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Entrepreneurial knowledge management and sustainable opportunity

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Article  in  International Journal of Learning and Intellectual Capital · January 2007

DOI: 10.1504/IJLIC.2007.013830

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Int. J. Learning and Intellectual Capital, Vol. 4, Nos. 1/2, 2007 187

Entrepreneurial knowledge management

and sustainable opportunity creations: a
conceptual framework

Lars Øystein Widding

Department of Industrial Economics and Technology Management
Norwegian University of Science and Technology (NTNU)
Bode Graduate School of Business
Alfred Getzv. 1.
N7491 Trondheim, Norway
Fax: +47 735 96426
E-mail: low@iot.ntnu.no

Abstract: The aim of this work is to develop a dynamic conceptual model to

assess and to assist entrepreneurial knowledge management and sustainable
opportunity creations. The conceptual model is backed by a theoretical
framework drawing on the Resource-Based View (RBV) of the firm,
the knowledge-based view of the firm, and entrepreneurship. The model
employs the following elements: tacit and explicit knowledge; and internal,
semi-internal and external knowledge reservoirs. Further, gate-keeping and
processes concerning the identification of requisite knowledge, the attraction
and exploitation of this knowledge, and finally, the mechanisms to protect the
firm’s knowledge reservoirs, are central elements. The model can be used in
different scenarios, explaining and guiding a firm’s challenges regarding
achieving competitive advantage.

Keywords: entrepreneurship; Resource-Based Theory; RBT; knowledge

management; knowledge reservoirs; business knowledge.

Reference to this paper should be made as follows: Widding, L.Ø. (2007)

‘Entrepreneurial knowledge management and sustainable opportunity creations:
a conceptual framework’, Int. J. Learning and Intellectual Capital, Vol. 4,
Nos. 1/2, pp.187–202.

Biographical notes: Dr. L.Ø. Widding holds a Dr Oecon degree from the Bodø
Graduate School of Business (BGSB). He is currently working on a post
doctoral fellowship at the Norwegian University of Science and Technology
(NTNU) and is an Associate Professor at the BGSB. Dr. Widding is a
Coordinator for the NTNU School of Entrepreneurship. His special research
interests are entrepreneurship and knowledge management. Dr. Widding also
has nine years’ managerial practice.

Copyright © 2007 Inderscience Enterprises Ltd.

188 L.Ø. Widding

1 Introduction

De Boer et al. (1999) claim that knowledge is the most important resource in terms of
a company gaining competitive advantage. This can be accomplished through building
a knowledge network (Nordhaug, 1993), which Leonard-Barton (1995) defines as a
mutually dependent knowledge system. In the strategy literature, the concept of
environmental scanning conveys how companies respond more rapidly to changes in the
environment (Thompson, 1967; Pfeffer and Salancik, 1978). This scanning occurs
through interaction with the environment. Johannessen et al. (1999) emphasise this
interaction, claiming that knowledge management must embrace the company’s entire
knowledge-base system – not only the internal knowledge, but the external knowledge
as well.
The importance of knowledge in sustaining and enhancing a firm’s compositeness
makes the acquisition of new knowledge a top managerial priority (Inkpen, 1998;
Abou-Zeid, 2002). However, because very few new venture firms enjoy the full range of
the knowledge and experience needed for timely and cost-effective product and service
innovation, firms are increasingly engaging in various forms of collaboration, such as
joint ventures, strategic alliances and multinational corporations, in order to access the
knowledge and capabilities unavailable internally (Premaratne, 2001; Abou-Zeid, 2002).
These collaborative arrangements are embodied in what we refer to throughout this work
as building knowledge reservoirs (McGrath and Argote, 2000; Widding, 2003; 2005).
The concept of knowledge reservoirs is based on how managers build and acquire
knowledge (McGrath and Argote, 2000) and has its foundation in Resource-Based
Theory (RBT). According to several studies (e.g., Chandler and Hanks, 1994; Brush and
Greene, 1996) resource-based theory is a central concept in understanding how
entrepreneurial firms identify and acquire resources to achieve competitive advantage
(Stevenson and Gumpert, 1985). According to RBT, resources can be combined or
developed over time to generate unique capabilities that increase competitive advantage
(Amit and Shoemaker, 1993). Schumpeter (1934) points to the link between RBT
and entrepreneurship and defines entrepreneurship as the activity associated with
innovatively combining resources into something that the market identifies as new. In
knowledge-based firms, knowledge is the most important resource and these companies
represent the biggest potential for economic growth and new jobs (Westhead and Storey,
1994; Rickne and Jacobsson, 1996; Jones-Evans and Westhead, 1996; Mason and
Harrison, 1999). This is why it is important to study growth-oriented knowledge-based
firms and seek to understand how they can achieve competitive advantage.
Entrepreneurship is a multifunctional, multifaceted exercise. It is, therefore, not
controversial to claim that entrepreneurs need access to multifunctional knowledge, or
business knowledge to manage the start-up. Business knowledge can be defined as
“…multifunctional knowledge comprised of the product, market, organisational, and
financing facets” (Widding, 2005, p.3). One can assume that entrepreneurs do not
personally hold all the business knowledge requisite for the firm to gain competitive
advantage (e.g., Chrisman, 1999; Premaratne, 2001). Entrepreneurs require knowledge
beyond themselves, and thus they must cooperate with other actors that possess this
knowledge. Growth-oriented and innovative ventures are often resource-constrained
(Kirchhoff, 1994; Greene and Brown, 1997; Brush et al., 2001). These ventures face
considerable challenges in gaining access to financial resources as well as knowledge
resources (Sørheim et al., 2005). One cost-effective way of acquiring this knowledge is
 Entrepreneurial knowledge management and sustainable opportunity creations 189

