Study On To Improving Efficiency of Knowledge Sharing in Knowledge-Intensive Organization

Chinese Academy of Sciences Research Center on Data Technology and Knowledge Economy
Management School of Graduate University of Chinese Academy of Sciences
Study on to Improving Efficiency of Knowledge

Sharing in Knowledge-Intensive Organization
Associate Professor Lingling Zhang

Prof. Shouyang Wang, Yong Shi
Aug. 2005
IIASA, Austria
The 19th International Workshop on CSM/The 6th International Symposium on KSS

Key Laboratory of Management, Decision and Information Systems, CAS
Study on Improving Efficiency of Knowledge Sharing in Knowledge-Intensive Organization CSM/KSS
Agenda
Background
Game analysis
Motivation mechanism
Conclusion
2
Management School of Graduate University of Chinese Academy of Sciences.
Knowledge Sharing in Knowledge-Intensive Organization
Importance Barriers
In Knowledge-Intensive In knowledge-intensive
Organization, making use of organizations, there are more
intangible, intellectual barriers in knowledge sharing :
knowledge is more important.
- Knowledge has become the hard- - nature of knowledge itself : Tacit,
core of an employees ability knowledge is difficult to clarify and
- KS becomes the main approach explain in words
that employees acquire knowledge - transmitter of knowledge: They are
and make creation usually unwilling to share it with
- The objective of KS is to achieve a others
corporate task(always a new - lack of effective platform and
knowledge product) motivation that help to knowledge
- Frequency and depth of knowledge sharing
sharing is greater than other kind of
company.
Davenport and Prusak (1998)
A formula of knowledge sharing:
sharing=transmit + absorb.
3
Literature review
Teece has proposed the concept of knowledge share for a long time. After this,
knowledge sharing has gradually become a hotspot in knowledge
management.
In Kought and Zander (1992) s opinion, the capacity of knowledge share is an
important element for a company to survive.
Dixon (2000) has studied the face to face knowledge communication and
sharing.
Lynne(2001) suggested to use a electronic knowledge-base to realize
synchronous and asynchronous knowledge communication and sharing.
After studying the possible barriers of knowledge sharing in individual,
technology and organization, Richard and Gillian (2000) thought that the main
barrier of knowledge sharing is individual.
4
Literature review
Nonaka and Takeuchi(1995) proposed an organizational knowledge creating
model based on Polanyis distinction tacit knowledge and explicit knowledge.
Originating Ba Originating Ba
(Socialization) (Socialization)
Face-to face Peer-to-Peer
On-the-site Collaboration
(Internalization) (Combination)
Exercising Ba Systematizing Ba
Resource: Nonaka et,al.
Nonaka also emphasized a Ba during enabling process. The concept of ba

has recently been explored as a supportive platform for recently been
explored as a supportive platform for knowledge creation(Nonaka ans Konno,
2001).
Ba can be thought as a shared mental space for emerging relationships. This
space can be physical(e.g. office, dispersed business space), virtual (e.g. e-
mail, teleconference) or mental (e.g. shared experiences, ideas, ideals).
5
Literature review
In these models, we can see they mainly emphasizes on the function of Ba, place or
platform in improving the efficiency of knowledge sharing. That is, how to create a
good place, tool or platform to make players convenient and willing to share their
knowledge.
We agree that in knowledge sharing, platform or Ba is very important, but in

knowledge-intensive organizations, situation is more complex and difficult, where
knowledge is very important for individuals to keep advantage in organizations, so they
are usually unwilling to share it with others, or contribute their personal knowledge to
the company. So, effective platform or place can make employees to share a few
knowledge, but once personal benefit involved, for reasonable consideration, employees
will keep secret of their knowledge.
To share knowledge well, we have to consider motivation methods. Current knowledge

sharing theories are seldom regard motivation as an important element, or just regard it
as an element of platform or place creation or use management control methods and
organizational background to replace it.
6
Our Opinion
We think that to share knowledge effectively, organizations must at least solve
two problems simultaneously, platform (or place) and motivation mechanism.
Figure 2 shows the above-mentioned relations. The efficiency and
effectiveness of knowledge sharing in one organization is determined by the
effectiveness of platform and motivation mechanism. Especially in
knowledge intensive company, it is more important.
Strong
I Motivation IV
Share Enough
Strong Ba, Weak Motivation Strong Ba and Motivation

Perceptual Platform Ba
/Ba III
II Motivation+Ba
Weak BaWeak Motivation Weak BaStrong Motivation

