Resource-Based View of Knowledge Management for Competitive Advantage

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Resource-Based View of Knowledge Management for
Competitive Advantage

Leila A. Halawi1, Jay E. Aronson2 and Richard V. McCarthy3
1Nova Southeastern University, Fort Lauderdale, USA
2Terry College of Business, The University of Georgia, Athens, USA
3Lender School of Business, Quinnipiac University, Hamden, USA
[email protected]
[email protected]
[email protected]

Abstract: We are not only in a new millennium, but also in a new era: the knowledge era. Sustainable
competitive advantage is dependent on building and exploiting core competencies. The resource-based
view (RBV) of the firm defines a strategic asset as one that is rare, valuable, imperfectly imitable and
non-substitutable. Knowledge is seen as a strategic asset with the potential to be a source of
competitive advantage for an organization. In this paper, we provide a model that examines how and
why knowledge management (KM) can be used to create competitive advantage from the RBV of the
firm.

Keywords: Knowledge management (KM), knowledge management systems (KMS), resource-based
view of the firm (RBV), sustained competitive advantage.

1. Introduction
There is a general agreement that KM will
represent the most important competitive
We live the Knowledge Age, a new era
advantage factor for organizations
which is likely to have a radically different
(Drucker, 1993; Quinn, 1992; Stewart,
outlook and which will entail a new
1997; Toffler, 1990; Ferran-Urdaneta,
business compass to traverse (van Buren,
1999). Practitioner oriented research, both
1999). Quickness is crucial to the success
of US and European origin, points to a
of firms in the rapidly changing setting of
general consensus concerning the
the knowledge era.
importance of knowledge as a basis for

competitive advantage and superior
The development and practice of
operational effectiveness (e.g., see
knowledge management (KM) is
Skyrme and Amidon, 1997; KPMG
continuously and dramatically increasing
Management Consulting, 1998; Price
in organizations. And due to improvements
WaterHouse Coopers and World
in KM, the race for seeking a competitive
Economic Forum 1999).
edge through knowledge increases at an

even faster rate (Hofer-Alfeis, 2003).
Success in today’s global, interconnected
Businesses have long recognized the
economy springs from the fast and
importance of managing their intangible
efficient exchange of information.

assets. The development of brands,
Sustainable competitive advantage is no
stakeholder relationships, reputation and
longer rooted in physical assets and
the culture of the organization is readily
financial capital, but in effective channeling
viewed as providing sustainable sources
of intellectual capital (Seubert, Balaji and
of business advantage (Chong, Holden,
Makhija, 2001)
Wilhelmij and Schmidt 2000).


Spender (1996) contended that a firm’s
The ability to develop and leverage the
knowledge and its capability to create
value of these intangible assets comprises
exclusive knowledge are at the center of
a core competency for organizations,
the theory of the firm. Grant (1996)
particularly those providing financial and
suggested that knowledge is the
professional services. In these
significant competitive asset that a firm
knowledge-intensive organizations, possesses. Resource-based theory has
processing knowledge is central to
been developed to understand how
business success (Prahalad and Hamel,
organizations achieve sustainable
1990; Drucker, 1998).
competitive advantages. Within the

resource-based view (RBV), researchers
assumed that the firm is a pool of hard-to-
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Reference this paper as:
Halawi L, Aronson J and McCarthy R (2005) “Resource-Based View of Knowledge
Management for Competitive Advantage” The Electronic Journal of Knowledge Management
Volume 3 Issue 2, pp 75-86, available online at www.ejkm.com

