Telling “white lies” within the entrepreneurial firm: How rationalized knowledge hiding between founder CEO and founder CTO influences new product development

Most knowledge hiding studies focus on its dark side. In contrast, we theorize the potential positive effect of rationalized knowledge hiding in the context of entrepreneurial firms’ new product development (NPD) speed. We extended and integrated theoretical perspectives of rationalized knowledge hiding and trust in theorizing that rationalized knowledge hiding accelerates NPD—a component considered critical to firm survival and growth. We developed and analyzed two datasets on the founder CEOs and the founder CTOs of 279 high-technology entrepreneurial firms in China to test this assumption. Empirical results suggest that CTOs’ rationalized knowledge hiding from CEOs accelerates these firms’ NPD. Further, such acceleration is slower (faster) when CEOs’ affective (cognitive) trust in CTOs is higher. Overall, we theorize that rationalized knowledge hiding has a positive impact on entrepreneurial firms’ NPD. The study offers a unique contribution to understanding the link between knowledge hiding and NPD, and practical implications for entrepreneurial firms.