Encouraging knowledge sharing: the role of organizational reward systems.

This article examines the role of monetary rewards in encouraging knowledge sharing in organizations through four mechanisms of knowledge sharing. We argue that the system of contributing knowledge to databases is the most amenable to rewards contingent on knowledge sharing behaviors because of opportunities for the reward allocator to measure the knowledge sharing behaviors. In the case of formal interactions within or across teams and work units, while rewards could be made partly contingent on knowledge sharing behaviors as in merit pay, rewards based on collective performance are also likely to be effective in creating a feeling of cooperation, ownership, and commitment among employees. In addition, we propose that team-based rewards and company wide incentives (profit sharing, gainsharing, and employee stock options) would be particularly instrumental in enhancing knowledge sharing within teams and across work units, respectively. In the case of knowledge sharing through informal interactions, the key enabling factor is trust between the individual and the organization. In this case, the role of rewards is indirect, that is, procedural and distributive fairness of organizational rewards are important factors in the development of trust. We also consider knowledge sharing in communities of practice and theorize that intrinsic rewards and factors that build expertise and provide recognition are the most appropriate means of fostering feeling of competence. Finally, we discuss the research implications.

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Organizational knowledge has been recognized as a valuable intangible resource that holds the key to competitive advantage (Grant, 1996). However, Spender and Grant (1996) noted that despite recent interest in organizationally embedded knowledge, little progress has been made "in understanding its anatomy and creation" (p. 6). Researchers have argued that since individuals are the prime movers of knowledge creation in an organization (Nonaka, 1994), knowledge sharing among individuals could assist in knowledge creation at a collective level. Senge (1990) proposed that organizational knowledge is created through communication of individual learning among co-workers. Similarly, Nahapiet and Ghoshal (1998) postulated that organizational knowledge is created as a result of the combination and exchange of existing knowledge among employees. Thus, given the importance of knowledge sharing, scholars and practitioners would be interested in identifying tools that enhance knowledge sharing within the organization. Our paper examines the role of one such mechanism, organizational reward systems, in influencing knowledge sharing by employees.