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Cooperation Between Rivals: Informal Know-How Trading

discuss how the phenomenon may apply beyond the arena of interfirm trading of
R&D-related knowledge (section 6).
2.0: A General Description of Informal Know-How Trading
Know-how is the accumulated practical skill or expertise which allows one
to do something smoothly and efficiently. The know-how which I focus on here is
that held in the minds of a firm's engineers who develop its products and develop
and operate its processes. Often, a firm considers a significant portion of such
know-how proprietary and protects it as a trade secret.
A firm's staff of engineers is responsible for obtaining or developing the
know-how its firm needs. When required know-how is not available in-house, an
engineer typically cannot find what he needs in publications either: Much is very
specialized and not published anywhere. He must either develop it himself or
learn what he needs to know by talking to other specialists. Since in-house
development can be time-consuming and expensive, there can be a high incentive
to seek the needed information from professional colleagues. And often, logically
enough, engineers in firms which make similar products or use similar processes
are the people most likely to have that needed information. But are such
professional colleagues willing to reveal their proprietary know-how to employees
of rival firms? Interestingly, it appears that the answer is quite uniformly "yes" in
at least one industry, and quite probably in many.
The informal proprietary know-how trading behavior which I have observed
to date appears to involve informal trading "networks" which develop between
engineers having common professional interests. Network formation begins
when, at conferences and elsewhere, an engineer makes private judgements as to
the areas of expertise and abilities of those he meets, and builds his personal
informal list of possibly useful expert contacts. Later, when "Engineer A"