Strategic Management Journal

Strat. Mgmt. J. (in press)

Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smj.333

RESEARCH NOTES AND COMMENTARIES

MEASURING ORGANIZATIONAL KNOWLEDGE:

A CONCEPTUAL AND METHODOLOGICAL
FRAMEWORK
ADELAIDE WILCOX KING* and CARL P. ZEITHAML
McIntire School of Commerce, University of Virginia, Charlottesville, Virginia, U.S.A.

Knowledge is fundamental to strategic success. Limited progress has been made, however, in
measuring organizational knowledge. We employ research on resource-based theory and organi-
zational epistemology to suggest a perceptual approach to measuring knowledge. We present a
research protocol to identify a domain of organizational knowledge resources within industries.
Using a sample of organizations from the hospital and textile industries, we interviewed CEOs
to identify the feasible set of knowledge resources. We presented this set to managers at those
organizations to measure their perceptions of the value-added of each knowledge resource for
their organizations. The results demonstrate that the importance of knowledge resources varies
by industry and organization, and calls to question efforts to generate an inventory of generic
knowledge resources that is applicable across industries. Copyright  2003 John Wiley & Sons,
Ltd.

We are ready to accept that a firm is a set of
resources, so when knowledge is defined as a
resource, it can be readily fitted into our precon-
ceptions. This still leaves the problem of how we
identify and measure such knowledge resources.
(Spender and Grant, 1996: 7).
INTRODUCTION
What can we do about this problem of identifying
and measuring knowledge resources? Although
Key words: organizational knowledge; epistemology; re-
source-based theory; measuring knowledge
*Correspondence to: Adelaide Wilcox King, McIntire School
of Commerce, University of Virginia, 256 Monroe Hall, Char-
lottesville, VA 22904-2493, U.S.A.
knowledge is fundamental to organizational suc-
cess, our tools for measuring organizational knowl-
edge are crude and often inadequate. Patent and
citation counts are restricted to industries that are
technology or science based; they play a negli-
gible role in most industries. Patent counts do not
address the wide disparity in the usefulness among
patents and the different stances that firms take
in their aggressiveness in patenting (Spender and
Grant, 1996; DeCarolis and Deeds, 1999). R&D
spending reflects investment in knowledge, rather
than knowledge, and it is a questionable proxy
because knowledge generation is path dependent,
cumulative and often idiosyncratic (Bettis and Hitt,
1995).
In this note, we employ research on the resource-
based view of the firm (RBV) and organizational

