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.
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Volume (Year): 12 (2005) Issue (Month): 2 (July) Pages: 193-209 Download reference. The following formats are available: HTML
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