From Knowledge to Advantage: Integrating Knowledge-Based and Dynamic Capability Theories

Abstract

Knowledge has long been recognized as a vital strategic resource, yet creating sustainable competitive advantage remains insufficiently explained. The Knowledge-Based View (KBV) emphasizes knowledge as the foundation of value creation. At the same time, the Dynamic Capability (DC) theory highlights a firm's ability to sense, seize, and reconfigure resources in turbulent environments. This study aims to integrate both perspectives by examining how knowledge management practices influence sustainable competitive advantage, directly and indirectly, through the mediating role of dynamic capabilities. A mixed-method design was applied, combining a survey of 220 managers from Indonesian knowledge-intensive industries with qualitative case studies for contextual validation. Structural Equation Modeling–Partial Least Squares (SEM-PLS) was used to test the hypothesized relationships. The results indicate that knowledge management practices significantly predict dynamic capabilities (β = 0.52, p < 0.001), which in turn positively influence sustainable competitive advantage (β = 0.41, p < 0.001). Knowledge management also has a direct positive effect on competitive advantage (β = 0.28, p < 0.001), while mediation analysis confirms partial mediation (β = 0.21, p < 0.01). The integrated model explains 62% of the variance in competitive advantage. The study concludes that knowledge and dynamic capabilities are complementary drivers of sustained competitiveness, recommending that managers simultaneously invest in knowledge management systems and dynamic routines to thrive in dynamic environments.