What Money Cannot Buy: The Detrimental Effect of Rewards on Knowledge Sharing

• Published date: 01 March 2020
• Author: Vincenzo Cavaliere,Fabrizio Cipollini,Sara Lombardi,Luca Giustiniano
• Date: 01 March 2020
• DOI: http://doi.org/10.1111/emre.12346

What Money Cannot Buy: The Detrimental

Effect of Rewards on Knowledge Sharing

SARA LOMBARDI,ASSISTANT PROFESSOR

1

VINCENZO CAVALIERE,ASSOCIATE PROFESSOR

2

LUCA GIUSTINIANO,FULL PROFESSOR

3

and FABRIZIO CIPOLLINI ASSOCIATE PROFESSOR

4

1

OrganizationStudies, Departmentof Economics and Management,University of Florence,Via delle Pandette 9, 50127,Florence,

Italy

2

Business Organization and Human ResourceManagement, Department of Economics and Management,University of Florence,

Via delle Pandette 9, 50127, Florence, Italy

3

Business Organization, Department of Business and Management, LUISS Guido Carli, Via Romania 32, 00197, Rome, Italy

4

Statistics, Department of Statistics,University of Florence, Viale G.B. Morgagni 59, 50134, Florence, Italy

Given theirextra-role nature, knowledge-sharingbehaviors need to be motivated. However, current literaturefails

to acknowledge that, instead of being determined by one type of motivation, they are more likely to derive from the

joint effect of both intrinsic motivation and extrinsic motivation (i.e., rewards). Based on this, we expect extrinsic

rewardsto crowd out the effect of intrinsicmotivation on knowledge sharing.We go further and contendthat extrinsic

rewardsmight provide a formalcoordination mechanismand interact with an informalcoordinating mechanism(i.e.,

the use lateral coordinationto foster employees’knowledgesharing). Weempirically test this argumenton a sample of

754 employees. The analysis shows that knowledge-sharing rewards significantly hamper the positive effect of both

intrinsic motivation and lateral integrative mechanisms on knowledge sharing, resulting in a detrimental factor for

employees’social relationships and helpful behaviors.

Keywords: knowledge sharing; motivation; integrative mechanisms; lateral coordination; incentives

Introduction

A long tradition supports the notion that knowledge

sharing is a critical determinant for organizations’success

(Černe et al., 2013). Given that strategic knowledge often

concentrates in certain units and individuals, by sharing

their ideas and knowhow employees can hasten the

developmentof new products, strengthenmutual learning,

and contribute to their own creativity (Mesmer-Magnus

and DeChurch, 2009). Being a discretionary, extra-role

behavior, knowledge sharing requires the individual to

be motivated to exchange personal ideas and opinions

with others.

Despite the plethora of studies investigating its

motivational antecedents (e.g., Gagné, 2009), there is

room for exploring how knowledge sharing is affected

by the joint influence of different types of motivation,

such as intrinsic and extrinsic motivations. While the

former refers to an individual engaging in a task or in an

activity for the resulting enjoyment and satisfaction, the

latter defines an individual accomplishing a task in order

to attain some separable outcome, such as a reward, a

special privilegein the group, etc. On a fundamentallevel,

the current debate fails to recognize that knowledge

sharing is not simply determined by one type of

motivation or the other. This is not surprising since the

knowledge-based view tends to assume that individuals

are ‘benevolent cooperators’(Dosi and Marengo, 2000),

thus, underestimating the issue of opportunistic behaviors

and (external) incentives (i.e., extrinsic motivation).

However, to some degree, scholars are gradually

acknowledging that both intrinsic and extrinsic

motivations contribute to shape employees’behaviors at

work (i.e., the motivation crowding effect) (Osterloh and

Frey, 2000; Frost et al., 2010; Gneezy et al., 2011).

Despite this, emerging research has produced quite

Correspondence: Sara Lombardi, Assistant Professor of Organization

Studies, Department of Economics and Management, University of

Florence, Via delle Pandette 9,50127 Florence, Italy, Phone:(0039) 055

2759 736; E-mailsara.lombardi@unifi.it

DOI: 10.1111/emre.12346

©2019 European Academy of Management

European Management Review, Vol. 17, –(2020)

1 3 5

–170,

5

inconsistent results. Some scholars contend that all

incentive contingency categories (i.e., engagement,

completion, performance, and non-contingent incentives)

undermine intrinsic motivation (Greene, 2011); others

have found that only controlling incentives are detrimental

to intrinsic motivation, while supporting incentives

enhance it (Deci et al., 1999; Cerasoli et al., 2014). Further,

Cameron et al. (2001) demonstrated that extrinsic rewards

negatively impact intrinsically motivated employees when

rewards are tangible and loosely tied to the level of

performance. In addition, to our knowledge, existing

literature has significantly neglected the investigation of

the motivation crowding effect on knowledge sharing.