by creating knowledge reservoirs. Premaratne (2001, p.363) refers to these resources as

“…gratis, which are exchanged without economic agreements between the two parties”.
The effectiveness resides in getting cost-effective access to the knowledge. Recent
studies have, to a large extent, a static and internal view of the firm’s resource base
(Sørheim et al., 2005). Further, few studies combine normative models and practical
implications. This is a problem for the research field of entrepreneurship, because the
current body of research through conceptualisation is relatively fragmented. The field
needs to accumulate more research through conceptualisation and realistic descriptions
that can be useful for advising entrepreneurs.
This work attempts to develop a dynamic conceptual model to assess and to assist the
knowledge reservoir building process in knowledge-based firms. The model can be used
in different scenarios, to explain and guide the firm’s dynamic challenges regarding
achieving competitive advantage. The model is backed by a theoretical framework based
on the Resource-Based View (RBV) of the firm, the knowledge-based view of the firm
and entrepreneurship.

2 Theoretical framework

A fundamental problem entrepreneurs should ask themselves is: “What processes are
essential in developing and expanding competitive advantage?”
Many studies claim that access to knowledge resources is essential to gaining
competitive advantage, and that setting up networks is the means. Though interesting, the
literature paints only a relatively rough sketch dealing with the concepts of knowledge
and comparative advantage, and is too static in nature as to the practical implications. The
literature lacks richness of detail, which is both of theoretical and practical interest.
That said, several scholars have, in recent years, made a case for the appropriateness
of using the Resource-Based View (RBV) to improve our understanding of
entrepreneurial processes (Dollinger, 1999; Rotefoss, 2001) and a new firm’s strategic
behaviour (Brush et al., 2001; Lichtenstein and Brush, 2001). According to RBV
scholars, the firm can be conceptualised as a bundle of resources and capabilities
(Amit and Shoemaker, 1993; Barney, 1991; 1995; 2001; Conner, 1991; Mahoney and
Pandian, 1992). The characteristics of the resource bundle – whether valuable, rare,
inimitable, or non-substitutable – are determinants of the organisation’s ability to survive
in the environment.
The growing body of RBV literature emphasises how the bundling of resources
can create sustained competitive advantage (Prahalad and Hamel, 1990; Barney, 1991;
Rumelt et al., 1994). However, said literature has, to a considerable extent, focused on
companies with an existing bundle of resources that can be refined and exploited in order
to create competitive advantages (Brush et al., 2001). Venkataraman and Van de Ven
(1998) argue that the most crucial activity in the business development process revolves
around the identification, assembly and allocation of resources: accordingly, a continuing
and dynamic process. Initially, an emergent venture will neither possess nor control the
resources necessary for survival and growth. Entrepreneurs are forced to simultaneously
react to the rapid change of their environment – owing mainly to the globalisation of
competition, which requires resources and expertise far beyond their own (Hamel et al.,
1989). Because no single firm has the full range of knowledge and experience needed for
190 L.Ø. Widding

