The Characteristics of Knowledge

In this chapter, we discuss the nature of knowledge and how it differs from other resources. This will explain why we need a new theory of knowledge and its management. The issue of knowledge in theories of the firm has been addressed mainly in the resource-based view of the firm, where it has been treated as one of the important resources that lead to above average returns (Winter, 1987; Prahalad and Hamel, 1990; Nelson, 1991; Kogut and Zander, 1992; Leonard-Barton, 1992; Teece et al., 1997). The central questions in this view have been concerned with what kind of knowledge resources bring above average returns, how a firm can realize potential profit from the knowledge it owns, and how a firm can protect such knowledge as a resource. Although this view recognizes the dynamic capability of the firm (Teece et al., 1997; Teece, 2007), many of the arguments tend to focus on the utilization of resources, rather than on the dynamics in which the firm continuously builds resources through interaction with the environment. What is missing in the resource-based approach is a comprehensive framework that shows how various parts within and across organizations interact with each other over time to create something new (for a detailed critique see, e.g., Priem and Butler, 2001). The so-called knowledge-based view of the firm (Grant, 1996; Spender, 1996; Nonaka and Toyama, 2005) that grew out of the resource-based view tries to overcome this weakness.