Creation, sharing, and utilization of knowledge

 A critical evaluation of the extent to which the creation, sharing, and utilization of knowledge is central to the Resource-Based View of competitive advantage.

 

 

 

 

 

 

 

 

 

Fabrice Tshiyoyi Banyingela

Theories of Management

UU-MBA-712-ZM

17 March 2024

1.    Introduction

Businesses strive to increase profits and maintain sustainability by gaining market share leadership through innovative and unique attributes over competitors. Dasgupta and Gupta stated that “sustainable development cannot happen without innovation. The challenge before every organization is to develop innovation strategies that not only respond to changes in the environment and societal pressures but also consider the needs and expectations of various stakeholders” (Dasgupta &. Gupta, 2009, p.204). Businesses can achieve this by prioritizing knowledge management and innovation strategies, allowing them to effectively adapt to external pressures. Knowledge drives innovation by providing a foundation and inspiration, driving meaningful change and progress in various fields. Innovation is crucial for a business's success, bringing positive change and improvement to products, services, or methods. Neglecting this management strategy could be detrimental to the business's survival and industry. Global economic growth is significantly influenced by a country's competitiveness of companies. The competition drives companies’ ability to meet consumers’ needs through production and increase revenues to remain sustainable. This type of environment fosters growth in different sectors of any industry. Thus, Organizations should continuously invest in learning to adapt to the evolving business environment. Dasgupta and Gupta (2009) emphasize the importance of organizations focusing on their organizational resources and capabilities to face the turbulence of external business. Knowledge is identified as a crucial strategic resource, making knowledge creation, sharing, and utilization the center of innovation for business development and sustainability. Therefore, this paper explores the role of knowledge creation, sharing, and utilization in management for innovation and boosting any organization’s competitive edge, referencing Dasgupta et Gupta's work.

 

The success of a firm – RBV of Competitive Edge

The Resource-Based View (RBV) is a strategic management theory that suggests an organization's competitive advantage is achieved through effective knowledge management of its assets. It emphasizes the importance of strategic management that focuses on internal resources and capabilities as a source of competitive advantage rather than external factors. It also emphasizes mobilizing and organizing tangible assets like technology, premises, and equipment, and intangible assets like trademarks, reputation, and expertise. A knowledge management plan is essential for organizations to foster a safe learning environment, enabling employees to generate new knowledge and retain it for future use. This plan facilitates the sharing of existing knowledge among members, with management guiding them to achieve strategic goals and objectives. Knowledge incorporates an organization's understanding of services, products, processes, mistakes, successes, and customers.

Existing resources alone cannot guarantee an organization's success. Research indicates that businesses that fail to invest in intellectual capital, such as knowledge, can be severely impacted. Knowledge can be explicit, tacit, or cultural. Explicit knowledge is available to everyone and can be documented or codified. Tacit knowledge is personal experience and skills, difficult to transfer but crucial for problem-solving, innovation, and social cohesion. Cultural knowledge refers to shared beliefs within a community. Each type of knowledge influences employees' motivation to innovate. Countries like Saudi Arabia prioritize modesty, limiting luxury fashion brands from establishing a strong market despite their innovation. Thus, knowledge is essential for innovation, competitiveness, and adaptability. However, according to Dasgupta and Gupta, several authors underline that it is not existing knowledge in a firm that is the source of competitive advantage. It is the ability to apply that knowledge effectively to create new knowledge (Dasgupta and Gupta, 2009, p.208). Gift Mpho, a South African man financed and mentored by his mother, failed three times to start his own business due to a lack of knowledge management. He often lacked sufficient information about different industries, hindering innovation. This lack of knowledge can create silos within departments, leading to inefficiency and wasted resources. It can also result in the reinvention of existing solutions, loss of expertise, and limited creativity. Knowledge management is a critical tool in assisting struggling businesses to restructure their operations and regain competitiveness.

Knowledge management strategies promote knowledge creation and utilization, enhancing efficiency, scalability, and consistency within organizations leading to innovation, and can be categorized into personalization and codification. Personalization enhances user engagement and loyalty by tailoring experiences to specific preferences. Codification standardizes business processes and knowledge, reducing reliance on individual expertise. Both strategies emphasize knowledge creation, sharing, and use through continuous learning.

