge of partners vulnerable to opportunistic
behavior because each partner may be tempted to use this knowledge to pursue its own interests. Recognizing this inherent tension,
alliance researchers have disagreed as to whether partners should
pursue stormy open marriages (Roehl & Truitt, 1987), or cooperative specialization (Zeng & Hennart, 2002). Our focus in this paper
has been the exploration of the contingencies under which behavior patterns triggered by either condent knowledge exchange
(the social capital perspective) or cautious knowledge exchange
(transaction risk perspective) governs knowledge exchange activity among supply chain partners. In this regard, the managerial
prescriptions that emerge from our ndings lean toward cooperative specialization i.e., condent knowledge exchange in a
trusting relationship because opportunism is subdued to insignificant levels in the presence of inter-organizational trust (social
capital). The need for cautious knowledge exchange behavior is
called for when the knowledge complementarity among partners
in the supply channel is rather low since this condition tends
We thank the anonymous reviewer for this specic suggestion.
to trigger opportunistic behavior patterns. An interesting nding

of signicant value to supply chain managers is that even when
knowledge complementarity is high one cannot take for granted
that trusting relationships is always a necessary condition for
promoting knowledge exchange behavior. Compelling reasons to
work together can occur even in mistrusting relationships. Likewise, sometimes, simply the absence of mistrust may be sufcient
when there are exogenous factors like knowledge complementarity
motivating knowledge exchange behavior. Finally, even in a hightrust relationship knowledge exchange behavior may sometimes
be dampened or even retarded subject to the inuence of other
exogenous contingencies one ought to watch for knowledge interdependence and/or dependence asymmetries in the supply channel
relationships.
6.2. Future research
The principal impetus for our future research is the set of unexpected ndings reported in this paper. An essential condition for
knowledge exchange is the presence of complementary knowledge,
which cannot be developed internally in either a timely or a costeffective manner (Park & Ungson, 2001). The more complementary
knowledge supply chain partners have, the less effort is required for
the source rm to develop relevant knowledge, as a consequence
of which more synergistic effects can be realized. For this reason, it
is important to think about the proportion of the partners knowledge that is synergy-sensitive to the focal rms knowledge. An
important question for the focal rm then is how to evaluate the
degree of complementarity of the partner rms specialized knowledge. Our scrutiny of the understudied construct of knowledge
complementarity sheds light on its richness. Our post hoc search
through the literature led us to a dimensionality of knowledge
complementarity emerging from the dual constructs of knowledge
interdependence and dependence asymmetry. Interestingly, most
research to date accepts as a premise that interdependence, in
general, positively affects exchange performance in a supply channel context because dependence increases both partners desire to
maintain the relationship and the level of adaptation they willfully
undertake (Palmatier et al., 2007). This premise in the knowledge
exchange scenario, however, has not yet been validated. Likewise,
dependence asymmetry that is, the imbalance between partners
dependence has been found to negatively impact exchange performance. Dependence is the need to maintain a relationship to
achieve planned goals, and both interdependence and dependence
asymmetry are crucial to understanding its impact on exchange in
a dyadic relationship (Jap & Ganesan, 2000).
Knowledge complementarity can be of two kinds. The rst
occurs when the bringing together of two knowledge sources
creates new knowledge that neither one of the contributing
knowledge sources could create or sustain by itself the idea of
the whole is greater than the sum of the parts; the second occurs
when the knowledge sources provide unidirectional or mutual catalytic effects in enhancing the capability/potency of each other. It is
this latter type of knowledge complementarity that may be vulnerable to the forces of knowledge interdependence and dependence
asymmetry. At another level, the properties of knowledge should
be examined to determine to what extent they are conducive to
complementation. For instance, unlike explicit knowledge, tacit
knowledge may not be quite amenable to sharing via organized
mechanisms such as information technology. Tacit knowledge may
add signicant value to supply chain performance and therefore
cannot simply be ignored because it cannot be easily captured by
technology.
Interestingly, both dimensions of dependence, components of
or antecedents to knowledge complementation, are shown to
inuence trust. For instance, interdependence, by reducing rela-
tionship problems and the convergence of interests, seems to

