Harnessing knowledge resources for increasing returns: Scalable structuration at Infosys technologies

Practitioners and researchers increasingly view knowledge as being a strategic resource (Winter, 1987).With rapid advances being made in information-based technologies, we are witnessing nothing short of another industrial revolution-one in which artisans are “using their heads and not their hands” (Fortune, 1991). Echoing the sentiments of a growing number of scholars and practitioners, an article in Business Week (1992) suggested “competitive advantage no longer belongs to the biggest or those blessed with abundant natural resources or the most capital. In the global economy, knowledge is king.” Although knowledge is now gaining the recognition that it rightfully deserves, it has always played a key role in the functioning of modern firms. Penrose’s (1995) work is illustrative in this regard. She pointed out that a firm is a bundle of resources possessing only an unrealized potential to yield different services. Eventually, it is the firm’s managerial capacity to identify and realize productive services from these resources that yields competitive advantage. Since Penrose’s time, a key shift has occurred in the nature of resources that firms harness. Specifically, a firm’s productive resources are no longer inert but, instead, infused with knowledge. This shift has profound implications for processes associated with knowledge production and use. Arthur (1991), for instance, pointed out that knowledge-infused resources have properties that are different from traditional resources such as land, labor, and financial capital. Rather than the diminishing returns that can set in with the use of such traditional resources, knowledge-infused resources have the potential to yield increasing returns. That is, returns from knowledge-infusedresources can increase with use, not at a diminishing rate, but at an increasing rate.