Resource Based View of Knowledge Management for Competitive Advantage
In the current digital era, knowledge is one of the most critical factors for an organizations survival. Sound knowledge management is critical for an organization’s sustained competitive advantage in the ever-changing business world. Sustainable competitive advantage relies on building and exploiting an organization’s key competencies. The resource-based view of knowledge management in an organization can be viewed as a key asset with the potential of providing a competitive advantage to the firms that use it. Competitive advantage is attributed directly to an organization’s continuous technical innovation. However, these organizations are not able to innovate in isolation and need external relationships with other firms in order to complement their knowledge and develop better and faster. In this sense, this paper seeks to examine how the resource-based view model of knowledge management is used in the creation of competitive advantage to an organization.
Resource Based View of Knowledge Management for Competitive Advantage
Over the past decade, the business environment has changed rapidly due to technological developments in how business is done. It is difficult to predict how the future will be. However, the new technological era is likely to provide a different business outlook in future. Firms seeking to improve their services have to embrace these changes. Technological advancements and changes are occurring rapidly and it is crucial that firms that seek to have a competitive advantage over their peers innovate well and quickly.
Many organizations are increasingly adopting and incorporating the practice of knowledge management to spearhead their competitive advantage strategies. The race to achieving competitive advantage through knowledge has been increasing rapidly. Many organizations have realized that managing their intangible assets such as culture, brand and stakeholder relationships, and the organization’s reputation is key to providing a sustainable business advantage. The ability to develop the value of intangible assets in an organization provides core competencies required in providing a competitive edge to organizations. In such organizations, knowledge management is crucial to business success. It is generally agreed that in the future, knowledge management will provide one of the most important factors for competitive advantage in organizations (Dasguta & Gupta, 2009).
In today’s interconnected and global economy, fast and sufficient exchange of information is a factor that contributes to business success. Competitive advantage is currently no longer limited to financial muscle and physical assets but in the efficient utilization of intellectual capital. A firm’s knowledge is at the center of its ability to create competitive advantage. The resource-based view of this knowledge management seeks to understand how organizations and firms are able to create and sustain competitive advantages. In the resource-based perspective, researchers assume that firms have discrepancies in resources and capabilities (Torres, Ferraz & Rodrigues, 2018). The discrepancies play a big role to determine the competitiveness of a firm. This is because competitiveness is determined by the ability of an organization to build and organize their key resources and capabilities in a way that provides a competitive advantage.
Knowledge management has been highlighted for its conceptual role in developing sustained competitive advantages for organizations. The assertion that knowledge management may be able to develop key competitive advantages to organizations is still conceptual and research in this area is relatively still in the development phase. Research in the resource-based view of knowledge management in relation to competitive advantage emphasizes on the how rather than why knowledge management is critical in creating competencies that enhance competitive advantage. Thus the purpose of this research is to develop a framework that shows the scenarios under which knowledge management can be used or cannot be used as a means of achieving competitive advantage. In this paper, the resource-based view of the firm is applied in developing the model of implementing knowledge management (Dasguta & Gupta, 2009).
A systematic literature review is conducted as a tool for gathering relevant evidence and theory building. The paper is organized by first defining knowledge management and knowledge management systems in the context of providing competitive advantages to firms. The resource-based perspective of the firms is reviewed followed by an examination of the literature on knowledge management in relation to competitive advantage. A proposed model for knowledge management is then conceptualized and implications are drawn up.
It is generally agreed upon that sustainable competitive advantage can be achieved through the strategic use of knowledge management. There is an increased awareness in organizations of the potential and significance of the use of knowledge to enhance efficiencies and promote competitiveness. The governing principle behind this line of thinking implies that knowledge management and its application in the operation of a firm is a means through which creativity can be created and developed (Dasguta & Gupta, 2009). Knowledge management in this sense means that competencies are organized in a way that enhances the overall performance of an organization. Knowledge management is key to a firm’s survival. Sound application of knowledge management strategies is a complex process involving significant outflows of resources in an organization. Therefore, knowledge management received attention in the business world (Meihami ; Meihami, 2014).
Knowledge management has found applications in a wide range of activities that seek to create, manage and enhance intellectual competencies in an organization. There is no exact agreement as to what knowledge management is but it is generally agreed that knowledge management can be described as a convergence of ideas and resource-based theories of an organization. The ideas and resources include intangible assets of the firm, business process optimization and re-engineering, and organizational learning (Dasguta ; Gupta, 2009). Knowledge management can also be described as a discipline that integrates technology, culture, organizational learning, business strategy, and business processes (Torres, Ferraz ; Rodrigues, 2018).