 

2.    Through knowledge, national prosperity is created, not inherited.

Innovation is a dynamic process influenced by factors like consumers and company knowledge. Effective knowledge management practices ensure accessible insights and diverse perspectives for collective brainstorming, fostering a more innovative environment. Alexis De Tocqueville recognized that “countries are not automatically rich in proportion to their natural resources. If that were so then Russia would be the richest country in the world. She has everything: oil, gas, diamonds, platinum, gold, silver, industrial metals, timber, and rich soil. Countries are rich whose governments have policies which encourage the essential creativity, initiative, and enterprise of man and recognize his desire to do better for his family.” Additionally, Michael E. Porter highlighted that “national prosperity is created, not inherited. That companies achieve competitive advantage through acts of innovation.” He added that “companies gain advantage against the world’s best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers.” Therefore, knowledge is the key to innovation. According to Momaya, global economic growth is largely due to increased competitiveness among companies, which has grown and adapted to change through recent innovations, positively impacting the economies of most countries (Momaya et al., 2019).

Organizations use knowledge as a tool for innovation, creating, sharing, and utilizing existing and new knowledge to satisfy stakeholders. Knowledge creation involves extensive research, while knowledge sharing encourages collaboration and upgrades existing knowledge before making it available to the public. Knowledge use aims to use existing knowledge to achieve strategic goals and objectives within an organization. Formal and informal communication channels, technology-enabled platforms, and a culture that encourages open communication facilitate knowledge sharing. To fully realize the benefits of knowledge, organizations must effectively utilize it in decision-making processes and operational activities. This involves aligning knowledge with strategic objectives and competitive priorities, translating acquired knowledge into actionable strategies, and fostering a culture that supports evidence-based decision-making and continuous learning. Four factors influence knowledge creation, sharing, and use in an organization's long-term success and sustainability: culture, structure, technology, and leadership. These factors constitute the backbone of an organization’s learning process.

 

2.1.       Culture

Dasgupta and Gupta define organizational culture as “the deeply seated (often subconscious) values and beliefs shared by personnel in an organization. It is manifested in the typical characteristics of the organization.” Additionally, Hellreigal, Smith, and Cronje state that organizational culture comprises routine behavior, norms, values, philosophy, rules of the game, and feelings (as cited in Martins and Terblanche 2003). An effective organizational culture enhances job and customer satisfaction, improves communication, and encourages innovation, enabling organizations to navigate challenges effectively. Dasgupta and Gupta identified five ways to enhance knowledge management: managing and developing intellectual capital, developing a learning and participative climate, changing the mindset of people and inculcating trust, effective communication, and organizational memory.

 

2.1.1.   Managing and Developing Intellectual Capital

Intellectual capital, an intangible asset, enhances an organization's competitive advantage through innovation. It can be managed through decision-making and continuous learning and training, crucial for sustainable market competitiveness and knowledge creation, fostering innovation. This leads to many benefits in an organization such as enhanced innovation, improved performance, increased employee engagement, and better decision-making. A learning culture encourages adaptive learning through job rotation, inter-divisional teams, and delegation of responsibility, promoting knowledge creation, sharing, and use in workplace routines and processes. However, organizations face challenges in retaining employee’s knowledge after resignation or death, find difficulties in quantifying intangible assets, and resistance to change. A well-developed intellectual capital strategy helps lead the industry and become sustainable, while investing in employee intellectual development, ensuring a sustainable approach to knowledge sharing and adoption.

 

 

2.1.2.   Developing a Learning and Participative Climate

A learning and participative organizational climate fosters employee engagement, collaboration, and innovation by encouraging continuous learning, open communication, and active decision-making. A participative or creative environment is crucial for growth, innovation, and productivity. Key elements include physical safety, psychological safety, inclusivity, and diversity, encouraging creativity, supportive feedback, empowerment, and continuous learning. Physical safety ensures a clean and organized space, while psychological safety promotes a culture of respect and open communication. Inclusivity and diversity promote equity and respect, while creativity encourages exploration and innovation. Supportive feedback is crucial for personal growth, while empowerment allows individuals to take ownership of their learning process. Continuous learning encourages continuous growth through training programs and resources. The learning climate fosters knowledge creation, sharing, and utilization in workplace routines and processes (Shipton, Fay, West, Patterson, and Birdi 2005).

 

2.1.3.   Changing Mind-Set of People and Inculcating Trust

Culture is crucial in an organization's internal integration and coordination, fostering a sense of identity and commitment. It also fosters an effective environment for communication and knowledge sharing. This process requires deliberate efforts to foster understanding, communication, education, leadership, honesty, and integrity. A sense of confidence and competence encourages employees to share knowledge (Lin and Kuo 2007). Organizations should benchmark their internal processes to align with industry best practices, identify knowledge gaps, and bridge them through acquisition or resource utilization (Massa and Testa 2004).

