Knowledge-Based Value Creation Dynamics in the IT Sector

In an economy characterized by rapid change, continuous innovation and high intensity and dynamism of competition, the analysis of strategy and competitive advantage has shifted from the more aggregate competitive forces to the idea that firms are essentially different and compete on the basis of their specific physical, human and organizational resources. The key to this new view of the firm as a collection of resources both human and material is understanding the relationships between resources, capabilities, competitive advantage, and profitability, in particular, an understanding of the mechanisms through which competitive advantage can be sustained over time. Even if knowledge assets have been widely recognized as the firm's main value drivers, little guidance is provided of how these unique attributes affect the firm's profitability and its overall performance. Through a case study research in the IT sector, this chapter provides empirical evidence as regards such interdependencies and analyzes the effects of knowledge asset dynamics on firm's performance and value creation mechanisms.