Knowledge Complementarity and Coordination in the Local Supply Chain: Some Empirical Evidence

Abstract

Knowledge, managed or coordinated as a strategic resource, can help to internalize uncertainty or volatility and play an important role in generating and sustaining competitive advantage. One potentially important determinant of knowledge coordination between firms is the relative strength of the knowledge bases of the two partner companies. In the context of the local supply chain, this paper examines the extent of knowledge coordination between a group of 18 Northern Ireland-based MNE plants and their local suppliers. A typology of knowledge complementarity is developed and related to the extent of firms' knowledge coordination activities. The analysis suggests three main empirical results. First, and somewhat unexpectedly, the relationship between MNE plants and their suppliers is characterized by a wide range of configurations of knowledge complementarity. Second, clear differentials exist between the occurrence of knowledge coordination activities incidental to normal trading relations and more intentional knowledge coordination activities. Third, no direct link was evident between knowledge complementarity and the level of knowledge coordination. The implication is that firms' willingness to coordinate knowledge, something that may be strategically determined, is more important than capability in determining the extent of knowledge coordination.