Strategic Management 1

Knowledge Management and Resource-based View of Competitive Advantage

Strategic Management 2
Introduction
In te current business environment! an identification of opportunities! treats and
competitive factors are not sufficient to build an effective strateg" as te" cange fre#uentl"$ In
order to determine and access strategic competences! it as become necessar" to understand te
availabilit" of sources and competences$ %is understanding re#uires significant &nowledge in
terms of its capabilities against organi'ational ob(ectives )*ulev + ,mer'el-$ In tis paper! te
role of Knowledge Management )KM- will be criticall" discussed in determining firms.
resources and capabilities and reali'ing competitive advantage accordingl"$ In tis paper!
influence of KM on resource-based view in relation wit te organi'ational competitive
advantage will be evaluated$
KM and Resource /ased View )R/V- of Competitive Advantage
According to 0gu"en! 0ec& + 0gu"en )2112-! R/V mainl" considers te firms.
permanent resources for evolving capabilities and competitive advantage over te time$ It is
applied b" firms to determine firms. tangible and intangible resources! wic ma" offer distinct
competence to perform better tan te competitors$ 3"sical assets including distinctive
e#uipment! plant and products are considered as tangible resources of a firm$ ,n te oter and!
intangible assets are not e4it p"sicall"! but provide additional value to firms. operations suc as
reputation! image! tecnical and mar&eting s&ills etc$ Intangible resources are coordinated and
used b" firms wit te use of capabilities! wic include people! principles and processes$
Srivastava! 5ae" + Cristensen )2111- state tat &nowledge creation! allocation and utili'ation
enable te firms to ma&e coordination among organi'ational capabilities tat drives utili'ation of
tangible resources to create competitive advantage$
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*ulev + ,mer'el also favor te views of 0gu"en! 0ec& + 0gu"en )2112- and depict
tat distinctive &nowledge of a firm is one of te vale cain functions! wic allows tem to
ma&e better use of resources and to create competitive advantage accordingl"$ R/V mainl"
focuses over te internal capabilities! wic are difficult to determine and access witout te
application of KM$ /" creating &nowledge in terms of organi'ational culture and people! a firm
could utili'e its resources in an effective manner! wic reasonabl" creates competitive
advantage$
According to Cuang )2117-! R/V of competitive advantage empasi'es over te
relationsip between firms. specific in-imitated resources and competitive advantage$ %is
relation is difficult to reali'e witout te elp of &nowledge management as it allows firms to
ma&e cange in teir resources and capabilities and to evolve competitive advantage accordingl"
b" saring it from all ma(or sta&eolders of te firm$ %ere are two &e" resources of KM namel"
tecnical and social! wic are essential to deplo" for attaining competitive advantage$ 8itout
te practices of KM! it becomes difficult for firms to use bot resources effectivel" and
efficientl"$ I% infrastructure of te firms considers tecnical resource! wic includes
communication tools! computers and different databases$ KM capabilities of te firms enable
tem to use teir tecnical resources for generating new &nowledge$ 9ffective tecnological
collaboration enables individuals to sare teir ideas and problem solving s&ills trougout te
organi'ation and to develop new &nowledge )Maier! 211:-$
;oia )211:- also states tat KM enables firms to create competitive position troug te
tecnical resources as it facilitates cross-selling opportunities! cross-functional processes and
innovations$ In tis wa"! tecnical resource of KM provides significant wa"s to ma&e constant
improvement in organi'ational products<services! wic reasonabl" creates competitive
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advantage for te firms$ Social resource of KM includes organi'ational structure! culture and
uman! wic is responsible for facilitating competitive advantage$ Structure! culture and
uman resources pla" a significant role in creating! generating and distributing &nowledge and
developing competences from different resources! wic is beneficial for an organi'ation based
on resource view$
Similarl"! =ebows&i )211:- sa"s tat a firm wit supportive culture and structure is more
li&el" to encourage it emplo"ees for &nowledge generation and allocation$ Social resource of KM
enables firms to manage and cange te functioning of all oter resources as per te needs of
business strateg" more effectivel"! wic elps tem to create competitive advantage$ 5irms wit
competent social KM are able to predict future needs of business before competitors and to
enlarge reliable and innovative s"stems! wic enances organi'ational abilit" to absorb canges
