Pay for individual performance and knowledge sharing: A new explanation based on the nonlinear effect

Abstract

The innovation process is inseparable from knowledge sharing. How to stimulate employee knowledge sharing has always been researched by scholars. This study develops a nonlinear research model based on self-determination theory to explore how and when pay for individual performance (PFIP), as a form of extrinsic reward, stimulates employee knowledge sharing. The multiphase and multisource data was collected from 385 employees at 8 Chinese firms to test the hypotheses. The results show that PFIP has an inverted U-shaped effect on employee intrinsic motivation, which in turn influences knowledge sharing. In addition, the indirect curvilinear effect is moderated by core self-evaluation and empowering leadership. The findings are vital for scholars and managers to design and adopt an effective compensation system to encourage knowledge sharing and, consequently, improve knowledge management practices.