 

2.1.4.   Effective Communication

While communication refers to the transfer of information from the sender to the receiver using a medium, effective communication involves the clear, concise, and understandable transfer of information from the sender to the receiver, ensuring that the information is conveyed effectively and efficiently. It is a great skill for every member of an organization and a personal setting as it builds strong relationships, fosters collaboration, resolves conflicts, and achieves common goals. And this is made possible through an organizational culture that promotes trust. The organization’s success relies on maintaining consistent service levels between offices and customers. Therefore, organizations must maintain effective communication with all internal and external stakeholders because stakeholders are good sources of information for innovation as they know what they possess and decide what they want or need. Feedback on services or products can be achieved through market research by using surveys, questionnaires, customer interviews, social media monitoring, or other review channels to help the company improve. For example, Microsoft faced significant product issues with Windows Vista in 2007, including hardware requirements, compatibility issues, and slow performance. Feedback led to the development of Windows 7, which addressed these issues in 2009, ensuring user satisfaction. Many Studies highlight customer knowledge as a crucial organizational knowledgebase, and there's a growing interest in coproduction, either individually or through communities, to enhance innovation and business performance (Dasgupta and Gupta, 2009, p.212). No matter the distance between members, managers must create efficient space management to promote open communication and collaboration within the organization. Through effective communication, trust is built, and ideas are shared without fear of being belittled or discriminated against, which in return fosters innovation. This can involve strategic workspace arrangement, technology use, employee preferences, budget constraints, and sustainability to create a collaborative environment. Huang, Wei, and Chang argue that distance affects communication probability and the likelihood of communication decreases with increasing distance. Organizations should optimize employee distance through efficient space management to enhance communication (Huang, Wei, and Chang 2007). Effective communication provides several benefits like enhancing decision-making, constructive conflict resolution, and increased productivity. This enables firms and suppliers to create, correct, improve, or discontinue services or products to meet customer satisfaction.

 

2.1.5.   Organizational Memory

Organizational memory is the accumulated knowledge and experiences of an organization, guiding its actions and storing it in various forms like databases, documentation, and employee experiences. This serves as the current collected intellectual knowledge of an organization and is crucial for an organization's success, enabling learning from past experiences, improving decision-making, productivity, innovation, and ensuring continuity during change or transition. A company's learning process is greatly impacted by organizational memory, necessitating a culture of utilizing current knowledge rather than continuously creating new ones. Knowledge degradation, knowledge hoarding, and knowledge loss are problems for organizational memory management. There is always a high risk of knowledge lost when workers pass away, quit, or retire, which lowers competitiveness and productivity. Knowledge hoarding is the deliberate or inadvertent concealing of information, which results in wasted effort and poor decision-making. Technology-induced knowledge decay can result in information that is out-of-date or irrelevant.  

 

Conclusion on Organizational Culture

Sustainability, long-term performance, and knowledge acquisition are all strongly impacted by organizational culture. Building a culture that values ongoing education, motivation, and staff involvement encourages development, creativity, and adaptability. Long-term success and sustainability are influenced by organizational culture, which has a major impact on knowledge generation, sharing, and application. Strong cultures that value education, teamwork, and flexibility foster creativity, responsiveness to market changes, and competitiveness. Through the implementation of knowledge management strategies and continuous learning, firms can establish a long-lasting competitive advantage. For long-term success and sustainability, then, an organizational culture and technology synergy are essential. A strong organizational culture that fosters learning, creativity, and teamwork equips workers for advancement and competition.

 

2.2.       Technology

For an organization to create, share, and use information effectively and sustainably over the long run, technology is an essential tool. It improves knowledge management skills, which boosts creativity, competitive advantage, and decision-making. Technology makes it easier to create knowledge by facilitating communication, teamwork, and information availability. It encourages the formation of multidisciplinary knowledge and an innovative culture. Effective knowledge sharing is essential for organizational growth, with platforms like intranets, social collaboration tools, and knowledge management systems facilitating the sharing of best practices. Dasgupta and Gupta explained that technology significantly enhances organizational learning and knowledge management by regulating the flow and access of knowledge within an organization through its technical systems (Dasgupta and Gupta, p.212, 2009). Technology also allows organizations to harness collective knowledge through data mining, machine learning algorithms, and artificial intelligence, providing actionable insights for strategic decision-making and continuous improvement.

