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.