Building on the service‐centered dominant logic, this paper aims to investigate the effects of firm knowledge (knowledge of customers, industry, and practices) and synergistic combinations of different types of employee knowledge as a foundation for competitive advantage in retail and service organizations. Specifically, it seeks to theorize that the firm's operant knowledge resources combine to develop the service‐based value proposition of enhanced ability to meet customer needs that results in greater performance.
A survey methodology was used to test the hypotheses using a sample of 293 retail and service providers.
Employees' knowledge of its customers and competitors allow the firm to enhance its ability to meet customer needs, whereas knowledge of firm practices, in isolation, does not enhance a firm's ability to meet customer needs. When looking at the synergistic combination of employees' knowledge (i.e. the two‐way interactions and the three‐way interaction of knowledge of customers; knowledge of firm practices; knowledge of industry) several interesting insights emerge to help to understand how to enhance a firm's ability to meet customer needs.
Since researchers have yet to fully explore the effects of knowledge as operant resources and their conversion into capabilities, this study uses a dynamic capabilities approach and demonstrates that providing front‐line employees with the knowledge necessary to understand the firm's consumer base allows the firm to develop the ability to meet customer needs (i.e. a capability), which in turn allows the organization to reap the economic benefits of a satisfied and returning customer base.
The two‐way and three way interactions provide new insights into the synergistic employment of operant knowledge resources.
The results suggest that operant knowledge resources may not be equally created as different combinations of operant resources result in superior capabilities than other combinations.