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Sources of Knowledge in Firms

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Business and Management. Please check back later for the full article.

In order to obtain competitive advantages, firms have to make use of knowledge as the main element of their capacities for innovation and management. Innovation is a complex and collective process, resulting from different contexts, socioeconomic aspects, and specificities of firms that create nuanced management and policy implications. Sources of knowledge are varied, as each firm interacts with multiple types of actors to pursue its mission: partners and strategic allies, suppliers, customers, competitors, specialized organizations such as knowledge intensive business services, universities, technology centers, public research organizations, innovation intermediaries, and public administration bodies.

Different kinds of knowledge are relevant for the firms, both tacit and codified knowledge. Knowledge needs to be translated into capacity to act. Knowledge generation and absorption can be understood as two sides of the same coin. It is necessary to take into account factors that shape both facets and the relationship between the production, transfer, and valorization of knowledge. Influential factors concerning knowledge characteristics are related to tacitness and to the existing knowledge base. Contextual factors, such as the economic sector, technological intensity, the local buzz, and the insertion in global value chains are essential as environmental enablers for generating and absorbing knowledge. Finally, the internal characteristics of the firm are of crucial relevance, namely the existing innovation culture, leadership, and also the size or internal R&D capacities. These factors reinforce the dynamic capacities of the firm and the decision to engage in open innovation strategies or to give more importance to strategies that protect and codify knowledge, such as industrial property rights.