MICRO Contracting for Tacit Knowledge - A study of contractual arrangements in international technology transfer

Yongjian Bao, Shuming Zhao
2004 Problems and Perspectives in Management  
To protect their tacit knowledge in international technology transfers, transferors generally selected ownership-based hierarchical control. Related research also argued that hierarchical contracting helped to economize transaction costs in tacit knowledge transformation. However, the interests of transferees and the nature of tacit knowledge transformation were not adequately considered in the control-oriented hierarchical contracting. This paper explores how transferees in China used
more » ... e contractual arrangements to acquire tacit knowledge while they have to succumb to the dominant strategy of hierarchical control by transferors. Our research results challenge the rigid application of hierarchical contracting in tacit knowledge transformation. By synchronizing transaction cost economics and knowledge management in the study of tacit knowledge transformation, our research also provides empirical support to the call by Williamsons to push beyond generic governance to address strategy issues faced by particular firms, and include dynamic transaction costs and learning (Williamson 1999).
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