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On the Benefits of Withholding Knowledge in Organizations

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  • Matthias Krakel

Abstract

Transferring knowledge to an agent makes him more successful or productive, which is beneficial for the principal. However, knowledge transfer also increases the agent's outside option. I identify two reasons for withholding knowledge — to reduce labor costs within a principal-agent relationship, and to weaken the agent in case of a separation. Moreover, the role of synergy is discussed both for building up a principal-agent relationship and for transferring knowledge. While synergy is decisive for knowledge transfer, cooperation between the principal and agent may even take place in the absence of synergy. Furthermore, I analyze whether the principal is more likely to transfer knowledge to a more able or to a less able agent. Finally, the advantages and disadvantages of a noncompetition clause are briefly discussed.

Suggested Citation

  • Matthias Krakel, 2005. "On the Benefits of Withholding Knowledge in Organizations," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(2), pages 193-209.
    • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:2:p:193-209
    DOI: 10.1080/13571510500127493
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    References listed on IDEAS

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    Cited by:

    1. Moore, Fiona, 2012. "Identity, knowledge and strategy in the UK subsidiary of an Anglo-German automobile manufacturer," International Business Review, Elsevier, vol. 21(2), pages 281-292.

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    More about this item

    Keywords

    Competition; Incentives; Knowledge Transfer; Limited Liability; Organizations; JEL Classifications: J3; M5;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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