The Role of Knowledge Management in Achieving Competitive Advantage

This essay explores the critical role of knowledge management in achieving and sustaining competitive advantage within organizations. It begins by highlighting the increasing turbulence in the external business environment and the subsequent focus on resources and organizational capabili...Read More

Theory of management
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Theory of management
Student’s Name
9/22/2019

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The globalization of economy, market segmentation and the varying expectations of
the customers have developed the emerging need for the organizations to exploit the
inclusion of multiplicity and heterogeneity in the company. It has developed the need to
incubate technological advancements and develop innovations in the company. It is essential
to create an environment that endorses research, learning of the novel ideas and adoption of
the technologies that help in sustaining competitive advantage and handling the pressures in
the external and internal environment (Urbancova, 2013).
In order to undertake technological advancements and adoption of innovation, the
concept of knowledge management and human resource management has become vital for an
understanding of the explicit and the implicit knowledge and development of the capability
among the employees for grabbing the opportunities that lies in the external environment and
creates the competitive edge over the competitors. Development of the human capacity
allows the organization to not resist the adoption of change and develop the capacities that
help in operational excellence (North & Varvakis, 2016). The additional paragraphs of the
essay will cover the literature review that will emphasize the importance of resources and
organizational capabilities to manage the instability that occurs in the outside environment
and sustaining the competitive advantage.
In accordance with the views of Gupta and Dasgupta (2009), the concept of
knowledge formation focuses on the generation of innovative knowledge in the cooperative
environment. It fosters to develop a more understanding of the products, market, successes
and processes, tools and approaches that will facilitate in managing the external pressures and
reduce the impact upon the performance of the organization. It will allow the companies to
develop the tactics they help in meeting the strategic goals of the organization (Dasgupta &
Gupta, 2009).

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Supporting to above views Wang & Noe (2010), knowledge creation allows creating
new knowledge through experimentation, interaction and practice. The adoption of
brainstorming activities allows generating new ideas for the business and developing a
system that supports the work of the company. It allows the company to timely use and
shares the relevant data with the employees for adopting change in response to the external
environmental pressures (Wang & Noe, 2010).
This concept generates an internal environment that nurtures organizational flexibility
and develops the dynamic capabilities of the company for effective management of the
challenges in the external environment. The knowledge at the organization is created through
instructing dialogue between implicit and explicit knowledge. The implicit knowledge helps
in the understanding of the structure and the culture of the organization. It also includes
knowledge of current leadership and knowledge. Through the concept of knowledge creation
the company develops new products and services and makes the modification in the present
products to improve the performance of the organization and ensures survival in the hostile
market (Mao, Liu, Zhang & Deng, 2016).
The companies can also sustain their competitive advantage through the concept of
knowledge sharing. Knowledge sharing allows transferring skills, knowledge, and abilities
and allows for the generation of the innovations to reduce the attack on the profitability of the
business and sustaining of competitive gain (Mao, Liu, Zhang & Deng, 2016).
In accordance with the views of Abdelrahman (2013), knowledge is reflected as the
main basis for the maintenance of competitive gain. The multinational corporations apply the
concept of the knowledge management system to their organization for the development of
the structures, process, and the right tools that facilitate the enhancing the organizational
performance and effectively manage the opportunities and threat that lies in the external

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environment. It permits organizations to evolve and flourish in a heterogeneous global
environment (Abdelrahman, 2013).
In order to maintain the change in an organization, it becomes imperative for the
companies to strategically integrate their innovative management practices and knowledge
management practices in order to connect knowledge for innovation. Both the practices are
vital for creating knowledge involvement atmospheres in the administration (Fainshmidt,
Wenger, Pezeshkan & Mallon, 2019).
It allows effectively managing the explicit and implicit knowledge for turning the
organization into a learning organization which in turn strengthens experimentation within
the business and leverages the competitiveness of the organization. It will drive the
innovation process in the organization and will in effectively responding to the changing
environment. The process of knowledge creation and knowledge sharing allows developing
the dynamic capabilities and creation of the internal environment that fosters organization
resilience and easier to adapt to change in the organization (Fainshmidt, Wenger, Pezeshkan
& Mallon, 2019).
In accordance with Qureshi, Aziz & Mian (2017), individuals are considered as a tool
for driving innovation in the organization. The individuals in the organization possess the
skills, knowledge, experience to generate new ideas for the organization and help in facing
the external pressures and challenges. However, the management of human resources is
necessary for the effective performance of the organization. The external turbulence has
developed the need to invest in the training of the human resource and allowing them to
develop the skills and the competency for developing innovative strategies for the company
and allowing the organizations to develop its competitive edge over its competitors (Qureshi,
Aziz & Mian, 2017).