Copyright  2003 John Wiley & Sons, Ltd. Received 1 November 2001
Final revision received 10 March 2003
 A. W. King and C. P. Zeithaml
epistemology to suggest a process for distinguish-
ing and measuring organizational knowledge that
can be applied in a broad range of industries. We
review relevant theory, and then we describe the
measurement protocol used in our sample of 17
hospitals and textile firms.
THEORETICAL BACKGROUND ON
ORGANIZATIONAL KNOWLEDGE
Organizations can achieve things that individu-
als cannot. Organizational knowledge reflects a
firm’s capacity to act that can differentiate it from
competitors and provide competitive advantage
(Leonard-Barton, 1992). The RBV suggests that
resources that are valuable, rare, inimitable, and
lack substitutes are central to competitive advan-
tage (Barney, 1991). Knowledge resources have
distinctive properties that help create and sustain
competitive advantage. For example, knowledge
may extend its value more broadly than many
physical resources because knowledge is capa-
ble of simultaneous multiple uses (Itami, 1987)
and is not depleted with use. Indeed, a firm’s
knowledge may be the critical resource that distin-
guishes a firm (Kogut and Zander, 1996; Spender,
1996a). However, a knowledge-based theory of a
firm requires resources that are ‘defined precisely
enough to let us see which firm has the more sig-
nificant knowledge and explain how that leads to
competitive advantage’ (Spender 1996a: 49).
Organizational epistemology suggests three pro-
perties that define organizational knowledge more
precisely (von Krogh, Roos, and Slocum, 1994:
61). First, organizational knowledge is enacted
through the perspective of multiple ‘knowers’ in
a firm (Tsoukas, 1996; Glazer, 1998; Orlikowski,
2002). As a result, measuring knowledge objec-
tively or from one individual’s viewpoint is inap-
propriate. Measuring organizational knowledge
without recognizing and assessing the attributes of
those who seek and provide the knowledge is also
problematic (von Hippel, 1994; Glazer, 1998).
Second, organizational knowledge entails scope
and context (von Krogh et al., 1994). Knowl-
edge in organizations can be scoped very gen-
erally (e.g., marketing) or very specifically (the
capacity to market health care services to senior
citizens during Pine Valley Rest Home’s Health
Fair). Research on knowledge acquisition helps
Copyright  2003 John Wiley & Sons, Ltd.
discern scope that is likely to differentiate signifi-
cant knowledge in organizations and explain com-
petitive advantage. Cognitive psychologists sepa-
rate knowledge acquisition into two stages (e.g.,
Anderson, 1976; Singley and Anderson, 1989).
The declarative stage consists of conscious, gen-
eral knowledge or skills that one can describe ver-
bally. With practice comes the procedural stage,
marked by growing recognition of previously unre-
alized patterns, which in turn leads to improved
abilities and lower requirements for cognitive
involvement (Newell and Simon, 1972; Simon,
1974; Anderson, 1995; Gobet and Simon, 1996).
Procedural knowledge is rich and embedded; it is
use specific and embodied in actions and skills
(Singley and Anderson, 1989: 31). Organizational
knowledge resources are predominantly procedural
because they consist of firm-specific routines and
skills that differentiate an organization (Nelson and
Winter, 1982).
Organizational knowledge is grounded in a firm
and its industry environment (von Krogh et al.,
1994). Organizational knowledge is created and
transferred within an organizational context, is
inextricably tied to this social context, and is not
fully reducible to individuals (Foss, 1996: 471).
Industry environment shapes managers’ percep-
tions of a firm’s capacity to act for competitive
advantage because it provides a critical analytic
context by which managers cope with uncertain-
ties (Spender, 1989: 64). It frames the question
‘competitive advantage over whom?’ An ‘industry
recipe’ guides managers, narrowing and framing
their choices as they make decisions under ambigu-
ous and uncertain circumstances (Spender, 1989:
190).
Third, organizational knowledge is captured
through language. People use language to distin-
guish relevant knowledge from that which should
be ignored (von Krogh et al., 1994). Language,
therefore, articulates the scope of what is and is
not organizational knowledge. The exigencies of
language present an inherent incongruity in mea-
suring organizational knowledge. Whereas organi-
zational knowledge resources are procedural, mea-
suring organizational knowledge demands declar-
ative knowledge.
Choosing the ‘knowers’ is critical in measur-
ing knowledge resources. Organizational knowl-
edge is rooted in the day-to-day practices of mem-
bers throughout a firm (Orlikowski, 2002). Man-
agers routinely are required to communicate and
Strat. Mgmt. J. (in press)

