ELI5: Explain Like I'm 5

Knowledge-based theory of the firm

The knowledge-based theory of the firm is a way of looking at how businesses grow and develop. It's based on the idea that the more knowledge a business has—which can include things like skills, information, or insight—the better they will be at making decisions, creating products, and providing services. The knowledge-based theory of the firm suggests that businesses should actively look for opportunities to learn new knowledge so that they can become more successful.