Cliques and elites: inter-organisational knowledge sharing across five star hotels in the Saudi Arabian religious tourism and hospitality industry - a grounded theory study

This research project is an exploratory, qualitative study focusing on knowledge sharing practices from an inter-organisational perspective in a context where organizations engage simultaneously in competitive and cooperative relationships. It addresses the lack of prior empirical research on the paradoxical competitive-cooperative environment of the tourism and hospitality industry and the need for theories in this area, which has been largely neglected by the discipline of Knowledge Management. This study deploys a four stage research design based on Grounded Theory principles. Throughout the first three stages a series of semi-structured interviews with hotel managers in the city of Madinah was conducted and analysed simultaneously as expected in the Grounded Theory approach. The result is a theory of knowledge sharing practices among five star hotels for the religious tourism and hospitality industry of Saudi Arabia. The research analysed the formation of a clique of five star hotels, which engage in intense cooperation despite the fact that they are competitors. Informal membership of the clique was found to be restricted by similarity, competition and status, and took place within the context of a market structure known as oligopoly. This type of market is characterized by few suppliers, a strategic interdependence between these competing suppliers, and a state of tension between actions that will benefit them individually and what will benefit the industry as a whole. Collective advantages benefit all clique members, and include areas such as standardisation, in which the hotels align their service levels and average out their prices; bargaining, with outside bodies, such as suppliers or industry regulators; and image promotion of the five star hotel market; finally, they also seek to assist each other by circulating amongst themselves details of potential and unwanted employees whom they wish to market to their fellow clique members, as well as information regarding troublesome clients. Thus, there exists interdependence between five-star hotels, which stems from the fact that there are few of them and each with a large share of the market. As a result, each hotel faces a conflict between the wish to compete - by seeking to increase market share and maximize profits independently - and the possibilities of cooperation with other, similar hotels, whereby all can jointly maximize profits and jointly protect their elite status. The theoretical model produced in this research places great emphasis upon the existence of this cooperative-competitive tension. A theoretical contribution of the model is the employment of oligopoly theory, to explain the way in which inter-organisational knowledge sharing occurs within this context. Another contribution is that it develops an analysis based on elements of game theory, particularly the Prisoner’s Dilemma. As is predicted in the Prisoner’s Dilemma, there are short-term gains to be met by agreeing to one course of action and then following another, as long as other firms do not deploy the same tactics. However, the same theory illustrates the mutual benefits of cooperation, which work to build bridges and create a basis for long-term success and protect and maintain the elite status of the clique. Accordingly, this research demonstrates that, similar to successful strategies within the Prisoner’s Dilemma, hotels choose to cooperate because it is a better long-term strategy than seeking to divide the market through competition.