transform procedural knowledge into declarative
knowledge as they negotiate organizational pri-
orities and make strategic decisions. Although it
is impossible to articulate all that one knows
about organizational knowledge (Leonard and Sen-
siper, 1998), we suggest that experienced top- and
middle-level managers are particularly adept at
recognizing and articulating organizational knowl-
edge. Tapping their knowledge about the orga-
nization and knowledge resources can provide a
new and valuable way to measure organizational
knowledge.
A METHODOLOGY FOR MEASURING
ORGANIZATIONAL KNOWLEDGE
To achieve more fine-grained insight about knowl-
edge resources, we present a four-step methodol-
ogy for measuring organizational knowledge from
practicing managers’ perspectives, and we test it
with 17 firms in two industries.
Step 1. Defining scope: Industry and
organization selection
We selected established industries that have well-
defined boundaries (Porac et al., 1995). Similari-
ties in competitive environment, value chains, and
terminology suggest greater consistency in indus-
try context across competing organizations. Estab-
lished industry boundaries reduce potential con-
founds that often arise when industry boundaries
are fuzzier, or when an industry’s competitive
dynamics are influenced by diverse configurations
of strategic groups (Porac et al., 1989; Mehra,
1996). This control increases the likelihood that
we can identify a relatively comprehensive inven-
tory of knowledge resources, and that managers in
the industry could evaluate their perceptions of the
resources’ importance to their firm’s strategic suc-
cess. We restricted the textile industry to the 52
publicly traded firms with a 22 primary SIC code
as textile mill products (COMPUSTAT 1994 data).
We restricted the hospital industry by geography,
domain, ownership (Graeff, 1980), and size. We
sampled from North Carolina’s medium to large
community hospitals with more than 100 beds,
defined by the American Hospital Association as
all nonfederal, public, short-term general and other
special hospitals.
Second, while the value chains of competitors
within these industries are relatively consistent
Copyright  2003 John Wiley & Sons, Ltd.
Research Notes and Commentaries
and stable, the value chains across these indus-
tries differ with respect to input/output (product
vs. service), throughput (continuous vs. job pro-
cessing), and customers (global wholesale vs. local
retail). These differences provide the opportunity
for exploring variation in knowledge resources
within and across industry contexts.
We also sought variation in firm size, which
plays an important role in industry rivalry (Porac
et al., 1995) and profitability. Consistent with
industry practices, we measured hospital size by
number of beds and textile firm size by annual
sales. We estimated profitability using objective
performance data in the textile industry and the
opinions of experts among hospitals.
We solicited 16 textile firms to gain access to
eight. We sent letters to these firms describing
the project and requesting an interview with the
CEO. Of the 16, nine agreed to participate and
four refused. Given past willingness of hospitals
to participate in studies, we solicited only 12
hospitals for this study. After sample goals in
each industry were met, we informed the other
CEOs that their participation was not needed. For
each industry, t-tests comparing key variables for
the sample organizations and other organizations
in the larger sample domain reveal no significant
(p < 0.10) differences.
Step 2. Protocol design: Building researcher
knowledge
The next step began with in-depth research, includ-
ing reviews of the practitioner literature and aca-
demic research and interviews with industry ex-
perts, to increase our familiarity with industry-
specific issues and terminology. This understand-
ing enhanced our credibility and enabled us to ask
richer and more probing questions during the struc-
tured interviews.
To structure the interviews with the chief exec-
utives, we developed a protocol that included an
overview letter (see Appendix) and a broad ques-
tion outline. The protocol was pretested on an
executive director of a major university hospi-
tal and the CEO and top manager of a large,
privately held textile firm. We solicited feed-
back regarding clarity, overall impressions, and
the likelihood of participation by other exec-
utives and organizations. Based on their feed-
back, we decided to use the label ‘competen-
cies,’ defined as ‘knowledge-based sources of
Strat. Mgmt. J. (in press)
 A. W. King and C. P. Zeithaml
competitive advantage.’ The individuals in the
