Knowledge, Learning and Competitive Advantage: Implications for the Management Profession

Abstract

Developing and effectively using firm-specific, idiosyncratic knowledge in a firm is becoming fundamental for the formation of sustainable competitive advantages. The issue unavoidably touches upon learning and management topics (motivation, compensation, etc.) A central one has to do with how to adequately compensate employees who make a learning effort to develop knowledge which, to the extent that is firm-specific, is of no value outside their firm. We argue that economic compensation is not enough because firm specific knowledge is by nature so close to the firm's own core that it deters employees' values in dimensions that can't be reduced to purely economic terms. An incentives-based approach to confront the problem reveals significant implications for the management profession which, in turn, suggest requirements for management education.