have a positive effect on trust (Palmatier et al., 2007). Conversely, trusting relationships tend to increase interdependence
in a dyad because duplicating relational bonds with a different
entity entails additional investments of time, effort and other
tangible and intangible resources (El-Ansary, 1975). Dependence
asymmetry, on the other hand, can undermine trust as partners interests diverge, resulting in less willingness to compromise
(Kumar et al., 1995). This behavior pattern, when explored further,
may shed light on the interactive effect of knowledge complementarity and interorganizational trust on knowledge exchange in our
study.
In addition to the richer dimensionality of knowledge complementarity, this ex post literature reminds us of the interactive
forces binding knowledge complementarity and interorganizational trust. It also appears that trust and commitment are
mutually integrative constructs and that, in the context of
knowledge exchange, interorganizational trust with and without commitment may play different roles (Morgan & Hunt,
1994) and require further theoretical and empirical investigation.
47
6.3. Limitations
The limitations of our study deserve some mention. The data
for this study were collected from 82 rms, all located in the same
country. The interpretation of this studys results is therefore constrained by the particular cultural characteristics of one country.
In order to increase the external validity of the ndings of this
study, future research should incorporate a sample from multiple
countries.
This study suffers from another limitation, which emerges
mainly from certain decisions that we made in the study. The generalizability of the study is restricted to the EMS industry, and the
sample is a little skewed toward smaller rms. Further, we had to
eliminate 33 rms when we divided the sample to classify high/low
knowledge complementarity. Future research should use a more
representative sample. Moreover, the respondents were asked to
select an ongoing relationship, and it was left to the respondent to
decide which relationship they selected. However, if the choice of
the relationship is randomly distributed across the sample, it will
have only minimal effects on this studys results.
Appendix A. Research Instrument
Construct
Questions
Source
Risk of opportunism
1. Complete honesty does not pay when dealing with my raw material/part supplier.
2. Sometimes my supplier alters the facts of its production processes or new product development slightly in
order to get what they need.
3. My supplier has sometimes promised to do things without actually doing them later.
4. They seem to feel that it is OK to do anything (such as leaking valuable information to competitors or setting the
prices higher without notice) within their means that will help further their interests.
1. Between our systems and the suppliers systems
Parkhe (1993)
Inter-organizational IT
infrastructure
Trust
Knowledge
complementarities
Knowledge exchange
2. Compatibility of computer platforms across user units

3. Data consistency and integrity (e.g., production process, delivery dates) across systems
4. User interface commonality across applications
5. Network connectivity across user units
6. Data security and privacy
7. Data received by our organizations from electronic links (e.g., EDI, EFT) are easily interpretable
1. Degree of mutual trust between the two rms.
2. Degree of comfort about sharing sensitive information with supplier
1. Our knowledge of the manufacturing process is complementary to the suppliers knowledge on its raw material
characteristics
2. Our knowledge of the manufacturing process is complementary to the suppliers knowledge on the technical
merits of its products
3. Our knowledge of the manufacturing process is complementary to the suppliers knowledge on the technical
constraints of its products
4. Our knowledge of the product design characteristics is complementary to the suppliers knowledge on its raw
material characteristics
5. Our knowledge of the product design characteristics is complementary to the suppliers knowledge on the
technical merits of its products
6. Our knowledge of the product design characteristics is complementary to the suppliers knowledge on the
technical constraints of its products
7. Our knowledge of the technical relationships among various component parts is complementary to the
suppliers knowledge on its raw material characteristics
suppliers knowledge on the technical merits of its products
suppliers knowledge on the technical constraints of its products
1. We exchange many opinions and idea about discussion topics (e.g., production process, product quality) in
meetings with the supplier.
2. We exchange much professional knowledge and expertise about raw material characteristics with the supplier
3. We exchange many ideas about new product development with the supplier
4. We exchange many new methods of task performance with the supplier.
5. We usually do a trial experimentation of new knowledge from the supplier when we develop a new market or
new product.
6. We and the supplier frequently modify the inter-organizational business processes to improve work
performance.
7. We exchange a considerable amount of engineering knowledge or component knowledge with the supplier as
well as information about day-to-day activities.
8. Technical support from the supplier often helps us solve technical problems in our production process.
Weill and Vitale (2002)
Bensaou and
Venkatraman (1995)
Developed by the
authors
Kotabe et al. (2003)
48
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Kyung Kyu Kim is Professor of Information Systems at Yonsei University, Korea.
He has been a faculty member at the University of Cincinnati, Pennsylvania State
University, Nanyang Technological University, and Inha University in Korea. His
current research interests are in the areas of virtual worlds, knowledge management, IT-enabled supply chain management, and behavioral issues in e-business.
He has published his research works in Accounting Review, MIS Quarterly, Journal
of the Association for Information Systems, Omega, Decision Sciences, Journal of MIS,
Information and Management, Database, Journal of Organizational Computing and
Electronic Commerce, Journal of Business Research, Electronic Commerce Applications and Research, Journal of Information Science, and Journal of Information
Systems.
Narayan S. Umanath is Professor Emeritus of Information Systems at the University
of Cincinnati, Ohio. Before that, he has been a faculty member at the Pennsylvania
State University and the University of Tulsa. Entering academia after 15 years of technical and managerial experience in software development, he received his Ph.D. in
49
Business Administration from the University of Houston in 1987. His undergraduate

