This paper discusses the impact of the dynamics of motivation on new organizational forms that are suited to forge value-creating knowledge transfers in teams and between organizational units and functions. Our aim is to develop the management of motivation as a source of distinctive firm competences. We argue that motivation is an endogenous variable and introduce it as a crucial link into the theory of the firm. Balancing intrinsic and extrinsic motivation helps to overcome social dilemmas in firms that are not solvable by hierarchical authority. Integrating the dynamics of motivation is a step to a more comprehensive theory of organization. It links organizational economics to the knowledge-based perspective.
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