Table of Contents

1. Introduction ........................................................................................................................................... 1

2. Research objective ................................................................................................................................ 2

3. Research Methodology ......................................................................................................................... 2

4. Literature Review.................................................................................................................................. 3

4.1 Knowledge-based view ................................................................................................................. 3

4.2 Knowledge .................................................................................................................................... 3

4.3 Forms of knowledge-Tacit and Explicit........................................................................................ 3

4.4 Knowledge management ............................................................................................................... 4

4.5 Competitive Advantage................................................................................................................. 5

5. Findings and Analysis ........................................................................................................................... 6

6. Conclusion ............................................................................................................................................ 9

Appendices.................................................................................................................................................. 11

Reference .................................................................................................................................................... 12
1. Introduction

Rapid economic expansion, technological advancement, and globalization have increased

the complexity, dynamics, and competitiveness of the environment in which organizations
operate. It is argued that organizations can mitigate such uncertainties and become
competitive with knowledge. As organizations began to view knowledge as an essential
factor in their success, the association of knowledge-based view and competitiveness
sparked curiosity among researchers and practitioners. In the past two decades,
management literature has widely discussed the importance of knowledge and its effective
and efficient management for achieving competitive advantage.

Organizations aim to achieve sustainable competitive advantage that underlies their

purpose of adding value. In resource-based view, organizations create such advantages
from unique and imperfectly replicable resources. In knowledge-based view, knowledge is
regarded as a significant source of a competitive strategy. Knowledge can facilitate
competitiveness (Forés and Camison, 2016) as its dynamic management can provide timely
information on new strategic opportunities. Organizations obtain tacit and explicit
knowledge from customers, suppliers, competitors and other sources in the environment,
share them and utilize them to their advantage. Knowledge is like an ace up the sleeve for
an organization.

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2. Research objective

The broad objective of this paper is to analyze and understand the dynamic role of the
knowledge-based view in making business more competitive. We particularly emphasized
the knowledge-based view at organizational level. The broad purpose has been divided into
three focused objectives. First of all, the report aims to understand the theoretical
framework of knowledge-based view in strategic management. The second purpose of this
paper is to discuss the implications of competitiveness. Finally, the correlation of
knowledge-based view and organizational competitiveness is also under consideration in
this study. For this, the paper will look into variables such as customer orientation, value
chain system, human resources, and operational efficiency and identify whether they serve
as a mediator between knowledge-based view and organizational competitiveness.

3. Research Methodology

First of all, we hypothesized that knowledge-based view plays a dynamic role in making
organizations more competitive. For ease of investigation, explicitly pre-defined the areas
to be addressed in this report. We simplified the knowledge-based view into knowledge,
forms of knowledge, and knowledge management and outlined five sources of competitive
advantage: operational efficiency, customer orientation, efficient value chain,
innovativeness, and competent human resource. The, we conducted a review of 23
management literature published between 2015 and 2021. All the research papers reviewed
in this paper have had fifty or more respondents and the majority of them were collected
from three renowned management journal publishers- Emerald Online, Science Direct, and
Springer. It is argued that literature review is a constructive way of compiling research
findings that provides evidence and identifies areas where more research is needed; it is a
critical source of the theoretical framework of a study that also helps to build the conceptual
models. (Snyder, 2019). Finally, we clustered the findings under the pre-defined criteria
and presented the evidence that supported or rejected the hypothesis.

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4. Literature Review

4.1 Knowledge-based view

Knowledge-based view is a management approach that considers knowledge as an essential

and strategic resource for the organization for the creation and sustenance of competitive
advantage (Grant, 2015). It emphasizes the strategic value of asymmetries in knowledge
that give rise to difference in the competitiveness and performance of an organization from
its rivals.

4.2 Knowledge

Many experts and researchers have defined knowledge in various ways. Chang and Lin
(2015) described knowledge as information readily available for use in decision-making.
However, some researchers argued that knowledge is not limited to data and information,
like Anand and Walsh (2016), who viewed knowledge as a mix of information, skills, and
expertise that organizations need to exploit to be successful. Knowledge was also reckoned
as the exclusive combination of consciousness, perceptions, and judgment that makes an
organization innovative and unique with its products and services and serves as a source of
competitive advantage (Latilla et al., 2018). To sum up, knowledge comprises information,
experience, values, insights, and attitudes embedded in the organization’s systems,
processes, culture, and practices. It enables efficient analysis of new information and
application of experience to achieve competitive advantage.

