Knowledge Management and Creation in Organizations


Knowledge is now seems to be the significant to organization success where organization able to secure its competitive advantage and competent to achieve sustainable superior performance. As pointed out in Migliarese and Verteramo (2005) article based on Alvesson (1995), Drucker (1988) Nonaka and Takeuchi (1995), Prusak (1997), many authors agreed that this competitive advantage relies on the ability to create new knowledge, to spread it throughout the organization and also to express that knowledge in products, services and systems.

Knowledge creation also should be important part in any business strategy as this has agreed by many executives (Migliarese and Verteramo 2005). While organizational capability to create knowledge is the most important source of organization to sustain its competitive advantage (Junnakar, 1997; Nonaka et al., 2000; Parent et al., 2000). While organizational knowledge creation, need to be understood as a process that organizationally increases by individuals and develops it as a part of the knowledge network of the organization (Nonaka and Takeuchi, 1995). Tacit and explicit knowledge are another crucial element that involved in the creating of knowledge. Tacit knowledge is important in creating knowledge in organization where logically this knowledge is created only by individuals. Nowadays, technology is crucial element that contributes to the creating of knowledge; however, knowledge management is not a technology. Technology is only a platform that enabled the activities of creation and people is the one who produce the knowledge.

Knowledge Management Concept

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There are numerous of knowledge management concept has been defined by various researchers and practitioners and there is no limitation to defined it. The concept of knowledge management in today's globalization world has brought to widen aspect, where it applies based on the circumstances of certain place, time as well as space. According to Awad and Ghaziri (2001) in their book of Knowledge Management, considered the knowledge management concept as a new interdisciplinary business model that has knowledge within the framework of an organization as its focus. Knowledge management is not only emphasizes on specific area of subject but it also covers all aspect of life comprising business, economic, psychology and information management. Becerra-Fernandez et al. (2004) have defined knowledge management as doing what is needed to get the most out of knowledge resources. Based on Awad and Ghaziri (2001) as taken from Malhotra (1999) stated that knowledge management provides to the serious issues of organizational adaption, survival and competence in the aspect of progressively discontinuous environmental. Basically, it represents organizational processes that seek synergistic combination of data and information processing capacity of information technology and the creative and innovative capacity of human beings.

In addition, knowledge management is seen as a repository where the composed of facts and information that can be stored, retrieved and transferred in order to run the business organization effectively. Besides, knowledge management also is more than getting the right information to the right individual at the right time. In upon of views by Nonaka and Takeuchi (1995), people do not only receive new knowledge passively but they interpret the knowledge actively in order to fit with their own situation and perspectives. Further, knowledge management assists people to share and put information in action in order to achieve the organization goals. However, Bodhanya (2008) argued that knowledge management cannot be considered as important for organizational success in the contemporary world because this may only be the case under certain conditions.

Knowledge management is really about the relationships between people, process and technology in overlapping parts (Figure 1). In order to manage knowledge, organization must first list its people, systems and decisions as well. Even though there are still have yet to agree the definition on knowledge management from researchers and practitioners (Awad and Ghaziri, 2001), each definition of knowledge management should include the above three important elements as these elements enable the organization to position itself and has positive impact on business processes.



Figure 1: Overlapping human, organizational and technological factors of KM

Source: Awad, E.M. & Ghaziri, H. M. Knowledge Management. International ed. Upper Saddle River, New Jersey: Prentice Hall, 2004

Knowledge Creation

Sabel (1994) as cited by Diego Puga and Daniel Trefler (2002) pointed out that knowledge creation is about shifting products and processes in theoretically ways of unpredictable. While as Soo, Divenney and Midgley (1999) have stated that knowledge creation is broadly known to be strategically essential for both organizational learning and innovation. In a different views, Nonaka and Takeuchi (1995) said knowledge creation is basically depends on the mobilization and conversion of tacit knowledge. In the other hand, knowledge can be created through the process of tacit knowledge transfer as well as the conversion of tacit knowledge to explicit knowledge. In addition, Choi and Lee (2002) referred to the views of Bloodgood and Salibury (2001) and Bohn (1994) said that, the continuous process that involves individuals and group of people within the organization and between organization share tacit and explicit knowledge is also known as knowledge creation. While for Ratcheva (2003) new knowledge creation is collectively constructed and embedded in the organising practices of virtual teams' activities.

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As written by Balestrin, Vargas and Fayard (2008) in their articles that taken from Nonaka and Takeuchi (1995), knowledge creation is considered as a process of knowledge conversion. Knowledge conversion is the interaction between tacit and explicit knowledge in the innovative of human beings activities where they are not isolated entities but complimentary entities. Nonaka and Takeuchi (1995) have introduced a model of knowledge creation known as SECI model that involved socialization, externalization, combination and internalization. SECI process will be function effectively with the support of proper context (Balestrin, Vargas and Fayard 2008) that covers the aspect of time, space and relationship between people in the organization.

