Management-Principle Source of Competitive Advantage-Myassignment

Question: Discuss with reference to appropriate literature sources, the extent to which the creation, sharing and utilization of knowledge is central to this resource based view of competitive advantage. Answer: Introduction Globalisation and technological advent has led to creation, sharing and utilization of knowledge is key to resource based approach to competitive advantage(Dasgupta, 2009). Developing sustainable competitive advantage for organization is bent on exploration and development of core competency. Analysing resource-based-view (RBV) for organizations explains strategic assets for it being valuable, rare, non-substitutable and imperfectly imitable. The current era of knowledge is variant rendering new dimension to businesses. In the knowledge-era quickness has been considered as a key factor that provides success to organizations. The dimension of knowledge management (KM) is impacted dramatically and continuously spreading across organizations(Easterby?Smith, 2009). As knowledge increases at faster rate, businesses have tend to realize increasing importance of intangible assets. Sustainable business advantages is built on developing stakeholder relationships, brands, culture and reputatio n. In financial and professional services especially, intangible assets leveraging and development can create core competency. Processing of knowledge is central to knowledge-intensive organizations for their business success. Various prominent researchers and scholars in the domain establishes that knowledge as being integral factor in competitive advantage(Ambrosini, 2009). In world of global economy, success arises form efficient and fast exchange of information. There has been a shift in competitive advantage from physical assets to intellectual capital. The current scope of the essay analyses Dasgupta and Gupta (2009) view, The increasing turbulence in the external business environment has focused attention on the resources and organizational capabilities as the principal source of competitive advantage. Literature Review Analysis of relevant literatures is critical for understanding trends around organisation with growing importance of knowledge in creation of core competency. The following literatures have been identified as being crucial contributing to the key concept in this analysis. Scott L. Newbert (2008) article, Value, rareness, competitive advantage, and performance: a conceptual?level empirical investigation of the resource?based view of the firm. In the Strategic management journal, pages 745 to 768(Newbert, 2008). The resource based view of the firm states that an organization comprise of a pool of capabilities and resources, their discrepancies indistribution and size and competitveness arises from their distinctive capabilities to develop and organize capabilities by application of value-increasign methodologies. The primiary scope of this article recognises knowledge as being a startegic asset fo the firm that can hep create a sustainable advnatage for the firm. Grant (1995, 1996)and Penrose (1959) extended the approach to integrate dimensions of knowledge. Knowledge is in turn integrated with four primary mechanisms of coordiantions as sequencing, rules and directives, routines and group problem solving and decision making. Another important article in the domain of analysing external conditions is Jay B. Barney and N. Clark Delwyn (2007) article, Resource-based theory: Creating and sustaining competitive advantage. In the Oxford University Press on Demand(Barney, 2007). The scope of this article analyses the critical aspects of external business environemnt that pressurises a firm to develop its knowledge bases. While a firm operates within the industry it is faced with divregent number of threats and opportunities from external business environemnt as political, economic, social, technological, legal and environemntal factors. While each of these might contriute separately towards startegic decisions taken by the firm, they are the factors that contribute in key decisions taken. A firm might have several resources and capabilities but extending them all at the same time might not benefit the firm. On the contrary, the firm needs to continuously evaluate and understand the potential impacts such external environmental factors caused on the firm in order to develop strategies. Key to strategy development lies at the centre of the firm being capable to analyse which resources and capabilities to apply first and derive advantage at that position in the market. Therefore, the scope of this literature is effective in developing and analysing factors that are critical to evaluating and sharing of knowledge that are critically needed for a firm. Therefore, it canbe said that knowledge is of startegic importance to the firm. A pertinent literature dominant in the field of creation and sharing of knowledge is capabilities to evaluate knowledge is Ragna Seidler-de Alwis and Evi Hartmann (2008) article, The use of tacit knowledge within innovative companies: knowledge management in innovative enterprises. In the Journal of knowledge Management, pages 133 to 147(Seidler-de Alwis, 2008). The scope of this article evaluates scopes