Electronic Journal of Knowledge Management Volume 3 Issue 2 2005 (75-86)
copy resources and capabilities (Conner,
then present our model along with a
1991) and those discrepancies in size
proposed research methodology. Finally,
distribution and competitiveness of firms
we draw up some implications for
occur from their distinctive capabilities to
knowledge management and a further
build up, expand, and organize those
research agenda.
resources and capabilities to create and
apply value-enhancing strategies (Amit
2. Knowledge Management (KM)
and Schoemaker, 1993; Barney, 1991;
Peteraf, 1993). In the resource-based view
There is a general acceptance that
(Wernerfelt, 1984; Barney, 1986, 1991;
sustainable competitive advantage in the
Prahalad and Hamel, 1990; Peteraf, 1993;
21st century will be accomplished thru KM.
Conner, 1991), knowledge is seen as a
Large organizations are becoming
strategic asset with the potential to be a
progressively more alert to the significance
source of sustainable competitive
of knowledge for efficiency and
advantage for an organization. The
competitiveness. The principal cause for
knowledge-based view of the firm (Grant,
this concern with KM is the idea that
1995, 1996) builds upon and extends the
knowledge and its application are the
resource-based theory of the firm initially
means by which creativity can be
promoted by Penrose (1959) and
promoted (Nonaka and Nishiguchi, 2000;
expanded by others (e.g., see Alavi and
Nonaka and Takeushi, 1995), innovation
Leidner 2001). It encompasses the facets
facilitated (Hargadon, 1998; von Krogh,
to knowledge integration (efficiency, scope
Ichijo and Nonaka, 2000), and
and flexibility) and the four primary
competencies pulled in such a way as to
mechanisms by which knowledge is
advance overall organizational
coordinated (rules and directives,
performance whether in the public, private
sequencing, routines and group problem
or not-for-profit sectors (Pitt and Clarke,
solving and decision making).
1999). Some of the KM drivers include

competition, customer focus, the challenge
KM has been mentioned for its possible
of a mobile workforce, equity in the
role in creating sustained competitive
workplace, and the global imperative
advantages for firms (Drucker, 1993;
(Macintosh, 1998). KM is crucial to
Quinn, 1992; Stewart, 1997; Toffler, 1990;
organizational survival. Nonetheless, KM
Ferran-Urdaneta, 1999). While the
is complex involving great outflows of
assertion that KM might be able to create
resources. As such KM is becoming an
sustained competitive advantage for firms
ever more persistent subject within the
is provocative, work in this area is
business community.
relatively underdeveloped, both empirically

and theoretically. Research on KM and
However, it has become clear that the
competitive advantage has emphasized
term ‘Knowledge Management’ has been
describing how rather than systematically
applied to a very broad spectrum of
why KM can lead to such an advantage
activities designed to manage, exchange
through case descriptions. Thus, the
and create or enhance intellectual assets
purpose of our study is to develop and
within an organization, and that there is no
apply a model that specifies the conditions
widespread agreement on what KM
under which KM can, and cannot, be a
actually is (Haggie and Kingston, 2003)
source of competitive advantage. We

apply the resource-based view of the firm
KM can be presented as a convergence of
(Barney, 1991; Conner, 1991) in
ideas promulgated over the past decade,
developing this model.
including core competencies and

resource-based theories of the firm, ‘info-
For the purpose of our research, we have
mapping’ and information resource
conducted a systematic literature review
management, the ‘balanced scorecard’
as a recognized evidence-based tool for
and intangible/intellectual assets, the
theory building. The remainder of this
learning organization and ‘communities of
paper is organized as followings. First, we
practice’, total quality management and
define KM and knowledge management
business process reengineering, the
systems. Second, we review the resource-
networked organization and the ‘boundary
based theory of the firm. Third, we
less firm’ (Corrall, 1998). KM is a multi-
examine pertinent literature on KM in
dependent discipline integrating business
practice and competitive advantage. We
strategy and process, organizational
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Leila A. Halawi, Jay E. Aronson and Richard V. McCarthy
community and culture, collaboration,
knowledge, they should support both
learning, expertise, and technology (Silver,
objective and subjective aspects, they are
2000).
highly dependent on Internet-based

technologies, and they enable the sharing
Defining KM is difficult because it has
of knowledge throughout the organization
multiple interpretations (Choi, 2000).
(Wickramasinghe, 2003).

KM is a conscious strategy of getting the
4. Resource-based view of the
right knowledge to the right people at the
firm

