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On the Benefits of Withholding Knowledge in Organizations

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Author Info

  • 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.

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File URL: http://www.tandfonline.com/10.1080/13571510500127493
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 12 (2005)
Issue (Month): 2 ()
Pages: 193-209

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Handle: RePEc:taf:ijecbs:v:12:y:2005:i:2:p:193-209

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Web page: http://www.tandfonline.com/CIJB20

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Related research

Keywords: Competition; Incentives; Knowledge Transfer; Limited Liability; Organizations; JEL Classifications: J3; M5;

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Cited by:
  1. Kräkel, Matthias & Sliwka, Dirk, 2006. "Should You Allow Your Agent to Become Your Competitor? On Non-Compete Agreements in Employment Contracts," IZA Discussion Papers 2054, Institute for the Study of Labor (IZA).
  2. 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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