Firms Theory Flashcards
What is the knowledge-based theory of the firm?
The knowledge-based theory of the firm argues that knowledge is a key resource that is used by firms to create and sustain competitive advantage.
What are the key components of the knowledge-based theory of the firm?
knowledge creation,
knowledge transfer,
knowledge utilization.
What are the implications of the knowledge-based theory of the firm for strategic management?
The knowledge-based theory of the firm suggests that strategic management should focus on creating and leveraging knowledge as a key resource, rather than simply optimizing resources such as capital and labor.
Two Main Types of Knowledge
Tacit
Explicit
Coordination within the firm depends on…
Transferring and Integration of Knowledge
How do firms coordinate
Rules and directives.
Sequencing.
Routines.
Group problem solving and decision making.
Different types of Common Knowledge
Language
Symbolic communication e.g. literacy, familiarity with the same computer software
Shared Meanings
Common Knowledge Paradox
a. Transfer Knowledge (everyone has same Knowledge)
b. Integrate Knowledge (everyone bringing specialist knowledge)
Organisational structures
Hierarchy - Command and Control, Good for stable environment
Team Based - Knowledge based on the ground level
Profits
Appropriability of Knowledge
who gets the Profits
Decision Making Authorities
Hierarchy - Push Data up to Mid + High Level Managers
Team Based - Decision Making at lower level
Co-locate Knowledge and Decision Making to be at the same level
Core Capabilities of a firm
Creative or Functional
Sustainable Competitive Advantage
Which one is easier to replicate for competitors?
