Management of Knowledge in Firms and Competitive Advantage: A Review of the Non-Financial Performance Dimension

Abstract

The relationship existing between management of knowledge in firms and the resulting competitive advantage has been a subject of intense research in the last few decades. More and more studies have found efforts at managing knowledge in firms to yield significant upturns in their performance levels. Ironically, a closer look at the performance implied by a significant percentage of previous studies is, little else but, financial performance. Pointedly, a number of studies show that non-financial performance is, for the most part, a contributor to improved financial performance. I argue that non-financial performance also merits investigation with respect to the manner in which management of knowledge by an enterprise impacts it. A survey of 75 Micro, Small and Medium Enterprises is instituted, consisting of family firms in Migori County, Kenya. Findings reveal that management of knowledge by enterprises has a positive and statistically significant effect on the enterprises non-financial performance. On the theoretical front, the study gives credence to the fact that valuable, rare, inimitable, and non-substitutable knowledge resources shared by a firm's workforce, have the potential to contribute to significantly enhanced levels of non-financial performance, hence their competitive edge. Besides, the resource based view is supported to lead to enhanced competitiveness by firms. On the practical front, the study makes a mark on the debate on the factors triggering competitive edge in affirm by showing that improved non-financial performance in organizations is associated with the role played by management of knowledge.