Strategic knowledge Management

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1

Strategic

knowledge Management


Term Paper


An Understanding toward Organizational
Knowledge Creation

Theory


Tong, Hui
-
Eng
(東惠瑛)

R48941156


Knowledge

is recognized as a key source for sustaining competitive advantage

(
Kogut,
and Zander, 1992,
Conner and P
rahalad, 1996
; Grant, 1996;

Hansen, et al.,1999)
.
The
widely held
belief that the richest resource of today

s organizations is the knowledge residing
individually and collectively among their employees reflects the importance of
processes for promoting the

creation, sharing, and leveraging of knowledge

(Becerra
-
Fernandez and Sabherwal, 2001)
. In other words,

organization is viewed as a
knowledge
-
creating entity or
systematic
device
(
Nonaka

et al
.
,
2000
;

Grant, 1996; Fang,
2008
)
.
Organizational knowledge cre
ation is the process of making available and
amplifying knowledge created by individuals as well as crystallizing and connecting it
to a
n

organization

s knowledge system
(Nonaka et al., 2006)
.

Over the last 15 years, the
organizational knowledge creation h
as
developed

rapidly in academia and been
broadly diffused in management practice.
T
his
essay summaries the concepts of
organizational knowledge, based on the article of

Organizational Knowledge
Creation Theory: Evolutionary Paths and Future Advances


wri
tten by Nonaka et al.,
2006.



Organizational knowledge Creation Theory


T
wo fundamental elements of organizational knowledge creation theory
:

1.

E
pistemology



K
nowledge is justified true belief
.



Individuals justify the truthfulness of their observations
based on their
observations of the world.



Justification hinges on unique viewpoints, personal sensibility and
experience
(Nonaka and Takeuchi, 1995)



Knowledge is
embodied
in the individual, and is therefore history

2

dependent, context sensitive, spec
ific
(Varela et al, 1991)
.



K
nowledge is the capacity to define a situation and act accordingly
(Stehr, 1992,
1994; von Krogh et al, 2000)
.

K
nowledge
is oriented towards defining a situation or problem so as to act on
it.

(Varela et al, 1991
; Newell and Si
mon 1972
)
.




K
nowledge is explicit and tacit
(Nonaka, 1991)
.


K
nowledge
include
s explicit aspects

(such as language and documentation)
,
and tacit aspects

(such as experience and skills)


2.

K
nowledge
C
onversion





Knowledge

creation as a continuous
process




Knowledge

creation is a journey from

being to becoming


(Nonaka et al., 2006)
.




Individuals
enhances the capacity

to define a situation or problem, and
apply his or her knowledge so as to act and specifically solve the problem.



I
n the organization, knowledge

become


or

expands


through
a four
-
stage
conversion process (

SECI

)
.



Organizational

k
nowle
dge creation as a construct comprising knowledge
conversion by means of externalization, internalization, socialization and
combi
nation
(Nonaka et al., 1994)
.



The concept of

knowledge conversion


raises two important considerations.




Knowledge system





The
knowledge

system captures the organization

s global learning.



The outcome of organization knowledge creation is re
-
cat
egorized and
re
-
contextualized th
is knowledge layer of the organization.



The
knowledge layer is embedded in the

corporate vision

(which
outlin
es
the fields of development for the organization) and the
organizational
culture

(that orients individuals


cho
ices, mindsets, and actions.



Whereas the corporate vision and the organizational culture provide
the knowledge base from which to

tap


tacit knowledge, technology taps
the explicit knowledge in the organization
(Nonaka and Takeuchi, 1995)
.



Th
e kno
wledge system incorporates what is termed

knowledge
management systems

.


Knowledge management systems are often equated with the
information systems
that

assist knowledge conversion or information
processes in the organization.



Social justification




The expansion of knowledge in the organization through conversion
makes justification a social process.


3



Social justification should be understood as a mechanism by which the
organization trades off innovation against cost containment in knowledge
c
reation.



Knowledge creation can be

regarded as moving up through different
organizational level, from the individual to the communities and the larger
networks, and it spans sectional, departmental, divisional and organizational
boundaries
(Swan et al.,

1999)
.



Paths in the Evolution of Organizational Knowledge Creation

Theory and Research


The definition of knowledge and the concept of
knowledge

conversion prompted
academic works on
organization
-
enabling conditions
and
the context for knowledge
creati
on
.

1. Organization
-
Enabling C
onditions and
Ba




A central purpose of organizational knowledge creation theory is to identify
conditions enabling knowledge creation in order to improve innovation and
learning
(Nonaka, 1994; Nonaka and Takeuchi, 1995; von Krogh et al, 2000)



Organizational knowledge c
reation is context dependent.



The context for knowledge creation is

ba

(Nonaka and Konno, 1998)
.