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The creation of the learning environment will motivate the employees to upgrade their
skills and advance their career growth. It allows developing a culture where the employees do
not resist adopting the changes and are loyal in meeting the organization's objectives and the
changing expectations of the shareholders (Qureshi, Aziz & Mian, 2017).
Considering the above views Brix (2017), suggested that the organization learning
cannot be separated from knowledge and innovation management because both are
influenced by the external turmoil. Environment-organization fitness is essential to face the
dynamic changes in the external environment. Due to external turbulence, various
multinational companies face the challenge of failure like the failure of Apple watch because
the brand becomes company-centric rather than customer-centric (Brix, 2017).
The customers were not convinced enough from the features because the same utility
can be received from the Apple phone which in turn restricts the customers to pay higher and
lead to failure of the product. However, the internal innovation does not assure the
competitive gain because of high external pressures creates difficulty in adaptions of the
innovation. Therefore it becomes necessary to consider the environmental pressures for the
success of internal motivation. The proper analysis of the external pressures will help in
allocating the funds accordingly and developing the innovation that provides a maximum
competitive advantage (Brix, 2017).
In accordance with the views of Gupta and Dasgupta (2009), the learning organization
alters the new ideas into innovative forms that add value to the company and build the unique
competencies for sustaining the competitive advantage. It helps the company to meet the
social-economic challenges and effectively manage the uncertain technology. In order to
build the learning organization, the organizations must focus on developing the shared values,
beliefs, effective management of the human resources and employee motivation to promote

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change in the organization and sustain the competitive gain in the global corporate
environment (Dasgupta & Gupta, 2009).
The instability in the outside environment includes the changing expectations of the
customers, shorten product life cycle and market segmentation has developed the need to
make the changes in the organization structure, culture and the adoption of the new
technologies to create that helps in developing the internal resources and capabilities and
allows the company to reduce the production cost and attain higher profit margins. This can
be done through effective knowledge utilization and encouraging good communications for
developing a positive organizational environment and making the employees more committed
to the organization's goals. Knowledge utilization generates the room for invention and
effective organizational modification (Wilden & Gudergan, 2015).
Globalization of business has brought more market turbulence and has made
fluctuations in the current currency rates, energy, customer demands has created the need for
the organization to be more responsive and survive the business by contributing towards the
people and the society. It is analyzed that Nestlé Nigeria has become one of the largest food
and beverage company that provides high-quality nutritious food to the consumers. It focuses
on augmenting the quality of life and contributes towards a healthier future. It applies the
approach of creating shared value and generates sustainable economic value. This is done
through the presence if high organizational agility (Buhler, Wallenburg & Wieland, 2016).
Nestle Nigeria has the ability to convert the knowledge into value. The company
focuses on using the best technologies and maximizing the satisfaction of the customers.
They are able to manage internal barriers and are highly responsive to the variations in the
external surroundings. The company meets the demands and fosters to deliver enhanced

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customer experience by developing innovative strategies that deliver maximum satisfaction
(Nestle, 2019).
However, according to Shanker, Bhanugopan, Van der Heijden, & Farrell (2017), the
traits of human resources dramas a foremost role in converting the organization into an agile
organization and delivering a superior experience to customers. It aids the business to design
new solutions and actively respond to the changing business environment. The successful
traits of the company, its resources and capabilities play a major role in sustaining
competitive advantage. It allows the business to develop leadership in innovation and
develops the skill to convert the worth into knowledge. Therefore organization agility is
critical for the success of the organization and is considered as the main differentiator in
today’s varying business environment (Shanker, Bhanugopan, Van der Heijden, & Farrell,
2017).
It is analyzed that innovation is the main driver that will allow the business to sustain
its competitive advantage in a turbulence environment. In order to drive innovation in the
organization, the resources and the capabilities of the business plays a major role. The
additional paragraphs will reflect upon the conceptual model designed by different authors to
understand how the innovation outcomes come into existence (Wu et al, 2016).
Innovation is considered as a learning process that transforms the idea into value. It is
considered imperative for driving the business performance of the company and is impacted
by various resources and the capabilities that exist in the internal business environment (Wu
et al, 2016).

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(Source: Wu et al, 2016)
From the above-described model, it is stated that the organization's culture and
structure theatres a main role in driving innovation. The structure provides the flexibility to
adapt to the new networks and implements the changes in the organization's strategies and
processes. The adoption of flat organization structures incubates creativity and provides the
opportunity for employees to involve in decision-making. This, in turn, motivates the
employees and makes them more committed towards the adoption of change and driving
innovation in the organization (Wilden & Gudergan, 2015).
The culture of an organization also affects the degree of innovation. The organizations
focus on effective management of human resource practices to develop the learning culture
and promote trust among the members. The company focuses on changing the mindset of the
employees and creates programmes that help in creating learning employees and focuses
more on developing the capacities of employees. The learning culture helps in gaining more

