Sample Business Essay on Knowledge Management

Knowledge Management


Knowledge-based theory of the firm considers knowledge as the vital part in a firm where it is a very significant source. It usually argues that knowledge is the most complex part in an organization where without it a firm cannot achieve the competitive advantage (Leonard & Swap, 2005). It is also a vital and major resource to the organization where it is used to improve the performance of the firm. Knowledge is a very essential and a major resource in an organization (Rivard, Raymond, & Verreault, 2006). It has a major task in making of policies, maintaining, or improving the culture and educating of employees of the organization. The knowledge-based theory of the firm is important to a firm in achieving its goals. This paper explains how organizations use knowledge management to achieve the competitive advantage Application of data, information and knowledge in knowledge-based theory.

Data, Information and Knowledge

Knowledge is regarded to be only a generic resource as it does not possess some special characteristics which make impossible for it to differentiate between those problems, which it can solve and those that it is not capable of solving. Information technology can help significantly in enhancing and synthesizing knowledge management of a firm. Knowledge-based theory of the firm also argues that knowledge differs among firms and so it is difficult for a firm to imitate another firm’s way of doing things. According to the theory, data refers to the collected raw materials, which can either be qualified or unqualified and is usually inform of numbers or text. These materials are usually unprocessed and so cannot be used directly by the firm (Paiva, Roth, & Fensterseifer, 2008). Data from various sources is piled together and then changed to information, which is important in the organizational performance.

After data is collected and processed it becomes information, which is now ready for use by the organization. For data to become information, it is organized, examined, analyzed, and then summarized (Lavie, 2006). After the data is processed it becomes information, which is primed for utilization by the firm. The information collected from different sources is then used by organizations as their resources. Knowledge is a resource gained by the organization from its employees from whom they have gained from experience while working. The knowledge is usually from experience obtained while working with the organization (Wiig, n.d.). When management of an organization has sufficient knowledge, it will be able to attain its organizational objectives.

Knowledge Management and Knowledge Management Systems

Knowledge management studies have helped many organizations for a long time to come up with styles and processes for good performance of the organization, as well as the organizational structure. It has also been a good tool to change tacit knowledge to explicit knowledge, which is then used as a resource in an organization. The collected information is piled up and then stored to be used by the organization in improving knowledge when need arises.

The stored knowledge is then used for innovative purposes, creation of value, and for development purposes in the organization (Lavie, 2006). When knowledge is stored in an organization, it can later be used as intellectual. Knowledge is regarded as awareness and understanding any information and being in a position to differentiate between different tasks and make informed decisions. Knowledge management explains knowledge assets where it is referred as knowledge that is usually recorded in various materials like textbooks, diagrams, reference books and also computer files where the knowledge is stored. In knowledge assets, every fact and procedure and something is recorded for reference when required (Rivard et al., 2006). Knowledge management system denotes a system that is designed to manage the knowledge in organizations where the system captures, stores, and disseminates information (Lavie, 2006). In order for the system to be effective, it uses technology to capture and pile up information for easy management. Knowledge management will also address the concern of loss of tactic skills, knowledge, and other attributes when employees leave the organization.

The solution to generating significance from database and intranet does not lie in the superiority of technology but on the atmosphere in the firm and the degree of contribution from every agent in the network. The United States chemicals company, Buckman Labs, nurtures a shared setting irrespective of its 1,300 associates being spread across the globe (Laycock, 2005). Buckman Labs employs electronic way of obtaining knowledge and information and its products to earnings ratio has increased from about 25 percent to more than 35 percent due to the connection with customers over the intranet. The design is that information in such deposits is distributed in the entire firm, and the database takes the place of knowledge management (Levinson, 2007). Concentrating on ventures on information and document management generates just a proportion of the value of a more tactical advance anchored in the knowledge-based theory of the firm that encompasses knowledge transfer.


For a long time, organizations have always been concerned with building and attaining knowledge in addition to consuming the same. Knowledge management was introduced a long time ago to improve organizational performance as people’s brains alone were not enough knowledge in the organization performance. Though the organizations still operated, they did not do their best due to lack of sufficient knowledge for competitive advantage. In most organizations, management knowledge has improved on their performance greatly.



Lavie, D. (2006). The competitive advantage of interconnected firms: An extension of the resource-based view. Academy of management review, 31(3), 638-658.

Laycock, M. (2005). Collaborating to compete: achieving effective knowledge sharing in organizations. Learning Organization, 12(6), 523-538.

Leonard, D., & Swap, W. (2005). The Knowledge Coach. HBS Working Knowledge. Retrieved from

Levinson, M. (2007). Knowledge Management Definition and Solutions. Retrieved from

Paiva, E. L., Roth, A. V., & Fensterseifer, J. E. (2008). Organizational knowledge and the manufacturing strategy process: A resource-based view analysis. Journal of Operations Management, 26(1), 115-132.

Rivard, S., Raymond, L., & Verreault, D. (2006). Resource-based view and competitive strategy: An integrated model of the contribution of information technology to firm performance. The Journal of Strategic Information Systems, 15(1), 29-50.

Wiig, K.M. (n.d.) On the Management of Knowledge. The Wiig Group. Retrieved from