The Dynamics of Firm Knowledge and Competitive Advantage: A Framework and Case Example

Even though the description of a dynamic capability is conceptually sound, the processes that help firms avoid the capability-rigidity tendency remain unspecified. To make progress on this the changing position of competitive advantage between two firms is discussed over time. Each firm is examined as a bundle of different types of boundaries and how effectively each firm manages knowledge across them will be used to explain the dynamic capability developed by one and the rigidity trajectory of the other. The framework developed is important because it describes how a dynamic capability can become a source of rigidity. It also contributes to the field of strategic management by providing a conceptual approach that connects the dynamics of firm knowledge to the dynamics of competitive advantage.