On the Existence of Knowledge Capital of the Firm

The firm can develop some firm-specific institutional knowledge, with which the firm coordinate specialists’ work under the condition of labor division. Due to the bounded rationality, the complexity of decision-making, uncertainty about the future and imperfect information, efficiency differences occur in developing firm-specific knowledge, and some firms gain knowledge capital. Besides, some isolating mechanisms and imperfect substitutability keep the firm’ s knowledge capital durable to add value. The primary contribution of the paper is in demonstrating the existence of knowledge capital as a long-lived phenomenon.