pertaining to ways in which various theories are evaluated for evaluation of knowledge. Spender (1996) proposed that a firms capability and knowledge in order to create exclussive knowledge is the centre most atatrction for any type of firm. Supporting this theory is Grant (1996) proposing that knowledge has tremendous potential of being a competitive assets for any firm. This article evaluates the possible scope of knowledge management (KM) and its research to render competitive advnatages to firm. Therefore, specific models relating to the development and application of KM that can be a source of competitive advantage was analysed. The scope of this essay was based on discussion by Meeta Dasgupta and R. K. Gupta (2009) article, Innovation in organizations: A review of the role of organizational learning and knowledge management. In the Global Business Review, pages 203 to 224(Dasgupta, 2009). This article proposed that knowledge has capabilities to deal with external business environemnt within the firm. This article evaluates contemporary globalisation trends in 21st century will be attained with extenssion of scopes of knowledge management. Large corporations have become aware reagrdign the applicability that knowledge can render to their organization and in deliverying competitiveness. Therefore the scope of this article focusses discussion primarily on ways that knowledge application can provide competitive advanatge. Analysis Resource based view of competitive advantage states that creation, sharing and utilization of knowledge is essential(Newbert, 2008). Resource based view an economic factor allows determination of strategic resources of a firm. These resources are exploited for retention of sustainable competitive advantage to extend core competency. Firms within industry needs to have knowledge regarding various happening and aspects that is happening around the industry, for determining key resources that are valuable. Rare or imperfectly imitable or non-substitute product or service knowledge within the industry can be used into creating something unique. Knowledge regarding resources, which can comprise of capabilities, assets, processes, knowledge, information and attributes can help firm create and implement strategies. These strategies in turn allow the firms to render effectiveness and efficiency into their businesses. Overall it allows implementation of strategies, through which a firm might be able to create competitive advantage(Barney, 2007). In turbulent times within the industry knowledge creation, sharing or utilization regarding resources as well as organisational capabilities might lead to core competency that is difficult to overshadow. Creating knowledge that can be uniquely matched to organisational capabilities or able to organize firms competency can lead to determination of a leading position in the market. Further sharing of such knowledge within organisation can enhance creation of more knowledge inputs that goes towards creation of products and services that are unique or rare in nature. When all such knowledge regarding organisational resources and capabilities are utilized, it leads to the creation of an unique offering which might render competitive advantage for the firm. Knowledge becoming a significant factor for rendering efficiency and catering to competitive advantage, there needs to evaluation done on its roles(Leonidou, 2011). Most importantly ways in which knowledge application are entailed are in its creativity. Facilitating innovations across organization can lead to enhancement of competencies in private, public or not-for-profit firms. Managing knowledge has been found to be key to organizations survival for dealing with external business environment. Organizations can only extend their competitiveness in the industry, which has now expanded to include global perspectives by way of assimilating knowledge. In order to create, manage and exchange intellectual assets of organization, role of knowledge has to be accepted. Knowledge can be represented as a convergence of ideas from core competencies along with resource-based theories of firm. Knowledge can be applied across broad range of strategies for understanding related to cultures, commun ity, learning, collaboration, technology and expertise(Kedia, 2009). The key for corporate success in contemporary competitive environment is to recognize and then sustain competitive advantage. Porter (1999) defined that ascertaining competitive advantage is to make sure what to do and what not to do. Therefore, in order to derive returns from investments consistently, it becomes imperative that firms implements their value creation strategy, which are not simultaneous with any other competitors. In order to derive sustainable competitive advantage, it becomes necessary that exceptional level of performance implementing value-enhancement strategy is applied. Such strategies are not possible to reduce by competitors as they are incapable of reproducing value gained from such strategy. Valued strategy can only arise from sustainable competitive advantage derived from strategic assets(Ardichvili, 2008). On the other hand, through industry analysis, organizational governance and firms effect on resources, it is possible to attain