How Multinational Companies Gain a Competitive Advantage Through the Effective Use of Knowledge Management

During the past two decades, domestic American business has undergone massive changes in the way commerce is both planned and conducted. Intense competition; the advent of high technology and its commercial applications; the reduction of global trade barriers; the effects of changing worker demographics; concern for environmental and employee welfare; and the resulting downsizing, reengineering and other efforts at cost-containment have all combined to make the acquisition and dissemination of knowledge within corporations paramount as firms struggle to find their way in a setting of ever-increasing uncertainty. The management of corporate knowledge, including intellectual capital, R&D efforts, and management and worker expertise has become so crucial that many firms now employ full-time Knowledge Management (KM) specialists to better facilitate the development and sharing of knowledge across departmental and divisional barriers. What began in the late 1980s as an intense effort to help firms become more cost-efficient domestically has become a major force for productivity-enhancement in the global operations of multinational (MNCs). In fact, this one factor alone contributes in a significant way to understanding why the domestic American economy has experienced the longest peacetime expansion in our nation\u27s history, and why American MNCs have not succumbed to the recent economic problems which befell our trading partners in Europe and Asia. Simply put, America\u27s global firms are better-prepared to deal with the volatile business environment than are our competitors. This is largely due to a sea-change in attitude and philosophy with respect to the acquisition, distribution and storage of knowledge and expertise, commonly called knowledge management. This paper will explore the relationship between KM and competitive advantage; analyze how certain successful domestic and foreign MNCs have used KM techniques to their advantage; and address the future implications of KM in an international setting