Knowledge is “what people understand about things, concepts, ideas, theories, procedures, practices and the way things are done” (Armstrong, 2009:220). Knowledge is according to Wang and Noe (2010) a critical organizational resource that provides a sustainable competitive advantage in a dynamic economy.
However, to gain this advantage the focus should not simply be on recruiting staff with specific knowledge, skills, or abilities, but also on sharing knowledge between experts and novices which are already part of the organization (Wang & Noe, 2010).
Previously, traditional economies and organizations relied upon assets such as capital and land having physical values. In the modern economy, this trend has changed and knowledge is now the key factor in gaining competitive advantage (Beijerse, 1999).
According to Hansen, Nohria, and Tierney (1999:106), “for hundreds of years, owners of the family business have passed on their commercial wisdom to children, master craftsmen have painstakingly taught their trades to apprentices and workers have exchanged ideas and know-how on the job”.
However, in the contemporary business world, knowledge sharing fundamentally means that employees contribute to knowledge application, innovation and ultimately the competitive advantage of the organization (Wang & Noe, 2010). Knowledge sharing has distinct advantages.
It is positively related to the reduction in production costs, faster completion of new product development projects, team performance, firm innovation capabilities and firm performance, including sales growth and revenue from new products and services (Wang & Noe, 2010).
In the business world, failing to share knowledge can bring huge financial losses. Fortune 500 companies lose at least $31.5 billion a year through deficiencies in knowledge sharing, according to International Data Corp, the US-based market intelligence and advisory firm (Babcock, 2004).