A Model of Knowledge Management through Intra-firm Market

Abstract

Failures of knowledge management projects in many firms are mainly due to the lack of incentives to knowledge suppliers. In economics, the market mechanism has been considered to balance supply and demand autonomously through prices. We introduce a knowledge management system where suppliers of knowledge set prices for their documents, and users, namely consumers, pay for them upon usage. A mathematical model demonstrates that the market mechanism motivates potential knowledge suppliers to produce documented knowledge and furthermore suppresses unnecessary production of similar knowledge which may be substituted by the existing knowledge.