A company's ability to connect with its stakeholders, suppliers, and customers through an efficient internal technology setup promotes ongoing learning and improvements that are advantageous to the business. According to Dasgupta and Gupta, by enhancing the ability of innovators to work together and find pertinent knowledge and information, information management fosters creativity. However, by standardizing and automating current operations and processes, information technology may hinder innovation. (Dasgupta and Gupta, p.213, 2009). Technology facilitates knowledge creation, sharing, and utilization within an organization, fostering innovation and employee involvement, ultimately leading to long-term success, sustainability, and scalability. It also enhances collaboration, data analytics, automation, communication, and knowledge repositories, facilitating personalized learning experiences, and improving operational efficiency, employee productivity, innovation, and agile market responses.

 

2.3.       Structure

Peter Drucker described Structure as “the rules, policies, procedures, processes, hierarchy of reporting relationships, incentive systems, and departmental boundaries that organize tasks within the firm” (cited in Gold, Malhotra, and Segars 2001). Within an organization, knowledge creation, sharing, and utilization are significantly influenced by organizational structure. Because of the inflexible divisions between departments and management levels, a hierarchical structure may hinder the creation of new information, whereas a flat, decentralized organization encourages free communication and teamwork. In a centralized organization, when information and choices are controlled by a small number of people, knowledge exchange is made from top to bottom minimizing any attempt at innovation. Employees with a decentralized framework are empowered to share their knowledge. A rigid, hierarchical structure may limit knowledge utilization due to slow information flow and decision-making. Knowledge usage is improved via a flexible, networked framework that facilitates speedier communication and decision-making. By encouraging a culture of learning and innovation, a well-designed organizational structure helps an organization be competitive and successful over the long term. It also helps the firm adapt to changing market conditions. Dasgupta and Gupta concluded that organizations face rapid change in their business environment, requiring adaptability and market orientation. Adaptability involves seeking new technologies and ideas, while market orientation reflects understanding customer needs and competitive situations. To remain agile, organizations should form learning networks across geographical locations and boundaries (Dasgupta and Gupta, 2009, p.213). Organizational structure significantly influences knowledge creation, sharing, and use. Long-term success, leadership development, and improved knowledge management may all be achieved with a flexible, decentralized structure that fosters learning, open communication, and teamwork.

 

2.4.       Leadership

Effective leadership is crucial for building strong organizational cultures. Mindi Cox once said, “The core of your company culture is the relationship individual employees have with their immediate leader.” As the first line of defense, leaders uphold and embody the principles, objectives, and policies of the organization. The culture will suffer if staff members don't perceive their leaders exhibiting these objectives. Processes for creating, sharing, and utilizing knowledge inside an organization are greatly influenced by organizational leadership. It creates an environment that supports innovation, continual learning, and knowledge management. Curiosity, experimentation, and learning are fostered by effective leaders, who create an atmosphere that propels innovation and the creation of new goods, services, and procedures. They make it easier for staff members to share expertise, encouraging open communication, cooperation, and teamwork. Employees can solve complicated problems and make better decisions by utilizing one other's knowledge and experiences in this environment.

Dasgupta and Gupta argue that “past research indicates that a strong leader-subordinate relationship, characterized by challenging tasks, risk-taking support, and recognition, fosters individual innovation and improves the relationship between subordinates and superiors, according to previous studies” (Dasgupta and Gupta, 2009, p.215). To promote organizational success, leaders ensure that knowledge is not only created and shared but also put into practice. They enable staff members to use their expertise in their day-to-day work, match data to strategic goals, and arrive at the decisions that can be defended considering facts and insights. By laying the groundwork for long-term success and sustainability, this strategy assists businesses in staying ahead of the competition, spotting emerging trends, and adjusting to shifting market conditions.    

 

3.    Conclusion

The major sources of sustained advantage for a corporation are its internal resources and capabilities, according to the resource-based view (RBV) of competitive advantage. This concept emphasizes the importance of knowledge creation, sharing, and usage. Knowledge creation is the process of coming up with fresh concepts, perceptions, and data that help businesses establish distinctive advantages that are hard for rivals to match. To promote a culture of learning and guarantee that important insights are available to all departments and levels of the organization, knowledge sharing entails the distribution of information and expertise among personnel within the company. This makes it easier to collaborate, innovate, and integrate different points of view—all of which help create a competitive edge. The use of knowledge resources to support creative thinking, problem-solving, and strategic decision-making inside a company is known as knowledge utilization. Organizations may swiftly adjust when they use information effectively. Over time, companies may improve their competitive position by integrating information into their systems, procedures, and practices. One of the main drivers of the world's rapid economic growth is innovation. Innovation propels economic growth through a variety of ways, including technological advancement, increased productivity, the creation of new markets, economies of scale and scope, and absorptive capacity. Long-term economic growth requires fostering innovation through favorable laws, investments in Research and Development, educational initiatives, and the development of human capital.

 

 

 

 

 

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