pretest believed that ‘competency’ was a less cum-
bersome term than ‘knowledge resource,’ and that
this definition helped managers focus on knowl-
edge at an organizational level (vs. individual
level) of analysis.
Step 3. Data collection: Interview CEOs to
identify organizational knowledge resources
To identify an inventory of organizational knowl-
edge resources, we interviewed nine textile and
eight hospital CEOs. Prior to each interview, we
faxed the overview to the CEO to establish expec-
tations for the meeting and provide initial guid-
ance in scoping the knowledge resources. During
each interview, we asked the CEO to identify the
‘knowledge or skills that may provide competitive
advantage’ at their organization and in the industry.
The interview involved an iterative process as
the CEO talked through the sources of competi-
tive advantage at the firm and worked to articulate
organizational knowledge on an appropriate scale,
specific enough to clearly relate to ways organiza-
tional knowledge can add value in an industry and
general enough to allow for reapplication to sus-
tain value in future endeavors. This excerpt from
an interview with a textile CEO provides a flavor
for the process.
Interviewer: Where do these kinds of [technologi-
cal] innovations come from?
CEO: . . . We’ve always had—at the top level
of the company—. . . the capability to work with
people, to be able to work in a lot of different
ways with companies. We don’t have any one set
formula that says ‘this is it.’ Sometimes we merge,
sometimes we acquire, sometimes we make joint
ventures, so there’s been a tremendous flexibility
of, of partnershipping, uh, joint venturing, where
you try to put one and one together and make it
four . . .
Interviewer: OK, so is knowledge about partnering
what you are saying? That sounds like something
that you think that . . . [firm name] has done well
and has provided a competitive advantage over
some of the firms that you compete with.
CEO: Right.
Interviews lasted from 50 minutes to 2 hours.
We took extensive notes and also taped and tran-
scribed 15 of the 17 interviews. Then, each inter-
viewer used a line-by-line open coding method
to generate a list of the knowledge resources
discussed during that interview (Strauss and
Copyright  2003 John Wiley & Sons, Ltd.
Corbin, 1990). For each organization, we then
compared our lists and our notes for content, tone
and accuracy, and, following a discussion, deter-
mined a final company-specific list that we sent
to the CEO for confirmation. The majority of top
managers confirmed these summaries exactly as
we wrote them. In a small number of cases, the
CEO slightly changed the wordings or stated that
a listed knowledge resource was not important to
his firm (see Table 1).
Based on these interviews, we identified 36 dif-
ferent knowledge resources in the textile industry,
and 30 in the hospital industry. We made every
effort to describe knowledge resources that were
simple, unambiguous, and not ‘double-barreled’
(DeVellis, 1991). For example, ‘maintaining a
stream of innovative products and/or processes
that add value in our customers’ eyes,’ that was
described by the CEO of Textile Firm H (Table 1)
is captured in the ‘developing differentiated inno-
vative products’ and ‘developing innovative pro-
cesses.’ Outside readers familiar with the indus-
tries (including executives from the interview
pretest) reviewed the final lists of knowledge
resources to confirm their clarity and comprehen-
siveness and to ensure that redundant resources
were consolidated. These resources were incor-
porated into two surveys: one for each industry.
Table 2 presents these resources and instructions
(discussed below).
Step 4. Data collection: Survey managers to
measure organizational knowledge resources
Because organizational knowledge is shared and
distributed (von Krogh et al., 1994; Orlikowski,
2002), and top- and middle-level managers are key
players in organization knowledge creation (Non-
aka and Takeuchi, 1995), we sought assessments
from multiple top and middle managers in each
firm. Members of the top management team and
4–11 middle managers in the same 17 organiza-
tions completed surveys appraising the knowledge
resources generated through the CEO interviews.
The executives who participated in the surveys
represented all functional areas. They averaged
over 20 years of industry experience and over
12 years of firm tenure. The questionnaires were
treated confidentially, and the managers who com-
pleted them were not aware of the organizational
knowledge discussed with their CEO. A total
of 224 usable surveys were returned, reflecting
Strat. Mgmt. J. (in press)

