The digital world affects everyone yet is incredibly difficult to understand. Take Artificial Intelligence (AI), for example. While there is reasonable evidence to suggest that AI will affect us all, we have huge difficulties understanding how this impact will materialise. The situation of an unknown future, however, is not only puzzling to individuals. Organisations conducting business in the digital world face many uncertainties: How will technologies further develop? What impact will the developments have on us? A powerful approach to find answers to these questions is to exchange knowledge and experience in networks – collaborations of organisations operating in different customer segments, industries, and countries. This provides a valuable intellectual infrastructure through which firms identify innovative solutions to succeed in the digital world.
The general design of networks, however, promote two reasons which threaten success: unclear incentives and frequent free-riding. First, why should actors benevolently share their knowledge although their return remains vague? Yet, exchanging experiences is the first step to building a vast knowledge pool beneficial to the entire network. Second, when firms benefit from the experience of partners who contribute to a knowledge pool but refrain from sharing their own knowledge, they engage in a modern form of free-riding. Scholars suggest that 20 – 40% of actors do so. Unclear incentives and frequent free-riding are thus the end of joint solutions to complex problems.
Perhaps unsurprisingly, both problems go beyond the private sector. The OECD finds that solutions to grand challenges (e.g. social inequality and climate change) presuppose the intense collaboration of actors rooted in different fields. In short, private, public, and hybrid actors (e.g. social entrepreneurships) must jointly develop solutions to grand challenges. Again, networks and vast knowledge pools are required to find innovative solutions. And again, this leaves room for actors to withhold their knowledge and engage in free-riding. The key question is as simple as it is difficult to answer: How can actors be incentivised to share their knowledge?
In the next article we will introduce a revolutionary approach to this problem and illustrate how blockchains solve the problem of limited exchange in networks.