P. Ranganath Nayak

The value of know-how depends on a company’s ability to apply it to usefully differentiate its products, services, and processes from those of its competitors. Without differentiation, value perceived by stakeholders does not increase; instead, as performance improves, expectations rise and perceptions stay constant. This argument suggests that the internal development of know-how should focus on those areas in which the company generates the highest stakeholder satisfaction per unit of investment, i.e., stakeholders’ “excitement wants” and some of their “performance wants,” leaving to suppliers the satisfaction of other performance wants (i.e., those not emphasized in the strategy of the company) and “threshold wants”. The argument also suggests that unless there is a way to make know-how differentiating, the company should not invest in it but rely instead on suppliers.

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