Purpose – Explaining how knowledge assets provide firms with a competitive advantage and show how organizational capabilities have the potential to produce long-term superior performance. Paper Category – Research Paper and Case Study. Design/Methodology/Approach – Systematic literature review and in-depth single case study. Findings – Knowledge assets through different learning mechanisms and effective knowledge management processes are bundled, linked, incorporated, converted, organized, and integrated into organizational capabilities which when leveraged into products and services they translate into above-average performance and abnormal profitability. Research Limitations/Implications – The paper lays a foundation for further theoretical and empirical inquiry into the nature of firm’s knowledge assets, organizational capabilities, and the sources of competitive advantage. Practical Implications – This research provides useful guidelines for further empirical inquiry and in-depth case studies to find more evidence regarding the impact of knowledge asset dynamics on value creation processes. Originality/Value – By introducing a framework and empirical evidence that demonstrate the link between knowledge dynamics, the development of organizational capabilities, and sustainability of a firm’s competitive advantage, the paper provides a significant clarification of how a firm’s knowledge assets drive long-term profitability and performance.