Table 1. Two examples of the post-interview summary sent to textile CEOs
CONFIDENTIAL: Please indicate if we have captured competencies for [FIRM NAME] by indicating agreement or
disagreement. Please comment where appropriate and return in the enclosed envelope. (Next to each competency
was a space to Agree or Disagree, and a comment section.)
Textile A
Capability in managing a decentralized organization
structure that encourages individual accountability and
empowers decision making
Capability in partnerships for innovation and product
development
Capability in creating innovative, value-added,
differentiated products
Capability in maintaining an organizational culture of
personal dependability and integrity
Capability in marketing and production processes for
Jacquard fabrics
Capability in fast response and delivery of customer needs
Others not mentioned above?
Textile H
Managing a stream of investments and company initiatives
that continually support and develop the capacity to be a
low-cost producer
Maintaining a corporate-wide ‘sense of urgency’
Maintaining fanatical attention to details throughout the
organization
Having deep market and organizational knowledge that
facilitates making difficult investment decisions
Maintaining deep understanding of our customers’
businesses and cost structures
Maintaining deep understanding of our suppliers’
businesses and cost structures
Identifying and developing market niches that the company
can dominate
Maintaining a stream of innovative products and/or
processes that add value in our customers’ eyes
Others not mentioned above?
response rates of 92 percent for textiles and 88 per-
cent for hospitals. Response rates by organization
ranged from 73 percent to 100 percent.
For each knowledge resource identified in an
industry, each manager rated the extent to which
their organization was at an advantage or disad-
vantage compared to their competition using a
7-point scale (see Table 2). We calculated means to
measure the perceived value of each organization
knowledge resource to an organization.
Two tests were conducted to explore whether
managers’ responses varied significantly by orga-
nization. First, chi-square tests were conducted
on managers’ responses regarding the knowledge
resources they considered most important for the
Copyright  2003 John Wiley & Sons, Ltd.
Research Notes and Commentaries
CEO written responses are italicized
Agree
Capability in managing supplier and customer
partnerships for innovation and product
development
Agree
Capability in maintaining an organizational culture of
personal dependability, reliability, and integrity
Disagree. A subcapability
Agree
Capability because of size and customer relationships
to bring a new product to market
Agree
Agree
Agree
Agree
Agree
Agree
Agree
Agree
None
firm’s current success. These tests revealed sig-
nificant differences in managers’ responses based
on the organization. In addition, ANOVA tests
regarding managers’ perceptions of the competi-
tive advantage for each knowledge resource reveal-
ed significant (p < 0.05) differences between firms
for an overwhelming majority of knowledge resou-
rces in each industry (25 hospital knowledge
resources and 32 textile knowledge resources).
Table 3, which illustrates the knowledge resources
that managers in each firm rated the most sig-
nificant competitive advantage and the least sig-
nificant competitive advantage, demonstrates the
variety of configurations of knowledge resources
among firms.
Strat. Mgmt. J. (in press)
 A. W. King and C. P. Zeithaml
Table 2. Organizational knowledge resources (including instructions)
Knowledge and competitive advantage
We are interested in your opinion about competencies that may provide competitive advantage to a firm. In this
section, we provide a list of 36 (30) identified competencies in the textile (hospital) industry. For each one listed on
this and the following page, please indicate whether your firm (hospital) is currently at an advantage or disadvantage
with respect to your competition.
−3 Very significant competitive disadvantage
−2 Moderate competitive disadvantage
−1 Slight competitive disadvantage
0 Neither an advantage nor disadvantage
+1 Slight competitive advantage
+2 Moderate competitive advantage
+3 Very significant competitive advantage

