In today’s digital economy, firms rarely become successful working in isolation. Instead, they create value through close collaboration, with a specific focus on effective knowledge transfers among collaborating partners. Our study, published in the Journal of Management Studies, sheds light on what really makes interfirm knowledge transfer work and why traditional thinking on knowledge transfers is no longer sufficient for interfirm/ buyer-supplier relationships.
Historically, research has emphasized the firm’s ability to absorb knowledge from its network and environment under the terminology of Absorptive Capacity (AC), which is a cumulation of a firm’s ability to recognize, assimilate, and apply external knowledge. While AC is critical, we show that AC is only half of the equation in relationships. For knowledge transfer to be effective, the firm sending the knowledge must possess Disseminative Capacity (DC) – the ability to articulate, package, and transmit knowledge in ways that the knowledge receiving partner can comprehend and use.
In this regard, our study consists of an important and often overlooked link that now provides a clear light for effective knowledge transfers involving both the sides of a knowledge transfer continuum. Specifically, by evaluating the role of AC and DC being ‘natural counterparts’, our study shows that partners’ knowledge capabilities that naturally complement each other are essential for effective knowledge transfers as they not only fit-in the saying that they are ‘two sides of the same coin’ but more importantly help fulfil the partners’ requirement of effective knowledge transfers. In other words, strong knowledge receivers cannot compensate for poor knowledge senders, and vice versa. Subsequently, our study validates the long-standing assumption that high performance outcomes emerge only when both AC and DC are aligned.
But not all interfirm/buyer-supplier relationships enjoy this ideal alignment; realistically, this is quite rare. This is where Digital Technologies (DT) become highly crucial. Digital platforms, shared systems, analytics tools, and collaboration technologies involving Big Data, Blockchain, Cloud, and IoT, among others, can enhance and enrich the process of knowledge flows. Our study demonstrates that DT can act as an offsetting or bridging capability, helping firms overcome gaps when either DC or AC is weaker. Importantly, digital technology can act as a silver bullet in that high levels of DT can address any possible misalignment between levels of AC and DC so as to deliver superior relational performance, thus highlighting the necessity for partnering firms to effectively adopt digital technologies. When used well, DT becomes a digital boundary spanner, fundamentally reshaping how knowledge is exchanged across organizational and relational borders.
Overall, the study delivers an important message for firms and managers in this digital age: success in interfirm relationships or collaborations is not about focusing on learning alone or teaching alone, but it is about aligning the learning and teaching capabilities along with the adequate use of DT.
Implications for Practice
Balance ‘knowledge transfer’ across firm boundaries
Managers need to focus not only on how well their firm is at absorbing knowledge but also pay equal attention to how well it is at transferring knowledge to its partners. Many firms invest heavily in training their teams to absorb external knowledge but neglect their ability to explain, structure, and transfer their own expertise. Thus, managers must:
- Develop standardized knowledge documentation, playbooks, and templates.
- Incentivize employees to share knowledge clearly, not just quickly.
- Treat suppliers and partners as learners, not just executors.
Potential impact: Exercising this could result in stronger relationships/collaboration, fewer misunderstandings, and better joint outcomes over time.
Treat Digital Technology as a strategic enabler, not just a tool
Digital technologies should strengthen relationships, not merely automate transactions. Our study shows that digital technologies add value only when both sides adopt and use them equally and effectively. Thus, managers must:
- Coordinate digital investments with collaborators and key partners.
- Prioritize interoperability of systems and use shared digital dashboards/platforms for interaction, feedback, automation, and joint problem‑solving.
Potential impact: This could result in digital technology serving as a bridge when other sharing/collaboration capabilities are uneven, improving knowledge flow and performance.
Manage Partnerships as capability systems rather than contracts
Performance depends on capability alignment, not contractual control. Thus, rather than assuming partnering firms are equally capable, managers must:
- Diagnose mismatches in AC and DC early.
- Use digital technologies and tools strategically to offset capability gaps.
- View relationships, specifically with strategic partners, as evolving capability ecosystems with digitalization at the core.
Potential impact: Thus, by recognizing and facilitating smoother knowledge flow, business relationships will mature to be more resilient and ensure higher relational performance.
Looking Ahead
In this digital era, competitive advantage lies with firms that could move beyond just being knowledge accumulators to being knowledge orchestrators. This transition requires these firms to leverage their abilities to learn, transfer, and connect with their partners more effectively and efficiently. More importantly, by combining firm-specific capabilities such as AC and DC with digital technologies, firms are future-proofed for any knowledge-specific uncertainties and better positioned to amplify the strategic value of their current as well as future relationships with partners and convert them into sustained competitive success.