smootl" and to respond accordingl"$ %is resource of KM is largel" based over te
interpersonal relations of te organi'ation! wic are developed in several "ears$ =ue to tis! it is
difficult and comple4 to obtain and cop" and it is because it serves as a source of sustainable
competitive advantage )Cuang! 2117-$ In tis wa"! te formation! development and allocation
of &nowledge enables firms to utili'e teir resources efficientl" and to develop competenc"$
In te views of Cuang )2117-! R/V considers tat it is not enoug for an organi'ation to
ave uni#ue resources for creating competitive advantage$ 5or tis purpose! it is necessar" to
emplo" its capabilities appropriatel" tat ensures effective e4ploitation of resources$ A compan"
wit uni#ue resources ma" fail due to its disabilit" to use tem in appropriate manner for
creating and sustaining competitive advantage$ KM enables firms to develop understanding
around te organi'ation in terms of resource utili'ation$ %e distribution of suc &nowledge
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among emplo"ees builds learning environment at wor&place! wic pla"s a significant role in
creating and sustaining competitive advantage$
KM enables firms to utili'e te resources in an effective manner! wic turns competitive
awareness and advantage accordingl"$ 5or e4ample? KM of =ell enables tis firm to ma&e
effective use of tecnological resources optimall" and to introduce an innovative framewor& of
suppl" cain )=essler + 3illips! 211:-$ /" emplo"ing KM! =ell puts its I% s"stems to ta&e
direct orders from te customers and to generate order accordingl"$ %is enables =ell to ma&e
build-to-order sales! wic provides an avenue for te development of customi'ed products$ It
eliminates cost b" reducing additional suppliers from suppl" cain and also te inventor" cost for
te firm )8u et$ al! 211@-$ In tis wa" management of &nowledge enables =ell to reduce cost of
its product and to create competitive advantage accordingl"$
According to Meso + Smit )2111-! R/V of competitive advantage considers a resource
as a source of competitive advantage! wen it fulfills four criteria namel" rare! in-imitable!
valuable and non-substitutable$ Knowledge is also one of te important resources of an
organi'ation! wic provides firms an appropriate pat for te development of sustainable
competitive advantage and organi'ational success accordingl"$ %e creation! saring and
utili'ation of &nowledge witin an organi'ation develops a learning and positive culture at
wor&place! wic is crucial to motivate emplo"ees towards mutual goals$ /" developing and
saring &nowledge! an organi'ation brings co-ordination among people! process and values!
wic is responsible for developing sustainable competitive advantage )Aronson! Aalawi +
McCart"! 211>-$
Kearns + Bederer )2116- also favor te views of Meso + Smit )2111- and state tat
&nowledge resource is in-imitable and non-substitutable as it cannot be transferred between
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organi'ations due to its un-codified nature$ Almost! all organi'ations collect and store data about
teir different resources including people and macines$ /ut its use significantl" depends over an
organi'ational abilit" to generate &nowledge from tis and to emplo" it significantl" for te
creation of competitive advantage$ 5or e4ample? eac firm collects data about uman capital! but
few of tem enable to cange tis data in &nowledge and to sare it for ma4imi'ing efficienc"
and minimi'ing cost$ I/M is one of te organi'ations! wic as effectivel" created! sared and
utili'ed te &nowledge for te improvement of uman resources )Verburg! ,rtt + =ic&e! 211>-$
%roug tis! it reduces cost and enances efficienc" of AR tat develops sustainable
competitive advantage for te firm$
Srivastava! 5ae" + Cristensen )2111- state tat firms wit e4tensive &nowledge are
more capable to notice and diagnose te mar&et canges rapidl"$ /" predicting canges more
efficientl"! te" enable to determine opportunities and potential treats before te competitors$
8it tis &nowledge! organi'ations enable to prepare and cange teir resources including
people! processes and e#uipments for responding foreseeable trends$ In tis wa"! management of
&nowledge provides a wa" to ma&e effective use of internal resources of te firms and to create
sustainable competitive advantage$
5or e4ample! %o"ota as created distinctive competence wit te use of KM$ KM
practices of tis organi'ation as enabled te firm to predict eco-friendl" consumer beavior and
adverse impact of fuel over te sales of automobile industr"$ /" saring tis &nowledge to R+=
department! it as introduced eco-friendl" and fuel efficient car model and protected its mar&et
sare from te adverse impact of e4ternal environmental canges )Bang! 2111-$ In tis wa"!
