The purpose of this paper is to present and study an analytical model of knowledge management (KM) in which employees’ fit with a firm’s organizational culture improves with their sharing and learning of the firm’s common organizational practices.
Incentive rewards motivate knowledge workers to share their knowledge and contribute to a firm’s central knowledge base. The authors develop a model in which the firm’s cultural fit changes with the sequence of KM-based business processes including sharing, learning, evaluation, and production, and then analytically investigate the design of knowledge sharing rewards as well as the business process sequence to shape a firm’s organizational cultural fit and maximize its profit.
The best sequence of KM processes is solved in the following order: (Announcement), (Evaluation), (Sharing), (Learning), and (Production). The sharing reward for knowledge workers is analytically derived accordingly, which increases with the level of KM systems and decreases with the probability of a worker staying in the firm, the probability of a culturally unfit worker being identified by the firm, and the probability of a worker being culturally fit on the labor market. The optimal volume of knowledge base is also investigated with respect to these factors.
Applying a novel analytical approach, the authors model and study KM processes and their relationships with organizational culture and incentives. The research provides valuable insights for managers to implement KM practices.
