Knowledge competency acquisition in the knowledge economy: Links to firm performance

In the new knowledge based economy competitive advantage comes not from tangible capital, but through intangible (i.e. intellectual) capital. Human capital is an important source of an organization's intellectual capital and the building block of organizational knowledge and knowledge competencies. Given its importance, it would be useful for managers to know how they should acquire their knowledge competencies. An organization's knowledge competency acquisition system is a potential source of competitive advantage.;Prior research is divided between universalistic and contingency perspectives on the best way for a firm to organize its knowledge competency acquisition system. Researchers under the universalistic perspective see competitive advantage as an implementation story in which organizations gain competitive advantage through superior implementation of universalistic best practices---in this case an internalized knowledge competency acquisition system. In contrast to the universalistic view of knowledge competency acquisition, the contingency view indicates that increased effectiveness is obtained via superior alignment between an organization's external task environment and its organization's knowledge competency acquisition system. Under the contingency perspective an organization should have a more internalized knowledge competency acquisition system in more stable environments and a more externalized knowledge competency acquisition system in more dynamic environments.;Using the context of large law firms in the United States the above two competing perspectives were tested using five years of panel data. Results did not lend support to the universalistic perspective, but did lend support to the contingency perspective. Results indicate that an organization's task environment moderates the relationship between an organization's knowledge competency acquisition system and its financial performance. Organizations in more stable environments which used more internalized knowledge competency acquisitions systems outperformed those that were more externalized, and organizations in more dynamic environments which used more externalized knowledge competency acquisition systems outperformed those that were more internalized.