¹University of Jena, Germany

Correspondence: Sidonia C. von Ledebur, University of Jena, Research Training Group 'The Economics of Innovative Change', Carl-Zeiss-Str. 3, Jena D-07743, Germany. Tel: +49 3641 943274; E-mail: Sidonia.von.Ledebur@uni-jena.de

Received 1 February 2007; Accepted 17 July 2007.

Abstract

Companies realize innovations by creating and implementing new knowledge. One possible source of innovative ideas are new employees. Based on an existing game-theoretic model the conditions of efficient knowledge transfer in a team are analyzed. Offering knowledge to a colleague cannot be controlled directly by the company due to information asymmetries. Thus the management has to provide incentives, which motivate the employees to act in favor of the company. The aim of this paper is to show what influences the propensity of the employees to engage in knowledge transfer and how the management can design the incentive structure for optimal transfer. Several factors are relevant, especially the individual costs of participating in the transfer. These consist mainly of the existing absorptive capacity and the working atmosphere. The model is at least partly generalized on more players. The relevance of the adequate team size is shown: too few or too many developers decrease the remaining company profit. A further result is that depending on the cost structure, perfect knowledge transfer is not always best for the profit of the company.