One exception is Lam and Lambermont-Ford (2010),

who provide evidence of the crowd-out effect (i.e.,

incentives undermining intrinsic motivation) on three case

studies taken from the Anglo-American context.

Acknowledging the need to reconcile existing findings as

well as the shortage of empirical contributions on this

issue, this paper addresses the question of whether extrinsic

rewards for knowledge sharing might hinder the positive

effect of intrinsic motivation by looking at employees’

contribution to knowledge-sharing processes.

Our study takes research one step further by addressing

a recent call for a deeper understanding on the interaction

between different coordination mechanisms on knowledge

sharing (Foss et al., 2011). In order to do that, we focus on

the effect of organizations’lateral coordination

mechanisms (e.g., liaison personnel, temporary teams,

and permanent teams; Gupta and Govindarajan, 2000) on

knowledge sharing. Allowing a great interaction and

mutual cooperation, these personal (vs structural), informal

(vs formal) coordination mechanisms are likely to provide

employees with the opportunities to increase their

information-processing capacity and knowledge-exchange

participation (Willem and Buelens, 2007). Considering

that coordination is about bringing organizational ‘units

together through communications, IT, leadership, culture,

incentives, routines and procedures’(Burton and Obel,

2018, p.4), we ground on prior works (see Arrow, 1964;

Gulati and Puranam, 2009; Crilly and Sloan, 2013;

McEvily et al., 2014) and look at extrinsic rewards for

knowledge sharing as a formal controlling and

coordinating mechanism likely to increase employees’

opportunism. Thus, while lateral coordination facilitates

knowledge sharing, extrinsic rewards provide an incentive

to knowledge hoarding. We test this prediction by taking

on an organization design perspective and positing that

extrinsic rewards might hamper the positive effects of

lateral internal coordination, thus, placing emphasis on

the cooperation–competition relationships that might arise

among organizational members.

The purpose of this article is to more clearly explainthe

links among individuals’motivation, lateral coordination

mechanisms and knowledge sharing by exploring the

interaction effect of both intrinsic and extrinsic

motivation, as well as intrinsic motivation and lateral

coordination mechanisms on employees’contribution

to knowledge-exchange processes. We test these

relationships on survey data drawn from 754 knowledge

workers of 23 Italian manufacturing and service firms,

and we found that both individuals’intrinsic motivation

and organizational integrative mechanisms have a

direct, significant, and positive influence on employee

participation in knowledge sharing; however,

implementing extrinsic rewards for knowledge sharing

significantly hampers both these effects.

With our study, we aim to contribute to the

underdeveloped literature on the joint effect of different

types of motivation on employees’behavior by placing

the emphasis on the contribution that organizational

members can provide to their firms by exchanging what

they know with their colleagues. Further, we attempt to

bridge motivation-based and organization design-based

literature by positing the existence of an interacting

influence between extrinsic motivation and lateral

integrative mechanisms. Moreover, although we test our

hypotheses by usingcompanies based in Italy, we believe

the our results could be generalized to some other

European countries (e.g., Germany, France, Slovakia,

Ireland and Belgium) presenting a similar structure of

the overall industrial system both in terms of distribution

of firms per size (i.e., large, medium,small) and dominant

sectors (manufacturing and services). Lastly, we advance

existing research on the interaction between formal and

informal coordination mechanisms to improve

knowledge-exchange processes within the organization.

Literature review

Knowledge sharing

Effectively managing knowledge may not be a sufficient

condition to achievea competitive advantage with respect

to rivals. Hence, to avoid the loss of strategic intellectual

capital even after individuals leave the organization,

knowledge should be shared with others across all

organizational levels. Knowledge sharing has been

defined as a social interaction culture in whichemployees

exchange work-related experiences and skills with

colleagues, providing them with task information and

knowhow, which help t hem do something bet ter, solve

problems more quickly, and develop new ideas (Černe

et al., 2017). Similarly, Camelo-Ordaz et al.(2011,p.

1444) define it as ‘the actof placing knowledge possessed

by an individual at the disposition of others within the

organization, in such a way that it can be absorbed and

utilized by them.’Thus, sharing knowledge with others

can be seen as a particular form of cooperative behavior

S. Lombardi et al.

©2019 European Academy of Management

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