An Integrated Framework of Knowledge Transactions in Firms

The purpose of this paper is to propose an integrative framework to explore the nature of knowledge transactions in firms. We adopt a resource-based perspective of firms and a transactional perspective assuming that firms have incentives for knowledge sharing so they can be competitive, and assuming that firm members are economic players who seek utility maximization. Through a review of the literature, the theoretical nature of firms that hold advantages over the market are explored. To fill the gap of the economics model in explaining the motivation of knowledge sharing, we examine the social exchange theory and find that social rewards as well as financial rewards facilitate knowledge transactions. The model also reveals that the pattern of knowledge transactions varies depending on the nature of the knowledge traded. In case of general knowledge, conceptual knowledge requires formal and structured training, while tacit knowledge requires competitive financial compensation. In case of firm-specific knowledge, the strategy for tacit knowledge should be based on social capital development, while conceptual knowledge should be dealt with compensation for performance and internal recognition. Based on a classification of knowledge, the best strategies for managing a transaction of each type of knowledge are discussed and suggested.