Textile Hospital

Benchmarking competitors’ processes to speed adoption
of valuable practices
Developing differentiated innovative products
Developing innovative processes
Developing new end-uses that expand the market for our
products
Flexible manufacturing through quick changeovers
Global sourcing of materials and labor
Identifying and developing market niches that my
company can dominate
Maintaining a corporate-wide ‘sense of urgency’
Maintaining an organizational culture of personal
dependability, reliability, and integrity
Making decisions quickly
Making difficult decisions among investment alternatives
(i.e., technology, staffing, and capital investments)
Managing a decentralized organization structure to
encourage individual accountability and empower
decision making
Managing costs
Managing customer partnerships
Managing domestic acquisitions
Managing global customer relationships
Managing international acquisitions
Managing international joint ventures
Managing manufacturing operations outside the United
States
Managing partnerships with other textile firms
Managing supplier partnerships
Managing teams at the plant level
Managing the balance sheet to allow for strategic
opportunistic investing
Managing vertical integration between units at different
stages of the value chain (raw materials to finished
goods)
Marketing products globally
Providing a wide range of products to identified
market(s)
Responding quickly to customers
Sharing knowledge across functional areas (i.e., sales,
production, R&D)
Specialized production process(es), such as surface
finishing to fabrics, creating printed and decorative
fabrics, or texturing yarn
Attracting and retaining top nursing and support staff
Attracting and retaining top physicians
Clinical capability of physicians
Clinical capability of the nursing and support staff
Cost containment
Health care services outside the hospital (such as home
health care and satellite primary care facilities)
Information systems to help physicians manage their
practices
Innovative partnerships
Internal information systems
Knowledge and skills necessary to succeed in an
environment of capitation
Knowledge and skills necessary to succeed in an
environment of managed care
Less invasive surgical procedures
Maintaining a business-driven environment throughout
the hospital
Maintaining a patient-friendly environment throughout
the hospital
Making difficult decisions among investment alternatives
(i.e., technology, staffing, and capital investments)
Managing a wide range of perspectives within the
hospital (internal relationships within the hospital)
Managing external (political and/or media) relationships
Managing relationships with potential competitors to
avoid predatory competition
Measuring and tracking individual knowledge and skills
throughout the organization
Negotiating managed care contracts
Outpatient services
Outpatient surgery
Outreach programs to important constituencies outside
the hospital
Specialized areas of clinical expertise
Total quality management
Tracking patient satisfaction over time
Training and education programs to develop employees
Understanding and managing the appropriate
investments in technology
Understanding and managing the appropriate mix of
nursing and support staff

Copyright  2003 John Wiley & Sons, Ltd. Strat. Mgmt. J. (in press)

Table 2. (Continued )
Textile
Thorough attention to detail throughout the organization
Training and education programs to develop employees
Understanding our customers’ cost structures
Understanding our customers’ needs and goals
Understanding our suppliers’ cost structures
Understanding our suppliers’ needs and goals
Understanding the needs of end users of our products
INSIGHTS AND IMPLICATIONS ABOUT
ORGANIZATIONAL KNOWLEDGE
This methodology for identifying and measur-
ing managers’ perceptions of knowledge resources
makes novel and important contributions to the
RBV. First, the results demonstrate that the impor-
tance of knowledge resources varies by industry
and organization. Only one comparable resource
emerged from the interviews in each industry:
cost containment for hospitals and managing costs
for textiles. Managers’ views of organizational
knowledge also varied significantly among orga-
nizations. A broad, not narrow, range of knowl-
edge resources provides a source of competi-
tive advantage across firms within the same
industry.
Because organizations are knowledge commu-
nities embedded in a larger domain of an industry
community, both industry and organizations imbue
organizational knowledge with meaning (Kogut
and Zander, 1996; Spender and Grant, 1996). In
validating the idea of industry recipes (Spender,
1989) and Winter’s claim that ‘lessons derived
from experience in one industry may be very
misleading guides to knowledge-related strategic
resources in another’ (Winter, 1987: 175), our
study raises serious concerns regarding any efforts
to generate an inventory of generic knowledge
resources of broadly scoped content (e.g., mar-
keting) that is applicable across industries. Also,
knowledge resources simply may not be acces-
sible using quantitative ‘content-free’ approaches
such as R&D expenditures, patent data, or research
surveys which presuppose managers’ assumptions
about organizational knowledge (Spender and
Grant, 1996).
This methodology complements and extends
prior RBV efforts to identify and measure firm
resources. Mehra’s (1996) study of strategic groups
in the banking industry identified and measured 10
Copyright  2003 John Wiley & Sons, Ltd.
Research Notes and Commentaries
Hospital
Understanding and managing the appropriate mix of
physicians
tangible and intangible resources using experienced
Wall Street analysts as informants. Our metho-
dology provides an effective complement that
focuses on intangible resources generated by inter-
nal informants at a more fine-grained level. Inter-
nal managers may have access to a richer under-
standing of procedural knowledge in organiza-
tions as a result of their direct experience (e.g.,
Orlikowski, 2002). They may also better rec-
ognize the potential inherent to the knowledge
resources, including how organizational knowl-
edge may be applied and changed in the future
(Spender, 1996b).
Our protocol also implies a mechanism for help-
ing managers articulate knowledge-based sources
of competitive advantage. Organizational knowl-
edge is about acting purposefully and effectively
(Spender, 1996b). This protocol facilitates man-
agers’ efforts to recognize and reflect on critical
strategic assumptions. Articulating implicit knowl-
edge can provide a valuable platform that man-
agers can use to transform declarative knowledge
and shape new procedural knowledge (Singley
and Anderson, 1989). This process can provide a
springboard for important decisions about knowl-
edge resources in a firm, such as R&D alloca-
tions and strategic hiring decisions. Although the
increased transparency may reduce somewhat the
costs for outsiders to discover and imitate knowl-
edge, the risk to competitive advantage is small
due to the situated nature of knowledge with
a firm’s complementary assets (Spender, 1996b;
Hallwood, 1997).
Finally, these findings evoke provocative impli-
cations for research on organizational knowledge
and RBV. This note demonstrates how theoret-
ically grounded empirical efforts can push us
toward a more nuanced understanding of organiza-
tional knowledge. Our results reveal that managers
in two very different industries can provide suit-
able descriptions of organizational knowledge and
Strat. Mgmt. J. (in press)
 Table 3. Knowledge considered most and least significant by organization

