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The KIBS paradox and structural holes

Abstract A first aim of this paper is to discuss the problem of vertical competition between suppliers of knowledge-intensive business services (KIBS) and their customers. The problem stems from the fact that the former transfer knowledge to the latter, thereby placing the latter in a position to produce the previously-purchased services by themselves (the KIBS paradox). A second aim is to demonstrate how KIBS deal with this problem. A literature review provides the elements we need to identify the competitive issue that these organisations face. Then we try to explain how KIBS deal with this issue, drawing on two theoretical approaches: (i) Burt’s social structural theory of competition; and (ii) the concepts developed in the knowledge management literature relating to intra- and inter-organisational knowledge processes. The results of this theoretical work provide an avenue for further research on KIBS and relevant implications for practitioners.