Ba

is a sh
a
red space for emerging relationships.




To participate in
ba

means to become engaged in knowledge creation,
dialogue, adapt to and shape pr
actices, and simultaneously transcend one

s
own limited perspective or boundaries.




Various
ba

characteristics are particularly suited for the conversion of
knowledge
(Nonaka and Konno, 1998)
.


The awareness of a
ba

s particular characteristics and the
ir support enable
successful knowledge creation
(
e.g.
Nonaka and Konno, 1998)
.



Organizational knowledge creation theory epitomizes a dynamic view:

T
he organization might be a well
-
designed engine for information processing,
but more importantly, it assiduo
usly becomes a context in which
knowledge


engine

s fuel


is created.



Relationships among individuals in
ba

impact organizational knowledge

s
synthesis and expansion.



knowledge creation is more effective when relationships exhibit a high
degree of care
for the other (mutual trust, active empathy, access to help,
leniency in judgement, and courage), particularly in the originating
ba

in

4

which individuals share tacit kn
owledge
(von Krogh 1998)
.


Based on the construct of care as a condition for knowledge creation,
Zarraga and Bonache (2005) developed a framework that linked
team
atmosphere

to knowledge transfer and creation. The stu
d
y confirmed that
high
-
care relatio
nships favour both the transfer and creation of knowledge.



Various
types of information systems

support
ba

and enable organizational
knowledge
creation

(e.g. Alavi and Leidner
,

2001).


Chou and Wang (2003) developed and tested a model of organizational
learning mechanisms and organizational information mecha
nisms of
composite effects on organizational knowledge creation. They identified
several ways in which
information systems

can facilitate and support

ba
.


2
.
Knowledge Vision and Activism




The
concept of
ba

highlighted
two critical challenges for organiz
ational
knowledge creation theory.



W
hether or not the organization is successful at creating knowledge hinges
on
a broader set of factors

than merely the knowledge outcome of team
work
(Zarraga & Bonache, 2005; Swan et al., 1999; Grant, 2001; Goodall & R
oberts,
2003)
.


H
ow the organization coordinates and shares knowledge more broadly
matters.



B
a
might have either negative
(Zaleznick
,
1985)
or positive effect on
knowledge creation in groups

(
Nonaka et al.
,
2006)
.



Knowledge activism

(von Krogh et al. 199
7, 2000)



V
arious forms of knowledge activism (e.g. CEO, project manager,
middle
-
level manager)

perform similar roles: they catalyse and
coordinate

knowledge creation and transfer, and communicate future prospects.

(i) As outsiders, knowledge activists pr
ovide
new input f
or knowledge
creation.

knowledge activists
bring different knowledge sets, and introduced



creative abrasion


(Leonard
-
Barton 1995)

that leads to conflicting ideas
but also new possibilities to create knowledge.


(ii)
K
nowledge act
ivists
coordinate

and transfer knowledge, by spanning
the boundaries of teams and communities
(e.g. Quinn et al. 1997, Wenger
2000, Newell et al. 2002)
.


(iii)
K
nowledge activists communicate future prospects and so provide an
overall

directio
n for knowledge




Knowledge
visions


5




Due to the dispersed nature or organizational knowledge creation, the need
for the coordination of teams and knowledge transfer, the theory of
organizational knowledge creation emphasizes the development of

knowledge visions


(
Nonaka & Takeuchi
,
1995
;

v
on Krogh et al.
,
2000
;
Nonaka et

al.
,
2005
; Giroux & Taylor, 2002
)
.




A

knowledge vision specifies

potentiality for being

: the current and
future organizational state, and the broad contours of knowledge that the
organization should seek and cr
eate in order to move from the current to
the future state

(
Nonaka et al.

(
2005
)
.



K
nowledge vision
both
result from
, and inspire, conversations and rhetoric
throughout the organizations, and, as such, they are
important resources to
justify involvement i
n organizational knowledge creation

(

see also
Giroux &
Taylor(2002)

.


3.
Organizational F
orms




Hedlund (1994) prop
o
sed that

heterarchy


is superior to hierarchy as an
organizational form for knowledge creation, based on the

Japanese vs.
Western


fir
m forms dichotomy (
Hedlund & Nonaka
,
1993
;
Osterloh and Frey; 2000
)




H
ypertext organization


granted organizations the high capacity required to
solve coordination problems inherent in knowledge creation

(Nonaka ,1994;
Nanaka & Takeuchi, 1995)

.



H
ypertext organization is a layered structure of activities, including
business system layer, and project system layer. These two layers provide
distinct, purposeful
ba
s

for organizational knowledge creation and allow for
both heterarchical and hierar
chical coordination of these activities.



