This paper explores the relationship between motivation and knowledge transfer in organizations, emphasizing the importance of intrinsic motivation for the generation and transfer of tacit knowledge. The authors argue that while extrinsic motivation (such as monetary rewards) is often used in firms to align employee behavior with organizational goals, it can undermine intrinsic motivation, which is crucial for tasks requiring creativity and the transfer of tacit knowledge. They introduce the concept of "crowding-out" effects, where extrinsic incentives can reduce intrinsic motivation, making it harder to sustain competitive advantage. The paper also discusses the differences between explicit and tacit knowledge, noting that explicit knowledge is easier to transfer and appropriate, while tacit knowledge is more difficult to transfer and is closely tied to individual experience and expertise. The authors suggest that organizational forms that emphasize participation, personal relationships, and team-based structures are more effective for fostering intrinsic motivation and the transfer of tacit knowledge. They also highlight the importance of balancing intrinsic and extrinsic motivation to ensure that knowledge generation and transfer contribute to sustainable competitive advantage. The paper concludes that firms should carefully consider the use of market elements such as profit centers and variable pay for performance, as these can sometimes undermine intrinsic motivation and the transfer of tacit knowledge. Instead, organizations should focus on creating environments that support intrinsic motivation and the development of tacit knowledge through teamwork, shared goals, and personal relationships.This paper explores the relationship between motivation and knowledge transfer in organizations, emphasizing the importance of intrinsic motivation for the generation and transfer of tacit knowledge. The authors argue that while extrinsic motivation (such as monetary rewards) is often used in firms to align employee behavior with organizational goals, it can undermine intrinsic motivation, which is crucial for tasks requiring creativity and the transfer of tacit knowledge. They introduce the concept of "crowding-out" effects, where extrinsic incentives can reduce intrinsic motivation, making it harder to sustain competitive advantage. The paper also discusses the differences between explicit and tacit knowledge, noting that explicit knowledge is easier to transfer and appropriate, while tacit knowledge is more difficult to transfer and is closely tied to individual experience and expertise. The authors suggest that organizational forms that emphasize participation, personal relationships, and team-based structures are more effective for fostering intrinsic motivation and the transfer of tacit knowledge. They also highlight the importance of balancing intrinsic and extrinsic motivation to ensure that knowledge generation and transfer contribute to sustainable competitive advantage. The paper concludes that firms should carefully consider the use of market elements such as profit centers and variable pay for performance, as these can sometimes undermine intrinsic motivation and the transfer of tacit knowledge. Instead, organizations should focus on creating environments that support intrinsic motivation and the development of tacit knowledge through teamwork, shared goals, and personal relationships.