THE EXTENT TO WHICH THE CREATION, SHARING, AND UTILIZATION OF

KNOWLEDGE IS CENTRAL TO THE RESOURCE BASED VIEW OF COMPETITIVE

ADVANTAGE

BY

SINTEI EBIMIERE
The drive of an organization to succeed, increase profit, and lead in its market has led every
business to wanting to have a competitive edge over its competitors. A company’s competitive
advantage simply means the significant attributes the company has over its competition in the
same market to outrun them and be on top in that industry. Every firm should have at least one
attribute the others don’t, to successfully compete in that market, most things can be considered
as a competitive edge since competitive advantage cannot be measured in one way, such as
higher profit margin, increased returns in asset, brand reputation etc .Sajjab and Scanawaz wrote
that firms make use of market based view and resource based view. This essay seeks to discuss
the extent to which knowledge sharing is essential to the resource based view also known as
RBV in deriving competitive advantage over other firms.

A company is believed to have competitive edge when the firm’s strategy is implemented and
none of its competitors and potential rivals has not implemented it already, competitive
advantage that is sustainable is known for its exceptional performance level that it derives from
enforcing such strategies, which is not jointly copied and put into action by rival firms due to
their inability to recreate the advantage of this scheme. According to Smith and Meso (2000)
competitive edge is sustainable from only cardinal assets, Pandian and Mahoney (1992) said that
competitive edge is a part of industry strategies, company’s rulings and organizational effects in
the mode of resource advantage and planning. Unique resources builds up the competitive
advantage of a firm and this consists of tangible and tangible assets, human and non human
resources that are managed by the organization, this resources varies such as organizational
culture, core qualification, invisible assets, distinctive abilities, nested knowledge, and other vital
organizational experiences. As Barney (1991) said that resources that are not common, valued,
non substituted and not easily copied makes up the company’s distinct and unique competency
and therefore creates a long lasting competitive edge. Tangible resources are less likely to
produce competitive advantage than intangible assets according to Bierman, Hitt, Kocher and
Shimizu (2001), intangible assets of a firm such as knowledge allows the organization to update
its new factors value of production, these organizational edges is refined overtime and it is not
copied with ease by rival firms.

According to Butler and Priem (2001), The resource based view of an organization influences
the literatures of strategic management and also literatures of management information systems,
which was created to analyze how firm’s attains a competitive advantage that is sustainable,
resource based promoters insights has made efforts to try and decipher how organizations are
different and its relevance. Resource based view is a method of aimed at deriving competitive
advantage and it came to practice in 1980s and 1920s, which was published by Wernerfelt (1984)
who added to the growth and development; sees the firm as a combination of assets and
capabilities after the significant works of The Resource Based View of a Firm by Prahalad and
Harmel and The Core Competence of the Corporation by Barney, J. The resource based view is
an organizational structure used in determining tactical resources which are plausible in
conveying comparative advantage to the organization, the supporters of this view believes that
the firm’s competitive advantage should be sourced from within the company than external
competitive environment, the resource based view theory focuses more on the company’s
resources internally in a bid to distinguish the abilities, assets and proficiency to deliver an
unrivalled competitive advantages, these internal resources are to be exploited to obtain a
feasible competitive edge.

In Barney’s 1991 article “Firm Resources and Sustained Competitive Advantage” is largely
referenced as s principle work in the development of the resource based view, he made emphasis
on the value of resources, for a good competitive advantage, a firm’s resource should not be
effortlessly attainable by competitors and emulating firms, proper application of these resources
are gears to increase competitiveness, which also includes analytical thinking, innovation and
creating new methods of application in the operations of the company, although some intellects
do not completely agree, they contend the fact to some indications of a fractional resource based
theory in the 1930s. Resource based theory asserts that companies are diverse as they own
multiplex resources, in other words firms could have heterogeneous strategies due to their
contrasting resources. According to David (1991), he said that the RBV is continuously
expanding and aims to build an agreeable network amid sustainable competitive advantage and
resources.