4.3 Forms of knowledge-Tacit and Explicit

Knowledge is embedded in various forms in different organizations. In their seminal paper

of 1995, Nonaka and Takeuchi divided knowledge into explicit knowledge and tacit
knowledge. Explicit knowledge implies structured and documented knowledge, while tacit
knowledge comes from people's learning, and personal and social experiences. Tacit
knowledge is arguably more sophisticated and is acquired and internalized by people over
a long period, making it difficult to articulate in a structured way which ultimately creates
the competitive advantage by making it challenging for competitors to replicate and

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imitate. Hence, organizations generally wish to enjoy the exclusivity of such resources and
take legal protective measures like intellectual property rights. Contrarily, people easily
express and share explicit knowledge with words and numbers. (Barley et al., 2018). For
this reason, researchers stress that explicit knowledge intensive organizations are
susceptible to imitation which can erode their competitive edge (Chen et al., 2020).
However, the difficulty in replicating tacit knowledge internally can be substantively
improved when it is externalized into explicit knowledge.

4.4 Knowledge management

Knowledge management is the process that integrates knowledge in the management
framework of the organization. Today organizations operate in a world of growing
knowledge, with more people than ever working as knowledge workers. Organizations are
increasingly interested in knowledge management because of its potential to increase
productivity, create sustainable competitive advantage, and protect intellectual properties
(Gaviria-Marin et al., 2018). Although knowledge management activities may differ due
to an organization’s dynamic and unique needs, the fundamental knowledge management
process involves creating, distributing, and applying knowledge resourceful to the
organization’s purpose (Al-Emran et al., 2018).

The quintessential knowledge management process begins with creating new knowledge
or replacing existing ones in the organization’s tacit and explicit knowledge pool (Donate
& Pablo, 2015). Knowledge can be made internally through research and development or
acquired from various external sources. Knowledge is then converted and transferred
across the organization. Explicit knowledge is combined and internalized by the people in
the organization, while tacit knowledge is exchanged during social interaction and
externalized in records and databases for future use (Nonaka and Takeuchi, 1995). The
purpose of knowledge transfer is to facilitate organizational learning and improve
outcomes through the experience of others. However, mobilization of knowledge can be
challenging because it involves dealing with people who must have the ability and
willingness to share their experiences. Usman et al. (2020) observed employees’ solitude
as a significant barrier to the successful implementation of knowledge management.

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Nonetheless, the outcome of knowledge management largely depends on how
organizations leverage knowledge to produce a beneficial outcome. Knowledge application
is the utilization of knowledge to optimize operation, innovate new products and create
intellectual assets (Boateng and Agyemang 2015).

4.5 Competitive Advantage

The competitive advantage of an organization refers to the ability to outperform others in

the same market or industry. In quintessence, competitive advantage enables a business to
stand out from the rest of its kind. The source of competitive advantage can be tangible and
intangible. Tangible factors imply physical resources, while intangible factors refer to
abstract resources like networks and goodwill. To summarize, competitiveness can be
achieved through strategy, resources, customers, innovation, linkages, and other
organizational capabilities. As a result of this competitive edge, the organization can
produce products and services cost-effectively, faster, or of superior quality than the rivals.
Meanwhile, Michael E. Porter emphasized the value chain that as a source of competitive
advantage. He claimed that when the value-creating strategy of the organization is not
found in any contemporary or potential players in the market, it achieves competitive
advantage.

A crucial facet to any competitive advantage is sustainability. An organization cannot

remain competitive in the long run unless it can hold on to this advantage in the future. So
organizations desire to achieve sustainable competitive advantage. This is possible when
the advantage is generated from a unique, not replicable, and inimitable source.

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5. Findings and Analysis

While much of the discussion earlier emphasizes on the theoretical aspect, this section
discusses the evident impact of knowledge-based view on competitiveness found in
management literature.

Much research had shown that good knowledge management can improve operational
efficiency. Al-Sa’Di et al. (2016) argued that knowledge-based view was conducive to
operational performance as it facilitated cost-effectiveness and efficient utilization of
resources, improved quality of operation process which boosted their competitive strength,
especially in new market segments. After examining Spanish organizations Obeso et al.
(2020), found that organizations became efficient and experienced a reduction in cost and
response time by actively gathering and storing knowledge about customers, suppliers, and
the external environment. Usman et al. (2020) provided empirical support to this in their
multifaceted research, where they addressed the importance, success factors, and barriers
to systemizing knowledge in Pakistan’s oil & gas automation sector. It turned out that
managing knowledge enabled such organizations to build a solid connection with suppliers,
maintain service quality and delivery commitment with customers, respond faster to
feedback, and mitigate conflicts and contingencies.

A great deal of research indicated nexus between knowledge-based view and customer
relationship and orientation. The study of Garrido-Moreno et al. (2015) gave empirical
evidence of positive implications of knowledge-based view on customer relationship
management. They observed higher sales and profitability, larger market share, better
customer service, greater customer satisfaction, retention and loyalty, and faster
customization of products and services in Spanish service firms that managed knowledge.
In 2017, Gu et al. investigated manufacturing firms in the United States and found that
integrated information systems assisted mass customizing manufacturers in designing
products and scheduling production processes to expedite response to market demand and
manage suppliers that improved operational performance directly and brought indirect
financial gains. Sadq et al. (2020) reported that managing knowledge was vital in bringing

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in information about clients in private banks in Iraq, which was crucial in developing good
policies that could create value and satisfy clients.

