Dynamic capabilities and the role of organizational knowledge: an exploration
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Dynamic capabilities and the role of organizational knowledge: an exploration Isabel M. Prieto1 and Mark Easterby-Smith2 1
University of Valladolid, Valladolid, Spain; Management School, Lancaster University, Lancaster, U.K. 2
Correspondence: Mark Easterby-Smith, Management School, Lancaster University, Lancaster LA1 4YX, U.K. Tel: þ 44 (0)1524 584012; Fax: þ 44 (0)1524 844262; E-mail: [email protected]
Abstract Two concepts, dynamic capabilities and knowledge management, are widely assumed to be linked to sustained competitive advantage, although researchers have found it hard to substantiate these assumptions. It has also been suggested that the interplay between the two is important, and that it needs to be better understood. In this paper, we therefore look at the nature of, and interaction between, organizational knowledge and dynamic capabilities in some detail. We do this first through a literature review, and second, through a case study of the evolution of a new international business. The study illustrates how forms of knowledge, particularly when transmitted via social interactions, can act as a source of dynamic capabilities, and we conclude with suggestions about further research on the social and political interactions between the two. European Journal of Information Systems (2006) 15, 500–510. doi:10.1057/palgrave.ejis.3000642 Keywords: organizational knowledge; dynamic capabilities; social processes; knowledge transfer; knowledge management; organizational politics
Introduction
Received: 3 August 2005 Revised: 8 January 2006 Accepted: 24 August 2006
The idea of dynamic capabilities plays a central role in the analysis of complex organizational processes because it offers a potential solution to the quest for sustained competitive advantage. Although it has been discussed widely in the strategy literature, it has also been considered in related fields such as information management due to increasing awareness of the links between knowledge and organizational capabilities. A stream of recent strategy literature has explored the organizational characteristics that determine the effectiveness of the emergence, evolution and utilization of dynamic capabilities. In these accounts, the role of knowledge and knowledge-based processes has been central: dynamic capabilities are seen to evolve through pathways that can be described in terms of the evolution of knowledge within organizations (Zollo & Winter, 2002), and this knowledge is then considered as a key resource to drive competitive advantage in organizations (Grant, 1996). In other words, the dynamic capabilities perspective suggests that the long-term, continuous renewal of the firm rests on both the exploitation of existing knowledgebased competences and the exploration of new knowledge-based competences (Zollo & Winter, 2002; Gibson & Birkinshaw, 2004). Scholars with a primary interest in knowledge processes have also considered their potential link to dynamic capabilities (He & Wong, 2004; Sambamurthy & Subramani, 2005), and a fe
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