Working Paper Alfred P. Sloan School of Management Informal Alliances: Information Tradi>4g between Firms Informal Alliances: Information Tradd^^g between Firms Massachusetts Institute of Technology Informal Alliances: Information Trading between Firms

SUMMARY Firms frequently cooperate by exchar\ging valuable information informally. This paper presents empirical evidence on information trading in the U.S. specialty steel and steel mini-mill industry. Technical information is exchanged informally between firms, including direct competitors. Employees who trade information orient their trading decisions around the economic interests of their firms. Employees are less inclined to provide information if doing so is likely to considerably hurt their firm's ability to capture economic rents from the information. They are more willing to provide information if they can expect to receive valuable information in return. Factors like friendship or duration of the relationship with the inquirer appear to be of secondary importance for the decision whether to trade a specific unit of information.