Informal Technology Transfer Between Firms: Cooperation Through Information Trading

Employees frequently give technical information or advice to colleagues in other firms, including direct competitors. This paper addresses whether such information transfer is in the economic interests of the firms involved. It is hypothesized that employees trade information in accordance with the economic interests of their firms. Condi-tions are discussed in which information trading creates an economic advantage for the participating firms. Data on specific information transfer decisions were ob-tained from a survey of 294 technically oriented middle-level managers from the U.S. specialty steel and mini-mill industry. The observed pattern of information transfer strongly supports the hypotheses (1) that employees trade information and (2) that such trading is desirable from a firm’s point of view. Furthermore, the data suggest a positive link between the participation of a firm’s employees in informal information-transfer networks and the economic performance of the firm. Indeed, it can be in a firm’s interest to make its boundaries penetrable for informal information trading rather than to discourage such transfers. 1