2.5 Internal Knowledge

2.5 Internal Knowledge

            Svetina & Prodan (2008) have argued that relying only on external knowledge does not lead to competitive advantage, as external knowledge is not, by definition, idiosyncratic of any organization. Although possessing it may be a competitive necessity, it does not suffice. It needs to be complemented by a different kind of knowledge, more idiosyncratic, much less visible and directly valuable and available, which is capable of differentiating the organization’s offer in the market. This kind of knowledge is known as “Internal knowledge”.  This is an organizational specific knowledge that refers to organization’s particular modes of functioning. Developing this kind of knowledge is much less environment-driven and belongs more to the realm of organizational routine, own ways of doing things and organizational “idiosyncrasy”.

Internally, organizations acquire knowledge through in-house research and development activities and by learning from continuous improvements in processes. Employee skills represent another important source of new knowledge, and organizations often organize internal education and training programs in order to further build and improve the internal knowledge base (Svetina & Prodan, 2008). Following organizational process can be considered as sources of  internal knowledge: supply chain management, finance & control, planning, human resource management, material management, customer relation management, production control, process automation, research activities, etc. (Pirttimäki, 2004).