More Effective Transfer of Competitor and Customer Intelligence

Mediating Roles of Common Knowledge Sharing and Source Credibility

Sirisuhk Rakthin

, Roger J. Calantone

and Seungho Choi

Department of Marketing, Eli Broad Graduate School of Management, Michigan State University, East Lansing, U.S.A.

Department of Management, Ewha School of Business, Ewha Womans University, Seoul, Korea

Keywords: Competitor Intelligence, Customer Intelligence, Perception of Common Knowledge Sharing, Source

Credibility, Corporate Culture, Motivation, Inter-departmental Relationship, Ties.

Abstract: This research study examines the antecedents of competitor and customer intelligence transfer process

between front-line and support personnel. Using structural equation analysis, the authors analyzed

relationships among seven constructs—ties, motivation, supportive corporate culture, inter-departmental

relationship, perception of common knowledge sharing, source credibility, and a transfer of competitor and

customer intelligence. Hypotheses were tested among business executives and managers in four

organizations in Thailand. The findings support the partially mediating effects of perception of common

knowledge sharing and source credibility on a relationship between the antecedents and a transfer of

competitor and customer intelligence.

1 INTRODUCTION

The ability to transfer knowledge effectively among

individuals is critical to a host of organizational

processes and outcomes (Reagans and McEvily,

2003); (Szulanski, 1996). According to some

scholars, the ability to transfer and use market

intelligence represents a distinct source of

competitive advantage for organizations (Menon and

Varadarajan, 1992); (Maltz and Kohli, 1996).

Managers often obtain intelligence formally (e.g.,

monthly reports, sales meeting) and informally (e.g.,

hall talk, telephone phone conversation, e-mail)

from various personal and published sources.

Informal interpersonal knowledge and information

transfer are thought to play an important role in the

knowledge transfer process (Reagans & McEvily,

2003), especially when considering a transfer of

competitor and customer intelligence within the

organization.

Several studies extensively examined the

relationship between informal networks and

knowledge transfer; yet, despite unique

characteristics of competitor and customer

intelligence which comprise explicit and tacit

knowledge and are very sensitive and critical to

corporate advantage and competitive strategy,

several organizational and individual conditions

encourage or support transfer of intra-firm

competitor and customer intelligence.

Hence, one expects there are a number of

antecedents that influence the effectiveness of

competitor and customer intelligence transfer

between the front-line personnel and the support

units/personnel. Structural equation analysis was

employed to analyze relationships among seven

constructs—ties, motivation, supportive corporate

culture, inter-departmental relationship, perception

of common knowledge sharing, source credibility,

and a transfer of competitor and customer

intelligence. In addition, this research study also

examines the impact of two potential mediating

constructs—a perception of common knowledge

sharing and a source credibility—including an

independent effect of these two mediators on the

extent of competitor and customer intelligence

transfer within an organization. It was hypothesized

that the (1) recipient’s perception of source

credibility and (2) perception of benefit and

necessity of sharing common knowledge will

mediate a relationship between personal ties,

motivation, inter-departmental relationship,

supportive corporate culture and the extent of the

competitor and customer intelligence.

The hypotheses were tested among participants

in 4 firms in Thailand. Targeted respondents were

251

Rakthin S., J. Calantone R. and Choi S..

More Effective Transfer of Competitor and Customer Intelligence - Mediating Roles of Common Knowledge Sharing and Source Credibility.

DOI: 10.5220/0004114202510256

In Proceedings of the International Conference on Knowledge Management and Information Sharing (KMIS-2012), pages 251-256

ISBN: 978-989-8565-31-0

 2012 SCITEPRESS (Science and Technology Publications, Lda.)

executives and middle managers involved in front-

line tasks (e.g., sales and marketing) and support

tasks (e.g., sales support, technical support, legal,

finance and accounting, and etc.). The findings

support the partially mediating effects of perception

of common knowledge sharing and source

credibility on a relationship between the focal

constructs and a transfer of competitor and customer

intelligence. The empirical results indicate that

although inter-departmental relationship does not

affect the perception of sharing common knowledge

and the personal ties does not predict the source

credibility, both mediators still have a substantial

influence on a transfer of competitor and customer

intelligence. In addition, a significant relationship

was found between supportive corporate culture and

a transfer of competitor and customer intelligence.

