Investigating the management of knowledge for competitive advantage : A strategic cost management perspective

Purpose – The purpose of this paper is to develop and apply a framework that examines the effectiveness and efficiency of managing knowledge in organizations for competitive advantage. Design/methodology/approach – Reviews knowledge management and strategic cost management literatures to identify key elements that determine and facilitate the enhancement of competitive advantage. Develops a cost‐knowledge management (CKM) framework that integrates these elements and enables the analysis of how knowledge utilization in organizational activities can be made more effective and efficient. Findings – The CKM framework is usefully applied to a sample of four Italian firms operating in the mechanical industry. Both the results of applying the CKM framework and the insights that are generated are discussed. Practical implications – The CKM framework allows organizations to analyze the activities performed in terms of cost structure and cost drivers, value created, and knowledge utilized, the latter in terms of knowledge specificity and type. The framework can also be used to highlight specific areas of effectiveness improvements in terms of identifying which activities should be leveraged and how knowledge can be better mobilized. In addition, the framework enables an assessment of the non value added but required and waste elements of organizational activities and the specific drivers of costs in these activities, thereby enabling an identification of efficiency improvement opportunities. Originality/value – This paper integrates strategic cost management and knowledge management perspectives to examine how organizations can usefully analyze and improve the effectiveness and efficiency of managing knowledge for competitive advantage. Thus far, this integration has not occurred in either literatures.