timely and cost-effective product and service innovation, firms increasingly set up
various forms of collaborative arrangement, such as joint ventures, strategic alliances and
multinational corporations, in order to access knowledge and capabilities unavailable
internally (Premaratne, 2001; Abou-Zeid, 2002). Hence, the new venture team’s most
challenging task is the acquisition of adequate resources. According to this perspective,
the entrepreneurial process is one in which the entrepreneurs acquire and develop
knowledge resources, and where the new venture’s outcome is largely determined by the
nature of the resources the entrepreneurs are able to acquire (Dollinger, 1999). The
awareness of the importance of knowledge in sustaining and enhancing a firm’s
competitiveness makes the acquisition of new knowledge a top managerial priority
(Inkpen, 1998; Abou-Zeid, 2002). This activity can be described as building ‘knowledge
reservoirs’ (Widding, 2003; Sørheim et al., 2005; Widding, 2005).
The concept of ‘knowledge reservoirs’ is based on how managers build and acquire
knowledge (McGrath and Argote, 2000; Widding, 2003; 2005). Knowledge reservoirs
have their foundation in RBV which, according to several studies (e.g., Chandler and
Hanks, 1994; Brush and Greene, 1996), is central to understanding how entrepreneurial
firms identify and acquire resources to achieve competitive advantage (Stevenson and
Gumpert, 1985).
Entrepreneurs need access to multifunctional knowledge, or ‘business knowledge’
to manage the start-up. But, it is important to note that not all knowledge is necessarily
good knowledge. Too much, or inappropriate knowledge can occupy capacity, take away
the firm’s focus, and be directly harmful. This is why it is important for the entrepreneur
to categorise and structure relevant knowledge, previously mentioned as business
knowledge. Business knowledge can be defined as the multifunctional knowledge
associated with knowledge areas such as:
• product development
• sales and marketing
• management
• finance (e.g., Widding, 2003; 2005; Davidsson and Klofsten, 2003;
Sørheim et al., 2005).
Several sub-items support each category:
• product development is backed by R&D and production
• sales and marketing is backed by customer knowledge and marketing
• management is backed by strategy and networking
• finance is backed by cash-flow control, accounting, further financing and exit
(Sørheim et al., 2005).
In Table 1, Widding (2005) has, through case studies, identified concrete actors that can
be organised into knowledge reservoirs, denoting what kind of knowledge these actors
contribute in terms of business knowledge.
 Entrepreneurial knowledge management and sustainable opportunity creations 191

Table 1 Internal, semi-internal and external actors organised in business knowledge

Actors, product Actors, market Actors, management Actors, finance

Employees, investors Employees, investors on Employees, chairman Members of the board,
on the board, investors the board, investors of the board, members investors on the board,
outside the board, outside the board, of the board, investors on lawyers, friends, brokers,
strategic alliance strategic alliance the board, competitors, audit
partners, suppliers, partners, suppliers, lawyers, friends, course
producers, customers, agents, customers, trade
competitors, associations, consultants,
universities, research temporary staff, trade
institutes, journals, consul
students, trade
associations
Tasks, product Tasks, market Tasks, management Tasks, finance
Innovation, Building relations, Project management, Statement of value,
transforming identifying new markets, access to network, formal alibi, emission,
knowledge, industrial market knowledge, operating management, fusion, economic chevron
research, field tests, marketing, sales, strategy, HRM, partner, bankruptcy
project management, customer service, administration, petition, cash
technical rigging, customer knowledge, management, fusion, management, accounting,
product and service, international marketing, contracts, chevron economic services
web and IT knowledge, export, letter of intent partner, learning,
programming, innovation
operative and strategic
knowledge, production,
handicraftsmen

Source: Widding (2005)

Table 1 breaks with the traditional view saying that resources are internal and stored in
the firms. The table shows that resources can be internal, semi-internal (on the board,
with owners), and external.