Knowledge management can be thought of as an intentional way or strategy of combining the right knowledge with the right people in ways that will enhance the overall performance of the firm. In this sense, knowledge management is used as a way of encouraging individuals to share their knowledge by creating scenarios and systems in which an organization can be directed to perform as innovatively as possible and to realize the value of its intellectual assets. The purpose of knowledge management is, therefore, to align an organization’s intellectual assets in a way that enables the development of sustainable competitive advantage.
Knowledge Management Systems
Knowledge management systems are grounded in both theory and practice. Knowledge management systems employ an extensive array of specific knowledge to solve problems and support key decisions in the organization. It involves the use of modern technology such as computing and the Internet to enhance the firms internal and external knowledge management. Processes in such systems include the creation, storage, transfer, and application of knowledge with an aim of enhancing organizational knowledge (North & Kumta, 2018). Knowledge management systems address both the future and present problems. They focus on problem-solving and support the development of knowledge in objective and subjective perspectives.
Knowledge management systems can be understood as a framework of activities that are designed to produce decisions with an aim of ultimately creating value and producing gains in income and market share. Knowledge management seeks to achieve the goal of differentiation from competitors in such a way that sustainable competitive advantages can be achieved.
Competitive advantage is achieved by firms that use their knowledge in the best ways as opposed to firms that have the best knowledge and don’t use it well (Schilke, 2014). Schilke argues that unless the knowledge is implemented in the real business environment appropriately, then all other phases of the knowledge management process will be deemed to have failed. Organizational learning from the knowledge management is key in developing a firms’ competencies. Such evaluations indicate whether the firm’s knowledge initiatives returned tangible results. This kind of organizational learning is complex and often ignored by various firms. Knowledge implementation and review helps to link the gap between the possession of knowledge and its implementation in the business environment.
Resource-Based View of the Organization
The best way for firms to be successful in the very competitive business environment is finding ways to achieve sustainable competitive growth. Competitive advantage is created by making tough decisions on what a firm will or will not do (Dasguta ; Gupta, 2009). A firm is said to have a competitive advantage when it implements a good value creation strategy that is not employed by its competitors. The sustained competitive advantage is observed in organizations having a certain degree of consistent exceptional performance and this strategy is not implemented by other competitors (Osman ; Ngah, 2016).
The resource-based view of the organization seeks to explain how organizations are able to achieve sustainable competitive advantages. The resource-based model considers various organizations as potential creators of value and key competencies that enable an organization to achieve competitive advantage by viewing its intangible assets from a knowledge-based perspective. An organization’s resources consist of all its tangible and intangible assets that are directly controlled by the organization. An organization’s resources are unique, valuable, and non-substitutable form the organization’s core competencies that may give it a lasting competitive advantage (North & Kumta, 2018). According to Omotayo (2015), intangible assets in an organization are better placed at providing competitive advantages than tangible resources. Specifically, intangible assets such as knowledge enable firms to create value and hence competitive advantage. Such competitive advantage is achieved over a long period of time and cannot be easily copied (Omotayo, 2015).
Knowledge Management for Competitive Advantage-A Resource-Based Approach
Knowledge management is a critical ingredient in an organization’s desire to solve problems, innovate and create value. This section addresses how and why competitive advantage is achieved through the appropriate implementation of knowledge management. Traditionally, competitive advantage can be created in various ways such as location, size, or even through luck. To create a lasting competitive advantage, knowledge management systems are employed to support key assets, what an organization does well, and optimize what the organization does worse. In order to create value and competitive advantage, an organization’s intellectual assets should be valuable, rare, not easy to imitate and non-substitutable. The prerequisite of implementing knowledge management is an understanding of the basic elements that are required in the management and use of organizational knowledge.
The most important elements that form part of organizational knowledge are the employees, processes, and its technologies. Innovations that are able to exploit an organization’s tangible and intangible assets are likely to create or add to the value of such resources and hence, to competitive advantage.
When the application of knowledge management does not add value to the firm, it can be seen as simply counterproductive and wasteful (Omotayo, 2015). Knowledge generally assumed to be positive. Assuming that knowledge is always positive is a mistake for any organization. As it was previously discussed, knowledge is a critical ingredient in an organization and provides the firms with sustainable growth. However, knowledge alone will not add value to an organizations’ competencies unless it is relevant to the goals the organization seeks to achieve.
Knowledge management systems have been demonstrated in the technical literature to have significant impacts on competitiveness to organizations that employ it appropriately (Sakas, Vlachos, & Nasiopuolos, 2014). Literature in resource-based view of organizations suggests that competitive advantages can be created and sustained through knowledge. The resource-based model is an appropriate theory that explains how knowledge management systems are able to create advantages for organizations employing them in their strategies.
