Abstract

The generation of new knowledge is crucial for a firm’s competitive advantage. We analyze explorative knowledge production in teams as a social dilemma. Such social dilemmas can to some extent be solved by transactional solutions such as activating the shadow of the future or
selective incentives. But transformational solutions are more important. Employee’s intrinsic initiative to participate in knowledge exploration is crowded-out by certain high-powered incentives and unfriendly monitoring. It is crowded-in by, low-powered incentives, friendly
monitoring, communication and institutional framing. We conclude that there exist convincing ideas of how to govern explorative knowledge production which should be tested
empirically.