Several authors have claimed that knowledge supports efficient and effective decision
making in complex and competitive environment. In a study, Valentim et al. (2015)
investigated whether knowledge-based view of small and medium-sized enterprises
(SMEs) in Portuguese influenced their potential to absorb changes in the organization’s
environment. They found knowledge management helped these organizations perform
strategically in a dynamic environment and gain advantage in competition through strategic
allegiance with external stakeholders and meticulous evaluation of joint ventures and
opportunities in the marketplace. Schütz et al. (2019) investigated European energy giants
and found that constructive acquisition of purchasing knowledge facilitated understanding
the business environment, supplier market, and commercial purchasing process like tender.
This enabled them to optimize cash flow and save cost during purchase, make buying
decisions consistent with strategic goals, and gain a competitive advantage from new and
innovative supplier markets. Around the same time, Bashir and Farooq (2019) noticed that
the synergistic integration of knowledge management and business model innovation led
to long-term competitive advantages.

Some researchers also looked into how knowledge-based view influence the human
resource of organizations. Alaarj et al. (2017) also observed employees in service providing
companies and found that they achieved better performance by actively engaging in
obtaining, exchanging and using knowledge in problem-solving, decision making, and
improvising processes. This was supported by Evwierhurhoma et al. (2020) who claimed
that efficient transfer of knowledge expedited decision-making, improved the working
style of the employees and boosted marketing outcomes.

Many researchers have suggested that knowledge leads to innovation. Ode and Ayavoo
(2019) investigated the correlation between knowledge management and creative
performance of firms in the tertiary sector and found that knowledge management induced
innovation and performance by expediting firm’s response to market changes, nurturing

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creative ideas and facilitating the development of unique products. Similar effects were
observed by Abbas et al. (2020) who concluded that effective acquisition, transfer and
utilization of information about customer and market promoted organizational learning and
enhanced creative capacity, which in turn furthered innovation.

Knowledge Competitive
source advantage
source

Tacit Customer
Customers Knowledge orientation
Suppliers Operational
efficiency
Evnironment
Efficient value
Past Data chain
Explicit
Employee Knowledge Innovation
Experience
Competent
employees

Figure 1 Flow chart- Knowledge converted into competitive advantage source

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6. Conclusion

The future of business is no longer reliant on just capital and raw materials alone. Today,
more than ever, knowledge is one of the most expensive and effective resources a business
can harbor. Undoubtedly, the knowledge-based view dictates a very prominent role in
making business more competitive. Studies by numerous decorated researchers have
theorized and proved time and time again that, in business, knowledge is omnipresent in
every aspect of its very establishment, and their relationship is unquestionably positive.
Thus, harvesting this dynamics relationship is argued as essential for any organization's
survival, growth, and competitiveness.

It is evident from the conclusions drawn in the studies reviewed earlier that tacit and
explicit knowledge can create a competitive advantage that is costly or challenging for
rivals to replicate. From a strategic perspective, knowledge helped organizations keep
aware of the strategic business environment, develop innovative business models, evaluate
business ventures and acquisitions, and make decisions consistent with long-term goals.
Knowledge-based view also probed organizations to obtain valuable information about
customers and utilizing such to design and customize products and services consistent with
their needs, maintain service quality and delivery commitment, and nurture a good
relationship with them. Knowledge was also strongly linked to innovation and expediting
organizations' response to market changes and product development time. Interestingly,
the knowledge-based view was found to impact organizational capability mediated by
improved working style, group dynamics, problem-solving skills, productivity, and
creativity of human resources. This way, a knowledge-based view is demonstrated to help
organizations achieve a competitive lead.

Nevertheless, it is essential to emphasize the significance of the type of knowledge, its

control, utilization, and overall management as a driving factor for increasing productivity,
efficiency, and cost-effectiveness and ensuring proper decision-making with minimum
managerial errors. This past literature reviewed in this study focuses on the role of
knowledge in making organizations. Although the findings from these papers recognize
the critical purpose of the knowledge-based view, further research is required to fully

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understand and generalize the practical implications of this approach in organizations
operating in different economic and industrial backgrounds.

10
Appendices

Marceline Swarna Modhu has completed introduction and research methodology. Fatema
Khanom has contributed to the theoretical discussion and literature review of knowledge-
based view, knowledge, knowledge management, and compiled and edited the individual
manuscript. Sanjida Alam has conceptualized the objective of this study, laid the
theoretical implication of competitive advantage. Farzana Khanom and Sanjida Alam has
contributed to the conclusion of this report. All members participated in reviewing past
management literature to find the evidences compiled in the findings of the study

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