EFFECT OF KNOWLEDGE MANAGEMENT, MANAGEMENT INNOVATION AND DYNAMIC CAPABILITIES IN SUSTAINING COMPETITIVE ADVANTAGE IN DYNAMIC BUSINESS ENVIRONMENTS

Abstract

Sustainable competitive advantage is imperative for business firms to survive and succeed in a complex and turbulent business landscape. From resource-based view perspective, firms have to utilise their resources and capabilities to exploit opportunities and neutralising threats to achieve sustainable competitive advantage. Knowledge is a crucial resource for the survival of firms when managed properly. Hence, firms that can capture knowledge and deploy it into their businesses could excel over their competitors. Besides, innovation has become the lifeblood challenge for business firms. However, firms cannot rely on technological innovation alone but also develop non-technological innovation (i.e. management innovation) to create and maintain a competitive edge due to the rapid development of science and technology. The value generated by current resources and capabilities inclines to become out-dated and competitive advantages may not be sustainable in the long run. Firms need to develop dynamic capabilities which are believed to be an essential element for their growth, survival and competitiveness. Furthermore, environmental dynamism is viewed as a critical contingency factor that affects every business firms. In sum, knowledge management, management innovation, dynamic capabilities, and environmental factors are critical for firms to sustain their competitive advantage over their competitors.