Internal diversification strategies and the processes of knowledge creation

The knowledge‐based theory argues that the strategy of internal diversification reflects a process of branching‐out, combination and transformation of the organization’s traditional knowledge bases. From this theory, this paper has the purpose to describe the cycles and phases in the process of knowledge creation that lead to the creation of new knowledge and consequently new product and business in a diversified Spanish firm. From the case study findings a theoretical proposition is derived in order to support the theoretical argument of the theory of knowledge creation.