3 Knowledge as a resource

There is a link between RBT and knowledge, also referred to as intellectual capital
(Ulrich, 1998). Knowledge is a somewhat slippery subject (Penrose, 1959), and in order
to discuss it meaningfully, it is vital to understand the construction of the phenomenon.
Knowledge is made up of data and information. Data represent special characteristics of
(a group of) objects or events in the real world. Data is literally ‘given’, and can be
anything from security numbers to statistics. Data can become information when it serves
a meaningful intention in a given setting, mainly in a decision-making process.
Information is a means to reduce uncertainty (Galbraith, 1973). Still, information only
reduces uncertainty if it contributes knowledge to the receiver of the information. This
means that it will not help an entrepreneur to have all the data and information in the
world, if he or she is not able to turn it into knowledge, or subsequently able to transform
the knowledge into performance (competitive advantage) (Nooteboom, 1996). ‘Knowing’
is a dynamic social process, which is constantly being built, tested and reconstructed
(Sveiby, 1997; Choo, 1998), and can be described as an activity-based process (Polanyi,
192 L.Ø. Widding

1974). Knowing is strongly related to capability, or dynamic capability. In terms of the

organisation, that dynamic capability is the ability to identify opportunities and the
capacity to use its knowledge to increase competitive advantage (Teece et al., 1997).
Amit and Belcourt (1999) claim that capability is made up of those mechanisms that a
firm uses to develop, combine, group and protect resources. As one can appreciate,
knowledge has some interesting and unique characteristics, quite unlike other resources
(Choo, 1998). For example:
• knowledge can be augmented by being used
• the ‘knowledge-holder’ still holds the knowledge after ‘giving it away’ to others
• knowledge exists independent of space and time.
In addition, knowledge can be divided into two – namely, explicit and tacit knowledge
(Polanyi, 1983; Sveiby, 1997; Nonaka and Konno, 1998). Explicit knowledge is codified
knowledge, and can appear as words, numbers, data, specifications, task descriptions and
manuals, for example. Provided the recipient has the cultural, linguistic and technological
knowledge necessary to decode the sender’s knowledge, explicit knowledge can be
relatively easily transformed between persons or groups, independent of space and time
(Choo, 1998). Edvinsson and Sullivan (1996) describe explicit knowledge simply and
elegantly as the knowledge that is left behind in the company when the employees have
gone home.
Tacit knowledge is a more complicated concept because it contains subjective
insights, feelings and intuition. This knowledge is personal, is deeply anchored in
individual action and experience, and is therefore hard to transfer to other persons
(Grimen, 1991). As a consequence, tacit knowledge is hard to copy or steal from
competitors (Amit and Belcourt, 1999), which presents both opportunities and constraints
regarding the building of knowledge reservoirs and the gaining of competitive advantage.

4 Entrepreneurial knowledge management and sustainable

opportunity creation

Shane and Venkataraman (2000, p.220) claim that “to have entrepreneurship, you must
first have entrepreneurial opportunities”, and that entrepreneurs are seeking opportunities
to create future goods and services. The opportunities are discovered, evaluated and
exploited. Although recognition of entrepreneurial opportunities is a subjective process,
the opportunities themselves are objective phenomena that are not known to all parties at
all times. Previous researchers have argued that entrepreneurial opportunities exist
primarily because different members of society have different beliefs about the relative
value of resources, given the potential to transform them into a different state (Kirzner,
1997). In addition, firm knowledge-reservoirs are, to a large extent, various and existing
tacit knowledge. This is the basis for firms to achieve competitive advantage. RBT
explains the variety in firm performance within the same industry as resulting from a
heterogeneous distribution of resources (Barney, 1991; Amit and Shoemaker, 1993;
Peteraf, 1993). In that respect, one should view the firm as a part of an extended
knowledge system (Johannessen et al., 1999). This brings us to the core of this paper.
 Entrepreneurial knowledge management and sustainable opportunity creations 193

