The Root Cause of the Hierarchical Structure of Enterprise Capabilities

Abstract

Based on the correlation between an enterprise’ unique resources and capabilities in its functional influence, resource school specialized in strategic management artificially constructs a hierarchical structure that reflects enterprise capabilities. In fact, an enterprise’s unique resources is substantially tacit knowledge, whereas the essence of an enterprise’ multiple capabilities is a different type of knowledge in the form of tacit knowledge, explicit knowledge or self-transcending knowledge, all of which form an interdependent hierarchical structure during knowledge conversion process.