right time and helping people share and
put information into action in ways that will
One key requirement for corporate
improve organizational performance (van
success in this competitive environment is
Ewyk, 2000). KM can be thought of as a
recognizing how to sustain competitive
deliberate design of processes, tools,
advantage. According to Porter (1999), we
structures, with the intent to increase,
can create competitive advantage as we
renew, share or improve the use of
make tough choices about what we will do
knowledge represented in any of the three
and not do. Competitive advantage is
elements (structural, human, and social) of
normally defined as the ability to ear
intellectual capital (Seemann, DeLong,
returns on investment consistently above
Stucky and Guthrie, 1999). KM is about
the average for the industry (Porter, 1985).
encouraging individuals to communicate
Barney (1991) indicates that a firm is said
their knowledge by creating environments
to have a competitive advantage when it
and systems for capturing, organizing, and
implements a value creating strategy not
sharing knowledge throughout the
simultaneously being implemented by any
company (Martinez, 1998:89). KM has two
current or potential competitors. Sustained
main objectives: (1) to make the
competitive advantage is recognized as
organization act as intelligently as possible
the level of exceptional performance that a
in order to secure its viability and overall
firm attains when it devises and
success, and (2) to otherwise realize the
implements a value-enhancing strategy
best value of its knowledge assets (Wiig,
that is not concurrently being followed by
1997). Knowledge management’s
any existing or possible competitors and
purpose, thus, is to leverage an
when these firms are either incapable or
organization’s intellectual assets in
reluctant to reproduce the benefits of this
sustaining competitive advantage.
strategy (Barney, 1991; Lado and Zhang,
1998). Sustainable competitive advantage
3. Knowledge
Management
results only from strategic assets (Meso
Systems (KMS)
and Smith, 2000). According to Mahoney
and Pandian (1992), competitive
KMS are predominant in both theory and
advantage is a function of industry
practice. Broadly defined, knowledge
analysis, organizational governance and
based system’s use extensive domain
firm effects in the form of resource
specific knowledge to solve problems and
advantages and strategies.
support decision processes. KMS refer to

the use of modern information
The resource-based view of the firm
technologies (e.g. the Internet, intranets,
dominates the strategic management
extranets, collaborative
literature and has also found use in the
computing/groupware, software filters,
management information systems (MIS)
agents, data warehouses) to systematize,
literature (Priem and Butler, 2001). It was
enhance and expedite intra and inter firm
developed to explain how organizations
knowledge management (Alavi and
achieve sustainable competitive
Leidner, 1999). KMS refer to a class of
advantages. Advocates of the resource-
information systems applied to managing
based view have tried to explain why firms
organizational knowledge. They are IT-
differ and how it matters (Barney, 1991;
based systems developed to support and
Wernerfelt, 1984, Hoopes, Madsen and
enhance the organizational processes of
Walker, 2003).
knowledge creation, storage/retrieval,

transfer and application (Alavi and
Resource-based theory treats enterprises
Leidner, 2001). KBS address both the past
as potential creators of value-added
and the future since they focus on problem
capabilities, and the underlying
solving, they support both tacit and explicit
organizational competences involves
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viewing the assets and resources of the

Prob (S) = f +(CA ∩ in ∩ sn ∩ tn)
firm from a knowledge-based perspective
Where CA is competitive advantage, v is
(Prahalad and Hamel, 1990; Conner and
resource value, r is resource rarity, S is
Prahalad, 1996). It focuses on the idea of
sustainability, i
costly-to-copy attributes of the firm as
n is non-imitability, sn is non-
substitutability, and t
sources of business returns and the
n non-transferability.
The first statement shows that the
means to achieve superior performance
probability of achieving competitive
and competitive advantage (Barney, 1991;
advantage is a positive function of the joint
Rumelt, 1987; Conner, 1991, Prahalad
occurrence of resource value and rarity.
and Hamel, 1990).
The second statement shows that the


probability of sustainability of an existing
A firm’s resources consist of all assets
competitive advantage is a positive
both tangible and intangible, human and
function of the joint occurrence of
nonhuman that are possessed or
competitive advantage, non-imitability,
controlled by the firm and that permit it to
non-substitutability and non-transferability.
devise and apply value-enhancing