Opportunity recognition and heterogeneous resources are strongly connected with the
entrepreneurs’ and the firm’s knowledge reservoir. In the knowledge society, the
recognition of opportunities and the heterogeneous distribution is related to the ability to
develop knowledge and processes proceeding at an accelerating speed. Entrepreneurs
often are managers as well, and for that reason have a responsibility to keep up and deal
with this speed. Johannessen et al. (1999) claims that knowledge management is about
the systemising and structuring of information for a given purpose. Venkataraman and
Van de Ven (1998) claim that identification, composition and allotment are the most
critical entrepreneurial management activities. This is accomplished by making the
knowledge productive by transforming the firm’s intellectual capital into value for the
customer (Ulrich, 1998), which includes identifying and developing existing and future
knowledge, intending to exploit new opportunities (Quintas et al., 1997). Brush et al.
(2001, p.67) claims that:
“Understanding the resource development pathway in terms of initial inputs
(types of resources) and early uses (application of resources) is central to
efficient, effective, and timely management of the resource building process,
development of a competitive advantage, and ultimately wealth creation.”
By doing so, the entrepreneur has an advantage in the opportunity recognition and
knowledge development fight. Sustained competitive advantage can be achieved through
sustained entrepreneurial knowledge management.
At this juncture we look to the development of a conceptual model for building
knowledge reservoirs that improve the firm’s fitness to exploit opportunities through
discovering, evaluating and exploiting.

5 Conceptualisation of building a knowledge reservoir

Figure 1 shows a knowledge system related to a new business venture. As discussed

previously, a firm’s knowledge reservoir consists of both tacit and explicit knowledge
(Polanyi, 1974; Sveiby, 1997; Nonaka and Konno, 1998). The black square inside the
grey oval circle symbolises the firm’s explicit knowledge. The square also symbolises
that explicit knowledge is formal, in contrast to tacit knowledge, which is round,
indicating that it is personal and less rigid. The explicit knowledge has a ‘gate’, indicating
the interaction between the tacit and explicit knowledge. The firm codifies that share of
tacit knowledge that is possible and/or strategically important to codify. At the same
time, tacit knowledge is developed by exploiting the firm’s explicit knowledge.
The little square and the circle, together, represent the firm or the firm’s internal
knowledge reservoir, consisting of the entrepreneurial team and the firm’s employees
(Widding, 2003). A firm’s knowledge reservoir also consists of a semi-internal
knowledge reservoir, symbolised by the white ellipse. The semi-internal knowledge
reservoir consists of the owners and the board members.1 One reason it is advantageous
to establish a semi-internal level is that these actors are not a part of the daily
management, yet they hold a constitutional responsibility. This division can also be
argued using the principal-agent theory, which claims that the entrepreneur and the
owners have different interests and roles.2 As shown in the figure, this reservoir interacts
with both the firm’s tacit and explicit knowledge.
194 L.Ø. Widding

Figure 1 Knowledge system in relation to the interaction between explicit and tacit knowledge

External
knowledge-
Internal reservoir
knowledge-
reservoir

Tacit
knowledge
Explicit
knowledge

Semi-internal
knowledge-
reservoir

The external knowledge reservoir is indicated by the outer frame. The total figure then
shows the knowledge system in which the firm takes part (Johannessen et al., 1999). The
relative scale between the tacit knowledge, the explicit knowledge, and the knowledge
system are not constant, and can change over time. One can assume that new ventures
have relatively limited explicit knowledge, because of their lack of routines,
specifications and task descriptions. The firm’s knowledge is, to a large degree, often
tacit, stored in the entrepreneur himself. The size of the figure, both exact and relative,
must not be looked upon as a zero-sum game, because of the characteristics of
knowledge. As such, if one of the elements increases, other elements are likely to do the
same, and the total knowledge reservoir will increase.
Knowledge is not enough; the firm also needs the dynamic capability to use its
knowledge to increase competitive advantage (Teece et al., 1997). Brush et al. (2001) has
identified four capabilities that are important to entrepreneurs when constructing a
resource base. They are:
1 identifying the need for resources
2 ability to attract resources
3 combining of the resources
4 transforming the individual resources into the firm’s resources.
Hamel (1994) also claims that resource management contains four capabilities, namely:
1 identifying
2 building
3 exploiting
4 protecting the resources.
 Entrepreneurial knowledge management and sustainable opportunity creations 195

