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What is the Knowledge-Based View?
The Knowledge-Based View (KBV) is a strategic management framework that positions knowledge as the most critical resource for achieving sustainable competitive advantage. It argues that firms are fundamentally differentiated by their ability to create, integrate, and apply knowledge.
Definition
The Knowledge-Based View is a theory that emphasises knowledge as the primary strategic asset that enables firms to innovate, compete, and grow more effectively than their rivals.
Key Takeaways
- KBV builds on and extends the Resource-Based View (RBV).
- Knowledge—tacit, explicit, and embedded—is seen as the core driver of competitive advantage.
- KBV focuses on how firms create, store, and leverage knowledge.
Understanding the Knowledge-Based View
KBV emerged as an evolution of the Resource-Based View, placing stronger emphasis on intangible, cognitive, and organisational capabilities. While traditional RBV highlights physical and financial resources, KBV identifies knowledge as the most valuable asset due to its difficulty to imitate, transfer, or substitute.
Types of knowledge in KBV include:
- Tacit knowledge: Experience-based expertise.
- Explicit knowledge: Documented information.
- Embedded knowledge: Knowledge built into routines, culture, or processes.
KBV explains why companies with strong learning cultures, effective knowledge systems, and innovation capabilities outperform competitors.
Knowledge creation and integration occur through:
- Collaboration
- Research and development (R&D)
- Organisational learning
- Digital knowledge systems
Formula (If Applicable)
Not formula-based, but KBV performance is often assessed through indicators such as:
- R&D intensity
- Knowledge-sharing effectiveness
- Innovation output
- Human capital strength
Real-World Example
Tech companies like Google and Microsoft compete primarily through knowledge assets such as expertise, intellectual property, algorithms, and organisational learning processes.
Consulting firms also rely heavily on collective knowledge, methodologies, and experience to differentiate themselves.
Importance in Business or Economics
KBV highlights the importance of intellectual capital, innovation, and continuous learning in modern economies. In a Knowledge Economy, firms with superior knowledge systems achieve sustainable growth, higher value creation, and greater resilience.
Investors also analyse knowledge assets as indicators of future potential.
Types or Variations
- Resource-Based View (RBV): Precursor emphasising overall resources.
- Dynamic Capabilities Theory: Focuses on how firms adapt and reconfigure knowledge.
- Knowledge Management Approaches: Practical systems for managing information.
Related Terms
- Knowledge Management (KM)
- Resource-Based View (RBV)
- Intellectual Capital
- Organisational Learning
Sources and Further Reading
- https://www.sciencedirect.com/topics/business-management/knowledge-based-view
- https://hbr.org/1998/11/the-knowing-organization
Quick Reference
- Core Idea: Knowledge is the most valuable strategic asset.
- Primary Benefit: Drives innovation and sustained competitive advantage.
- Impact: Strengthens long-term performance and adaptability.
Frequently Asked Questions (FAQs)
Is KBV only relevant for tech companies?
No, KBV applies to all sectors where knowledge and expertise are crucial.
How does KBV differ from RBV?
KBV emphasises knowledge specifically, while RBV considers all types of resources.
What makes knowledge a durable source of advantage?
It is hard to imitate, transfer, or replace.
