Knowledge market in organizations: incentive alignment and IT support

Purpose – Knowledge market has become an important issue of knowledge management. The purpose of this paper is to study the design of an internal knowledge market for enabling knowledge transfer within an organization. Design/methodology/approach – The knowledge market is modeled as a pull market, where buyers post and price their questions to elicit answers from potential sellers. Designing and offering different incentives and information technology (IT) support to knowledge workers with heterogeneous knowledge levels, a firm maintains the efficiency of the market and maximizes the organizational benefit from knowledge transfer. Findings – The authors identify two payment policies, a priori and a posteriori, and two market‐regulating mechanisms, Locking and Open mechanisms. The optimal designs of incentive contracts and IT support are fully demonstrated for the a priori policy and Locking mechanism. The benefits of the market for knowledge transfer are illustrated from three aspects: transaction price as sharing reward; market as payment platform; and IT as transaction facilitator. Originality/value – The paper provides valuable insights for practitioners to effectively manage knowledge assets within markets.