This paper, published in *Organization Science* in 2000, explores the relationship between motivation and knowledge transfer within organizations. The authors, Margit Osterloh and Bruno S. Frey, argue that intrinsic motivation is crucial for the generation and transfer of tacit knowledge, which is a key source of sustainable competitive advantage. They distinguish between explicit and tacit knowledge, noting that explicit knowledge can be codified and traded, while tacit knowledge is deeply embedded in individuals and difficult to imitate. The paper discusses the crowding-out effect, where extrinsic incentives can undermine intrinsic motivation. This effect is particularly significant in tasks requiring creativity and when multiple tasks are involved. The authors suggest that organizational forms should be designed to balance intrinsic and extrinsic motivation, emphasizing participation and personal relationships over market elements like profit centers or variable pay for performance. They provide examples of how different organizational structures can facilitate or hinder the transfer of tacit knowledge. For instance, linking pins or overlapping teams can foster intrinsic motivation, while market mechanisms can lead to knowledge withholding. The paper concludes that firms can manage motivation more effectively than markets and should choose organizational forms that align with the specific needs of generating and transferring knowledge.This paper, published in *Organization Science* in 2000, explores the relationship between motivation and knowledge transfer within organizations. The authors, Margit Osterloh and Bruno S. Frey, argue that intrinsic motivation is crucial for the generation and transfer of tacit knowledge, which is a key source of sustainable competitive advantage. They distinguish between explicit and tacit knowledge, noting that explicit knowledge can be codified and traded, while tacit knowledge is deeply embedded in individuals and difficult to imitate. The paper discusses the crowding-out effect, where extrinsic incentives can undermine intrinsic motivation. This effect is particularly significant in tasks requiring creativity and when multiple tasks are involved. The authors suggest that organizational forms should be designed to balance intrinsic and extrinsic motivation, emphasizing participation and personal relationships over market elements like profit centers or variable pay for performance. They provide examples of how different organizational structures can facilitate or hinder the transfer of tacit knowledge. For instance, linking pins or overlapping teams can foster intrinsic motivation, while market mechanisms can lead to knowledge withholding. The paper concludes that firms can manage motivation more effectively than markets and should choose organizational forms that align with the specific needs of generating and transferring knowledge.