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ABSTRACT The resource-based strategy paradigm emphasizes the importance of firm-specific assets and knowledge, variously referred to as core competencies and distinctive capabilities. This perspective on sources of competitive advantage is complemented by knowledge and learning perspectives on strategic innovation. We explore conceptual links between knowledge development and the management of strategic innovation. We argue that the management of strategic innovation is the purposeful orchestration of organizational knowledge development and application and we highlight a variety of managerial dilemmas associated with this view.
Introduction
The resource-based strategy paradigm emphasizes distinctive, firm-specific and thus hard-to-copy assets, skills and knowledge. They are referred to generically as core competencies or distinctive capabilities that confer competitive advantage on the firm that possesses them. Here we explore the integrative nature of these distinctive capabilities and the concomitant processes of collective knowledge development.
The essence of our argument is that strategic innovation is the purposeful orchestration and directed application of organizational skills and knowledge. Effective strategic management requires the deployment of this 'architectural' competence, primarily an organizational not a technical skill. We explore this claim from a knowledge development (learning) perspective, posing the question of how senior managers can enable or orchestrate knowledge development and extension. We review alternate cycles of knowledge progression. One is relatively formal, appealing to senior managers' instincts for control and intentionality. The other is grounded in localized, interactive learning within the firm and, arguably, is very difficult to control in any formal way.
We relate these cycles of knowledge progression to three notional domains of innovation activity using an adapted form of a familiar strategic process framework1 and we then explore issues that can affect the development and application of knowledge in practice. We suggest that effective managers are those who can successfully mediate the two learning cycles and balance conflicting resource constraints and innovation priorities within and between the three innovation domains.
Competence, Advantage and Knowledge Progression
Organizational competence implies a co-ordinated, collective skill or capacity. Resourcebased thinking about the firm2 equates capability with the firm's exploitation of its tangible and intangible value-generating assets and resources. Intangible assets include the personal knowledge of individuals and collective knowledge lodged in the firm's architecture of internal and external relationships. This knowledge is manifest in the firm's dynamic,...