In our highly competitive, digital economy businesses must go above and beyond to stand out. The importance of knowledge should not be undervalued within this endeavour for success. In 1776, well-known economist Adam Smith published the book titled “The Wealth of Nations” where he presented that three main production factors: labour, land, and capital in a combination produce a company’s final result. Almost 250 years after, the situation has completely changed. It is not enough to possess only these three production factors because all successful companies have them. In the current highly competitive global market, companies must add one more production factor, and that is - knowledge.
By definition, knowledge is the purposeful gathering of information in the direction of fulfilling the aspiration to achieve its usefulness and use-value. Knowledge is the only resource that is spreading in its quantity when it is shared with others, compared to others resources that decrease in quantity after utilisation.
The role of knowledge will be taken from both, macro and micro perspectives. On a macro level, we are living in a 4.0 Digital Era. The most developed countries recognised investments in innovations, science and education as a strategic goal that will bring them a necessary competitive advantage compared to other less developed countries.
On a micro level, companies and their managers, directors, and decision-makers are mostly focused on immediate short-term returns. To gain a competitive advantage, companies must invest all of their resources for developing new and innovative ideas. It is not possible to do this overnight, implementing new ideas is a long-term investment. This is only possible within companies that strategically see that as an opportunity.
Unlike other resources, knowledge is not visible in easily quantifiable ways - but the nurturing, growth and adequate use of knowledge undoubtedly improves performance. Employees are the beholders of valuable knowledge and it is up to the company’s management as to whether or not this knowledge will be adequately used.
This is an extract from our student magazine, Pioneer. If you want to read more articles - click here.
About the author
Milos Petkovic is a Lecturer in Management Sciences at Berlin School of Business and Innovations, an Assistant professor at Singidunum University in Serbia, and an Adjunct Professor at Concordia University in Chicago. His research field of interest is related to the topic of strategy, and how companies gain a long-term competitive advantage in the current global market. His work in consultancy allows him to teach students better to understand managerial concepts and methods.