Weak
Strong
Weak Motivation
Rational
7
Our Opinion
In quadrant I, strong platform/Ba, but motivation is weak. In this situation,
company provides a good platform/Ba and place for employees to share
knowledge, such as meeting room, good company culture, good organization
structure and skill, etc., where employees feel happy and likely to share
knowledge with others, but once personal benefit is involved, theyll consider it
rationally and keep core knowledge secret. To improve efficiency and
effectiveness of knowledge sharing, design of motivation mechanism is a must.
In quadrant II, weak platform/Ba, weak motivation mechanism, which is a

common phenomenon in some companies, they dont think its necessary to
share knowledge among employees. In this situation, the effect of knowledge
sharing is worst, especial those tacit knowledge. To improve the knowledge
sharing in these companies, one should design motivation mechanism and
create appropriate platform/Ba to make employees willing to share knowledge.
8
Our Opinion
In quadrant III, the leader of organization has realized the importance of knowledge and
designed some motivation mechanism, but not realize the importance of company
culture or Ba, so fail to create a platform for knowledge sharing, restrict employees
passion. For these organizations, they should take more consideration in creation of
platform/Ba.
In quadrant IV, the effect of knowledge share is the best. In these organizations, good
motivation mechanism and platform/Ba encourage employees to share knowledge
perceptually and rationally. The combination of platform and motivation mechanism can
cause a high efficient knowledge sharing, both in quality and quantity.
In knowledge sharing, company should know which quadrant it belongs to, and then
take specific method accordingly.
For the role of Ba or platform in knowledge, Nonaka and etc has had a detailed paper.
So in this paper, well emphasize on the role of motivation mechanism in knowledge
sharing within organization.
9
Agenda
Background
Game analysis
Conclusion
10
Game analysis
Without motivation mechanism, individuals of organization are unwilling to share
knowledge with others because they are afraid of standing in their own light. A simple
complete information static gaming model can be used to analyze this process.
According to the situation of knowledge share in knowledge-intensive organizations,

knowledge can be sorted into two parts:
a, nontransferable knowledge, mainly tacit knowledge that cannot be transfered or
imitated in a short term, or cost too much to share.
b, transferable knowledge, mainly explicit and part tacit knowledge, Which is part of core
technical knowledge.
Except for directly absorbing resource knowledge of others to get value, individuals will
also obtain new creative value because of the synergetic effect and leverage of
knowledge. These new creative value includes synergetic value and multiplication
value. The more dependence among organization members are, the more the
synergetic value is.
On the other hand, recipient using obtained knowledge and causes value loss of
knowledge provider, such as knowledge loss because of losing monopoly.
11
Game analysis
Suppose player A and B are individuals of an organization, they are rational,

the knowledge theyll share and sharing is useful for organization.
U A1 U A2 UB1 UB2 Member A and Bs nontransferable knowledge value and

transferable knowledge value
A (0 < A<1)and B (0 < B<1): Knowledge absorbency coefficient
U A3 UB3: Synergetic value after knowledge sharing because of synergetic effect of
knowledge
U A4UB4: Multiplication value because of leverage of knowledge
U A5 UB5 Recipient using obtained knowledge and causes value loss of knowledge
provider, such as knowledge loss because of losing monopoly.
12
Game analysis
For analyzing convenient, we divided the sharing process into two processes: A to B
process and B to A process. In this way, we will analyze each companys knowledge
gain after a simple round.
13
Participant A Participant B
UA1+UA2 UB1+UB2 a. A shares knowledge to B. Company B