Therefore, it can be safely concluded that source

credibility partially mediates a relationship between

supportive corporate culture and a transfer of

competitor and customer intelligence.

2 FOCAL CONSTRUCTS

2.1 Competitor and Customer

Intelligence Transfer

Generally, knowledge can be transferred from a

source to a recipient through a variety of formal and

informal mechanisms. Researchers have found a

number of explanations for how the transfer

processes occur, including how the organizational

and individual factors can facilitate or obstruct them

(e.g., Cavusgil et al., 2003); (Gupta and

Govindarajan, 2000); (Nonaka, 1994). Since this

study intends to examine a transfer of competitor

and customer intelligence, their unique

characteristics will be of primary focus.

There are several definitions of competitor and

customer intelligence in various dimensions (e.g.,

Kelly, 2006); (Wright et al., 2002). In brief,

competitor intelligence could be summarized as the

knowledge that enables us to know what competitors

have and their competing strategy, while customer

intelligence could be considered as the knowledge

that enables us to know what the customers need and

their buying decision model.

A challenging point for managing an intra-firm

knowledge transfer mechanism is that many firms

fail to analyze competitor and customer intelligence

collected from or by the front-line units, e.g.,

marketing, sales, or customer service personnel, or

to integrate this data into the general market

intelligence system (Festervand et al., 1988); (Le

Meunier-FitzHugh and Piercy, 2006). Thus, we

assess the extent of a transfer of competitor and

customer intelligence between the front-line and

support units from the respondents’ perception of

their dissemination of such knowledge across

departmental boundaries, as valuable, timely, and

relevant to company’s current objectives.

2.2 Ties and Inter-departmental

Relationship

The strength of an interpersonal connection can also

affect a knowledge transfer process either within or

across firms (Granovetter, 1973); (Hansen, 1999).

Individuals who frequently share communications or

have strong emotional attachment with each other

are more likely to share knowledge than those who

communicate infrequently or who are not

emotionally attached (Reagans and McEvily, 2003).

In this study, the assessments of personal ties and

inter-departmental relationship are separated to help

differentiate the effects on the competitor and

customer intelligence transfer.

2.3 Motivation

Cyert (1995) suggested that a unit with uniquely

valuable knowhow is likely to enjoy an “information

monopoly” within an organization (Gupta and

Govindarajan, 2000). In addition, the sender of such

knowledge may be unwilling to devote time and

resources to support the transfer (Szulanski, 1996).

However, considering the fact that employees may

also possess personal motivation to retrieve the

knowledge or, in this case, the competitor and

customer intelligence, from the other units in the

organization, we have decided to include the

respondent’s perception of need and value of

competitor and customer intelligence transfer in the

research study. We expect that the reciprocal

interaction to transfer such intelligence will increase

the extent of a dissemination of competitor and

customer intelligence within an organization.

2.4 Supportive Corporate Culture

Similar to the personal motivation, the supportive

corporate culture is expected to stimulate an intra-

firm transfer mechanism of competitor and customer

intelligence by increasing the “eagerness to share

and help others” (Gupta and Govindarajan, 2000)

and encouraging the sharing knowledge activities

either at the individual or group level.

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2.5 Perception of Having Common

Knowledge and Source Credibility

as Mediating Constructs

The degree to which the sender and the recipient

share common knowledge is expected to have a

positive effect on knowledge and information

transfer since it will be easier for an individual to

accumulate knowledge in the areas in which he or

she has made prior investments (Reagans and

McEvily, 2003). However, to our current

knowledge, no research study has examined the

effect of the sender’s perception of benefit and

necessity of sharing common knowledge on the

relationship between personal ties, motivation, inter-

departmental relationship, and supportive corporate

culture and the extent of the competitor and

customer intelligence. We expect that the sender’s

perception of common knowledge sharing will

mediate such relationships.