In 1985, Porter wrote about competitive advantage which originates fundamental elements an
organization produces for its clients and customers that transcends the firm’s charge in creation.
With proper planning which is an up-front investment in success (David, 2011), strategies are
formulated that sets goals for competitive targets, for an organization to be successful, it is
essential to make adequate short and long term plans to guide the general operations, getting
ahead of the competition is the optimum method of attaining high profitability than rival firms.
Porter views competitiveness as a layout that an organization should use to advance themselves
over their rival. He later stated that the objective of competitive scheme is to revamp the
organizational rules and structure to increase profit and turnover. Five forces of competitive
analysis was introduced by Porter which regulates the company’s capacity to acquire high
returns on investments and profit, these forces that structures the superiority in competitiveness
in a firm includes entry of new rivals, opposition amidst competing firms, expansion of
additional product, bargaining power of suppliers and conferring influence of consumers. The
battle is largely on which company does it better and the better players gain advantage over
others. David (2011), in profit making businesses; these forces affects its competitiveness and
operations. In highlighting and competitive strategies, a firm that fails to coordinate and audit
their external environment misses the opportunities and wrongfully implements strategies that
are not suitable for the organization. Adapting and implementing competitive strategies is vital to
the survival of corporations (Wernerfelt, 1984).

Dasgupta and Gupta (2009) stated that knowledge has grown to be gimmick and essential
resource of a company; they made emphasis on the creation, sharing and utilization of
knowledge, with its fundamental significance in respect to resource based view, furthermore said
that an organization should have a large scope of proficiency in other to confront financial and
communal problems that may arise in the course of business. According to Duhon (1988),
knowledge management (KM) is a practice that recommends a system to allocate, obtain,
amplify, retrieve, and articulate the firm’s informative possessions, which includes documents,
reports, plans, employee’s adroitness and quota. Rahimil in 2012 stated that in attaining a
feasible competitive edge over competition, the firm has to comprehend the method of
construction, allotment and practice of knowledge within itself and effectively ascribe to
management operations. Utilization of knowledge created is essential in a company’s
competitiveness, Dasgupta and Gupta (2009) maintained that a creation which leads to
competitive advantage facilitates a gross managerial approach primarily on learning and
knowledge. For sustainable knowledge, systems should be made to manage the flow of
knowledge, competitiveness foster how knowledge is created, used and shared from one
department to another, to preserve competitiveness, every department within the organization
must develop understanding, teamwork, and strategy. The capacity of a firm to distinguish
themselves is based on the efficiency for them to merge their knowledge, management style and
their innovative practices in order to gain knowledge in innovation. In reviewing knowledge
management, Macintosh stated the substantial deduction as to why knowledge management
should be put into consideration and it includes conflicts, because marketplace is continuously
competitive and knowledge based management has to be a daily exercise, the challenge of a
moving worker, due to early retirement, knowledge is lost that builds from institutional
memories, focus on consumers which is the aim of an organization to increase their customer’s
worth and the worldwide obligation where intelligibly worldwide integration has brought about
firm’s having foreign customers, knowledge management systems should be created to benefit
the firm and earn advantage over rivals and stay functioning. All departments of an organization
should be properly equipped with the right skills for competitiveness by creating, distributing
and proper usage of company’s resources, David (2011) examines strategic management as
remarkably colluding growth that postulate unity amidst advertising, book keeping and finance,
administration, operations and manufacturing, development and research. Failure to understand
and recognize networks bonded by operational departments of the firm can result to a
disadvantage in strategic management, information sharing unites departments as one and
promotes the strategic planning in a firm, this encompasses that knowledge shared between units
and operational areas is an essential part of competitive advantage, communication between units
should be handled carefully as it is a crucial element of knowledge sharing, gaps in the flow of
operational knowledge should be audited internally by the firm, assessments done internally
should be according to the organizational structures as operational units differs among firms,
corporations and industries. Qualified staffs are to be employed by management with such roles
to promote and enhance the sharing of knowledge, usage and creation, with competition
increasing, firms has established programs of competitive intelligence, which according to David
(2011) are efficient methods for retrieving and analyzing information about the accomplishments
of the economy global corporate growth of contesting firms to continue a company’s objectives.
Intelligence from contesting corporations are gotten from different methods which includes
employing top personnel from rival firms, in the united states it is a very common practice in the
technological industry and also in Nigeria’s banking industry, giving managers information to be
more superior than rivals is part of the program of competitive intelligence and it is an essential
method of focus planning and application to promote competitiveness.

There is a general consensus that knowledge management is the most vital factor of competitive
advantage of a firm, living in the knowledge era now, which is rapidly changing, creating rooms
for organizations to progress, speed and agility are the base for a business to succeed in this ever
changing era of technology, organizations continue to grow increasingly with the principles and
development of knowledge management, seeking competitive advantage increases through
knowledge rapidly, intangible assets has longed received recognition from the organization in
management, according to Chong (2000) that stated that brands developed, relationships with
stake holders, organizational culture and reputation are seen as a good source of business edge.