absorbs shareable knowledge value (BUA2) of
Knowledge value of both participants before sharing company A, at the same time, because of
synergetic effect and leverage combined with
UB2
Participant A Participant B knowledge of A, causes new value (include
synergetic value UB3 and multiplication value
UA1+UA2+AUB2+UA3+UA4 UB1+UB2
a UB4 ).
Participant Bs knowledge value structure after sharing knowledge with A b. B shares knowledge to A. Company A
absorbs shareable knowledge value (AVB2)
Participant A
UA2
Participant B of company B, at the same time, because of
synergetic effect and leverage combined with
UA1+UA2 UB1+UB2+BUA2+UB3+UB4 knowledge of B, causes new value UA3 UA4 .
Participant As knowledge value structure after sharing knowledge with B b c. After knowledge sharing of both
Participant A UB2 UA2 Participant B companies, Obviously, after a simply round,
both values of player A and B are increased
UA1+UA2+AUB2+UA3+UA4-UA5 UB1+UB2+BUA2+UB3+UB4-UB5 than before.
Two companies knowledge value structure after knowledge sharing
c
Figure 3 Knowledge sharing process
14
Game analysis
Suppose all the players are rational. The aim of sharing knowledge is for maximal
payoff. Simply, we just consider the situation of only two players: A and B. Each
player selects one strategy: sharing knowledge or not. So there are four combinations.
Its payoff matrix is as table 1.
Table 1 Payoff Matrix of the Game
B Strategy
A Strategy
Sharing Not sharing
AUB2+UA3+UA4-UA5 -UA5
Sharing
BUA2+UB3+UB4-UB5 BUA2+UB4
AUB2+UA4
0
Not sharing
0
-UB5
15
Game analysis
M.levy has demonstrated that there is no relevancy between low synergetic value and high
multiplication value, because he found that low synergetic value always goes with low value loss,
and high synergetic value always goes with high value loss. By comparing synergetic value with
value loss while increased value is bigger than value loss, We can see that the game has two
Equilibrium outcomes, as table 2:
Table 2 Equilibrium Outcome of the Game
Equilibrium Outcome
UA3<UA5, UB3<UB5, (not-sharing, not-sharing)
UA3<UA5, UB3>UB5, (not-sharing, not-sharing)
UA3>UA5, UB3<UB5, (not-sharing, not-sharing)
UA3>UA5, UB3>UB5, (not-sharing, not-sharing) (sharing, sharing)
16
Game analysis
aPrisoners dilemma. When any players t synergetic value is less than value loss, (not-
Sharing, not-sharing) is the only Equilibrium Outcome. That is to say, to each player the not-
sharing payoff is better than sharing strategy absolutely, so they both select not-sharing strategy.
It is a dominant strategy equilibrium.
But if both of them select not sharing, their payoffs are less than the payoffs ones when they all
select sharing ones. To get the maximal benefits they should choose the sharing strategy and
cooperation respectively. It is the conflict between collectivity and individual rationality. That is
to say, though cooperation and sharing knowledge are favorable to each player, in a one time
game , the two players would also get in Prisoners dilemma. The reason is that when synergetic
value is less than value loss, the synergetic value from knowledge sharing cant make up risk
from cooperation. So the players both select not sharing.
In the knowledge intensive companies, players are risk-evade. So how to design a mechanism to
let them select strategy of sharing knowledge is a critical problem. The method to solve this
problem is repeated game.. In this condition the knowledge sharing becomes possible.
17
Game analysis
b. Assurance Game. Only when the two players synergetic value is bigger than their
value loss, UA3 >UA5 and UB3 >UB5 the Equilibrium Outcome are (not-Sharing, not-
sharing) and (Sharing, Sharing).
That is to say, the players would get the maximal benefits while they make the same
choose. There is First-mover advantage. when synergetic value is bigger than value
loss, players will wait and see. If A player selects sharing strategy, Bs best selection is
sharing, if A player selects not-sharing strategy, player Bs best strategy is not-sharing.
18
Agenda
Background
Game analysis
Motivation mechanism.
Conclusion
19
How to deal with prisoner dilemma (Not sharing, Not sharing) is critical to improve
knowledge sharing.
In Game theory, infinitely repeated game can break prisoner dilemma. In a repeated
game, players (employees) will think how his present action will influence the other
players future strategy. He is not only get his present outcome but also his future
outcome. So in a repeated game, cooperation (Knowledge sharing) is possible.
If employees did not know when they would leave the company exactly, the
knowledge sharing game can be looked as infinitely repeated game. So as long as the
player is patient enough, the equilibrium outcome can appear.
Equilibrium outcome and its stability of the infinitely repeated game are concerned
with players strategy.
20
a. Grim Strategy
At the very beginning, Players select sharing knowledge strategy, and then, if one
selects sharing knowledge strategy the other would selects it as well. But if the other
player select not sharing one time, he will select not sharing for ever.
Let RA=AUB2+UA3+UA4-UA5 TA=AUB2+UA4 SA =- UA5 PA= 0
In this condition, if the player selects sharing knowledge strategy, his expected utility
is: U R A
1
AC
P
If he select not sharing strategy, his expected utility is:U T 1 T AD A
A
A
Here is discount factor, it reflects players attitude to the future income. The Bigger
of represents the more important the future income to the player. also reflects the
feasibility of players meet each other in the future. Bigger , more feasibility.
T R R
When U U , players will select sharing knowledge. T P 1 T
A A A
AC AD
A A A
So, as long as is big enough, effective knowledge sharing equilibrium outcome can
be realized by repeated game. It means that bigger the long term expected utility and
longer the time to work together, then easier for knowledge sharing.
21
b. Tit-for-Tat Strategy.
In a Infinitely repeated game, Tit-for-Tat is the best strategy.
But the strategy is not fit for the knowledge sharing game.
First, It is difficult to have both retaliation and toleration. Once break faith will
result in permanent and hard to cooperate again.
Second, because of the difficulties of expression and receiving information it is also
difficult to measure how much knowledge is shared during the game, it is impossible
to select alternatives in sharing and not sharing continually.
The third, Tit-for-Tat Strategy need players know the other players strategy in short
time, it is impossible in reality.
22
How to improve efficiency of Knowledge sharing in knowledge-intensive company
We can see that, suppose players are rational, they will select not-sharing knowledge which is the
best strategy to them. So, to improve efficiency of knowledge sharing in knowledge-intensive
company, except to Ba, the company must emphasis on the motivation mechanism.
It has been proved that, as long as the discount factor is big enough, the effective knowledge
sharing can be realized. Factors influence discount are: expected income, possibility of long term
relationship, return of cooperate, punish to betrayer.
The knowledge intensive company can improve its efficiency of Knowledge sharing by:
1. Keeping the employee team in a relative stability, to improve their long term expected
outcome and cooperate opportunities Which will improve discount factor and realize effective
Equilibrium Outcome.
2. Establishing motivation mechanism, encourage employee to share knowledge, improve
expected outcome for a long term cooperation and decrease the excepted outcome of betrayer
and temptation of the not-sharing
3. Creating an effective and cultural environment for knowledge sharing.
23
Agenda
Background
Game analysis
Inspirit mechanism.
Conclusion
24
Conclusions and Future research