creation! allocation and dissemination of &nowledge reasonabl" enable te firms to manage te
resources in effective manner to create sustainable competitive advantage$
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Colbert )2117- supports te views of Srivastava! 5ae" + Cristensen )2111- and states
tat globali'ation! rapid tecnological diffusion! development of tecnolog"! etc are some of te
factors tat motivate te firms to act differentl" for surviving and prospering$ Knowledge is not
onl" a &e" resource of a firm! but it is necessar" for te efficient allocation and utili'ation of
oter resources$ Auman Resource )AR- is one of te important resources of an organi'ation and
its effective utili'ation largel" depends over te KM practices$
5or instance? in order to emplo" AR for creating sustainable competitive advantage! it is
necessar" for firms to create &nowledge about emplo"ees. motivational level! needs and
preferences as tis consideration increases teir satisfaction and performance levels accordingl"$
%is &nowledge furter elps firm to ma&e effective AR policies and s"stem tat ensures te
development of inspirational culture at wor&place )Verburg! ,rtt + =ic&e! 211>-$ In tis wa"!
creation! allocation and utili'ation of &nowledge provide an effective floor to ma&e effective
deplo"ment of AR resources for te development of competitive advantage$
/aradwa( )2111- describes and states tat resources based perspective of competitive
advantage lies over te KM abilit" of firms as it severs an effective avenue to determine and
utili'e organi'ational available resources in most suitable manner$ 8itout aving &nowledge in
terms of current status of resources. performance! it becomes difficult to response te needs of
canging environment and to create competitive advantage accordingl"$ If firms ave significant
&nowledge about te abilit" and performance of available resources ten it enables tem to bring
improvement as per te demands of e4ternal environment$ In tis wa"! KM is te central element
tat elps an organi'ation to ma&e effective utili'ation of oter resources for creating and
sustaining competitive advantage )=essler + 3illips! 211:-$
Strategic Management C
Ricard )2111- also provides consent to te views of /aradwa( )2111- and states tat
effective allocation of resources is also one of te important aspects! wic is responsible for
developing competitive advantage$ An inefficient resource allocation ma" create disaster for a
firm! wic can affect firms. competitive position at a greater e4tent$ In te R/V of competitive
advantage! competitiveness depends over te coordinated and effective application of firms.
