Opportunism by cheating and its effects on industry profitability. The CIOPS model

Abstract

CIOPS (Cognitive Inter-organizational Production System) is an agentbased model that integrates industry structural aspects and agents' cognitive characteristics. A demand-driven industry, whose profitability depends on the quality of suppliers' products, is represented by a three-stage vertically integrated industry. Four types of decision-making patterns are analyzed and confronted each other: from the simplest one (random choice) to the most complex one, which includes direct and indirect experience and reputation. They operate as selection devices supporting agents to select the best suppliers. Requiring agents' communication, indirect experience and reputation could be influenced by eventual opportunist behaviors. As the disturbing effect of falsity depends also on the size of decision and information space, the CIOPS model simulates different situations. Even though submitted to some restrictive assumptions, by testing five groups of hypotheses CIOPS model enables to fix many points that could be tested by empirical data and further developed by relaxing the assumptions. Results show that, especially in presence of reputation-based trust, cheating attitude severely damages industry profitability and the enlargement of information space dramatically strengthens the negative effects. Though indirect experience and reputation-based trust are powerful tools to improve industry profitability, when people cheat they dramatically reverses its effects. A sharp performance diversity is also evidenced between industry segments, because firms in the first tiers segment, who are also the suppliers of final producers, perform much better and more efficiently than final producers. Though industry size growth determines the negative url: www.knownetlab.it 192 L. Biggiero, E. Sevi effect of reducing performance, it produces the positive effect of shortening the time to reach the highest profitability and to stabilize it. Finally, it is also demonstrated that cheating half times determines almost the same negative impact of cheating always.

An agent-based model for exploring the impacts of reciprocal trust on knowledge transfer within an organization

“…It also fits the research goal of this study the most by emphasizing the action of the person that is based on trust. Among the many dimensions and kinds of trust extensively reviewed by previous studies, three kinds of trust can be individuated: experience-based, identification-based and reputation-based (Biggiero and Sevi, 2009). We also present them in Table 1.…”

“…This dynamic process can be summarized as experience-based trust, which refers to experience and social-exchange knowledge (Mcknight et al , 2002). In fact, experience-based trust can be considered as a kind of knowledge-based trust which refers to direct and indirect experience that occurs between transactors (Biggiero and Sevi, 2009). The information that individuals collect from their own and others’ experience can be seen as internal and external knowledge sources (Biggiero, 2010).…”

“…However, this assumption of zero initial trust is contradicted by other scholars, assuming that cooperation between strangers could emerge (Macy and Skvoretz, 1998). In addition, the strangers who share similar values and identity can have an initial trust with each other (Meyerson et al , 1996; Luhmann, 1982; Biggiero and Sevi, 2009; Jones and George, 1998) and may transfer their hard-earned knowledge when they feel a sense of common identity (Camuffo and Grandinetti, 2011; Sammarra and Biggiero, 2001). This identification-based trust has been traditionally studied in reference to social relationships between individuals and groups (Tajfel, 1981).…”

“…The knowledge sharing in the simulation model is an on/off condition and it is not possible to share only a fraction of knowledge, which is eventually also because of convenience. This seems quite a radical and dichotomic position because in concrete practices many mechanisms of graduation can be conceived and discovered (Biggiero and Sevi, 2009). This limitation could be indeed overcome by enriching the model toward a more realistic that allows agents to share only a fraction of knowledge according to trust degree.…”