Organization of knowledge exchange: An empirical study of knowledge-intensive business service relationships

Abstract

This article empirically examines, the structure of relationships between business service firms and their clients, in particular, the allocation of control rights to the intellectual assets created in joint projects. Business service firms are a distinctive case because their ‘product’ is essentially knowledge, and in many cases this knowledge is partly tacit and collectively generated and applied. It is proposed that allocation of the rights to intellectual assets in service relationships has a bearing on the creation and deployment of knowledge. Therefore, from the perspective of a service firm, contractual arrangements need to be aligned with the nature of its knowledge base. Knowledge base is characterized here by the firm’s service strategy and by its learning strategy. Estimation results using a survey dataset of 167 business service firms provide support for the conjecture. Service firms that provide expert skills or learn incrementally are less likely to retain control rights to their intellectual output. A possible interpretation is that control rights are less valuable to knowledge service providers, whose activities are based on tacit and non-replicable knowledge resources, than to firms with organizationally controlled and replicable resources.