competitive advantage. Strategic management literature has since a long time dominated resource-based-view. Literatures have been used to understand and explain reasons that firms vary and ways in which such matters. Resource-based-view focuses on firm as being potential creators of value-added capabilities having organizational competencies, entailing assets along with resources from knowledge-based aspect. The view idealizes capability of firm inability to copy as being key to generate potential returns as well as in achievement of superior performances. An organizations resources consists of assets that might both be tangible as well as intangible in nature, comprising of human and nonhumans, possessed by the firm for enhancing is value-based strategy(Barreto, 2010). Capabilities and resources that are uncommon, valuable, non-substitutable and poorly imitable can render long-term competitive advantage. Such advantages can only be generated through knowledge creation and expansion. Knowledge can be categorised as an intangible resource that possesses more capabilities compared to tangible resources for creation of competitive advantages. This type of advantage cannot be generated overnight and requires longer period of time to be applied. Barney (1991) proposed that resources that are controlled by a firm allows it to develop and implement strategies. He formed the VRIO framework for analysing resources that have capabilities to create competitive advantage. However, the basis of the framework was focused on a firms capability to gen erate knowledge and apply it with its present capabilities and resources(Kiessling, 2009). An ideal example to the situation would include, an organization based in Turkey, who is aware regarding its financial situation and also has knowledge regarding Brexit, will design its tourism products accordingly. Meaning, the firm having knowledge regarding the possible impact that Brexit could have on its product is more likely to lower prices and clear stocks compared to a firm having no knowledge at all regarding Brexit and its own financial position. Therefore, it can be said that a firm is able to make use of knowledge to take decisions more prudently, which in turn makes it more competitive in the industry. A consumer when offered with similar product qualities from both firms is more likely to select the one with lower price compared to the one offering higher price. Thus, competitiveness of first firm to cater to industry demands is better, therefore it has been able to make effecti ve use of knowledge in making appropriate strategic decision regarding pricing. One profound researches of Graham and Pizzo (1996) proposed a framework which allowed to position companies for management of knowledge in order to understand competitive advantage(Du Plessis, 2007). Their works identified four independent and dynamic elements within closed loop system which aims at balancing organizational domains and fluid for strategic flexibility and operations efficiency. Knowledge is a concept from fluid domain that originates and grows from individual intuition, improvisations and personal networks. Whereas in organizational domain, there are three elements are identification of strategic business drivers, application of knowledge interrelationships and core, application of discipline and monitoring with rebalancing. In all domains with this framework, knowledge including tangible and intangible assets in cultures and values, technology, people and business capabilities is determined. In business it needs to be ascertained places where knowledge exists and way s it exists for further constructions. Through value chain applicability, knowledge movement through formal and informal sides is ascertained. Therefore, there needs to be highly centralized focus along with consideration of variables for disseminating of knowledge. Researchers in the area has been able to establish that knowledge can render sustainable competitive advantage by value addition to existing resources and capabilities. therefore, apart from innovating easy and methods in knowledge for application of resources and capabilities there needs to be utilization of such knowledge as well. That is to say, mere creation of knowledge can be entailed by analysing and understanding several existing variables in the external business environment. It is only when data or information which has capabilities to turn into valuable knowledge in assimilated that it can have capabilities to value-add to the firm ultimately. Sharing of such knowledge gained with all departments of managerial sections can help in identification of such competencies. While dealing with products or services, identifying particular areas where knowledge gathered can be applied, is done using knowledge sharing techniques. With sharing of knowledge, it is possible that all departments are able to brainstorm and create or generate ideas further that can contribute towards innovation(Wang, 2012). Thus, the field of knowledge in contribution towards a firms competitive advantage is interrelated. Once, an idea or concept is generated then it is possible with application of such ideas or utilization of the same to yield valuable output. Value addition or outcome has to be generated