Using Knowledge Management to Gain Competitive Advantage in the Textile and Apparel Value Chain: a Comparison Small and Large Firms

The ability to store, capture, and disseminate knowledge within and across organizational boundaries has challenged managers for many years. However, as product lifecycles have decreased and environmental complexity and volatility have increased, the need to manage knowledge is intensifying, particularly across the value chain. Firms view knowledge and knowledge management as part of their strategic orientation. The difficulties of managing knowledge of are faced by firms of all sizes. Low-cost strategies may emphasize knowledge that can be used to cut costs, lower prices, and shorten cycle times whereas differentiation strategies may emphasize knowledge that adds value to a product giving it unique characteristics that serve to differentiate it from the competition. This research examines the process of acquisition, retention, maintenance, and retrieval of knowledge both within the firm through organizational memory and across the value chain through knowledge management and compares these practices for small and large firms. KNOWLEDGE AND KNOWLEDGE MANAGEMENT Knowledge theories span over 30 years (Polyani, 1966), however, it is only recently that knowledge has become regarded valuable asset in corporate boardrooms. Knowledge acquisition has become a critical resource for creating and sustaining competitive advantage as the competitive environment continues to intensify (Hitt, Ireland, & Lee, 2000). As with other corporate assets, the processes surrounding creation and transfer of knowledge must be managed with significant insights in order to derive the most value from knowledge investments (Bhagat, Kedia, Harveston, & Triandis, 2002; Conner & Prahalad, 1996; Davenport & Prusak, 1998; Edvinsson & Malone, 1997; Stewart, 1997). The purpose of this research is to examine the significance of managing knowledge both within firm (internal knowledge) and across the value chain (external knowledge) for small and large firms. First, we review the literature on knowledge management systems and propose some hypothesis for internal and external knowledge management. Next, we present the data and measures and follow with the results. Discussion of the results follows and the paper closes with managerial implications, limitations, and suggestions for future research. The quest to innovate through research and development is essential for firms to remain ahead of competitors. Indeed, many firms view the acquisition of new knowledge as a way to gain and maintain competitive advantage (Danskin, Englis, Solomon, Goldsmith and Davey, 2005). However, few firms fully realize the benefits from highly valued knowledge. Knowledge that is isolated in one department or in a specific segment of the value chain is not utilized to its full extent. New knowledge should be harnessed and managed through internal knowledge management systems that create learning opportunities for other departments or product areas within the firm. Internal knowledge management systems may provide platforms for further development of knowledge transfer to external partners. By implementing internal and external