T
he organizational form that best coordinates and enables knowledge creation
is an amalgamation of three layers working in
parallel
: the business system,
the project system and the knowledge system.

Without

a k
now
ledge system, the organization would fai
l to share
information, face rapidly increasing task complexity, develop an inability to
cope with uncertainty in decision making, or repeat problem
-
solving errors
(e.g.
Lyles & Schwenk, 1992; Huber, 1991; March, 1991; Walsh & Ungson, 1991; Werr &
Stjernbe
rg, 2003)
.



4. Leadership




Leadership

s primary function is to maintain efficiency in the business system
layer, thus enabling knowledge creation in the project system layer, while
shaping, maintaining and securing the knowledge system layer.


6



I
n keeping with the concept of the
heterarchy form, leadership is distributed in
the organization that supports the flow of knowledge from the middle to the
top and down to the rest of the organization
(Nonaka
and

Takeuchi
,

1995)
.




Middle managers promote organizational knowledge by fac
ilitating all four
modes of knowledge conversion.




Leadership is about enabling knowledge creation,



not controlling and
directing it.

Top managers and middle managers are engaged in a cycle of
formulating and reformulating visions that explore
the

new territory


envisioned by the top, while ensuring that the visions and the

old


frontline
realities fit.



The organization is in a state of becoming, moving between cycles of
sense
-
giving from the top and sense
-
making in the middle , to sense
-
gi
ving in
the middle and sense
-
making at the top
(Gioia and Chittipeddi
,

1991)
.


5. The Nature of the Firm and Knowledge Strategy




The Nature of the Firm



Firms differ because they want and strive to differ, and first and foremost,
because they cannot esc
ape the idiosyncrasy of organizational
knowledge

creation.


Due to the intersubjective nature of knowledge, firms differ because
organizational knowledge creation gives rise to unique organizational
knowledge systems.



Org
anizational knowledge
creation theory proposes concepts and
relationships regarding organizational enabling conditions and
ba
,
organizational forms, as well as leadership

that

explain the conundrum of
firm differences
.



Knowledge strategy



The firm

s knowledge system layer r
elates to firm profit, directly
(DeCarolis
and Deeds 1999)

or indirectly
(Droge etal. 2003)

, giving rise to strategic
considerations.



Knowledge assets



K
nowledge assets are the outcomes of knowledge creating processes
through the dialogues and practice
s in

ba
, and are used to provide a
n

analysis of knowledge system layer for strategic purposes
(Nonaka et al.
2000; Nonaka and Toyama 2005)
.




To

counter the problem of

inertia


or

core
-
rigidities

, firm have

creative routines


to develops and accumul
ates knowledge assets of a

7

higher order: knowledge to create knowledge, or
organizational

capability to innovate and self
-
renew.

knowledge visions,
ba
and the knowledge creation process that
takes place in
ba

are part of the firm

s creative routines and

it is nurtured
by leadership
(Nonaka & Toyama 2002, 2005; Nonaka & Reinmoeller 2002)
.



K
nowledge assets are the focus of the firm

s strategic decision making
and resource allocation aimed at aligning it with its changing
environment
(Nonaka et al. 2005)
.

Managers formulate and implement
knowledge strategies to build and utilize knowledge assets.




The

relationship between firm performance and knowledge strategy

has
been confirmed

(Bierly & Chakrabarti, 1996; Choi & Lee ,2002)
.




Knowledge strategies

bui
ld distinctiveness through resource allocation.




Future Advances in Organizational Knowledge Creation Theory


1.

The origin of knowledge




Without
substantial emphasis on this topic, those analyses will be confined to
knowledge
-
in
-

motion reflected in o
rganizational becoming.


2
.

B
a




ba

is
empirically

under
-
explored
.



Little is known about

the many
factors that potentially impact the
effectiveness of ba
across organizations.



--

to identify ways in which management can develop bas to foster knowle
dge
processes both in teams and the organization as a whole


--

to reveal the nature of interaction, relationships and learning that is bestowed
on individuals as they enter, dwell in or exit
ba
.


--

to explore
ba

as an aesthetic space in which groups
aspire to function without
compromising form and beauty.


--

to explore the implications of plural epistemologies for an understanding of
the nature of knowledge, its origin, and the
ba
.




Th
eoretical and empirical wo
r
k is needed to shed more light on
the
controversial issue of
the possibilities of and constraints on the sharing of
tacit knowledge,
or

the process of conversion from tacit to explicit
knowledge

(Gourlay 2002; Tsoukas 2003)



More theoretical elaboration is
needed on

the interrelationships

between
leadership and
ba

in organizational knowledge creation theory.


8



--

What does leadership of, and/or in
ba

entail
?


--

What forms, shapes, energizes, positions, nurtures and transforms them?

