from common to uncommon knowledge

Topics: Knowledge, Knowledge management, Foundry Pages: 37 (24097 words) Published: June 9, 2015
௠ Academy of Management Journal
2012, Vol. 55, No. 2, 421–457.
http://dx.doi.org/10.5465/amj.2008.0352

FROM COMMON TO UNCOMMON KNOWLEDGE:
FOUNDATIONS OF FIRM-SPECIFIC USE OF KNOWLEDGE AS
A RESOURCE
RAJIV NAG
Georgia State University
DENNIS A. GIOIA
The Pennsylvania State University
Although the knowledge-based view of strategy has significantly advanced understanding of the foundations of competitive advantage, less is known about how knowledge becomes a strategic resource. In this study, we develop an inductive, process model of the relationships among (1) top managers’ beliefs about knowledge as a resource (termed executive knowledge schemes), (2) the ways that executives search or scan for knowledge, and (3) how they use that knowledge in practice to transform common knowledge into distinctive, uncommon knowledge as a way of achieving competitive advantage. In the course of generating the grounded model, we also uncovered a new concept, scanning proactiveness, and identified two distinct forms of knowledge use in practice: knowledge adaptation and knowledge augmentation.

One of the most venerable observations about
knowledge is Francis Bacon’s dictum that “knowledge is power.” Management scholars have now firmly established the role of knowledge as one of
the key competitive resources of modern times
(Drucker, 1993; Penrose, 1959) and have underscored the importance of knowledge in strategic and competitive contexts by proposing a knowledge-based view of the firm (Grant, 1996; Kogut &

Zander, 1992). Proponents of this view not only
treat knowledge as the principal strategic resource,
but also argue that firms supersede markets in their
ability to create and harness this resource (Kogut &
Zander, 1992). A central premise of the knowledgebased view is that knowledge that is largely tacit and grounded in the unique historical and social
context of a firm can be a source of sustained competitive advantage, because such knowledge is difficult for competitors to imitate and acquire freely in factor markets (Barney, 1991). Although the

knowledge-based view has developed rich conceptual arguments about why firms can outperform markets (Conner & Prahalad, 1996; Kogut & Zander,
1996), less is known about how firms create, acquire, and apply knowledge better than other firms. An important question therefore becomes: How do
strategic leaders create competitive advantage that
is rooted in the development of unique knowledge— especially in institutionalized settings in which rivals also have access to much of the same
information? To address this subtle but significant
question, we set out to understand the processes
managers use to transform common knowledge into
uncommon knowledge that can create distinctive
capabilities.
Penrose offered one of the earliest arguments
about the role of a firm’s internal resources and the
ways in which managers fashion competitive advantage from those resources when she argued, “Not only are the significance of resources to a firm
and the productive services they can yield func-

We are indebted to Bob Voigt for aiding our access to
the U.S. metal-casting industry and counseling us about
the workings of foundries. We thank Don Hambrick and
Wenpin Tsai for their valuable consultations during the
execution of this project. We also thank Pam Barr and
Arun Kumaraswamy for their detailed peer reviews of
the paper and Claus Rerup, Tom Schuessler, and Susmita
Sil for their helpful insights. Thanks also to three anonymous reviewers who provided many helpful suggestions. The paper also improved through presentations at Case Western Reserve University, Rutgers Business

School, and the Academy of Management annual meeting. Special thanks to Mike Pratt for his outstanding guidance and counsel in helping to shepherd the article
through a rigorous review process. This work was sponsored in part by a research grant from the Smeal College Competitive Research Grant...

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