Investigating knowledge-intensive business services: The influence of knowledge, solution characteristics, and environmental turbulence

Abstract

Knowledge-intensive Business Services (KIBS) is one of the most important service sectors in many industrialized countries. By using a sample of 327 new technology based KIBS firms in Finland, this empirical study investigates how knowledge contributes to competitive advantage in KIBS from the absorptive capacity perspective. It also probes the moderating effects of solution characteristics and environmental turbulence on KIBS competitive advantage.

Our findings show that absorptive capacity is more a result of internally accumulated knowledge, rather than externally gathered knowledge. Except for knowledge exploitation, which only contributes to strategic flexibility, all the other three dimensions of absorptive capacity¿knowledge identification, knowledge acquisition, and knowledge transformation¿contribute to both dimensions of competitive advantage, i.e. innovation and strategic flexibility. The direct effects of the antecedents on absorptive capacity and the direct effects of absorptive capacity on competitive advantage are moderated by the IHIP (intangibility, heterogeneity, inseparability, and perishability) level of solution characteristics and the level of environmental turbulence.