Knowledge market in organizations: incentive alignment and IT support
| DOI | https://doi.org/10.1108/02635571211255041 |
| Date | 17 August 2012 |
| Published date | 17 August 2012 |
| Pages | 1101-1122 |
| Author | Zuopeng (Justin) Zhang,Sajjad M. Jasimuddin |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Knowledge market in
organizations: incentive
alignment and IT support
Zuopeng (Justin) Zhang
School of Business and Economics, State University of New York at Plattsburgh,
Plattsburgh, New York, USA, and
Sajjad M. Jasimuddin
Euromed Management, Marseille, France
Abstract
Purpose – Knowledge market has become an important issue of knowledge management. The
purpose of this paper is to study the design of an internal knowledge market for enabling knowledge
transfer within an organization.
Design/methodology/approach – The knowledge market is modeled as a pull market, where
buyers post and price their questions to elicit answers from potential sellers. Designing and offering
different incentives and information technology (IT) support to knowledge workers with
heterogeneous knowledge levels, a firm maintains the efficiency of the market and maximizes the
organizational benefit from knowledge transfer.
Findings – The authors identify two payment policies, a priori and a posteriori, and two
market-regulating mechanisms, Locking and Open mechanisms. The optimal designs of incentive
contracts and IT support are fully demonstrated for the a priori policy and Locking mechanism. The
benefits of the market for knowledge transfer are illustrated from three aspects: transaction price as
sharing reward; market as payment platform; and IT as transaction facilitator.
Originality/value – The paper provides valuable insights for practitioners to effectively manage
knowledge assets within markets.
Keywords Organizations,Information systems, Knowledgemanagement, Knowledge market,
Incentives
Paper type Research paper
1. Knowledge market in organizations
In a knowledge-based society,the knowledge withinan organization is viewed asthe main
source of its competitive advantage( Jasimuddinet al., 2005). Knowledge is continuously
created, shared and applied through the processes of knowledge management (KM)
development (Chong et al., 2006) that enables companies to deliver innovative products
and services (Gupta et al., 2000). Internal knowledge markets can play a role to help
facilitate the creation and transfer of knowledge within an organization.
Benbya and van Alstyne (2011, p. 66) define an internal knowledge market as:
[...] a forum within an organization that matches knowledge seekers with knowledge sources
– for example, branch offices and headquarters, novices and experts – and that includes
material or social incentives to encourage information sharing.
Access to intrafirm knowledge is obtained through knowledge-based exchanges
within internal knowledge markets (Verbeke et al., 2011). A marketplace connects and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-5577.htm
Knowledge
market in
organizations
1101
Received 30 November 2011
Revised 4 February 2012,
14 April 2012
Accepted 15 April 2012
Industrial Management & Data
Systems
Vol. 112 No. 7, 2012
pp. 1101-1122
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571211255041
facilitates transactions among the two pools of participants: it accommodates those
who own and those who seek knowledge assets (Dushnitsky and Klueter, 2011).
However, various barriers exist that inhibit knowledge sharing and learning on a
market. Incentives and information systems are two major enablers in promoting
knowledge sharing within organizations. Early adopters such as Xerox, Siemens, Best
Buy, Eli Lilly and McKinsey & Co. have demonstrated the role of incentives and
information technology (IT) in managing knowledge flows among employees. For
example, Xerox uses Eureka, an intranet system connected with a corporate database, to
help service representatives share repair tips around the world with their laptops. Xerox
monitors and rewards its employees based on their participation and contributions to
Eureka (APQC, 2001b). Best Buy applies RetailZone and KnowledgeZone, two primary
KM tools, in combination with a framework that measures the contribution of its
employees to the KM system to achieve various organizational objectives (APQC, 2001a).
The practice of maintaining a knowledge market to facilitate internal knowledge
transfer has been recently documented in business communities. Creating and
maintaining a successful knowledge market requires a firm to allow the trade of
distinctive knowledge, provide an exchange mechanism, maintain competition, and
develop standards, protocols, and regulators for both knowledge buyers and sellers
(McKinsey & Co., 2004). IBM’s social network tool, DogEar, has been successfully
implemented by some large service firms in coordinating their internal knowledge
markets. Hewlett-Packet developed an internal knowledge to gather and disseminate
knowledge about the future sales of HP printers (Mills and Snyder, 2009). Demand
Ventures Ltd, a Canadian Venture Exchange, employed an internal knowledge market
with dynamicpricing mechanisms toreward knowledge sharing(The Free Library, 2000).
Despite the emerging importance of internal knowledge markets, it is not well
understood how incentives and information systems jointly support and regulate such
markets. Our research addresses the gap by exploring the implementation of an
internal market, where buyers can post and price their questions and sellers transfer
their knowledge to buyers to obtain payments. Our model is inspired from Google
Answers, a public online knowledge market, and UClue.com, a fee-based internet
knowledge market staffed by former Google Answers researchers after the demise of
Google Answers on December 1, 2006. The difference is that our model is fully
embedded in production processes within organizations so that workers try to achieve
a better production output by utilizing an internal market. In particular, we investigate
the design of incentive contracts to induce sellers to optimally price their questions on
the market as well as the necessary support of information systems for this market to
fulfill knowledge transactions.
The paper proceeds as follows. Next section reviews related literature, focusing on
the IT support and incentives for knowledge market. Section 3 outlines the model of an
internal knowledge market. Section 4 presents our analysis and discussion an d Section
5 concludes the paper.
2. IT and economic incentives for knowledge market
Davenport and Prusak (1998) pioneer the concept of knowledge market as a mechanism
for enabling the knowledge transfer among providers and users, highlighting the
necessity of IT support and incentives to build a market. Following this initial idea of
knowledge market within organization, Ba et al. (2001) demonstrate that knowledge
IMDS
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