KM scholars believes that knowledge is the most vital resource in today modern firms, because
of its distinctiveness as a resource that is not easily copied by contesting firms, this practice
points to the evolution of fresh knowledge and its usage to maintain planning edge, systems are
assumed to be created to collect and utilize important knowledge data from both internal and
external environment with effective indexing and also to rid off obsolete knowledge. In this
growing market according to Loudon (2002), there are four strong changes that has changed the
environment of the business which is globalization, the evolution of digital business, industrial
economies transformation and enterprise transformation, firms are faced with managing
intellectual capital in this world wide economy driven with information, managing essential
knowledge systematically and its processes in planning, collecting, creation, exploitation and
utilization is explicit and it involves the transformation of individual knowledge to corporate
organizational knowledge that can be shared widely and applied appropriately through the firm.

KM involves creating and managing an organizational culture that promotes the dissemination,
building and proper usage of knowledge which enhances competitive advantage, attaining a
relevant organizational knowledge culture requires management to pay more attention in three
areas which according to Abell (1997) was organization preparation, managing knowledge
assets, and manipulating knowledge for competitive advantage. Knowledge systems use broad
scope of knowledge to make decisions and rectify problems; it makes use of recent advanced
technologies such as intranets, soft ware filters, extranets, and internets, this information
technology based systems are made to facilitate the growth of organizational knowledge
processes in creating, collection, and utilization. With this in mind it is essential for
organizations to maintain an integrated approach towards production and innovation in the
business environment, technologies are easily assessable and affordable to be operational now in
organizations, in other to properly share knowledge the organizations are required to give their
employees the right tool, knowledge management is important because it ensures necessary
information are accessed by employees when needed, the knowledge is still kept in the firm even
after the workers are no longer with the firm, duplicated efforts are avoided, existing expertise
are taken advantage off, methods and processes are standardized, this leads to growth and
innovation stimulation and collaboration and decision making becomes easier and faster. The
new work place has changed over the years from workers working in office spaces physically
and through emails within a set time to now working across several locations, and devices; it is
no longer confined to a single working environment, as this evolution in workplace continues, a
digital work place was born to retain and share information. Employees in a digital work place
are given support to enhance sharing such as training through cloud based learning platforms and
spaces online to collaborate easily. This can be done by adding learning and social aspects which
forms an effective digital work place in the intranet, so employees can be expressive too and
know one another from various departments, and cultivate organizational culture.

The intranet is vital in an organization as it allows work spaces to be made, communication is

improved with the addition of social aspects and also positive amount of competition amongst
units and workers, social aspect of the intranet is essentially useful as it is used by employees to
check their organizational requirements to effectively carry out their job task, for this to happen
strategies are to be pre made like; auditing the work place for possible improvements, expanding
areas that would be beneficial and increase employees and clients, updating information in the
knowledge base, allowing organization widespread sharing and assessing how knowledge shared
in the future can be improved. By including social to the digital work place, most of this can be
facilitated whereby both senior and junior workers can update and add what they know and have
learnt in their jobs into the job pool of the organization, which in turn would be easily retrieved
by colleagues, with the use of blogs, wikis, employee profiles and team work spaces. The
employee capacity to update the addition in blogs and wikis would depend on the size and work
force of the firm, for workers to do this, it means that the base of knowledge of the organization
is continuously growing and it is owned by the firm and not just individuals. It is important to
make strategies taking into consideration people and culture, the company, and technology.
Though technologies fades away and organizations are obsolete and resist change, which is the
genesis of problems, it is important to place workers in paramount positions where they can feel
valued and this would motivate them into increase productivity.

Concluding that competiveness is vital for organizations to continue to survive and exist against
their competition in the industry, and also creating, disseminating and proper utilizing of
knowledge is important to resource based view (RBV) of competitive advantage, critically
reviewing literatures of knowledge management which focuses on information technology to
build a network structure that shares knowledge through intranet social communities, where
organizations of different sizes can update the intranet with new additional information to create
and effective digital work place and ensuring organization culture sustains teamwork and
innovation, this flow of information should be maintained from both outside and within the
various units, and knowledge expertise employed should be responsible for ensuring that there is
no information gap or leak and positive results are achieved to enable the firm stay competitive,
in the growing knowledge based economy.

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