Is Knowledge Management Process an effective tool for building dynamic capabilities?

With the increasing market dynamism and global competition, the topic of dynamic capability has carved a significant place for itself. It has become a need of the hour rather than an option to ensure firms growth and competitiveness. This intensifying need has garnered the strategic concern towards the question: What facilitates dynamic capabilities?

Knowledge management has been advocated as effective predictor of dynamic capabilities. Knowledge based resources act as a base for facilitating knowledge flow in organizational learning processes, which forms an essential mechanism for building dynamic capabilities. These thoughts emphasize the role of knowledge management process in leveraging, integrating, and reconfiguring knowledge-based-assets that is significantly associated with dynamic capabilities.

An article from the Emerging Economy Studies explicates that firms are more likely to develop dynamic capabilities when they possess intellectual capital, defined as sum of organizational knowledge resources which lies inside as well as outside the facets of the organization. And Knowledge Management Process mediates the positive linkage between Organizational Capital and Dynamic Capabilities.

Knowledge management process is constructed as, the process of acquisition, application and transfer of knowledge-based-assets to achieve the firm’s goal. Knowledge acquisition refers to the process of acquiring new knowledge by an organization from data, information, or knowledge available within organization. Knowledge application refers to the process focused on the actual usage of knowledge to perform certain tasks. Knowledge transfer refers to the process focused on the exchange of knowledge from individuals to groups or from one individual to another or else from one group to another.

Firm’s knowledge resource forms a basis for building capabilities through fostering knowledge management processes that support new knowledge flows and constitute a basic mechanism for developing capabilities.

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