Competence-Based Competition: Gaining Knowledge from Client Relationships 1

Knowledge creation and organizational learning have become central concerns in strategic management. This chapter analyzes customer relationships as a source of new organizational knowledge. Knowledge absorption from customer relationships involves two key processes of organizational learning: creating new knowledge within the firm from client relationships and leveraging this new knowledge within the firm and in client relationships. The management of such learning and knowledge leveraging processes is critical to a firm's ability to build new organizational competences. These processes are examined in the context of knowledge intensive business service firms including both specialist and general management consulting firms, to gain insights into processes of strategic organizational learning. After presenting two brief case studies of knowledge absorption from clients, some implications for knowledge management in various kinds of client relationships are considered. This chapter contributes to the competence-based view of competition by developing a typology of client relationships and an integrative framework that helps to clarify several important types of knowledge absorption opportunities.