A firm as a knowledge-creating entity: A new perspective on the theory of the firm

The knowledge-based view of the firm views a firm as a knowledge-creating entity, and argues that knowledge and the capability to create and utilize such knowledge are the most important source of a firm's sustainable competitive advantage. Knowledge and skills give a firm a competitive advantage because it is through this set of knowledge and skills that a firm is able to innovate new products/processes/services, or improve existing ones more efficiently and/or effectively. The raison d'etre of a firm is to continuously create knowledge.