Knowledge management is one of the most popular themes of modern scientific literature. However, in spite of all the published research on the importance of knowledge management, there is little said about knowledge as a direct source of a firm’s competitive advantage. In the past decades, three main hypotheses on the sources of a firm’s competitive advantage were developed; namely, the industrial organization, the resource-based and the capability-based hypotheses. In this paper, we argue that the knowledge-based hypothesis can and should be considered as the fourth tantamount hypothesis on how the sources of the competitive advantage of a firm can be explained.