Knowledge Sharing and Learning in Organizations: Role of Incentives and Information Systems

Abstract

Knowledge sharing and learning play a fundamental role in the success of knowledge management (KM). While information technologies facilitate learning and sharing of knowledge in organizations, incentive systems help to align organizational and individual goals. Applying a modeling framework that captures the characteristics of both information systems and incentives in a team-based organization, we demonstrate that an output allocation rule linear in output, and sharing-learning incentive rewards linear in the amounts being shared and learned can be optimally designed. Broad conditions for implementing such incentive systems are derived. The incentives facilitate desirable KM goals such as knowledge sharing (learning) alignment and full-knowledge transfer. Deriving an optimal level of knowledge management systems (KMS), we determine a threshold level required to achieve complete-knowledge enablement to facilitate high performance teams. We explore how investment in information technologies impacts incentives and their combined role, and find conditions under which they substitute or complement each other. Moreover, we demonstrate that IT can help organizations narrow the gap between the profits the firm can make under the two cases — when worker’s knowledge levels are known and unknown. We extend the model to multiple dimensions of knowledge, study a mandatory learning policy, and compare the team-based results to a non-team based setting. Our research provides guidelines for matching investments in information technology with appropriate incentives.