strategies (Barney,1991; Wernerfelt,1984).
Graham and Pizzo (1996) developed a
Unique resources and capabilities are
framework to help companies’ position and
discussed under a variety of names, e.g.
manage knowledge for competitive
distinctive competences, core advantage. The process of applying the
competences, invisible assets, core
framework “Configuring for Knowledge”
capabilities, internal capabilities, has four interdependent and dynamic
embedded knowledge, corporate culture,
elements that exit in a closed loop system
and unique combinations of business
and is always focused on the balance
experience (von Krogh and Roos, 1995).
between fluid and institutional domains
Resources and capabilities that are
that will yields operating efficiencies and
valuable, uncommon, poorly imitable and
strategic flexibility. In the fluid domain,
nonsubstitutable (Barney, 1991) comprise
knowledge originates and grows from
the firm’s unique or core competencies
individual intuition, personal networks and
(Prahalad and Hamel, 1990) and therefore
improvisation. In the institutional domain,
present a lasting competitive advantage.
work is structured controlled and
Intangible resources are more likely than
measured. The elements were:
tangible resources to generate competitive
Identifying the strategic business
advantage (Hitt, Bierman, Shimizu and
drivers,
Kochhar, 2001). Specifically, intangible
firm-specific resources such as knowledge
Establishing the knowledge core and
permit firms to add up value to incoming
interrelationships. That knowledge
factors of production (Hitt et al., 2001). It
core includes both tangible and
represents competitive advantage for a
intangible assets in values and culture,
firm (Prahalad and Hamel, 1990; Collis
people, technology, and business
and Montgomery,1995; Post,1997;
capabilities. Determining what and
Markides,1997; Bogner,Thomas and
where business critical knowledge
McGee,1999). Such advantage is
exists, how it is used and how is also
developed over time and cannot easily be
important as well as constructing a
imitated. Barney (1991) regards resources
knowledge value chain that traces the
as those controlled by a firm that allow the
patterns of knowledge use and
firm to formulate and implement strategies
movement through the informal and
that expand its efficiency and
formal sides of the organization;
effectiveness. He developed the VRIO
Applying just-enough-discipline (JED)
framework for assessing what kinds of
which begins with a highly centralized
resources would present sustainable
focus on culture and a consideration of
competitive advantage. These were value
variables such as speed, or precision
creation for the customers, rarity
with which knowledge is disseminated;
compared to the competition, inimitability,
and
and organization.
Monitoring and rebalancing.

Priem and Butler (2001) summarized the
RBV statements in the two following
mathematical expressions:

Prob (CA) = f +(v ∩ r)
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Leila A. Halawi, Jay E. Aronson and Richard V. McCarthy
5. Knowledge Management (KM)
leading to sustainable competitive
in practice
advantage, which formed the basis of a
national survey of chief executives in the
Differences in direction toward KM are
U.K. Some of the more interesting findings
established by empirical studies. There
were that employee know-how and
was common agreement that KM will
reputation are perceived as the resources
symbolize the largest competitive
that make the most important contribution
advantage for organizations in the new
to business success and that for most
millennium (Drucker,1993; Quinn,1992;
companies operations is the most
Stewart,1997; Toffler,1990).
important area of employee know how.


Brown and Duguid (1998) addressed the
Miller and Shamsie (1996) used a
organization of knowledge itself. They
resource-based orientation in examining
suggested that capabilities could be a
the performance of seven major
source of competitive advantage for an
Hollywood film studies over thirty years
organization. The key premise is that
that began with a period of stability but
knowledge will reside in different areas of
turned into one of change. They
the organization. However, the focus of
hypothesized contexts within which
the firm should be on organizing that
particular resources were determined to
knowledge by providing translators,
be more or less valuable. They found that
knowledge brokers and boundary
property-based resources in the form of
spanners. They also stressed the role of
exclusive long-term contracts with starts
communities of practice in providing
and theatres helped financial performance
common structure and meaning for the
in the stable, predictable environment of
transfer of experience.
1936-1950. In contrast, knowledge-based

resources in the form of production and
Coyne (1986) postulated that the sources
coordinative talent and budgets boosted
of sustainable competitive advantage
financial performance in the more
include four types of capability gaps/
uncertain (changing and unpredictable)
differentials: (1) the functional/business
post-television environment of 1951-1965.
system gap, (2) the positional gap, (3) the

cultural or organizational quality gap, and
Prahalad and Hamel (1990) proposed the
(4) the regulatory or legal gap. Process
notion of core competencies relating to the
differential is the gap between an
internal capabilities of organizations. They
organization and its competitors based on
listed three tests to be applied to identify a
the efficiency of their business processes
core competence: (1) it should provide
or supply chains. Cultural differential
potential access to a wide variety of
incorporates the habits, attitudes, beliefs
markets, that is it possesses leverage
and values with permeate the individuals
potential; (2) it should be relevant to the
and groups, that compromise the
customer’s key buying criteria; and (3) it
organization into a working unit. Positional
should be difficult for competitors to
differential exits because of past actions,
imitate. They emphasized the application
which may have created a certain
of ‘invisible’ assets, innovation, leadership
reputation with customers or a certain
and competencies, or knowledge as the
advantageous location of facilities.
basis for competitive viability.
Regulatory differential occurs due to the

