Knowledge Management Implications for the theory of the firm

Knowledge Management –Implications for the Theory of the firm Introduction: The firm is a repository for knowledge The knowledge is embedded in business routines and distinctive processes. The firm’s knowledge base includes its technological competences as well as the knowledge of customer needs and supplier capabilities

Knowledge Management –Implications for the Theory of the firm The indispensible characteristics being its ability to create, transfer, assemble, integrate and exploit knowledge assets Knowledge assets underpin competences, and competences in turn underpin the firm’s product and service offering to the market Utilizing these knowledge assets & competencies constitute dynamic capabilities

Knowledge Management –Implications for the Theory of the firm Dynamic capabilities stresses the firm’s entrepreneurial side of management over administrative side of management. In dynamic companies, the need is keep up pace with ever changing market conditions, along with keeping costs down which translates the need to utilize the knowledge assets towards value maximization than cost reduction. Competitive advantage can be attributed to not only ownership of knowledge assets and its related assets, but its ability to combine all of them effectively to create value

Knowledge Management - Conclusion  Knowledge, competence and related intangibles have emerged as the key drivers of competitive advantage in developed nations  The value-enhancing challenges facing management are gravitating away from the administrative and towards the entrepreneurial. This is not to undermine the importance of administration, but merely to indicate that better administration is unlikely to be where the superior profits reside  It is no longer in product markets but in intangible assets where advantage is built and defended