Is knowledge really the most important strategic resource for a firm?

In a recent paper¹ in Strategic Management Journal, Donald D. Bergh, Laura D’Oria, T. Russell Crook, and Ashley Roccapriore alert that the knowledge-based view of the firm claim “that knowledge is the most important resource” has been widely accepted without a rigorous assessment of its validity.

The knowledge-based view of the firm has emerged as a prominent perspective to explain competitive advantage and firm performance. Indeed, citation counts of two foundational contributions provide some evidence of the knowledge-based view’s acceptance in the strategic management community: one has been cited more than 27,000 times, and the other over 21,000 times.

The distinct identity of the knowledge-based view lies in its assertion that knowledge is “the most strategically important of the firm’s resources.” Knowledge is depicted as the strongest driver of competitive advantage and serves as a “glue” that pulls resources together to create firm resource distinctiveness, firm differences more generally, and, ultimately, high performance outcomes.

However, Bergh and colleagues contend that because managers need to understand what resources yield the strongest and most consistent returns, the often-invoked claim that knowledge is the most important resource associated with firm success needs to be tested. What if this assertion is not actually supported in the body of research on the knowledge-based view? Does the knowledge-based view currently stand on a strong evidence-based footing?

Bergh and colleagues test this question using a meta-analysis of study findings on the resource-performance relationship reported during the period spanning 1990 to 2022. Data from 348 samples reporting 248,136 firm-level observations was analyzed. “Knowledge resources” was defined to “refer to the knowledge and information held by an organization that all, part, or parts of the organization share” and encompassed both explicit knowledge and tacit knowledge.

The most important strategic resource?

The meta-analysis revealed that knowledge is indeed the most important strategic resource, as no other resource helps firms consistently realize competitive advantage, as reflected in a firm’s performance. This was captured on three dimensions: stock market, financial performance, and growth performance. Bergh and colleagues operationalized stock market performance as including stock market returns, Tobin’s Q, and cumulative abnormal returns. Financial performance encompassed return on assets, investment, and sales. Growth performance was captured using year-over-year changes in sales, total assets, and employees.

Further, the meta-analysis findings show that knowledge may serve as a foundational resource by augmenting other strategic resources and helping make firms different. Bergh and colleagues identify three other resource categories beyond knowledge: tangible, intangible, and relational resources:

• Tangible resources refer to a firm’s physical resources. This includes measures of property, plant, and equipment and capital expenditures, as well as cash and marketable securities.
• Intangible resources reside in a firm’s culture, structure, brand, internal coordination policies, capacity for change, and responsiveness. Measures include brand name capturing symbols, names, and images used in commerce, organizational culture, and characteristics of a firm’s structure (e.g., interfunctional coordination, informal organizational structure).
• Relational resources involve affiliations with other firms. Examples include links with important external stakeholder groups, the duration of a buyer–supplier relationship, characteristics of a firm’s interfirm network, board interlocks, and entrepreneurs’ social ties.

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