This article examines the role of monetary rewards in encouraging knowledge sharing in organizations through four mechanisms of knowledge sharing. We argue that the system of contributing knowledge to databases is the most amenable to rewards contingent on knowledge sharing behaviors because of opportunities for the reward allocator to measure the knowledge sharing behaviors. In the case of formal interactions within or across teams and work units, while rewards could be made partly contingent on knowledge sharing behaviors as in merit pay, rewards based on collective performance are also likely to be effective in creating a feeling of cooperation, ownership, and commitment among employees. In addition, we propose that team-based rewards and company wide incentives (profit sharing, gainsharing, and employee stock options) would be particularly instrumental in enhancing knowledge sharing within teams and across work units, respectively. In the case of knowledge sharing through informal interactions, the key enabling factor is trust between the individual and the organization. In this case, the role of rewards is indirect, that is, procedural and distributive fairness of organizational rewards are important factors in the development of trust. We also consider knowledge sharing in communities of practice and theorize that intrinsic rewards and factors that build expertise and provide recognition are the most appropriate means of fostering feeling of competence. Finally, we discuss the research implications.
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