The need for absorptive capacity alleviates the free-rider problem in knowledge production
File(s)
Accepted version
Author(s)
Denrell, Jerker
Luukkonen, Jerry
Chater, Nick
Liu, Chengwei
Type
Journal Article
Abstract
Knowledge sharing is central to strategy and organizational learning, yet its effect on knowledge production remains underexplored. When knowledge diffuses too easily, individuals may free-ride on others’ costly knowledge production, creating a suboptimal equilibrium in which knowledge sharing persists but the average payoff is no greater than if everyone produced knowledge independently—a paradox first identified by
Rogers (1988). We develop a game-theoretic model to reexamine this puzzle. In our baseline model, we
reproduce Rogers’ paradox: frictionless sharing does not increase performance beyond individual knowledge
production alone. We then extend the model to incorporate absorptive capacity—the need for prior investment in one’s own knowledge before learning from others. Absorptive capacity discourages pure free-riding.
Counterintuitively, although it introduces frictions in knowledge sharing, absorptive capacity increases collective knowledge production beyond the level attainable through individual knowledge production alone.
This explains why extensive knowledge sharing in domains such as academia does not erode incentives
for knowledge production and contributes to knowledge-based theories of the firm by showing that while
hierarchical control may be crucial in contexts in which knowledge is simple and codifiable, but less necessary where knowledge is complex and tacit. More broadly, our analysis illustrates how formal modeling can
uncover overlooked mechanisms and integrate insights across cultural evolution, organizational learning, and
strategy.
Rogers (1988). We develop a game-theoretic model to reexamine this puzzle. In our baseline model, we
reproduce Rogers’ paradox: frictionless sharing does not increase performance beyond individual knowledge
production alone. We then extend the model to incorporate absorptive capacity—the need for prior investment in one’s own knowledge before learning from others. Absorptive capacity discourages pure free-riding.
Counterintuitively, although it introduces frictions in knowledge sharing, absorptive capacity increases collective knowledge production beyond the level attainable through individual knowledge production alone.
This explains why extensive knowledge sharing in domains such as academia does not erode incentives
for knowledge production and contributes to knowledge-based theories of the firm by showing that while
hierarchical control may be crucial in contexts in which knowledge is simple and codifiable, but less necessary where knowledge is complex and tacit. More broadly, our analysis illustrates how formal modeling can
uncover overlooked mechanisms and integrate insights across cultural evolution, organizational learning, and
strategy.
Date Issued
2026-03-13
Date Acceptance
2026-01-08
Citation
Management science, 2026
ISSN
0025-1909
Publisher
Institute for Operations Research and Management Sciences
Journal / Book Title
Management science
Copyright Statement
Copyright © 2026, INFORMS. This is the author’s accepted manuscript made available under a CC-BY licence in accordance with Imperial’s Research Publications Open Access policy (www.imperial.ac.uk/oa-policy)
License URL
Publication Status
Published online
Date Publish Online
2026-03-13