KNOWLEDGE-BASED VIEW OF THE FIRM – THEORETICAL NOTIONS AND IMPLICATIONS FOR MANAGEMENT Blomqvist Kirsimarja and Kianto Aino Department of Business Administration and Technology Business Research Center (original) (raw)

The competitive environment of firms has changed dramatically during the last two decades. The role of the traditional sources for competitive advantage has deteriorated in the process of globalization and technological change. Monopolies have broken down through the deregulation of markets, and the economies of scale seem to bring diminishing returns. The high-technological change creates incentives for innovation and entrepreneurs seeking opportunities. Also, large and established companies need to adapt to the changes in the business environment. In addition to streamlining their structures and processes for increased efficiency, firms need to create new knowledge for increased innovativeness. As James March (1991) notes, firms simultaneously exploit the existing potential, but attempt to adapt to the ongoing changes by exploring new business opportunities. The discontinuities may be turned into opportunities either through proactive innovation and self-renewal (Pöyhönen, 2004), ...