for generation of final positive outcome of effect for the firm. The outcome with assimilation of knowledge is then extended across to the industry that decides position of the firm I n the industry. Several models for management of knowledge that connects firms internal resources to be fed with information has been developed. Such systems gather extensive data and information then processing them into knowledge to yield valuable output. Thus, researchers have been effectively able to connect strategic perspective of managing knowledge by way of its creation, utilization and sharing of information(Lichtenthaler, 2009). Though published instrument or measurement does not yet exists in this regard for application of organizational information. There are communication instruments but there effectiveness has not yet been measured. Most researches have empirically established facts that have supported previous arguments creating instruments for measuring them. Models for practioner needs to include more divergent aspects connect domain of strategic advantage with that of managing knowledge. Competitive advantage becoming an increasingly important domain with rising business complexity in globalized world, more domains has to be included in management of knowledge. Thus, researchers needs to build a model that is able to integrate competitive advantage with that of knowledge and external business environment. A combined model will be able to tackle the complex challenges and enable businesses to extend their core competencies in a better and more advanced manner. Conclusion Analysing several pertinent models and application of knowledge management across organizations has provided useful insights into the same. While firms experiment with various combinations of their resources and capabilities, the core of the competitive advantage lies in analysing and evaluating pertinent factors related to the same. With globalisation challenges for firms have become complex and diversified in nature. A firm is now exposed to external business environment from the entire world that is undergoing transformation continuously. Often such factors make it difficult for firms to develop strategic decisions. At every instance a firm gets bombarded with varied knowledge pouring into their systems from world across, which they need to analyse. Therefore, all departments of the organization needs to have access to diversified knowledge, create them and share them concurrently such that effective utilization of resources and capabilities are done. Only through such effective u tilization it is possible to extend core competency of the firm, by making changes to their products or service features. Such changes might often be insignificant in nature but might be able to create customer satisfaction. In other words, capability of firms to deal with external business environment by management of knowledge is crucial for a firms existence and also to create effective sustainable competitive advantage. Reference Lists Ambrosini, V. . (2009). What are dynamic capabilities and are they a useful construct in strategic management? International journal of management reviews, 29-49. Ardichvili, A. (2008). Learning and knowledge sharing in virtual communities of practice: Motivators, barriers, and enablers. Advances in developing human resources, 541-554. Barney, J. B. (2007). Resource-based theory: Creating and sustaining competitive advantage. Oxford University Press on Demand. Barreto, I. (2010). Dynamic capabilities: A review of past research and an agenda for the future. Journal of management, 256-280. Dasgupta, M. . (2009). Innovation in organizations: A review of the role of organizational learning and knowledge management. Global Business Review, 203-224. Du Plessis, M. (2007). The role of knowledge management in innovation. Journal of knowledge management, 20-29. Easterby?Smith, M. L. (2009). Dynamic capabilities: Current debates and future directions. British Journal of Management. Kedia, B. L. (2009). Understanding offshoring: A research framework based on disintegration, location and externalization advantages. Journal of World Business, 250-261. Kiessling, T. S. (2009). Exploring knowledge management to organizational performance outcomes in a transitional economy. Journal of world business, 421-433. Leonidou, L. C. (2011). National export-promotion programs as drivers of organizational resources and capabilities: effects on strategy, competitive advantage, and performance. Journal of International Marketing, 1-29. Lichtenthaler, U. (2009). Absorptive capacity, environmental turbulence, and the complementarity of organizational learning processes. Academy of management journal, 822-846. Newbert, S. L. (2008). Value, rareness, competitive advantage, and performance: a conceptual?level empirical investigation of the resource?based view of the firm. Strategic management journal, 745-768. Seidler-de Alwis, R. . (2008). The use of tacit knowledge within innovative companies: knowledge management in innovative enterprises. Journal of knowledge Management, 133-147. Wang, N. L. (2012). Resource structuring or capability building? An empirical study of the business value of information technology. Journal of Management Information Systems, 325-367.