In addition, the reluctance of some recipients to

accept the knowledge or information because the

source unit is not perceived as reliable, trustworthy,

or knowledgeable, has long been widely accepted

among research scholars (Szulanski, 1996);

(Zaltman et al., 1973). Lack of the source credibility

may reduce the motivation to receive such

intelligence from that source. Furthermore, advice

and examples from such source are likely to be

challenged and resisted (Szulanski, 1996); (Walton,

1975). However, because most competitor and

customer intelligence are collected by sales or

marketing personnel, the recipient’s perception of

source credibility could become even more crucial.

As Moss (1979) noted, since the prime interest of

salespeople is making sales, they may not be

objective observers or reporters of reliable

information. Thus, we expect that the recipient’s

perception of source credibility will mediate a

relationship between personal ties, motivation, inter-

departmental relationship, supportive corporate

culture and the extent of the competitor and

customer intelligence. The overarching framework

developed in this section can be translated into the

following hypotheses:

H1: There is a positive relationship between

strong ties of front-line and support personnel,

personal motivation, inter-departmental relationship,

supportive corporate culture and the perception of

benefit and necessity of sharing common

knowledge.

H2: There is a positive relationship between

strong ties of front-line and support personnel,

personal motivation, inter-departmental relationship,

supportive corporate culture and the source

credibility.

H3: Perception of benefit and necessity of sharing

common knowledge mediates relationship between

strong ties of front-line and support personnel,

personal motivation, inter-departmental relationship,

supportive corporate culture and the extent of

competitor and customer intelligence transfer.

H4: Source credibility mediates relationship

between strong ties of front-line and support

personnel, personal motivation, inter-departmental

relationship, supportive corporate culture and the

extent of competitor and customer intelligence

transfer.

3 METHOD

3.1 Samples and Data Collection

Data are collected from respondents in 4 companies

in Thailand. Two of them are in banking and

financial businesses, the third one is in

telecommunications, and the last one is in online-

game business. The authors developed an instrument

to assess the focal and mediating constructs as

described earlier. The instrument was evaluated

initially by interviewing executives and senior

managers in each company. In each interview, the

manager was asked to fill out the survey in the

presence of the researcher and raise questions as

problems or any ambiguities arose. After the first 10

interviews, a new survey was drafted professionally.

Then, a pre-test study was conducted by

interviewing a new group of executives and senior

managers in each company (N = 30). The responses

from the pre-test significantly assist the researcher in

understanding (a) nature of existing workflow

among front-line and support personnel, (b)

competitive environments in the industries, and (c)

executive’s opinion towards a transfer of competitor

and customers intelligence between front-line and

support personnel in each company.

After the pre-test, a total number of 399 refined

surveys were sent to the respondents in four

organizations. Targeted respondents are executives

and middle managers who are involved in front-line

tasks (e.g., sales and marketing) and support tasks

(e.g., sales support, technical support, legal, finance

and accounting, and etc.). The respondents were

informed that the survey was for both educational

and managerial purposes and that their responses

would be anonymous. A total of 180 responses were

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returned, with a response rate of 45%, while 18 out

of 180 were excluded from the final response

calculation because of some missing data, leaving a

base of 162 respondents as a final sample size.

The procedures recommended by Brislin (1990)

for survey translations across different languages

were applied before the pre-test study. It is important

to stress that this research study elicited perceptions

of the personnel who were strongly involved in a

competitor and customer intelligence transfer

process. As the researcher intended to model

managerial behaviour, it may be more appropriate to

focus on perceived rather than actual situations

(Weick, 1969).

