Managing knowledge and corporate performance: An empirical analysis of the world automobile industry

Despite the growing recognition of the importance of managing knowledge for improving the competitive performance of organizations, there has been little systematic research attention to the dynamics of knowledge accumulation and their implication for corporate performance. This research study develops a model to address this lacuna. The model is based on a theory that stresses innovation and intra-organizational selection processes. Time series data for 36 firms in the world automobile industry over the period 1946–1989 are used to test a set of propositions derived from the model. The results support the model and its underlying theory, and suggest that competitive performance outcomes for firms in global competition largely depend on how their management balances, or fails to balance, the rates of innovation vis-à-vis selection over the long-term. This insight is discussed, and implications for practice and research are suggested.