However, for Awad and Ghaziri (2001), the knowledge creation is related to the updated knowledge which is based on the experiences in a certain problem area and utilizes the new knowledge in combination with initial knowledge in order to update the knowledge for the purpose of knowledge sharing. In different point of views by Lehaney et al. (2004), knowledge creation is a key factor in competitiveness in a service economy where the creation of new ideas, new methods to market the existing products, upgraded old products and brand new products are all based on idea.

Two Dimensions of Knowledge Creation

According to Daud et al. (2008), knowledge creation has two dimensions, which are epistemological and ontological. The epistemological knowledge creation dimension comprises of both tacit and explicit knowledge. As mentioned in the book of The Knowledge Creating Company by Nonaka and Takeuchi (1995), tacit knowledge is personal where it is difficult to formalize and communicate as it basically in people's mind such as ideas and thought while explicit knowledge is a knowledge that is transmittable in formal with systematic language. However Daud et al. (2008) defined explicit knowledge as a knowledge that is described in symbols such as mathematical formula and statements. The interaction between tacit and explicit knowledge is presented in the Nonaka and Takeuchi SECI model. This model is basically shows the relationship between tacit and explicit knowledge with different modes of knowledge conversion in order to develop important information and knowledge as for the business purposes.

In ontological knowledge creation dimension, it emphasizes more on the different level of knowledge creating entities which involves individual, group, organization and inter-organization (Daud et al., 2008). The concept of ontological dimension can be portrayed that it is impossible to create knowledge without a people where knowledge only can be created by them. Organization also need to have a clear understanding towards the created knowledge and should constitute it as a part of knowledge network of the organization.

Knowledge Creation and Four Modes of Knowledge Conversion

Based on the assumption that knowledge is created through the collaboration between tacit and explicit knowledge made by Nonaka and Takeuchi (1995), allows them to produce model of SECI modes. These four different modes were presented in the simple square box (Figure 2) and the conversion of knowledge consists of socialization (tacit knowledge to tacit knowledge), externalization (tacit knowledge to explicit knowledge), combination (explicit knowledge to explicit knowledge) and internalization (explicit knowledge to tacit knowledge).

In socialization modes, knowledge is created through the interaction between people and mental models or knowledge sharing among team members in the organizations such as team meetings and discussion. As stated by Nonaka and Takeuchi (1995), individual can acquire tacit knowledge without language. While the concept of combination modes refer to the process of socialization where it merges different type of explicit knowledge that is produced by individual. This mode will be take place when individuals exchange and merge knowledge such as through meetings and phone conversation. According to Nonaka and Takeuchi (1995), the reconfiguring of existing information through the sorting, adding, recategorizing and recontextualizing of explicit knowledge can assist in the production of new knowledge.

Another two modes is the knowledge conversion process of both tacit to explicit communication also referred to as externalization and internalization modes. Externalization mode is very important in articulating among team through dialogue such as formal meeting and brainstorming. The process helps the team members to articulate the hidden tacit knowledge. This mode is different with internalization mode where it related to "learning by doing" such as a report and deducing ideas or taking constructive action.

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Tacit Knowledge

Tacit Knowledge

Explicit Knowledge

Explicit Knowledge

Figure 2: Conversion of knowledge between tacit and explicit forms

Source: Nonaka and Takeuchi (1995)

Principally, in order to ensure the SECI process occurs effectively, Balestrin et al., (2008) said a proper context is required. This proper context referred to the concept of "ba" that developed by Nonaka and Konno (1998). The ba concept is originally created by Kitaro Nishida (Nonaka and Konno, 1998) which means multi context place (Kivijarvi, 2008). According to Nonaka, Toyama and Konno (2001, p. 22) ba can be defined as "a shared context in which knowledge is shared, created and utilize". Each ba in ba concept supports a particular mode of knowledge conversion in the SECI process (Nonaka and Konno, 1998; Balestrin et al., 2008) as represented in Figure 2. This topic of ba concept will be explained further in the next topic.

Knowledge Creation and the Characteristic of the Four Types of "Ba"

According to Nonaka and Konno (1998), ba concept consists of four types of elements namely originating ba, interacting ba, cyber ba and exercising ba. While, Nonaka et al., (2002) have categorized it with different name of ba, there are originating ba, dialoguing ba, systemitizing ba and exercising ba. However, both opinions have similar concept. Each ba supports a particular mode of SECI model (Nonaka and Konno, 1998; Nonaka et al., 2002) and this lead to increase the speed of knowledge creation within the organization (Nonaka and Konno, 1998). For John and Cook (2001), it is very important to understand the characteristics of ba with the relationship of knowledge creation modes (SECI modes) to enhance organizational knowledge. Within a given perspective, this article will be followed the terms created by Nonaka et al. (2002).