Separately, Brush and Hamel’s elements have defects, but a more holistic approach can
be made by combining them. Doing so, the following rudiments emerge:
• resource need identification
• resource attraction ability
• resource exploitation
• resource protection.
These rudiments are depicted in Figure 2, represented by the four arrows, which
symbolise a continuous process. Both the existence of the rotation (process), and the
speed of the rotation is the entrepreneur’s responsibility as a manager. The speed should
be adapted to the firm’s ability to absorb and carry out the process, which will be
influenced by the relationship between the tacit and explicit knowledge.

Figure 2 Knowledge system existing (1) identifying the need for resources, (2) ability to attract
resources, (3) exploitation, and (4) protection of the resources

Attraction Exploitation

Identifying
Protection

As shown above, knowledge resources can be internal, semi-internal and external. The
network theory approach claims that resources can be developed through alliances,
networks and other external constellations (Lang, 1997; Quelin, 1997; Sakakibara, 1997;
Sanchez, 1996; Stein, 1993). When opening for interaction with external sources, the risk
that competitors will gain access to unique knowledge increases, and through this, the
firm loses competitive advantage. Rumelt (1984) claims that firms should build insulating
mechanisms to protect their resources. Mahoney and Pandian (1992) described this as
absorbing the knowledge within the organisation, making it hard to track and separate the
constituent elements, both within time and space, which is characteristic of tacit
knowledge. Resources mixed together in contexts like these make it hard to unmask
causal coherence, a situation Barney (1997) describes as ‘costly-to-copy’. Prahalad and
196 L.Ø. Widding

Hamel (1990) claim that it is hard for competitors to copy a specific strategic
architecture. Barney (1991, p.102) claims that the best way to protect resources is when
they are “…rare among the firm’s competitors (both present and potential), as well as
being imperfectly immutable and substitutable”. On the other hand, if firms do not dare to
expose themselves to others, it is not likely that they will manage to develop their own
significant resources (Kalling, 1999).
The firm’s absorptive capacity is related to its ability to soak up knowledge from the
environment (Cohen and Levinthal, 1990). In Figure 3 this is depicted by a gate. The
firm’s direct knowledge flows in and out via ‘gate keeping’. The intention of gate
keeping, in addition to getting knowledge from the environment, is to allow directed
knowledge out of the firm (Mahoney and Pandian, 1992), and at the same time to protect
specific, essential firm knowledge resources.

Figure 3 Knowledge system and ‘gate keeping’

‘Gate keeping’

6 Discussion and implications

In the RBT, a company’s resource base has traditionally been regarded as internal.
The treatment of resources has been too restricted and static; resources have been
perceived as something that the business already has, and the main challenge has been the
management of this resource base. This is why the RBT has failed to grasp the challenges
of entrepreneurship. This can be illustrated through the following points. Firstly, one
could argue that entrepreneurship, to a high degree, is about getting access to resources
one does not have, as opposed to managing a set of given resources. Secondly,
knowledge as the main resource in knowledge-based companies, is very dynamic, and
requires a different kind of management than that of traditional industrial businesses.
Thirdly, the knowledge of new venture firms is often the knowledge of the individual
employee (tacit knowledge), and consequently companies will have a relatively limited
ownership of the resource base. A way to reduce this risk is to construct systems for
making tacit knowledge explicit, which also should be in the owner’s interests.
 Entrepreneurial knowledge management and sustainable opportunity creations 197

The purpose of this conceptual model is to facilitate the telling of stories about
new ventures and their ability to gain competitive advantage. Figure 4 shows the
complete model.

