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Edited by Laura Anna Costanzo and Robert Bradley MacKay
28 Dynamic knowledge creation Taman H. Powell and Howard Thomas Introduction In the dynamic environments faced by many of today’s ﬁrms, market positioning can become rapidly obsolete due to new innovations, process improvements and hypercompetitive environments. To successfully compete in these markets, it is argued that ﬁrms need to continually create new sources of competitive advantage – but how? Much research in the ﬁeld has focused on competitive strategy and competitive advantage (Porter, 1980, 1985; McGee and Thomas, 1986) and at the ﬁrm level on the characteristics of resources that are of importance to achieve sustainable rents (Barney, 1991; Peteraf, 1993), or how to determine what resources will be crucial to compete in the future (Hamel and Prahalad, 1994). However, this research focuses on the knowledge creation process itself and links the knowledge-based view of the ﬁrm to the literatures on the resource-based view and competitive strategy. It illustrates the theoretical arguments with examples from the consulting industry. By focusing on facilitating the knowledge creation process, rather than fortifying current resources, or predicting future strategic resources, this chapter also adopts a somewhat evolutionary approach (Nelson and Winter, 1982) to the development of a knowledge-based view of the ﬁrm. If strategy is deﬁned as occupying a unique strategic position, or a ‘viable who–what– how combination’ (Markides, 1999, p. 58), dynamic strategy in ﬁrms involves both competing in a current position and also: [searching] continuously for new strategic positions. After identifying another viable strategic position in its industry, the company then...
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