Illuminating and Bridging the Vortex between Tacit and Explicit Knowledge: Counterbalancing Asymmetric Information in High-Value Low-Frequency Transactions

Abstract

Asymmetric information within a transaction can cause a great deal of harm to a buyer or a seller who is not aware of the disparity of the information provided. This research explored the causes of asymmetric information in a high-value low-frequency transaction (HVLFT). Many factors contribute to asymmetric information, and these are especially prevalent in an HVLFT. The two main differentiating characteristics of an HVLFT are the low frequency and the high value associated with this type of transaction. If a transaction has a low frequency, the valuation of the asset becomes harder to ascertain. Because of this low frequency, it is also harder for a buyer or seller to learn from previous experiences. The high value of an asset increases the tension between the seller and the buyer. With conflicting objectives, the seller is not motivated to address asymmetric information. Information that could be relevant to the buyer might not be shared by the seller, because this information could negatively influence the financial gain from the seller’s perspective. These HVLFTs are generalisable to numerous industries, such as marine, jewellery, automotive and real estate. The real estate industry is a prime example of the aforementioned problems and issues. This research addresses the causation of asymmetric information in an HVLFT and provides procedural and technological artefacts to counterbalance asymmetric information in an HVLFT, using the New Zealand real estate industry as an exemplar. This thesis expands on asymmetric information in the context of an HVLFT, through a review of the literature on stakeholders, decision-making, decision support, knowledge, knowledge management and knowledge management systems. The literature review and pilot study led to the creation of four conceptual artefacts to address asymmetry between the buyer and seller and to illuminate asymmetric information in an HVLFT. The artefacts highlighted the interactions between the various stakeholders and led to the conceptualisation of the research questions and objectives that guide this research. The initial part of the research was supported by a pilot study expanding on and validating the problems and issues as mentioned above. This pilot study also resulted in the proposal of a number of nascent procedural artefacts that illuminated the vortex between tacit and explicit knowledge as a key contributor to asymmetric information, particularly in the context of an HVLFT. Exploring this vortex, where tacit or explicit knowledge has been lost, distorted, suppressed, misrepresented or misappropriated, intentionally or unintentionally, resulted in the synthesis of a new knowledge dimension (X). These artefacts illuminate and bridge the chasm of decision-making, asymmetric information, noise in a transaction and how information is used or misused between the various stakeholders in an HVLFT. A case study was conducted to explore and flesh out the nascent ideas, models and procedural artefacts proposed in the pilot study. The case study was conducted over a period of six months, among key stakeholders involved in a New Zealand real estate transaction. The case study focused on the decision-making process and the information flows seen from the perspective of different stakeholders involved in an HVLFT. Based on this case study, a new model of knowledge was proposed, articulated and applied. This model explicitly acknowledges the new knowledge dimension (X) and the dark side of knowledge. This knowledge model suggests the need for the application of convergent technologies to ameliorate the risk and asymmetricity caused by the dark side of knowledge and enhance governance in the context of an HVLFT. Finally, four proof of concept system artefacts were created based on the information collected from the pilot study, case study and literature. These artefacts help in counterbalancing, bridging and illuminating asymmetric information through system dynamic models, gamification, blockchain architecture and a decision support app. The conceptual, procedural and systems artefacts are intertwined and validate each other. Furthermore, these artefacts were evaluated through a number of design science principles, guidelines and mechanisms. All artefacts were presented at three top tier conferences and published in their proceedings (HICSS 2020, HICSS 2021 and AMCIS 2020) and CCIS Springer series (FNSS 2019) and Springer Lecture Notes in Computer Science (ICCASA 2020). Furthermore, a paper that fleshes out the key artefacts of this thesis has been published in the journal of Decision Support Systems (A* ABDC).