Knowledge Utilization Capability and its Dimensions

As innovative solutions become more complex, requiring specialist knowledge and specialized software support even more deeply skilled, competing specialist firms have appeared. A knowledge-based perspective of the firm has emerged in the strategic management literature which states that the services rendered by tangible resources depend on how they are combined and applied, which is a function of the firm’s know-how i.e. knowledge. While the combinative capabilities generate new applications from existing knowledge, knowledge utilization capability is the capability of an organization to synthesize new knowledge and reconfigure it from both the existing and new knowledge via the interorganizational linkages. The systems, coordination, socialization and assimilation combinative capabilities of firm exploit knowledge during “interactions” institutionalized within a firm. This finally leads to knowledge utilization capability in a firm as typified in this paper. 1.0 Introduction Increasing emphasis is given to the areas in which international service business should extend itself (Quinn, 2000). Chief amongst those is the exploration of capabilities enhancement via knowledge utilization. It is during the operational stage in any international deal, wherein the partnership flourishes that knowledge utilization enabled competitive advantage is built. The service provider must be ensuring knowledge transparency over time as it is important to capitalize on experiences shared with clients in the past. By taking advantage of these shared experiences the vendor can help its clients learn. This also implies that vendor must thoroughly understand the industrial processes of its main clients so that it can fully exploit all opportunities for service and productivity improvements (Quelin & Duhamel, 2003). Knowledge is the intimately defined and specialized power of translation required to capture customer requirements and reproduce them in the language of subsystem performance specifications. It is based upon the many detailed understandings of the linkages between user requirements, system parameters, and component specifications and is unique to each company, intuitively developed in countless conversations by different teams of strategists (Venkatesan, 1992). Companies with successful knowledge strategies follow certain well-accepted principles by: (1) concentrating more power than anyone else on a few capabilities that customers genuinely care about; (2) innovating constantly to ensure that their performance and value-added stay ahead of competitors; (3) developing conscious flexibilities to deal with changing competitor pressures and opportunities; and (4) leveraging their resources significantly by using the capabilities and investments of others(Quinn, 1999). 2.0 Knowledge Utilization Capability A knowledge-based perspective of the firm has emerged in the strategic management literature (Cole, 1998; Spender, 1996a, 1996b; Nonaka & Takeuchi, 1995). The oft repeated framework of “knowledge systems” in organizations is grounded in the sociology of knowledge (Berger & Luckman, 1967; Gurvitch, 1971; Holzner & Marx, 1979) that views organizations as social collectives. According to this stream of research, organizations are portrayed as consisting of four sets of socially enacted “knowledge processes” (1) creation, (2) storage/retrieval, (3) transfer, and (4) application (Holzner & Marx, 1979; Pentland, 1995). While this view represents both the cognitive and social nature of organizations as knowledge systems, it does not mean a linear sequence for the four processes delineated above. Instead, the four organizational knowledge processes may be tightly intertwined (Alavi & Leidner, 2001). Additionally, the construct of knowledge utilization capability is introduced as the harbinger of new knowledge creation and its application via the incorporation of the existing and new knowledge. 3.0 Combinative Capabilities A firm’s ability to “generate new combinations of existing knowledge” and “to exploit its knowledge of the unexplored potential of the technology” is described as “combinative capabilities” by Kogut and Zander (1992). New technological fields emerge through researchers’ problem solving activities. These efforts result in ideas and techniques representing knowledge (Lauden, 1984; Rosenberg, 1982). Thus, technology is a form of knowledge and technological change can be understood by examining knowledge development. Thus, in terms of knowledge, “a firm’s combinative capabilities synthesize and apply current and acquired knowledge” (Kogut & Zander, 1992). The use of the term “combination” by Kogut and Zander is associated with the term “integration” as used by Grant (1996). The idea behind the concept of combinative capabilities is that it is the integration of knowledge, rather than the knowledge itself that forms the basis of a firm’s competitive advantage. But, creating new knowledge doesn’t occur in abstraction from current abilities. Rather, new learning, such as in innovations, is product of a firm’s combinative capabilities to generate new applications from existing knowledge. Thus, combinative capabilities imply the intersection of the capability of the firm to exploit its knowledge and the unexplored potential of the technology. Although, there are three major types of combinative capabilities of a firm that have been identified by Van den Bosch, Volberda & Boer (1999), this paper and its conceptualization of knowledge utilization extends this framework by proposing a fourth combinative capability. Van den Bosch, Volberda & Boer (1999) have discussed the three combinative capabilities termed as the systems capabilities, coordination capabilities and socialization capabilities. Added to this framework is the fourth combinative capability labeled as the assimilation capability. This is necessitated by a need to complete the knowledge conversion spiral in inter as well as the intraorganizational relationships.