several resources$ %e lac& of &nowledge wat area of organi'ation re#uire in wic amount of
resources! leads inefficient allocation of resources$ Informed allocation of resources enables a
firm to increase efficienc"! wile reducing cost$ In tis wa"! te creation! development and
utili'ation of &nowledge elps te firms to ma&e effective utili'ation of resources and to reduce
cost )Aronson! Aalawi + McCart"! 211>-$ /" maintaining #ualit" and reducing cost! firms
ma&e availabilit" of teir product or service at lower costs tan te competitors and tis provides
sustainable competitive advantage$
In te views of *old! Malotra + Segars! )2111-! te creation! development and
utili'ation of &nowledge is not enoug to emplo" te resources for creating competitive
advantage$ Knowledge renewal is also necessar" for ma&ing efficient use of resources witin te
organi'ation and developing sustainable competitive advantage$ It includes up-gradation of
&nowledge as per te canging re#uirement of internal and e4ternal environment$ 94ternal
business environment is responsible for increasing instabilit" and confusion and due to tis
organi'ations need to understand te canges and upgrade teir &nowledge accordingl"$ /"
upgrading &nowledge! firms can use teir resources and capabilities innovativel" and can create
completive advantage accordingl" )Bee + Dang! 2111-$
5lo"d + 8ooldridge )2111- also support te view of *old! Malotra + Segars! )2111-
and state tat &nowledge renewal is also a &e" aspect of te resource based perspective of
Strategic Management 2
competitive advantage as it allows firms to modif" people and process as per te canging
environmental re#uirements$ %is ma&es organi'ational functions more sustainable! wic is
crucial to create competitive advantage$ In addition! Bee + Dang )2111- state tat &nowledge
renewable also provides distinct and fres understanding about organi'ational people and
processes! wic is effective to increase organi'ational capacit" for introducing innovations$ It
also enables firms to manage competitive advantage and to bring sustainabilit" in teir functions$
5or e4ample? wit te elp of KM! Apple Inc$ as utili'ed and managed its R+= department in
most creative manner tat enables it to introduce most innovative products witin te industr"
)B"nn! Reill" + A&gun! 2111-$ It creates brand reputation and image of te compan"! wic
provides it a sustainable competitive advantage$
Verburg! ,rtt + =ic&e )211>- e4ibit tat &nowledge saring wor&place culture enables
firms to utili'e teir AR resource for te development of distinctive competitiveness$ 9iter b"
decreasing cost or increasing differentiation or bot! firms create additional value and
competitive advantage accordingl"$ Rapid increase in emplo"ee turnover due to increase in
mobilit" of labor mar&et is responsible for affecting firms. sales and competitive position$
Kearns + Bederer )2116- also state tat an organi'ation wit &nowledge saring culture allocates
s&ills and e4perience of one person for solving problems of oter staff$ /" tis! firms develop
tactic &nowledge at wor&place in te form of routine! wic are difficult to imitate and ac#uire$
In addition! &nowledge saring practices also facilitate free and constant flow of &e"
&nowledge from one person to oter witin te organi'ation$ It increases individual
understanding in terms of functional processes! wic encourages is<er to wor& wit an
organi'ation for several "ears$ /eside tis! &nowledge saring also allows organi'ation to reduce
te adverse impact of emplo"ee mobilit" from competiveness troug te development of
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learning environment )Academic Conferences + Remen"i! 211C-$ In tis wa"! KM enables firms
to emplo" AR resources in effective manner tat leads reduction in cost and e4tension in value!
wic elps in te development of competitive advantage$
According to Kearns + Bederer )2116-! &nowledge saring also allows organi'ation to
combine tecnical and social resources in a wa" tat ma" offer competitive advantage$ %roug
tis! organi'ations encourage people to provide teir suggestion for te betterment of s"stems
and processes$ It enables tem to combine organi'ational resources for developing distinctive
competencies and competitive advantage$ KM improves organi'ational abilit" to use and manage
internal resources effectivel" tat is responsible for improving operational effectiveness and
creating distinctive position accordingl"$
Conclusion
5rom te above discussion! it can be concluded tat &nowledge creation! development
and allocation is te &e" of resource based perspective of competitive advantage at ig e4tent$
,rgani'ational function of creating! saring and utili'ing &nowledge is termed as KM$ 8itout
te practice of KM! it is difficult for firms to utili'e teir resources and capabilities in te
development of competitive advantage$ A firm wit effective KM creates useful information
about te internal resources and teir application! wic is used b" it to respond te canges tat
occur in e4ternal business environment$ 8itout aving an effective KM! organi'ations disable
to predict te canges of e4ternal environment and to utili'e and manages its resources for
developing survival abilit"$
Strategic Management 11
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Strategic Management 12
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Strategic Management 16
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