Hospital HA HB HC HD HE HF HG HI Textile TA TB TC TD TE TF TG TH TI

Bus.-driven envir. L Attention to detail H L

Capitation H L L Balance sheet L H L
Clinical—MDs H H H H H Benchmarking L L L
Clinical—staff H H Managing costs H L L H L
Cost contain. H H L L Customer partnerships H H
External relations L L L H L Responsive to customers H H H
Hiring MDs H H L Customer cost understanding L L L L L L
Hiring staff H L L L Customer goal understanding

Copyright  2003 John Wiley & Sons, Ltd.

Info. systems MDs L L L L H Decentralized organization H H L
Innovative partners L L L Organizational decision making H H H H H H
Internal info. sys. L L L L H Differentiated products H L H H H
A. W. King and C. P. Zeithaml

Investment alts Domestic acquisitions L L

Less invasive surgery H End user needs
Managed care H End uses L H H
MD mix L L Fast decisions H H
Negotiating contracts H H L Global customers H L L H
Outpatient services H H Global markets H L L H
Outpatient surgery H H H H H L Global sourcing L L H L
Outreach programs L L H L Innovative processes H H
Outside health care L H H International jvs L L L
Patient-friendly H H H International acquisitions L L
Potential competitors L International management H L L
Range of perspectives Investment alternative
Special clinical L H Market niche
Staff mix L Partner other
Technology mix Partner supplier H
TQM H H H Plant team L L L
Tracking knowledge L L L L L Quick change H L H
Tracking patient satis. H H H Sharing knowledge
Training programs Specialized processes H H H
Suppliers’ costs L L L L
Suppliers’ goals L L
Training H L L
Urgency L H H
Vertical integration L H
Wide production H H H

H highest average rating for significant competitive advantage (top 5 for organization).
L lowest average rating for significant competitive advantage (bottom 5 for organization).

Strat. Mgmt. J. (in press)


