The capability-based view of the firm is based on the assumption that firms know how to do things. Assuming the existence of a thing called `organizational knowledge', in the first part of the paper we identify its main building blocks and we provide a description of its inner structure. This results in an analysis of the relationships among key concepts like organizational routines, organizational competencies and skills. In the second part, we consider some empirical implications of the adoption of a capability-based view of the firm in dealing with issues like horizontal and vertical boundaries of the firm, innovation and corporate performance. Some implications for strategic management are also discussed.
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