In this paper, we analyzes Characteristic of Knowledge Sharing and barriers in
Knowledge-Intensive Organizations.
We believe, to improve the efficiency of knowledge sharing, two problems should be
solved: Ba (Platform, place) and motivation mechanism. Especially in Knowledge-
Intensive Organizations, motivation mechanism is more important.
Analyzing problem of prisoner dilemma between individuals in knowledge sharing,
and show the effective motivation mechanism to improve the efficiency of knowledge
creation and sharing among individuals.
Knowledge Sharing
Knowledge of Knowledge of
Resources Sharing channel recipient
Platform / Ba and Motivation Mechanism
Begin Implementing Adjusting conformity
Figure 4 Knowledge sharing with motivation mechanism and ba
25
Conference
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4. Kought, B.&U.Zander. 1992. Knowledge of the firm, Combinative capabilityes, and the replication of technology. Organization Science,3:383-397.
5. Dixon ,N. M. Common Knowledge : How Company Thrive by Sharing What They Know ,Harvard Business School Press ,Boston ,MA. 2000
6. Lynne ,M. M. Toward a Theory of Knowledge Reuse : Types of Knowledge Reuse Situations and Factors in Reuse Success . Journal of Management
Information System ,2001 ;18(1) (
7. Richard J Barson1 , Gillian Foster1 , Thomas Struck1. 2000 : Inter - and Intra -Organizational Barriers to Sharing Knowledge in the Extended Supply -
Chain. http :/ / www. corma. net/ download/ e2000.pdf
8. Davenport , T. H. , Prusak L. Working Knowledge , Boston MA , Harvard Business School Press ,1998
9. Jeffrey Cummings. Knowledge Sharing : A Review of the Literature , 2003. http :/ / lnweb18. worldbank. org/ oed/ oeddoclib. nsf/ Doc UNID View For
JavaSearch/ D9E389E7414BE9DE85256DC600572CA0/ file/ knowledge - eval - literature - review. Pdf)
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J. Roos, & A. Van de Ven(Eds.), Implementing Strategic Process: Change, Learning, and Co-operation. Oxford: Basil Blackwell:117-144
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Chinese Academy of Sciences Research Center on Data Technology and Knowledge Economy

Management School of Graduate University of Chinese Academy of Sciences

Study on to Improving Efficiency of Knowledge

Associate Professor Lingling Zhang

The 19th International Workshop on CSM/The 6th International Symposium on KSS

Knowledge Sharing in Knowledge-Intensive Organization

Face-to face Peer-to-Peer

Resource: Nonaka et,al.

Nonaka also emphasized a Ba during enabling process. The concept of ba

We agree that in knowledge sharing, platform or Ba is very important, but in

To share knowledge well, we have to consider motivation methods. Current knowledge

Strong Ba, Weak Motivation Strong Ba and Motivation

Weak BaWeak Motivation Weak BaStrong Motivation

In quadrant II, weak platform/Ba, weak motivation mechanism, which is a

According to the situation of knowledge share in knowledge-intensive organizations,

Suppose player A and B are individuals of an organization, they are rational,

U A1 U A2 UB1 UB2 Member A and Bs nontransferable knowledge value and

UA1+UA2 UB1+UB2 a. A shares knowledge to B. Company B

UA3<UA5, UB3<UB5, (not-sharing, not-sharing)

UA3<UA5, UB3>UB5, (not-sharing, not-sharing)

UA3>UA5, UB3<UB5, (not-sharing, not-sharing)

UA3>UA5, UB3>UB5, (not-sharing, not-sharing) (sharing, sharing)

Conclusions and Future research

Platform / Ba and Motivation Mechanism

Begin Implementing Adjusting conformity

Figure 4 Knowledge sharing with motivation mechanism and ba

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