and graduate educations are in mechanical engineering and industrial engineering,
respectively. Dr. Umanaths current research interests include knowledge exchange
in supply-chain relationships, and data modeling & data warehousing. His research
publications have appeared in Management Science, Journal of MIS, Communications of the ACM, Decision Sciences, Information & Management, Information
Resources Management Journal, and Journal of Managerial Issues.
Joo Young Kim received her Ph.D. in Information Systems from Yonsei University
in Korea. Her research interests are in the areas of online community, supply-chain
management, and knowledge management. She has published her research works
in Daehan Journal of Business and Journal of Consumer Studies.
Fred Ahrens is a PhD student in the Department of Information Systems at the University of Cincinnati. He holds Master of Science in Mechanical Engineering from
the University of Toledo. He also has a Master of Science in Quantitative Analysis
and an MBA from UC. Previous to his current academic program he worked as a
mechanical engineer in the aerospace industry and in the latter part of his industry
career focused on operations management. His current research is focused on applying Game Theory to characterize knowledge exchange behavior in supply channels
and workforce control. His previous publications have addressed pedagogical issues
in science, technology, engineering and math education (STEM) and more recently
applications of Game Theory in IS research.
Beomsoo Kim is Associate Professor at the Graduate School of Information, Yonsei
University, Korea. He worked as a faculty member at the University of Illinois at
Chicago and an executive member at Hangul & Computer Co. Ltd. Dr. Kims research
interests include privacy laws and policies, information security and privacy best
practices, security and privacy management in cloud computing services, corporate
security and privacy policy, knowledge management, and economic issues in IT
industry.

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International Journal of Information Management 32 (2012) 3549

Contents lists available at ScienceDirect

International Journal of Information Management

Knowledge complementarity and knowledge exchange in supply channel

Yonsei University, Seoul, South Korea

Corresponding author. Tel.: +82 2 2123 4525.

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

2. Inter-rm knowledge exchange

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

our attention to the intellectual property domain knowledge

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

Transaction risk related barriers

1. Unwillingness to share important knowledge (e.g., Nahapiet & Ghoshal,

Fig. 1. Research framework based on social exchange theory.

organizational trust as a source of competitive advantage for supply

cooperation for obtaining mutual benets; and to the extent

3.2.1. Direct effects of social capital and the risk of opportunistic

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

ior is exacerbated in situations in which the relevant resources and

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

2002). Compatible infrastructure channels help reduce the costs

4.3. Survey administration

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

The extent to which an organization exchanges knowledge

Pham (2006) and Kotabe et al. (2003)

Bensaou and Venkatraman (1995)

Weill & Vitale (2002)

standardized coefcients (beta coefcients) provide an estimate

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

Extraction method: principal components analysis.

ences knowledge exchange, the direction of the relationship is

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

Model 2: low complementary group++

summary of the ndings for the hypothesized effects appears in

Inter-organizational trust Knowledge exchange

0.014 (opposite effect)

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

(H1), when knowledge complementarity is low, a stronger effect

inter-organizational trust [Full model: KE = f (Trust, KC, Trust * KC);

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

We thank the anonymous reviewer for this specic suggestion.

to trigger opportunistic behavior patterns. An interesting nding

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

tionship problems and the convergence of interests, seems to

2. Compatibility of computer platforms across user units

Weill and Vitale (2002)

Kotabe et al. (2003)

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

K.K. Kim et al. / International Journal of Information Management 32 (2012) 3549

Business Administration from the University of Houston in 1987. His undergraduate

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