existence of intellectual assets.
Spender (1996) noted that an

organization’s knowledge and its ability to
Grant (1995, 1996) discussed the facets of
generate new knowledge is the key to
knowledge integration and coordination
achieve competitive advantage. Similar to
capabilities that are a source of
the resource-based view of the firm, he
competitive advantage for the firm. He
also argued that this competitive
pointed to four mechanisms for integrating
advantage only arises from the use of
specialized knowledge: (1) rules and
scarce, intangible, firm-specific
directives, (2) sequencing, (3) routines and
knowledge. He further identified four
(4) group problem solving and decision-
heuristics that managers could use to help
making.
them define the firm as a knowledge-

based activity system, and to understand
Hall (1992) produced a framework for
their relationship to it. The four heuristics
strategic analysis of intangible resources
include (a) interpretive flexibility, (b)
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Electronic Journal of Knowledge Management Volume 3 Issue 2 2005 (75-86)
boundary management, (c) identification of
and Hamel
Competencies
institutional influences and (d) the
Spender 1996 Competitive
distinction between systemic and
Advantage
component features.
Zack 1999a,b
Competitive

Advantage and
Zack (1999a,b) postulated that competitive
Strategy
advantage arises due to the strategic use
of resources and capabilities, of which
6. The resource-based model of
knowledge is believed to be the most
KM for competitive advantage
significant. He offered an outline for
describing and assessing an
KM is clearly a key approach to solving
organization’s knowledge strategy. Zack’s
current problems such as competitiveness
approach to integrating knowledge
and the need to innovate, which is faced
strategy with business strategy was
by businesses today (Wickramasinghe,
illustrated with cases drawn from a
2003). We seek to assess how and why
number of high profile organizations that
KM can yield competitive advantage.
include Dow Chemical, Buckman

Laboratories, and Image Corp. His
Our research aims to answer the following
knowledge strategy framework matches
questions:
the traditional strengths-weaknesses-
1. Do Knowledge Management Systems
opportunities-threats (SWOT) analysis,
yield competitive advantage?
and is depicted along two dimensions. The
2. If so, what is the nature of relationship
first focuses on the extent to which the firm
between knowledge management and
is mainly a creator, rather than a user of
competitive advantage?
knowledge. The second dimension
Competitive advantage is normally defined
focuses on whether the primary sources of
as the ability to earn returns on investment
knowledge are internal or external.
persistently above the average for the
Together, these two dimensions help a
industry (Porter,1985).
firm explain its current or desired

knowledge strategy. Zack advises that
Competitive advantage can be created in
knowledge-based SWOT analysis can
numerous ways, for instance, by size,
lead to mapping knowledge-resources and
location, access to resources
capabilities against strategy opportunities
(Ghemawat,1986), or even by plain luck
and threats to clearly understand
(Barney, 1996). Lasting advantage comes
advantage and weakness. Yet to do so,
from using knowledge management
the organization should express its
systems to support what we do well and to
strategic intent and afterward identify the
add value to resources we possess that
knowledge required in executing it. The
are not readily available to competitors.
required knowledge should be compared
For organizational knowledge to offer
to the actual knowledge. The comparison
sustainable competitive advantage, it
is expected to guide the detection of gaps,
should have the following four properties:
two of which are the strategic gap and the
it should be valuable, rare, imperfectly
knowledge gap.
imitable and non-substitutable or

imperfectly substitutable. A prerequisite of
In Table 1, we list major published
implementation of KM is to understand
research on KM, strategy and competitive
and develop the infrastructure elements
advantage.
required to support the acquisition,
Table 1: Research on KM, strategy and
management, and transfer of tacit and
competitive advantage:
explicit organizational knowledge. Three
areas of emphasis form the literature on
Author(s) Year Category
Brown and 1998 Competitive
organizational knowledge infrastructure;
Duguid
Advantage
these are the emphasis on people,
Coyne 1986
Competitive
process and technology. Innovations that
Advantage
exploit a firm’s assets are likely to add
Grant 1995,
Competitive
value to those resources, and the
1996
Advantage
competitive advantage that results is likely
Hal 1992
Competitive
to be sustainable. The literature on KM
Advantage
highlights the importance of a sharing
Miller and
1996 Resource-Based
culture to support and foster a knowledge
Shamsie
View of the Firm
Prahalad 1990 Core
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Leila A. Halawi, Jay E. Aronson and Richard V. McCarthy
management focus (Alavi, 1999; Zack,
significant impact for organizations that
1999a,b; Davenport and Prusak, 1998).
implement it right and well. Also, previous

