The 19th International Workshop on CSM/The 6th International Symposium on KSS Key Laboratory of...

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

Key Laboratory of Management, Decision and Information Systems, CAS

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

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CSM/KSSStudy on 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.

Agenda

Background

Game analysis

Motivation mechanism

Conclusion

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Knowledge Sharing in Knowledge-Intensive Organization

Importance

- Knowledge has become the hard-

core of an employee’s ability

- KS becomes the main approach

that employees acquire knowledge

and make creation

- The objective of KS is to achieve a

corporate task(always a new

knowledge product)

- Frequency and depth of knowledge

sharing is greater than other kind

of company.

Barriers

Why interesting

and important?

In Knowledge-Intensive

Organization, making use of

intangible, intellectual

knowledge is more important.

In knowledge-intensive

organizations, there are more

barriers in knowledge sharing :

- nature of knowledge itself : Tacit,

knowledge is difficult to clarify and

explain in words

- transmitter of knowledge: They are

usually unwilling to share it with

others

- lack of effective platform and

motivation that help to knowledge

sharing

Davenport and Prusak (1998) A formula of knowledge

sharing: sharing=transmit + absorb.

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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.

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Literature review

Nonaka and Takeuchi(1995) proposed an organizational knowledge creating model based on Polanyi’s distinction tacit knowledge and explicit knowledge.

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).

Originating Ba(Socialization)

Face-to face

Originating Ba(Socialization)

Peer-to-Peer

(Internalization)Exercising Ba

On-the-site

(Combination)Systematizing Ba

Collaboration

Resource: Nonaka et,al.

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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.

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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.

Motivation

Platform/Ba

Weak

Weak

StrongMotivation

Ba

Motivation+Ba

Rational

Perceptual

Strong

I

Strong Ba, Weak Motivation

IV Share Enough Strong Ba and Motivation

II

Weak Ba ， Weak Motivation

III

Weak Ba ， Strong Motivation

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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, they’ll 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 don’t think it’s 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.

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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, we’ll emphasize on the role of motivation mechanism in knowledge sharing within organization.

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Agenda

Background

Game analysis


Conclusion

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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.

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Game analysis

Suppose player A and B are individuals of an organization, they are rational, the knowledge they’ll share and sharing is useful for organization.

U A1 、 U A2 、 UB1 、 UB2 Member A and B’s nontransferable knowledge value and

transferable knowledge value

αA (0 < αA<1)and αB (0 < αB<1): Knowledge absorbency coefficient

U A3 、 UB3: Synergetic value after knowledge sharing because of synergetic effect of

knowledge

U A4 、 UB4: 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.

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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 company’s knowledge gain after a simple round.

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Participant A’s knowledge value structure after sharing knowledge with B

Participant A Participant B

UA1+UA2 UB1+UB2+αBUA2+UB3+UB4

UA2


UB1+UB2+αBUA2+UB3+UB4-UB5UA1+UA2+αAUB2+UA3+UA4-UA5

Two companies’ knowledge value structure after knowledge sharing

UB2 UA2

Figure 3 Knowledge sharing process


UA1+UA2 UB1+UB2

Knowledge value of both participants before sharing

Participant B’s knowledge value structure after sharing knowledge with A


UB1+UB2

UB2

UA1+UA2+αAUB2+UA3+UA4

a. A shares knowledge to B. Company B absorbs shareable knowledge value (αBUA2) of

company A, at the same time, because of synergetic effect and leverage combined with knowledge of A, causes new value (include synergetic value UB3 and multiplication value

UB4 ).

b. B shares knowledge to A. Company A absorbs shareable knowledge value (αAVB2) of

company B, at the same time, because of synergetic effect and leverage combined with knowledge of B, causes new value UA3 、 UA4

.

c. After knowledge sharing of both companies, Obviously, after a simply round, both values of player A and B are increased than before.

a

b

c

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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

A Strategy

B Strategy

Sharing Not sharing

Sharing

αAUB2+UA3+UA4-UA5 ，

αBUA2+UB3+UB4-UB5

-UA5 ，

αBUA2+UB4

Not sharing

αAUB2+UA4 ，

-UB5

0，0

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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)

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Game analysis

a ． Prisoners’ dilemma. When any player’s 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 can’t 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.

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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, B’s best selection is sharing, if A player selects not-sharing strategy, player B’s best strategy is not-sharing.

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Agenda

Background

Game analysis

Motivation mechanism.

Conclusion

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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 player’s 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 player’s strategy.

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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=αAUB2+UA3+UA4-UA5 TA=αAUB2+UA4 SA =- UA5 PA= 0

In this condition, if the player selects sharing knowledge strategy, his expected utility is:

If he select not sharing strategy, his expected utility is: Here is discount factor, it reflects player’s 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.

When , players will select sharing knowledge. 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.

1A

AC

RU

AA

AAD TP

TU

1

ADAC UU A

A

AA

AA

T

R

PT

RT

1

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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 player’s strategy in short time, it is impossible in reality.

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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.

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Agenda

Background

Game analysis

Inspirit mechanism.

Conclusion

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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 of Resources

Knowledge of recipient

Knowledge Sharing

Sharing channel

Platform / “Ba” and Motivation Mechanism

Begin Implementing Adjusting conformity

Figure 4 Knowledge sharing with motivation mechanism and “ba”

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Conference

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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) 10. Arrow K J. The economic implications of learning by doing [J]. Review of Economic Studies. 1962, 29:155-173. 11. Romer, Paul M. Increasing returns and long run growth. Journal of Political Economy, 1986,94 (5):1002-1037. 12. Foss, N.J., 1996. Knowledge-based approaches to the theory of the firm: A paradox in managing in the west and Japan. In P. Lorange, B.

Chakravarthy, J. Roos, & A. Van de Ven(Eds.), Implementing Strategic Process: Change, Learning, and Co-operation. Oxford: Basil Blackwell:117-144 13. Leonard-Barton. D.1992. Core capabilities and core rigidities: A Paradox in managing new product development. Strategic Management

Journal,13:111-125. 14. Gupta, A.K. & Govindarajan.1991. Knowledge flows and structure of control within multinational corporations, The Academy of Management

Review,16:768-792. 15. Nonaka I., Takeuchi Y., 1995. Knowledge Creating Company. New York: Oxford University Press. 16. Nonaka I., Nonno N., Toyama R., 2001. Emergence of “Ba”, in Nonaka I. and T. Nishinguchi eds., Knowledge Emergence, Oxford Universty Press.

PP13-29.

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