1 Costly Signaling Theory and Propensity for Knowledge Sharing among Employees Jan Fazlagić Poznan University of Economics, Poznan, Poland Introduction Organisations can manage knowledge resources more effectively only if employees are willing to share their knowledge with colleagues (Amayah, 2013). This article makes two contributions. First, there is little research on costly signaling theory explaining the behaviours of people related to interpersonal communication and knowledge sharing. Second, this study extends the literature on the factors that affect informal knowledge sharing. The desire to send out signals is considered as a viable factor or enabler affecting the propensity of employees to share their knowledge. Costly Signaling Theory (CST) is a branch of evolutionary biology. It examines communication among individuals. The central question is when organisms with conflicting interests should be expected to communicate honestly (no presumption being made of conscious intention) rather than cheating. This paper‟s main thesis is that, as in the case of animals, the behavior of humans in organisations, specifically their willingness to share knowledge, can be explained by means of the costly signaling theory. To better understand the possible application of CST into knowledge management theory, this paper offers a brief review of literature on the sharing of knowledge and interpersonal communication in organisations. The paper also includes a proposed research design for the purpose of testing the CST in knowledge management (KM) applications. Introduction to Costly Signaling Theory The main thesis of this paper is to bring to the attention of KM practitioners and academics the postulate that one of the viable factors explaining the propensity of employees (or simply “people”) for knowledge sharing is their desire to “send signals”, as explained by the signaling theory. Knowledge management relates to explaining the dynamics of three KM processes, namely: the production, dissemination and utilisation of knowledge. Knowledge sharing is synonymous with the dissemination of knowledge; it usually relates to the transfer of knowledge within an organisation among its employees (as opposed to the transfer of knowledge, which usually relates to the intra–organisational or macroeconomic context of dissemination). CST states that only individuals who are elevated in status have usually acquired the capacity, resources, money, time and influence to behave altruistically. Only wealthy people, for example, can afford to donate large sums of money. Thus, it can be ascertained that the possession of knowledge may be one of the motives for individuals to behave altruistically to elevate their status among peers and co-workers. Knowledge sharing is a “currency”, which is spent to buy respect and status. Many studies indicate that individuals often act altruistically towards strangers (Van Vugt & Van Lange, 2006, cited in Simons 2014).