implementations of enterprise-wide efforts
KM can be viewed as a socio-technical
(e.g., Enterprise Resource Planning and
system of tacit and explicit business
CRM) have exhibited similar properties.
policies and practices. It is enabled by the
Finally, the RBV literature indicates that
integration of information technology tools,
competitive advantages can be created
business processes, human or social
and sustained via knowledge use.
capital, continuous learning and
Therefore, we believe that the RBV is an
innovations. Huber (1991: 89) argues that
appropriate theory to explain whether
an organization learns if any of its units
knowledge management systems indeed
acquires knowledge that it recognizes as
formally and empirically yield competitive
potentially useful to the organization.
advantage, and to formally and empirically
Productive learning exploits, explores, and
explain the nature of the relationship
restructures an organization’s values and
between knowledge management and
criteria, enhances organization capability
competitive advantage. Thus, question 1
and improves an organization’s
above essentially is answered in the
performance. This is the type of learning
literature, and question 2 is the key one
that organizations promote (Argyris and
we plan to explore in our research.
Schon, 1996). Learning is identified as a

quantifiable improvement in activities,
We postulate the following hypothetical
increased available knowledge for
four variables model to empirically
decision-making or sustainable investigate the causal relation between
competitive advantage (Cavaleri, 1994;
knowledge management systems usage
Dodgson, 1993).
and the firms’ competitive edge. Figure 1

portrays our preliminary research model.
As with any major, enterprise-wide
The added three precursors to knowledge
effort/system, knowledge management
management systems use are drawn from
systems have been demonstrated in the
theories on organization systems usage,
popular, technical press as having
strategy, learning and innovations.

G ene ral Environm ent
K now ledge M anagem ent
Infrastructure
O rganizational E nvironm ent
- C orporate C ulture
Task E nvironm ent
- Leadership
- Inform ation
Technology
infrastructure
-C om m unities of
K now ledge M anagem ent
P ractice
System :
-O rganization Structure
K now ledge P roperties
-C om m on K now ledge
- R are
S ustaina ble
- P hysical environm ent
- V aluable
C o m petitive
- N on
A dvantage
substitutable
- Im perfectly
im itable
K now ledge Q uality

-B arriers to K M
im plem entation
- SW O T on K M
-Threats & O pportunities
-K M Strategy
- Innovation
- Learning

Figure 1: Research model

We plan to explore the model in Figure 1.
quality and/or other factors. For now,
Note that it could be expanded to include
these are incorporated in the current
organizational environmental factors that
model in the KM quality construct. We plan
are strategy related as independent
to expand the model to include these
constructs. These include literal and
constructs explicitly as the topic of a
separate measures of strategy, innovation,
further study.
and learning that would influence the KM
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7. Discussion and Implications
and opportunities, KM strategy, innovation,
and learning.
In the information system literature, Ives,

Hamilton and Davis (1980) proposed a
Such considerations suggest the following
model for IS research using two
hypotheses:
information system environments: the
external environment which includes legal,
H1. Knowledge management
social, political, cultural, economic,
infrastructure is positively
educational, resource, and industry trade
related to KMS knowledge
considerations and the organizational
properties.
environment. Variables in the external
H2. Knowledge quality is
environment can affect information
positively related to KMS
systems within organizations through the
knowledge properties.
resources and constraints that these
H3. KMS knowledge
variables can impose or offer.
properties are positively

related to sustainable
Bozeman and Bretschneider (1986)
competitive advantage.
maintained that the frame for public
H4. Knowledge management
management information systems consists
infrastructure and knowledge
of three levels: society which includes
quality are positively related
variables that define resources and
to the knowledge
constraints on MIS, organization which
management systems
includes variables within the organizational
properties.
context that affect information system such
as size, structure, time frame,
H5. Knowledge management
organizational resources and
infrastructure, knowledge
organizational maturity, and the individual
quality and knowledge
which reflects characteristics of individual
management systems
actors within an organization, including
properties are positively
cognitive style, level of satisfaction within
related to sustainable
MIS and other personal and demographic
competitive advantage.
information.
H6. Sustainable competitive

