Theory of Organizational

Knowledge Creation

- Sahil Arora and Udhbhav Misra

Organizational Knowledge Creation
• Creating organizational knowledge is as much
about bodily experience and trial and error as
it is about mental modeling and learning from
others.
• The capability of a company as a whole to
create new knowledge, disseminate it
throughout the company, and embody it in
products, services and systems is the root of
continuous competitive advantage.
 Knowledge
• Business organizations don’t just process
knowledge, they create it as well.
• Knowledge creation by the business
organization has been virtually neglected in
management studies.
• Explicit knowledge and tacit knowledge are
the basic building blocks in a complementary
continuous dynamic interaction/conversion.
 Human Knowledge
• Explicit knowledge can be articulated in formal
language including grammatical statements,
mathematical expressions, specifications,
manuals and so forth.
• Tacit knowledge is hard to articulate with
formal language. It is personal knowledge
embedded in individual experience and it
involves intangible factors such as personal
belief, perspective and the value system.
 Tacit Knowledge
• Knowledge expressed in words and numbers is
only the tip of the iceberg. Tacit knowledge is not
easily visible and expressible. It is highly personal
and hard to formalize, making it difficult to
communicate and share with others.
• Subjective insights, intuitions, and hunches fall
into tacit knowledge, which is deeply rooted in
individual action and experience, as well as in the
ideals, values and emotions he or she embraces.
 Tacit Knowledge
• Two Dimensions of Tacit Knowledge-
The technical dimension, which contains the kind of
informal and hard-to-pin-down skills or crafts captured
in the term “know-how.” A master craftsman is often
unable to articulate what he knows.
The cognitive dimension, which consists of schemata
(cognitive schemes), mental models, beliefs, and
perceptions so ingrained that we take them for granted.
It reflects our image of reality (what is and ought to be)
 Explicit/Tacit
• Distinctions –
The distinction between explicit and tacit is key to
understanding the difference between Western
and Japanese approaches to knowledge.
Explicit knowledge can be processed by
computer, but the subjective and intuitive
nature of tacit knowledge makes it difficult to
process in any systematic or logical manner.
 Explicit/Tacit
• Distinctions –
For tacit knowledge to be communicated and
shared within an organization, it has to be
converted into words and numbers that
anyone can understand. It is during this time
of conversion, from tacit to explicit, and back
again into tacit, that organizational knowledge
is created.
 Tacit Implications
• Whole different view of the organization – Not
as a machine for processing information, but
as a living organism.
• Whole different view of innovation – Not a
putting together of diverse information, but a
highly individual process of personal and
organizational selfrenewal – ideals not ideas. –
The essence of innovation is to re-create the
world according to a particular ideal or vision.
 Tacit Implications
• Whole different view of knowledge –
Not acquiring, teaching, training. – But less
formal – metaphors, pictures, experiences,
mental and physical transitions.
 Japanese Companies
• Organizational knowledge creation is the key to the
distinctive ways that Japanese companies innovate.
They are especially good at bringing about
innovation continuously, incrementally, and spirally.
• Their success is not due to access to cheap capital;
or manufacturing prowess; or cooperative
relationships with customers, suppliers, and
government agencies; or lifetime employment and
seniority systems – though these factors are
important.
 (Western) Epistemology (Knowledge)
Cartesian Split: –
• Subject (the knower) and Object (the known)
• Mind and body/matter/nature
And opposing traditions: –
• Rationalism-
True knowledge is not the product of sensory
experience but some ideal mental process.
• Empiricism-
“The only source of knowledge is sensory experience.”
 (Eastern) Epistemology (Knowledge)
• Oneness of humanity and nature
– Think visually and manipulate tangible images
– Time as a continuous flow of “present”
• Oneness of body and mind
– Wisdom is acquired from the perspective of the entire
personality
– Knowledge is integrated into one’s personal character
• Oneness of self and other
– Exist among others harmoniously as a collective self
– You and I are two parts of a whole
 Organizational Culture
• Studies have shown the importance of
organizational values, meanings, commitments,
symbols and beliefs, and recognized that the
organization as a shared meaning system, can
learn, change itself, and evolve over time.
• But these studies have not paid enough attention
to the potential and creativity of human beings.
The human being is seen as an information
processor, not as an information creator.
 Organizational Culture
• A major target for research in organizations
today is to understand how organizations
acquire new products, new methods of
manufacture and marketing, and new
organizational forms.
• A more fundamental need is to understand
how organizations create new knowledge that
makes such creations possible.
 Knowledge
• Knowledge (unlike information) is a function
of: “a particular stance, perspective, or
intention.”
• Knowledge is anchored in: “the beliefs and
commitment of its holder.”
• Knowledge (unlike information) is always: “to
some end.”
• Knowledge is: “essentially related to action.”
 Knowledge Conversion
• Westerners tend to emphasize explicit knowledge,
Japanese tend to stress implicit, but tacit and
explicit are mutually complementary entities.
• They interact with and interchange into each
other in the creative activities of human beings.
• Knowledge is created and expanded through
social interaction between tacit knowledge and
explicit knowledge.
• This interaction is called Knowledge Conversion.
Four Modes of Knowledge Conversion
Thank You!