Efficiency Improvements or Competitive Disadvantage?

Abstract

Knowledge is, arguably, the most critical organisational resource affecting an organisation's ability to develop, and sustain, a competitive advantage in the marketplace. A focus on economic efficiency is suggested to result in an increase in skills, capacities, and quality of the human resources of organisations, and a substantial improvement in the organisation's productivity overall. Economic efficiency is also often defined as ‘doing more with less’, leading to various cost cutting practices. This paper argues that three such commonly practised efficiency practices - process reviews; downsizing; and internal competition - may result, however, in a reduction of the organisation's ability to learn and use knowledge, and therefore in the organisation's ability to compete.