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knowledge and information that helps in driving innovation in the organization (Wilden &
Gudergan, 2015).
To drive innovation in the organization the support from the leaders and the sharing of
knowledge is essential. The collaborative communications and sharing of knowledge allow
the organization to use technology and develop new ideas that will provide value to the
organization. The creation of knowledge and knowledge management helps in developing
intellectual capital and is used as a learning tool that helps in embracing innovative strategies
in the business (Shanker, Bhanugopan, Van der Heijden & Farrell, 2017).
The above-mentioned factors help in establishing an innovative process and
converting it into innovative outcomes. It helps the organization in designing new products,
services or processes and gaining new knowledge that will help the company in facing the
challenges in the turbulence environment and ensures the survival of the business. It will help
in developing a new way of coping up with the new global world and helps the company in
sustaining its competitive advantage through the usage of knowledge, possessions and the
competences of the organization (Donate & de Pablo, 2015).
In contrast to the above Hitt, Xu, & Carnes (2016), stated that the corporation is able
to produce value through its resources and capabilities and also allows the company to be
superior to others. The resources based view reflects that the organization has the resources
and the capabilities which help the organization to develop distinctive competitiveness and
gain an advantage over its competitors. The resources include brand equity, connected
customer base, proprietary know-how and the reputation of the company. The capabilities
describe the firm’s capability to use its assets and actively respond to the changing business
environment. However, it theatres a major role in sustaining a competitive advantage in a
turbulence business environment (Hitt, Xu, & Carnes, 2016).

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In accordance with the Sotarauta (2016), the organization's capabilities help the
company in differentiating itself from the competitors and contribute to the survival of the
organization. The expansion of the organization's capabilities allows the company to actively
respond to the changing demands of customers and creates flexibility among the human
resource to adopt changes in the business processes and systems that will help the company
to differentiate itself from other companies (Sotarauta, 2016).
The creation of knowledge and development of learning organization through
effective training programs and experimentations helps in developing a talented workforce
which in turn will make the highly responsive towards the changing business environment
and will allow them to encounter the changing expectations of the consumers. It will help in
enhancing customer relationships and attaining the loyalty of the customers. Enhanced
customer relationship boosts the sales of the company and helps in enhancing its brand equity
(Namada, 2018).
The 21st-century impermanence necessitates businesses to improve their
organizational procedures and invest in leveraging official and outside knowledge more
efficiently. To use the knowledge the company must create an environment of trust that
facilitates knowledge sharing among the employees and must develop effective human
resource practices that induce fairness and involves the humans in decision making (Coccia,
2017).
It must foster the culture of open communication that facilitates knowledge sharing
and allowing the organization to develop an edge over its competitors. The knowledge
management edges are associated with the current routines and habits and knowledge sharing
is linked to company goals and values for driving change in organization and allowing the
companies to sustain their competitive advantage in the turbulence environment. Therefore

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the companies must make continuous innovations in their products, services, and processes
not only because of the external factors but also to grow the success of the organization
(Wang, Zhao & Voss, 2016).
Contrary to the above views, the maintenance of resources and the capabilities
become complex because these cannot be rigid in the growing changing environment.
However, it becomes essential for the companies to create a learning organization and induce
an environment where the employees do not resist sharing and creating knowledge.
Knowledge plays a major role in turning the innovation process into innovation outcomes.
Therefore, the companies must use effective knowledge management and human resource
management system to handle complexities of the business environment and effectively
responding to the changing expectations of the customers (Noe, Hollenbeck, Gerhart &
Wright, 2017).
From the above discussion, it is critical to note that the increasing turmoil in the
external environment has increased the need to focus on the continuous development of the
resources and the capabilities to increase the knowledge and allows the company to
differentiate it from others. It is analyzed that the formation and sharing of knowledge will
help the employees to be more responsive towards the changing needs of customers and
developing short product life cycles. It will help in developing innovative strategies that will
ensure the survival of the business and will increase the profitability of the business.
The changing trends in the business environment have developed the need for the
companies to be flexible, agile and develop the organizational culture that focuses on learning
and sharing of knowledge. The advancement in the technologies and the increasing
competition drives the need to implement innovative strategies that reduce the cost of

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production and improvise customer services. This, in turn, will help in gaining the loyalty of
customers and attaining higher profitability
It has developed the need for the organizations to centre more on the possessions and
the competences because they have to rely deeply on knowledge as the most significant
commodity that gives them a competitive benefit. The above mentioned conceptual model
described that the structure and the culture of the association play a major role in driving
innovation in an organization. The adoption of best human resource practices affects the
behaviour of employees and in turn, reflects their acceptance towards the adoption of change.
From the above-mentioned literature review, it is recorded that the company resources
and capabilities are developed through continuous knowledge creation and sharing and helps
in generating an innovative process that delivers innovative outcomes. The innovative
outcomes help the company to sustain its competitive gain in the global commercial
environment.

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