Information Sharing With Competitors: Wisdom or Folly?

Giada Di Stefano, Professor of Strategy and Business policy - June 14th, 2014
Gourmet Cuisine in Italy - Information Sharing With Competitors: Wisdom or Folly? by Giada Di Stefano

Creative professionals such as chefs, fashion designers, or even computer programmers do not produce their work in a vacuum. They receive inspiration from fellow professionals. And yet, proprietary information may be the basis of their competitive advantage. A new study examines the calculus Italian gourmet chefs perform in order to decide whether to share professional secrets with other chefs.

Giada Di Stefano ©HEC Paris

Giada Di Stefano has been assistant professor of strategy and business policy at HEC since January 2012. She obtained her M.Sc. in business administration in 2003 then her PhD in (...)

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Creative industries are an interesting paradox for social scientists. Creative professionals need freedom and a free flow of ideas to stimulate their own innovations. Yet as businesspeople, they must protect, one would assume, some proprietary information to maintain a competitive advantage. A chef may have a signature recipe, a magician a trademark illusion, and a fashion designer a distinguishing style that they would not reveal to their peers.

Knowledge transfer: not a simple equation

Giada Di Stefano and her two co-authors, Andrew King and Gianmario Verona, studied gourmet restaurants in Italy to see how the chefs of these restaurants decided whether or not to share information with their colleagues, or, in the parlance of the study, whether to “transfer knowledge.” They found there were norms at work in the industry that guided the behavior of those involved, but those norms alone were not enough to predict how chefs would behave when it came to deciding whether or not to help a fellow chef. They also took into account mediating elements that determined whether or not they perceived the potential knowledge recipient as trustworthy.

Chefs with a capital ‘C’: Norms at work

“Gourmet cuisine is a peculiar industry because there is a lot of innovation but people engage extensively in knowledge sharing,” Di Stefano explains. “Chefs are not secretive about their recipes and techniques: they tend to share them with competitors. Given that these recipes and techniques are important to them in order to gain competitive advantage, the question we were trying to answer was: Why do they share these key assets so freely without worrying about the fact that someone else will copy them or appropriate this information?” This is where social norms come into play. By interviewing chefs in the U.S. and Italy, the researchers found that the demimonde of gourmet cuisine is regulated by certain rules. “If you want to be considered as a chef with capital ‘C,’ people expect that you use the information that you get in a particular way,” Di Stefano says. Namely, the expectations are: you do not copy exactly; you cite the source of the information; you do not transfer the information to third parties without permission. Chefs’ assessment of how well knowledge recipients would conform to these norms was key to their decision about whether or not to share information. In other words, they asked themselves, “Can I trust this person or not?”


guillemet
Chefs are not secretive about their recipes and techniques: they tend to share them with competitors

Contextual cues

Previous research on norms has suggested that people are more willing to transfer knowledge when they feel there are rules that proscribe certain uses, which the authors’ work supports. However, Di Stefano, King and Verona also found that in the case of gourmet chefs, they used specific contextual cues to judge whether a potential knowledge recipient could be expected to abide by these rules. “The basic contribution of this paper is to show that these cues are what allow people to form expectations about the behavior of others, to decide whether a person is someone they can trust,” Di Stefano says. “Based on that, they decide ultimately if they want to transfer knowledge or not.” This “strategic component” included chefs’ consideration of: the reputation of the knowledge recipient; the level of competition between the knowledge holder and the knowledge recipient; the visibility of the behavior of the knowledge recipient in the social group.

Chefs are both artists and businessmen

As might be expected, chefs were less willing to share information with restaurants in competition with their own. According to the researchers, this is because chefs are more suspicious about competitors and believe they may have an incentive to “misbehave,” i.e., violate social norms. Analogously, chefs were more willing to share knowledge with chefs with a high reputation, as they expected such “big names” to abide by extant social norms. Interestingly, this is only part of the explanation, as chefs are more willing to share knowledge with reputed counterparts regardless of the expectation that they will follow the rules. The researchers argue that this is probably because by transferring knowledge to reputed counterparts, chefs expect to gain repute in return. “Perhaps the fact that they have entered into an exchange relationship with a well-regarded industry player signals something about their own quality, or possibly chefs want some of their recipes to be diffused (as long as they can claim paternity of a dish) and transferring to a reputed chef may increase the fame and distribution of a recipe,” the paper states. 

In short, there were many complex considerations that chefs took into account when deciding whether to share information. “Strong social norms are not enough to guarantee knowledge flows,” Di Stefano says. “These chefs are artists and craftsmen, but they are also businessmen and, as such, engage in highly complex reasoning before giving information away.”


Based on an interview with Giada Di Stefano and on her article, “Kitchen Confidential? Norms for the Use of Transferred Knowledge in Gourmet Cuisine,” co-authored with Andrew A. King and Gianmario Verona, forthcoming in Strategic Management Journal.

Business applications
Business applications

There are many industries in which an exchange of information may take place, and in which norms operate. The scientific community, for example, encourages the sharing of the results of experiments to advance knowledge in the field. This research points out that while norms may be important, and sanction the “bad behavior” of those who violate the rules, it is still wise to consider cues about the propensity of the other party to follow these norms before entering into any sort of knowledge sharing or partnership. Not everyone will always abide by the rules. Looked at from an opposite point of view, if you or your company is attempting to find a partnership, it may be important to know the right attributes that will make you seem more trustworthy and hence ultimately more likely to be selected as a partner in an alliance or in collaborations more generally.

Méthodology
Méthodology

After conducting initial interviews with chefs in the U.S. and Italy, the researchers created a scenario-based experiment featuring a hypothetical restaurant and a hypothetical chef with certain characteristics. The scenarios manipulated conditions that the researchers felt would influence the perception of the hypothetical chef as trustworthy or not, and thus the propensity of the chef answering the survey to transfer knowledge to this counterpart. All restaurants listed in the Michelin Guide Italy 2009 were contacted, with a response rate of 20 percent, for a total of over 500 respondents. All respondents were assigned two scenarios, thus allowing the researchers to observe how changes in the manipulated conditions generated changes in the answers, while controlling for characteristics at the individual level.