‘externalize’ (Nonaka and Takeuchi, 1995) knowl-
edge resources that are meaningful to other man-
agers and to researchers. Future research may
develop an even deeper understanding of knowl-
edge resources by relaxing or challenging assump-
tions we made. One example is research in indus-
tries with ‘fuzzier’ boundaries or competitive land-
scapes populated by more variegated strategic
groups. Also, to unpack the consequences of using
‘competitive advantage’ as an identifier of valu-
able knowledge, future research may explicitly
map managers’ assumptions of their firms’ most
important competitors. Finally, we claim that man-
agers are key communicators and transformers of
organizational knowledge. We suggest a promising
next step in this research agenda is toward a more
complex understanding of the processes managers
use in drawing conclusions about organizational
knowledge. Do managers generalize knowledge as
researchers do in order to increase its scope? Do
they specify knowledge to make it more concrete
for the researchers? Do they transform knowledge
by integrating procedural knowledge from multiple
activities? Unpacking issues such as these opens
the door for even more sophisticated discernment
of not only what managers know about organiza-
tional knowledge and but also how they know it.
ACKNOWLEDGEMENTS
The authors thank Sarah Marsh, Ellen Whitener,
and two anonymous reviewers for their valuable
feedback and guidance.
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APPENDIX: EXCERPTS FROM
OVERVIEW SENT TO TEXTILE CEOS
PRIOR TO INTERVIEW
The purpose of this study is to define a set of
competencies for the textile industry and gain
understanding of the relationship between man-
agers’ views toward competencies and firm per-
formance. . . .
What is a competency? . . . We define [competen-
cies] as knowledge-based sources of competitive
advantage. In other words, competencies are the
knowledge, skills, or routines that an organization
possesses that are sources of profits for the firm
and may be difficult for competitors to imitate.
. . . To have survived in this industry, [textile firm]
must have knowledge and skills in a wide range
of areas. Our interest, however, lies in the more
limited number of those knowledge sets, or compe-
tencies, which your firm possesses that allow you
competitive advantage over most other firms in the
textile industry. . . . [In addition], competencies are
not static resources but instead are often changing;
the knowledge and skill inherent to a competency
today has the potential to continue to be developed
and reused to allow the firm future competitive
advantage. [Finally], not all sources of competitive
1
We recognize that CEO selection of middle managers introduces a potential selection bias that may exclude decision-makers who do
not share the CEO’s beliefs. We attempted to ensure that the surveyed managers were representative of the firm by: (1) requesting a
cross-section of middle managers by functional areas, (2) emphasizing to the CEO and the respondents that the value of this research
was in gaining information about their managers’ actual beliefs about the knowledge-based sources of competitive advantage, and
(3) ensuring confidentiality of responses for all respondents.
Copyright  2003 John Wiley & Sons, Ltd.
advantage are competencies. Competencies do not
include sources of competitive advantage that are
attained simply through economies of scale, patent
protection, or unique access to resources.
Examples of competencies. One of a firm’s com-
petencies may be its skill in opening overseas
export markets that allow first mover advantage
over competitors. A second example may be the
superior knowledge and skills that an organization
possesses in managing profitable alliances with
suppliers. Each is a competency because the firm
possesses knowledge which allows it to outperform
competitors in ways that add value to the firm. In
each case, a firm may also be able to redeploy
the competency in ways that will continue to add
value to the firm—the first in opening new inter-
national markets when the opportunities arise, the
second in negotiating new contracts with existing
partners or in developing new alliances with dif-
ferent suppliers.
General format. This interview consists of a set
of open-ended questions. The purpose of these
questions is to identify and gain deeper understand-
ing of your firm’s competencies. Particularly, we
are interested in understanding what these com-
petencies are and where they are located in your
firm. During the first part of the discussion, we
will ask you to identify several competencies at
[textile firm]. Examples of questions we will ask
are: ‘What are some examples of your firm’s
knowledge-based sources of competitive advan-
tage? In other words, in what areas are you partic-
ularly strong compared to your competitors?’ We
will also ask you for your preliminary ranking of
these competencies regarding their importance to
the current success of [textile firm].
Other information. At the end of the interview,
we will ask for the name of an individual who
will coordinate the distribution of a brief survey
in March. Responses will be needed from 4–5 top
managers and 7–9 middle managers whom you
identify for participation in this study. Top man-
agers are the individuals who report directly to the
CEO and are full-time employees of the firm. Mid-
dle managers are individuals whose responsibilities
place them about halfway between you and the
lowest-level managers.1
Strat. Mgmt. J. (in press)