Nonaka’s Theory of Knowledge Creation
In the previous section, we reviewed the current state of research into organizational learning in Asia outside Japan, and concluded that indigenous Asian perspectives on the field are generally rare or under-developed. The tendency has been for Asia-based researchers to follow research traditions that have been imported from either North America or Europe, rather than developing emic approaches (Meyer, 2006).
There is, however, one notable exception, in the form of the work of Professor Ikujiro Nonaka of Hitotsubashi University, who, over two decades, through decoding the principles that underpin the innovative capability of Japanese organizations (Nonaka, 1988; Takeuchi and Nonaka, 1986) has developed a dynamic theory of knowledge creation in Japanese firms (Ichijo and Nonaka, 2007; Nonaka, 1991, 1994; Nonaka and Konno, 1998; Nonaka and Nishiguchi, 2001; Nonaka and Takeuchi, 1995; Nonaka and Toyama, 2002, 2003, 2005, 2007; Nonaka et al., 2000a, 2000b, 2006; von Krogh, Ichijo and Nonaka, 2000). Nonaka’s research, which draws on data from inside Japan, provides highly credible insights into the dynamics of knowledge creation within a dozen or more large and successful Japanese multinationals across various industries (Nonaka and Takeuchi, 1995). However, doubts remain concerning the universality of the theory (Glisby and Holden, 2003; Gourlay, 2006; Gueldenberg and Helting, 2007; Weir and Hutchings, 2005), and hence about the transferability of Japanese organizational learning and knowledge management practices to other locations (Hong et al., 2006a; Hong et al., 2006b; Collinson and Wilson, 2006), with some critics arguing that the theory is applicable only in the specific context of Japanese culture and institutions (Easterby-Smith, 1998; Glisby and Holden, 2003; Lam, 2003).
It is against this background that we shall review Nonaka’s theory of knowledge creation. First, we shall acknowledge the considerable impact of the theory. Second, we will summarize its core conceptual components, with particular emphasis on the SECI (socialization, externalization, combination, and internationalization) model, and the enabling factors that are embedded at the individual and organizational levels. Third, we will identify the taken-for-granted social and institutional factors underpinning the model. Fourth, with reference to existing critiques, we will assess whether these built-in assumptions imply limitations when attempting to transfer and localize the model to other settings, including other Asian countries.
Impact
The theory, and the extensive body of research upon which it has been based, has inspired a plethora of studies exploring how Japanese organizations might adapt and transfer their home-grown organizational learning and knowledge processing systems to overseas operations, and the impact thereof on organizational performance (Beechler and Bird, 1999; Cutcher-Gershenfeld et al., 1994; Giroud, 2000; Kidd, 1998; Lam, 2003; Whitley et al., 2003). The theory’s influence has also had a broader beneficial impact on the fields of knowledge management and organizational learning, which owe much to Nonaka for the rapid increase in their popularity, research output, and academic legitimacy (Easterby-Smith and Lyles, 2003). Teece sums up Nonaka’s contribution thus, ‘there is no one who in recent years has done more to shape the field of (knowledge) management than Ikujiro Nonaka’ (2008: 6).
Core conceptual components
The theory draws on the ontological ideas of Polanyi (1962), regarding the nature of tacit knowledge and its relation to explicit knowledge. Tacit knowledge is characterized by personal intuitions that arise from close and deep exposure to phenomena that are of compelling interest to the practitioner-cum-inquirer. Knowledge that is discovered in this way is difficult to articulate, and creates an urge for further sense making. Explicit knowledge, by contrast, is readily codified into precise formulae or verbal prescriptions. According to Nonaka and Takeuchi (1995), knowledge creation involves dynamic interplay between the creation of tacit and explicit knowledge, in what they label a ‘knowledge creation spiral’ in the SECI model. The model encompasses four distinct modes of knowledge conversion (see Figure 28.1), each of which entails distinctive knowledge sharing practices, and the interplay between them across individual, group, and organizational levels constitutes the foundation for the dynamic process of knowledge creation (Nonaka, 1991; 1994).
The theory contends that knowledge creation begins with tacit individually-held intuitions, and that the first mode of knowledge conversion is from the tacit knowledge of one individual to the tacit knowledge of one or more others, through socialization. In this mode, an individual employee shares his or her experientially-grounded insights about appropriate actions or conduct with colleagues, by means of demonstration to them or through soliciting their co-participation. For example, within a typical Japanese organization, it is taken for granted that those employees who have previously faced a particular problem and have improvised a workable ad hoc solution to it will offer hands-on help to their peers whenever the latter encounter a similar problem. Also, if a new member needs to learn the ropes, experienced colleagues will comprehensively role model the expected behaviors and norms throughout the day, both inside and outside the formal workplace.