--

Is there an empirically robust and conceptually ele
gant theory of

high
q
uality


leadership that proposes specific and mutual interactions between
leadership and
ba
?




A promising line of work would be inductive theorizing in the vein of
Ghoshal and Bartlett (1966
)
,

which

first identified the dimensions
of
leadership, and thereafter the characteristics of leadership quality that
created effective change in an organization.


3.

The orgin of firm



Entrepreneurship research is limited use
d in organizational knowledge creation
theory, and particularly of the

exploration of
the relationship
between the
origin of knowledge and the origin of firms and organization

--

Does the
ba

precede the firm, and if yes, what characterizes the

ba

of
entrepreneurship prior to firm formation?

--

What distinguishes entre
preneurial knowledge creation from knowledge
creation within the boundaries of a firm?

--

What spaces, discourses and stakeholders are imperative for entrepreneur

s
knowledge creation (Steyaert and Katz 2004)
?


--

W
hat is the relationship between entrep
reneurial knowledge creation and the
entrepreneur

s ability to perceive, create and profit from business
opportunities
?


--

What is the knowledge system layer

s impact on the emerging project and
business system layers in the entrepreneurial firm?




--

What is the project system and business system layer

s impact on the
knowledge system layer after the firm has been founded and resources
acquired for business and projects?



4. T
he
dynamics of organizational knowledge creation in organizational
adaptati
on




An important area for future research is not only why organizations succeed in
doing all this, but also why they fail.



Organi
zational failure must be studied along the temporal dimension where
imbalances

can emerge (Probst & Raisch 2005)




(e.g
. creative routines vs. easily manageable assets,



applying existing knowledge assets
vs.

generating its capacity

exploration vs. exploitation, and so on)


9



The organization does not build effective

organizational memories
and
knowledge management
, and the organization’s knowledge system layer
falters

(e.g. Argote 1999)
.



T
he lack of

knowledge vision




The

justification of knowledge creation hinges on the past and current
utility of knowledge, driven by the immediate needs in the business
system

and project system layers. The firm sacrifices economy of patience
for economy of speed (Nonaka and Toyama 2002)
: fast and effective
knowledge use becomes the primary justification criterion.

.



In the long run, it will fail to adapt to a changing envi
ronment, and more
im
portantly, it loses its reason for being.



The study of the balance in organizational knowledge creation is not only a
topic for cross
-
sectional research (e.g. resources allocated to
exploration

vs.
exploitation, the yearly R&D budget
versus investment in operational
improvement), but should also be studied as

processes
.





Firms may

create, lose and restore their balance on the temporal dimension,
and it is important for future research to understand how these processes work.



C
omp
aring successful and unsuccessful organizations will lead to better
predictions regarding the adaptation of organizations
in

the face of internal and
external changes.


Nonaka et al. (2006) argued that u
nde
rstanding relative

success


requires a
retrospect
ive view of the context of
entrepreneurial knowledge creation
,
ba

and

leadership
, and, ultimately,
the very origin of organizational knowledge
. In this sense,
epistemology continues to matter!



Reflections



Nonaka and Takeu
chi (1995) proposed a rich mode
l that conceptualized the activities
of knowledge creation. However, the
y only presented the guidelines that can
purport
edly

facilitate knowledge creation at a high level of generality and did not
provide explicit
g
uidance for organizational actions
.

In or
der to make the knowledge
creation feasible and effective, it is important to identify the possible causality of
knowledge creation.
F
actors that may contribute to knowledge creation and
conversion
need to be identified.
Quantitative empirical test relatin
g Nonaka

s
knowledge creation modes to organizational performance
(e.g.
Lee and Choi, 2003
)

might
verify t
he feasibility of
the model

as well
.


10

Supplementary Readings



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方世杰、方世榮,

「知識管理

觀念架構的建立」,商管科技季刊,第一卷
第三期,頁
355
-
37
4
,民國
89
年。

2.
方世杰,

「知識管理研究之本質:組織知識的統治」,
民國
97
年。

3.

Becerra
-
Fernandez, I. and Sabherwal, J. (2001),

Organizational
k
nowledge
m
anagement: A
c
ontingency
p
erspective
,


Journal of Management Information
Systems, 18(1), pp.23
-
55.

4.
Conner, K.R., and Prahalad, C.K.
(1996),

A resource
-
based theory of
the firm:
knowledge versus opportunism
,


Organization Science, 7
(

5
), pp.
477
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501

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Hansen, M.; Nohria, N.; and Tierney, T.

(1999),

What

s

your
strategy

for
managing knowledge?
,



Ha
r
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Toward
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,
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Choi, B. (2003),

Knowledge Management Enablers, Processes, and
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(199
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A
d
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k
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Organization Science, 5( 1), pp.14
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