3.2 Measures

Twenty-eight measures are used to capture seven

latent constructs. All of the exogenous and

endogenous measures were adapted from a variety

of sources. Several techniques were used in the

survey design to decrease the potential for halo

effects, including a use of a variety of measurement

scales, grouping together items designed to measure

a single construct, and spatially separating the items

for various constructs. In a survey, the questions

include two different types of scale—Likert-scaled

and semantic differential. Due to limited space in the

conference proceedings, details of all measurement

items including all tables and figures in this paper

cannot be presented here.

4 RESULTS

4.1 Measurement Model

According to Andersen and Gerbing (1988), we use

a two-step approach in testing structural equation

models. This approach is particularly salient when

using structural equation modeling to assess

construct validity since it is essential to identify

potential sources of misfit so that researchers can

reach consensus on a well-established construct

measure before testing substantive research

questions. Therefore, the measurement model will

be tested and followed by a simultaneous test of the

measurement model and the structural model.

As recommended by Bollen (1989) and Nunnally

(1978), a confirmatory factor analysis (CFA) was

conducted to assess the measurement model. All

indicators were restricted to load on one factor to

which they are supposed to measure so as to reflect

the hypothesized simple structure of the

measurement model (Thurston, 1940); (Kaplan,

2000). However, LM Test was used to examine

whether the restrictions imposed on the model were

valid. Factor variances were constrained to equal

one to set the metric of the latent variables. In

addition, the latent variables were allowed to covary

freely to consider the validation of this measurement

model. The overall fit indices obtained in EQS

(Bentler, 2004) were closed to admissible range (χ 2

= 530.32 (df=313), p=0.00, CFI=.97, GFI=.83, and

RMSEA = .058 with 90% confidence interval .049-

.067). All exogenous and endogenous constructs

were measured in the following manner.

To test for a reliability of all measurement scales

in the model, composite reliability or CR (Werts et

al., 1974) is used to examine the internal consistency

of a measurement scale. CR is considered to be a

closer approximation to reliability than coefficient

alpha (Chin, 1998). Internal consistency reliabilities

for most measurement scales in a model were found

to be above commonly accepted standards (CR >.7).

Hair et al., (2007) suggest that reliability is also an

indicator of convergent validity and that high

construct reliability indicates the existence of

internal consistency.

In addition, the high factor loadings of each

indicator and high coefficient average variance

extracted or AVE (> .5 in all cases, and in most

cases > .7) also indicate high convergent validity.

Furthermore, since construct validity is proved

through establishment of convergent and

discriminant validities, the procedure suggested by

Fornell and Larcker (1981) is frequently used to test

discriminant validity. According to this procedure,

the square root of the coefficient average variance

extracted or AVE for a given construct should be

larger than any correlation between that construct

and the other constructs. This result reveals good

discriminant validity. Thus, we can conclude that

each latent construct explains its item measures

better the other constructs or, in other words,

individual measured items also represent only one

latent construct in the model.

4.2 Testing the Hypothesized

Structural Model

The hypothesized structural model was tested using

EQS (Bentler, 2004). Residual analysis supported

multivariable normality assumptions and revealed

that there are no influential outliers. ML (Maximum

Likelihood) estimation procedures are employed.

The overall fit indices were close to acceptable

range (χ2 = 503.22:df=313, p=0.00, CFI=.97,

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GFI=.83, and RMSEA=.058 with 90% confidence

interval .049-.067). Following the proposed

conceptual model, we first discuss the links between

the four antecedents and the mediators, and then the

effects of the mediators on such paths.

4.2.1 Results of Main Effects

H1 states the positive relationship between strong

ties of front-line and support personnel, personal

motivation, inter-departmental relationship,

supportive corporate culture and the perception of

benefit and necessity of sharing common

knowledge. The empirical results afford mixed

support for this hypothesis. Ties, motivation, and

supportive corporate culture predict the extent of

perception of common knowledge sharing.

However, the inter-departmental relationship does

not predict the perception of benefit and necessity of

sharing common knowledge (γ = -.082, n.s.). Thus,

we conclude that the results partially support H1.