However, tacit knowledge that is held among a few individuals is of limited value to the organization unless it is more widely shared through being made explicit. Thus, the second mode of knowledge conversion is from tacit knowledge to explicit knowledge, through the externalization of ideas or lessons derived from concrete experience, into stories, images, or other narrative forms of expression. For example, Japanese managements tend to use metaphors and analogies to convey otherwise hard-to-communicate ideas to subordinates (Nonaka, 1991). The third, and potentially most important, mode of knowledge conversion is explicit to explicit, or combination, where formally articulated knowledge is shared, merged, modified, and integrated among group members or across a set of groups (Hedlund and Nonaka, 1993). The combination mode serves to synthesize explicit knowledge from diverse sources (Nonaka and Johansson, 1985), and to organize, encapsulate, and codify them into knowledge repositories, maps of processes, and other boundary objects (Carlile, 2002; 2004). The fourth mode entails internalization, where shared understandings and prescriptions, such as newly-agreed routines, which have been developed through earlier modes of knowledge creation, provide a context for individuals to convert the explicit knowledge into embodied, tacit knowledge. Then, as fresh intuitions are triggered through engagement in newly-embodied practices, individual members interact with each other, first in order to work out common, tacit solutions to any further problems that may arise, and then to articulate these explicitly as potential procedural solutions, thus initiating a new spiral of knowledge conversion.
It has been argued that the effective functioning of the SECI knowledge conversion processes depends on the existence of two key enabling factors, one at the level of the individual behavior and the other at the level of organizational culture-cum-systems (von Krogh et al., 2000). At the individual level, enactment of the knowledge creation model may depend on each organizational member assuming a distinctly proactive role in knowledge conversion. For example, the promotion of ‘middle-up-down’ management practice (Nonaka, 1988) and cultivation of ‘knowledge activists’ (von Krogh et al., 1997), who are responsible for coordinating and energizing the knowledge creation efforts throughout the organization, indicate the importance of active contributions by middle-level managers. According to Nonaka, such individuals play a key role in combining the strategic, macro-level, context-free, ‘abstract concepts’ that originate from top-level management with the hands-on, micro-level, context-specific, ‘experientially-grounded’ concepts originating from the shop floor (1988: 9). Active participation by middle managers in open dialog with those both above them and below them in the organizational hierarchy is therefore essential for the development of practical wisdom, or phronesis (Nonaka and Toyama, 2007), through which unique problems arising in particular situations or contexts are solved.
The second key enabling factor is the existence, at the organizational level, of a shared context or ba (Nonaka and Konno, 1998), which is conducive for knowledge to be created, shared, and acted upon. This shared space for action is conceived as ‘the dynamic, generative source of possibilities, providing the “room” or “space” for innovations to emerge’ (Gueldenberg and Helting, 2007: 113). Translated literally as ‘space’ or ‘place’ in English, ba signifies ‘an existential place where participants share context and create new meanings through interactions’ (Nonaka and Toyama, 2003: 7). This place for engagement in knowledge creation and knowledge conversion may be psychological, physical, social, or virtual in nature. For example, Nonaka et al. (2000a) distinguish four types of ba based on the types of interaction and media used in such interactions. Originating ba refers to the occasion, during which individuals share experiences and feelings with each other on a face-to-face basis, whereas exercising ba supports individual knowledge contributions within a virtual space. For group-based and face-to-face interactions, it is necessary to establish a dialogically-based ba to promote open interchanges among participants, while systemizing ba offers a systemic infrastructure for various groups to combine knowledge within a virtual space. It is through participation in and engagement within the various types of ba that the members: (1) develop a shared sense of purpose, (2) transcend their own limited and subjective perspectives, (3) interact with each other, and (4) create new knowledge (Nonaka et al., 2008). In sum, ba provides a nexus of forums and platforms that supports and records a plethora of simultaneous, ongoing, and informal episodes, during which knowledge is shared and dialogs take place openly between people at various levels, and in various functional positions, both inside and outside the organization, thereby facilitating the operation of the SECI knowledge conversion modes.
Taken-for-granted social and institutional factors
Nonaka has drawn substantially and explicitly on the ontological insights of great Western philosophers, such as Aristotle and Polanyi (Gueldenberg and Helting, 2007), but there is also an explicitly Japanese influence, in that the concept of ba derives from the ideas of a Japanese philosopher, Kitaro Nishida.