During the recent years, different enterprises have started to join knowledge process and new concepts such as knowledge-based labor and knowledge-based organizations have reported intensification of this process. Such concepts reflect creation of a new type of organizations in which mind power rules instead of arm power. According to this theory, the enterprises will expect the more successful growth and development in future to enjoy the more knowledge. Therefore, enjoyment of natural resources shall not be significant to the extent of enjoyment of knowledge. A knowledge-based organization will achieve capabilities which will make a great power from a weak force Knowledge management is an instrument which can help the enterprises to achieve the aim of supplying innovation. Knowledge management is a process which helps organizations to find, select, organize and publish important information. It is a specialization required for some activities such as resolving problems, dynamic learning and conclusion Knowledge management is considered as a vital strategy for achieving competitive advantage during the recent years The researchers have emphasized on different dimensions of knowledge management and defined it from different aspects. There are different definitions on knowledge management but it is important to understand that the substantial objective of knowledge management is improving the performance by use of processes, systems, structures and culture designs for improvement of knowledge creating, sharing and applying Knowledge management concerns attaining and saving staffs knowledge and accessibility of knowledge for the others within an organization believes that knowledge management means creation of the processes required for recognizing and absorbing data, information and knowledge required for the organization from both internal and external environments and transmitting them into decisions and actions taken by the organization and individuals. Knowledge management includes human behaviors, perceptions and capabilities as well as business philosophies, patterns, performances, approaches and complex technologies Knowledge management may be used as creation, acquisition, sharing or utilization of knowledge towards enterprises performance promotion Knowledge management emphasizes on recognizing and presenting knowledge through a method which can be dully shared and subsequently it can be reused. Most of researchers believe that knowledge management means transforming data to information and then transforming information to knowledge
The most appropriate definition which has the most common points with other definitions is definition presented by NASA organization which defined knowledge management as providing people who need the relevant knowledge with it, at appropriate time.
Knowledge culture is defined as a type of organizational culture that influences the creating, sharing and making full use of the knowledge for the prosperity of an organization referred to the fact that culture is considerably related to knowledge sharing behaviors of individual personnel, groups and overall organizations It is the culture that determines which knowledge is to be shared, with whom it could be shared and when it should be shared
argued that the motivation of people to share their indigenous knowledge with others, especially when they are not well acquainted to each other is very important Attitude towards learning, flexibility and intention to share information influences the knowledge management performance significantly Thus in order to manage the knowledge effectively in an organization, a knowledge culture must be fostered examined the role of knowledge infrastructure capability in knowledge management practices within an organization and suggested that organizational structure plays a facilitating and steering role in developing the culture of knowledge the problem of proper control in society is a complicated issue. It is complicated by the fact that there are three different types of control existing in a society control in socio-technical systems, control in managed systems, and control in self-organizing systems. Organizational culture is considered to be the biggest obstacle in the way of effective knowledge management. To manage knowledge more efficiently, an organization must shape its culture more effectively Thus the interaction between individual employees in an organization is key to innovation Often new ideas are created courtesy of a dialogue between individuals in an organization. Hence, formal as well as informal interaction among the employees should be encouraged which will allow for the sharing of ideas and opinions Interaction among individuals becomes significant when there is an intention to transmit tacit knowledge between individuals or to convert that tacit knowledge into explicit form. This knowledge will ultimately be transferred at the organizational leve It has been suggested that individuals should be able to organize their own knowledge and they should have the ability to apply their knowledge in solving prevailing organizational problems Many scholars have pointed out that corporate vision is an imperative element of the organizational culture The overall vision of an organization states a clear goal of the organization and ignites the mandatory actions in the organization to achieve those goals (Nonaka and Takeuchi A vision incorporates two things: first it shows the desired future direction of the organization and secondly it shows the organizational values. A well-articulated and well communicated vision can be utilized to develop involvement and contribution among the employees Vision and the corporate values determine the knowledge that is required by the organization and the knowledge related activates accepted by the organization Hence the clearly stated visions foster the knowledge management behaviors in the organization In conclusion, the focus in vision statements should be on those components of the organization that promote the knowledge management processes to occur.
The importance of sound knowledge management practices to organizations has been discussed from a resource-based perspective. The effective management of knowledge has also been described as a key factor in firms seeking to create value and achieve competitive advantages over their competitors. The resource-based view establishes that the appropriate utilization of an organization’s resources will help it achieve competitive advantages. As such, processes and technology in isolation are not sufficient to take a firm to new heights while the employees and the knowledge they possess play a vital role in ensuring a firm’s success. Therefore, for a firm to be successful and achieve competitive advantage over its competitors, attention must be paid not only to the firm’s tangible assets but also to the intangible assets such as the employees.
Knowledge management is a critical tool that is related to the objectives and the strategies of the organization. Knowledge management can be applied to reduce an organization’s operational costs or to add value to products and to improve customer satisfaction. Therefore, the effective management of knowledge using a resource-based perspective has the ability to significantly influence how an organization does its business in minor operations such as daily tasks and the more complex strategic decision-making activities.
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