Figure 3: Types of Ba

Source: Nonaka, Toyama and Konno (2002) taken from Balestrin et al. (2008)

Originating ba is the beginning of the process of knowledge creation where it involves socialization mode (SECI model). Originating ba is the situation where individuals share their feelings, emotions, experiences and mental models. This can be achieved through the face to face interaction such as social gatherings and informal meetings (Trips and visits). Dialoguing ba is the second phase of ba concept where it refers to the situation where dialogue is a key to the conversion between people. This ba supports the conversion and articulation of tacit knowledge into a more external form. This means, individuals share their experiences and abilities, and finally transform it into common terms and concepts. While systematizing ba is the situation where it offers a context that combine explicit knowledge with the existing knowledge in the organization. For exercising ba, it allows the knowledge that has been socialized, externalized and systematized to be interpreted again or in the other hand it offers a context for the internalization of the knowledge again.

Ba concept can be applied in the organization where it will guide an assist organization in analysing valuable basis for knowledge creation. As mentioned by Nonaka and Konnon (1998) awareness of different categories of ba can enable successful support of knowledge creation.

Case Studies: Knowledge Creation in Organization

This section will be presented one case studies about knowledge creation in the organization with the adaption of ba concept.

Knowledge creation within the AGIVEST network

Association of Rio Grande do Sul (AGIVEST) is a clothing industry that is located in southern Brazil. Based on the case study done in this small firm network, it was found out that majority knowledge is created from the information and knowledge sharing through the interaction between people in the organization. And this knowledge sharing occurs informally between the businessmen. Besides, several spaces in which this factor takes place in the network were identified. It was discovered that the effective process of knowledge creation in the AGIVEST that supported by the different types of ba concept lead to the creation of valuable knowledge assets in order to develop value and competitive differential for the organization. Various types of ba were identified and each type of ba identified works as different situation that promotes an effective platform as to make knowledge creation easier between the network firms.

Based on the findings, there are 7 (seven) types of ba have been identified which consist of meetings at firms, assemblies, social gatherings, trips and visits to fairs, courses and lectures, strategic planning and electronic space. All the types of ba have been categorized according to respective ba as represented in Figure 4 below.

As can be seen in the Figure 4, visits to factories, trips and visits to fairs and social gatherings and informal meetings were group under originating ba. As discussed above originating ba is a platform for individual to socialize with others through face to face interaction which they can share their feelings as well as experiences. In AGIVEST, the visits by businessmen between network industries assist them to identify enhancements of their business in the aspect of production processes, technologies and other production concepts. Through the visits and social gatherings also help them to strengthen the relationship between industries and increase the trustworthiness among networks. In fact, AGIVEST businessmen obtained chances to know the other experiences and cooperate together on the trends and challenges as well.

Figure 3: Types of Ba in the AGIVEST

Source: Balestrin et al. (2008)

While in dialoguing ba, assist AGIVEST in to develop a good strategy in order to ensure their business stay competitive with others. It also helps in structuring their best network strategy planning as it were participated by all network businessmen. Through formal assemblies, they can take an action based on the planning that has been structured at collective decision making process in order to achieve its business goals and objectives.

Electronic communication and courses and lectures occur under the systematizing ba. This stage helps the businessmen to share their knowledge that has been received from the previous stage of ba. As stated by Henderson and Sussman (1997), computer mediated communication may lead to the development quality knowledge creation through forum, and sharing beliefs, in order to confirming consensual interpretation and allowing expression of new ideas. However, limitation on it ensued in AGIVEST due to the systematization resources for knowledge was fragile and deficient, mainly in the aspect of non-existence of use of IT system. Finally, exercising ba was taken place as to produce new management concept and new production process.

In short, by applying the ba concept, it helps the AGIVEST in observing the interaction between their networks that lead to the creation of knowledge. From the collected findings, it was discovered that most of the knowledge creation occurred in the AGIVEST was resulted from the informal communication between the businessmen. However, this evidence is not actually a definitive theory but it purposes to encourage further research concerning on knowledge creation and small firm network in the academic community.


As conclusion, many different types of knowledge can be created within the organization. Basically knowledge creation occurs in the organization is resulted from the interaction between people in the organization, and then this knowledge is captured and share among them for the purpose of business development. According to Ratcheva (2003), the creation of new knowledge is socially embedded in interaction and communication practices. She also said that new knowledge creation processes in virtual partnership exist in in the networks of professionals and the interaction and communication forms and rules established amongst team members decide how knowledge is gathered.

Every individual in organization need to participate in the process of knowledge creation as this will lead to produce good answer to the presence problem. This method is very useful because by sharing knowledge whether in both formal and informal meetings can develop new management concept as well as better solutions for specific problems as these meetings were participated by various levels of people in the organization. All of them may contribute an idea based on their experiences at different level of job environments. However, according to Roth (2003) it is a challenge for all organizations to enhance effective knowledge creation within and between diverse knowledge areas, as significant in the deep professional knowledge area as in the cross-functional team area or other communities of practice.

In reality, most of the existing study done on knowledge creation is emphasizes on the source and state of knowledge (John and Cook, 2001). Further study on this topic is needed to identify more comprehensive approach towards the creation of organizational knowledge, where the successful process of knowledge creation is resulted from the much cooperation and knowledge sharing between many organizations. Based on John and Cook (2001), research is needed where it must be beyond the source and state of knowledge in order to consider the conditions that enable knowledge creation.