Economic incentives and the knowledge economy

It is not a new idea that knowledge plays an important role in the economy, nor is it a new fact. However, the degree to which knowledge is now generated and exploited, as a means of generating wealth, is immense (United Kingdom Department of Trade and Industry, 1998). Lank (1997) argues that human expertise and knowledge are the source of value creation in today’s knowledge intense world economy. Our ability to acquire and distribute information has increased its value to all participants in the economic system (Houghton and Sheehan, 2000). Knowledge is a unique asset to a firm; in the right hands, it can create immense value, however, people can leave the business at any moment in time, taking all their knowledge with them. While many firms now use information technology systems to collect and store knowledge, these systems are worthless unless firms encourage and incentivise knowledge sharing.