How Knowledge Management Is Central as a Competitive Advantage in the Resource Based View Theory

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Knowledge sharing

As explained by Nonaka, I., et al. (2006) through communication and “sharing tacit and explicit knowledge with others”, the person can enhance his ability to understand conditions or difficulties, and use the knowledge gained to find solutions for problematic situations, also “without knowledge system ,the organization would fail to share information, face rapidly increasing task complexity” being unable to deal with uncertainties , also highlighted the importance of KM sharing referring to his earlier work (Nonaka and Takeuchi 1995) explaining that avoiding redundant and complex firm’s knowledge system is essential for the firm to innovate and gave an example of “high degree of shared tacit knowledge among engineers is needed for effective product design”.

Importance of knowledge in product development

According to Nonaka, I., et al. (2006) within the firm “many vital processes of innovation, change and renewal can be analyzed through the knowledge conversion lens” and he gave examples like “product development” referring to his earlier work (Nonaka et al. 1996 a),where this process of development should be coordinated and kept protected to ensure the safety of what he called “the intense flow of information” between the firm and its customers, also help the firm to read market feedback, also “effective product development” needs more than market information, it requires market communication of organization with the “environment” and introducing to customers “successful products and services”, hence creating also “new knowledge for customers”, market information also according to him should be disseminated among the organization.

Knowledge management Strategies

Nonaka, I., et al. (2006) argued that organizations may direct “resources” to improve their “knowledge assets”, making them accessible to its departments or extend them further , also getting information from “markets”, including clients, “partners, suppliers or external departments, also organization may seeks and create new knowledge assets by adapting new “technologies or markets”, Mullins, L. (2005) mentioned two important approaches to develop organization employees and management through “Action learning and continuous professional development”, he explained also that action learning includes a small selected group of employees to develop actual projects for the

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Firm ,the concentration here is on “learning by doing, using case studies and simulations” Tutored by superiors, this operation is a key developer for both the management and the firm, helping the “Managers to think systematically and reflectively on different situations”, also “Continuous professional development CPD” include giving chances to managers to undergo certification programs as “Chartered Managers”, Mullins also mentioned other significant training and certified training as “ short courses, workshops

,seminars, conferences and exhibitions” clarifying that “Lifelong learning should be the concern of all employees in the organization”.

Competitive advantage

According to Porter, M.E. (1980) primarily, “developing a competitive strategy is developing a broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals”, meantime as defined by Coyne, K.(1986) Competitive strategy is entirely involved in beating “competitors” and accomplish “dominance in a product/market segment” ,therefore it is theoretically and practically a set of “business strategy” which deals with the expansive objective of achieving growth in the “wealth of shareholders”, Sadler, P. (2003) argued that to sustain “competitive advantage” as time progresses, there should be distinctions between organizations, where some organizations are capable of surpassing others, The main distinctions between organizations are in their “resources and capabilities”.

Porter’s Five Forces of Competitive Position Analysis

Figure 3- The five forces of competitive analysis, Source: Chartered Institute of Management Accountants (2013).

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According to Porter, M.E. (1980) Five competitive constructs determining industrial lucrativeness “the power of buyers, the power of suppliers, the threat of new entrants, the threat of substitute products, and the rivalry among existing competitors”, The strength of the five forces differs according to “industry”, David, F.(2011) declared that “Normally, a firm can sustain a competitive advantage for only a certain period due to rival firms imitating and undermining that advantage. Thus it is not adequate to simply obtain”

Temporary competitive advantage

Many researchers suggested that the approach of competitive advantage witnessed lot of changes as argued by Grant, R.(1991), he stated that through the early years of the 1980s, strategic analysis was concentrating on seeking “monopoly through industry and segment selection and the manipulation of market structure to create market power” where he referred to (Porter 1980) in this regard, he also argued that if market is growing and this achieved “monopoly” challenged by competitors, then this “monopoly” will turned out to be a “temporary” one, same also suggested by Rastogi, P. (2002) who stated that “ In today’s highly dynamic business milieu characterized by saturated markets and over-capacity in almost every industry; all competitive advantages have become temporary.”

Shift in strategy looking inside the firm, the Resource based view theory of competitive advantage.

Grant, R. (1991)” defined strategy as "the match an organization makes between its internal resources and skills . . . and the opportunities and risks created by its external environment", Sadler, P.(2003) during the 80s and 90s of the last century, strategists focused their “analysis” on “the attractiveness of the external environment and issues of positioning, market share, relative cost position, first-mover advantage, etc”, this concentration was in effect influenced by some contributions