advantage is a function of
Three environments are incorporated in
knowledge management
our model. The organizational
infrastructure, knowledge
environment includes all internal variables
quality, knowledge
that exist within the organizational
management systems
boundaries. The middle frame or task
properties, organization
environment includes the external
environment, task
variables with immediate relevance and
environment and general
direct interactions with the organization.
environment.
The outer frame, or general environment
The firm’s competitive advantage
includes the external variables with
represents its raison d’etre. Therefore, the
potential relevance and no direct
understanding of the basis for competitive
interaction with the organization. Our
advantage is of vital importance in today’s
model has several important constructs,
economy.
namely the knowledge management

infrastructure construct, the knowledge
The RBV explains why and how firms
quality, the knowledge management
achieve competitive advantage. Wernerfelt
system and sustainable competitive
(1984), Barney (1986, 1991), and others
advantage. The knowledge management
have contributed to the subsequent
infrastructure block defines the KM
development of the RBV of strategic
infrastructure in terms of the following five
management. In much of the conceptual
constructs: corporate culture, leadership,
and empirical RBV work, researchers have
information technology infrastructure,
either paraphrased Barney’s RBV
communities of practice and common
statements or simply stated his article.
knowledge. The knowledge quality block
Attempts to further define underlying RBV
defines the knowledge quality in terms of
constructs or specify causal relationships
six constructs: barriers to implementation,
have been extremely sparse (Priem and
SWOT analysis, identification of threats
Butler 2001). Consequently, we will spend
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Leila A. Halawi, Jay E. Aronson and Richard V. McCarthy
much of our research effort determining
Argyris, C. and Schon, D. C. (1996).
how to measure the sustainable
Organizational Learning II – Theory,
competitive advantage construct. This
Method and Practice, .Addisson
elusive measure is readily understandable
Wesley Publishing.
in the strategic management literature, yet
Barney, J. B. (1986) “Strategic Factor
few have truly defined it empirically or
Markets: Expectations, Luck and
even come close to attempting to measure
Business Strategy”, Management
its dimensions.
Science, Vol. 32, pp. 1231-1241.

Barney, J. B. (1991) ‘Firm Resources and
Despite growing interest about the
Sustained Competitive Advantage’,
strategic perspective on knowledge
Journal of Management, Vol. 17, No.
management (KM) there is no published or
1, pp. 99-120.
available procedure or a measurement
Bogner, W. C., Thomas, H., and McGee,
instrument. A large number of knowledge
J. (1999) ‘Competence and
management instruments both
Competitive Advantage toward a
organizational, information and
Dynamic Mode’, British Academy of
communication instruments have been
Management, Vol. 10, pp. 275-290.
proposed but none of them measured
Bozeman, B. and Bretschneider, S.
competitive advantage. Our research is a
(1986). ‘Public Management
first step in providing a push in empirically
Information Systems: Theory and
supporting previous arguments and
Prescription’. Public Administration
creating an instrument to measure them.
Review, 46, pp. 475-487.

Brown, J. S., and Duguid, P. (1998)
Our model has implications for both
‘Organizing Knowledge’, California
researchers and practitioners. For
Management Review, Vol. 40, No. 3,
researchers, the model suggests the types
pp. 90-111.
of the variables that need to be included in
Cavaleri, S. (1994). ‘Soft Systems
future empirical tests of the relationship
Thinking: A Pre-Condition for
between KM and competitive advantage.
Organizational learning’, Human
Consequently, the model extends
Systems Management, Vol. 13, No.4,
understanding of what is becoming an
pp. 259-267.
increasingly important issue in knowledge
Choi, Y. S. (2000) An Empirical Study of
management, the relationship between
Factors Affecting Successful
KM and competitive advantage.

Implementation of Knowledge
Practitioners, on the other hand, could use
Management. Doctoral Dissertation,
the model to refine their thinking about KM
Graduate College at the University of
and their firm’s strategic resources.
Nebraska, University of Nebraska,
Lincoln, NB.
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Document Outline

  • Introduction
  • Knowledge Management (KM)
  • Knowledge Management Systems (KMS)
  • Resource-based view of the firm
  • Knowledge Management (KM) in practice
  • The resource-based model of KM for competitive advantage
  • Discussion and Implications
  • References