H2 states that there is a positive relationship

between strong ties of front-line and support

personnel, personal motivation, inter-departmental

relationship, supportive corporate culture and the

source credibility. As theorized, motivation, inter-

departmental relationship, and supportive corporate

culture predict the extent of source credibility.

However, the personal ties does not predict the

source credibility (γ = -.098, n.s.), thus H2 is

partially supported.

4.2.2 Results of Mediating Effects

The hypothesized mediating models (H3 and H4)

state that a sender’s perception of benefit and

necessity of sharing common knowledge and a

source credibility mediate a relationship between the

four main antecedents and a transfer of competitor

and customer intelligence. Although inter-

departmental relationship does not affect the

perception of sharing common knowledge and the

personal ties does not predict the source credibility,

both mediators still have a substantial influence on a

transfer of competitor and customer intelligence.

Thus, H3 and H4 are also partially supported.

In addition, we also found a significant

relationship between supportive corporate culture

and a transfer of competitor and customer

intelligence (γ= .330, p<.01). So, it can be concluded

that source credibility partially mediates a

relationship between supportive corporate culture

and a transfer of competitor and customer

intelligence. We also conduct the hypothesized

structural model without residual covariation within

a set of indicators and across latent variables

(unconstrained model). There are no significant

differences in structural elements (paths) between

unconstrained and constrained model. Since the key

concern in the hypothesized model is the mediating

role of a perception of common knowledge and a

source credibility in determining the extent of

intelligence transfer, it is logical to test whether the

deletion of some mediation paths will significantly

improve the model fit. 

5 DISCUSSION

This research represents one of only a few empirical

examinations of mediating effects of a perception of

common knowledge sharing and a source credibility

on a relationship between the focal antecedents and

a transfer of competitor and customer intelligence.

There are a number of reasons that the unique

characteristics of competitor and customer

intelligence including the nature of front-line

personnel will shape an intra-firm transfer

mechanism of competitor and customer intelligence.

For example, the recipients may be reluctant to

accept the transferred competitor and customer

intelligence if the source unit is not perceived as

reliable, trustworthy, or knowledgeable (Szulanski,

1996); (Zaltman et al., 1973). Also, suggestions

from that particular source are likely to be

challenged and resisted (Szulanski, 1996); (Walton,

1975). In addition, based upon the results of the

interview during the pre-test study, most of the

managers who were in the support units believe that

front-line personnel may not be willing to report or

share information or knowledge or even

intentionally keep some parts of competitor and

customer intelligence to themselves, especially when

they expect that a conflict of interest may occur as a

result of sharing such knowledge. The concept of

agent-principal relationship and intrinsic motivation

in agency theory could be applied in this case

(Eisenhardt, 1989). Thus, the empirical analysis of a

competitor and customer intelligence transfer

suggested that the source credibility could mediate a

relationship between these antecedents—(a) inter-

departmental relationship, (b) corporate culture, and

competitor and customer intelligence transfer

between the front-line and the support personnel. It

is logical to acknowledge that a source credibility

does not mediate a relationship between personal

ties and a competitor and customer intelligence

transfer since the strong personal ties between front-

MoreEffectiveTransferofCompetitorandCustomerIntelligence-MediatingRolesofCommonKnowledgeSharingand

SourceCredibility

255

line and support personnel could reduce the

recipient’s suspicion of whether the source of such

intelligence is unreliable. This notion is empirically

supported by the findings in this study.

Furthermore, two mediators illustrates that the

flow of knowledge between senders and recipients

can be affected by cognitive and relational factors.

Source credibility can be considered as a social and

relational mediator. Knowledge transfer process gets

involves with the connections of employees and the

quality of relationships between recipients and

senders influences the process. In addition, a

perception of benefit and necessity of common

knowledge sharing represents cognitive perspective

of knowledge transfer mechanisms. Sharing

cognitive map between senders and recipients is the

critical path of knowledge transfer.

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