Perhaps more important are the implicit theoretical assumptions. The two enabling factors explained above, i.e. proactive involvement in knowledge creation and ba, share, as a common foundation, the cultural expectation that everyone employed by the organization, or with an interest in it, will engage in dynamic, open-minded dialog with one another, regardless of differences in their functional backgrounds or position in the organizational hierarchy (Cole, 1992). This spirit of openness can be attributed to the Japanese tradition of designing organizations according to the principles of within-team and between-team cooperation (Abegglen, 1957; Kumazawa, 1996). Production operations are normally conducted in teams, within which each member co-operates with others, whether from the same or from different departments, to solve daily problems, and where recognition of individual contributions and narrow job demarcations are de-emphasized. The assumption that work is conducted in a collaborative manner is evident in the many types of work group, such as quality control (QC) circles, self-managing teams, and kaizen meetings (Cole, 1989). These ubiquitous organizational group settings, whether formal or informal, not only provide the primary context for contributing work, but also constitute powerful socializing vehicles that build and reinforce members’ relationships with other members and with the organization itself. Engagement in group dialogs enables each member to acquire a shared nexus of tacit meanings and assumptions about knowledge creation that support the associated modes of knowledge conversion. We may note here the contrast with the example, cited earlier, of strong resistance to team-based learning in South Korea (Kim, 2003).
Glisby and Holden (2003) have also suggested that a number of other distinctly Japanese cultural and institutional assumptions are embedded in the SECI model. These include: close relationships between partner organizations within the business network, intense employee identification with and commitment to corporate goals and ideals, seniority-based promotion systems, and company-wide employee participation. The following section will identify the major critiques and limitations of the theory.
Critiques and limitations
We shall consider two main critiques of the theory, both of which relate to the distinctly Japanese cultural and institutional assumptions upon which the theory is based. The most commonly mentioned critique of the theory among knowledge management scholars concerns the lack of evidence to support its applicability outside Japan. The second critique, which by implication relates to the first, reflects various degrees of skepticism regarding the possibility of converting tacit knowledge to explicit knowledge.
The first critique focuses on the fact that the exemplary knowledge creation practices reported by Nonaka and colleagues (Nonaka et al., 2008) are all based on studies of the operations of major Japanese multinational corporations on home territory. Findings such as those by Wong (1996), cited earlier, along with the exclusive use of Japan-based studies in the generation of the theory, have raised questions of ‘whether the SECI process is fully transferable to US and European contexts.’(Teece, 2008: xv), and of how Japanese multinational firms and their managers might overcome barriers to the implementation of the SECI process, which could arise when particular socio-cultural factors in the host country are substantially different from those in Japan (Glisby and Holden, 2003; Hong and Snell, 2008; Keys et al., 1998). In the face of this criticism, advocates of the theory, and of the knowledge management practices associated with it, can argue that the theory may still be adaptable to foreign soil, if managements adjust for differences between those features of Japanese culture and society that are factored into the theory, and local cultural assumptions and institutional circumstances. For example, a foreign subsidiary of a Japanese MNC might seek to create its own supportive enterprise context (Hong et al., 2006a), in order to bridge the cultural and institutional gaps between the host and home country environments (Hong and Snell, 2008; Kostova, 1999; Takeuchi, Wakabayashi, and Chen, 2003).
The second critique relates to Nonaka’s emphasis on the role of externalization of tacit knowledge in knowledge creation (Tsoukas, 2003; Tsoukas and Vladimirou, 2001), represented in the proposition that ‘subjective, tacit knowledge held by an individual is externalized into objective, explicit knowledge to be shared and synthesized within the organization, and even beyond’ (Nonaka and Toyama, 2007: 17). This proposition may, at least in part, be attributed to Nonaka’s Asian background (Gueldenberg and Helting, 2007), and even to the social embeddedness of Japanese cultural traditions and organizational forms for handling tacit knowledge (Lam, 1997). Nonaka’s emphasis on the importance of contextualized experience to the knowledge creating firm can best be illustrated by the portrayal of the ‘indwelling’ activities conducted by Japanese employees when handling problems and issues at the workplace (Nonaka et al., 2008: 40).
The assumption that tacit knowledge is converted into explicit knowledge has been criticized on the grounds that people’s knowing in action (Orlikowski, 2002) inevitably entails some tacitly known components, which are present regardless of conscious awareness (Polanyi, 1962). This tacit element of knowledge comprises ‘non-reflectional experiences’ and is ‘the characteristic of our everyday living’ (Gourlay, 2006: 1427), rather like water surrounding fish, thus making it extremely difficult to recognize, articulate, and externalize. Instead of being externalized, tacit knowledge may remain a nexus of meaning that remains a shared but tacit set of assumptions among employees. Although Gueldenberg and Helting note that, ‘tacit knowing refers to the context, field or source from which more explicit forms of knowing evolve’ (2007: 118), they argue that it does not follow from this that the explication of tacit knowledge is a typical consequence; instead it is merely a possibility. Whether explication takes place depends on whether the bearers are both able and willing to engage in the necessary amount of mindful reflection, which may be a rare occurrence. While Jonsson (2007) notes some difficulties of tacit to explicit knowledge conversion but attributes these to linguistic and semantic barriers, Tsoukas (2003) expresses even stronger skepticism, holding that while tacit knowledge can be shared through manifestation or display, it cannot, as such, be converted to explicit knowledge.