Figure 4 Entrepreneurial knowledge management and sustainable opportunity creations

‘Gate keeping’

External
knowledge-
Internal
reservoir
knowledge-
reservoir

Exploitation

Attraction
Tacit
knowledge

Identifying Protection

Explicit Semi-internal
knowledge knowledge-
reservoir

This model will be placed into a two-dimensioned frame, where competitive advantage is
the vertical axis and time is the horizontal axis (Figure 5).
We can portray the firm in three different phases, with three different competitive
advantage levels, three different knowledge reservoir sizes, both actual and relative, and
three different numbers of gates. Each of the dimensions should be understood as
relative. Down to the left, we find a very new established firm. It has a relatively low
degree of competitive advantage. This could be explained by its relatively low knowledge
reservoirs – internal, semi-internal and external. The tacit knowledge is relatively over
represented in relation to the explicit. This is due to the firm’s age, and lack of routines,
specifications and task descriptions. The firm has only one gate open to the environment,
which means that relatively little knowledge is passing in and out of the firm. This is a
situation the firm cannot be in for very long without risking bankruptcy, and here it is
essential that entrepreneurs seek to understand what processes are essential to develop
and expand the firm’s competitive advantage. An assumption made in order to
understand this is that entrepreneurs must have entrepreneurial opportunities. Knowledge
resources are essential to get access to more opportunities gaining competitive advantage,
and setting up networks is the means. Entrepreneurs have to learn how to manage the
building of resource bundles, because, as the RBT emphasises, this is a determinant of
the organisation’s ability to survive in the environment.
198 L.Ø. Widding

Figure 5 Building competitive advantage by entrepreneurial knowledge management and

sustainable competitive advantage

Competitive
Advantage

Time
Phase I Phase II Phase III

In the second phase of Figure 5, we have a situation where the firm’s competitive
advantage has grown. There are many reasons for this. First, we can assume that the
entrepreneur has started the process of identifying the knowledge necessary, attracting
and exploiting this knowledge, and finally put in place mechanisms to protect the firm’s
knowledge reservoirs. The speed of these processes are adjusted to the organisation’s
ability to implement them, and the firm’s capability to transform it to its own advantage
(e.g., Cyert et al., 1993). In the model, the growth of the knowledge reservoirs is a result
of these processes, and the fact that the firm has opened more gates has a positive effect
on the knowledge flow among the reservoirs.
In the figure’s final time phase, we see that these processes have been further
developed, resulting in a greater competitive advantage. It is interesting that in this phase,
the firm’s explicit knowledge has grown relatively larger. This is due to management’s
desire to reduce the firm’s risk in terms of losing key employees.
The story told by Figure 5 is a sunny one. Within the field of entrepreneurship, this
is far from ordinary. Some firms will realise this growth, but most firms will never
take off, may stagnate, or even miss their competitive advantage entirely. But, these are
also stories that can be told by using the conceptual framework developed in this paper.
This is an important contribution: the creation of the conceptual model for use in
developing the research field of entrepreneurship and knowledge management using the
RBT perspective.
This paper contributes to further developing the field of entrepreneurial research by
facilitating our understanding of the entrepreneur as a knowledge manager, while its
contribution to RBT is to shed light on the processes that take place in the ‘black-box’,
 Entrepreneurial knowledge management and sustainable opportunity creations 199

between resource input and output in companies. The conceptual model was constructed
and based on a review of entrepreneurship, knowledge management and RBT literature.
The model may have implications for further research because the model provides a
richer way to explain a new venture’s struggle to obtain competitive advantage. The
holistic and dynamic view of the firm should be empirically investigated, using both case
studies and larger samples, in order to test and develop the conceptual model. The model
also has practical implications as entrepreneurs are provided with new terminology that
can help them increase their understanding of how to gain competitive advantage, and
how to build their own knowledge reservoirs.

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Notes
1 It is necessary to separate these, because not all owners are represented on the board, and not
all members of the board are necessarily owners (Borch and Huse, 1993; Huse and
Johannisson, 1998). Another argument for this is that the board and the owners represent
different constitutional levels.
2 This is often a more complex question within entrepreneurship, because entrepreneurs often
hold positions as both managers and owners.

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