The knowledge-creating company: How Japanese companies create the dynamics of innovation

Japanese companies have become successful because of their skill and expertise at creating organizational knowledge. Organizational knowledge is not only the creation of new knowledge, but also disseminating it throughout the organization, and embodying it in products, services, and systems. Knowledge is the new competitive resource, and its creation and utilization is a dynamic, interactive process. Knowledge is used as the basic unit of analysis to explain firm behavior; a business creates and processes knowledge. Knowledge may be explicit or tacit; this study treats them as complements that form a dynamic relationship. The individual interacts with the organization through knowledge; knowledge creation occurs at the individual, group, and organizational levels. The forms of knowledge interaction (between tacit and explicit, and between individual and firm) produce four major processes of knowledge conversion: from tacit to explicit, explicit to explicit, explicit to tacit, and tacit to tacit. Japanese companies create new knowledge by converting tacit knowledge to explicit knowledge. The book has three goals: to formalize a generic model of organizational knowledge creation, explain why certain Japanese companies have been continuously successful in innovation, and develop a universal model of company management based on convergence of knowledge practices in Japan and the world. First presents a philosophical exposition of knowledge and its application to managemen, then the core concepts of knowledge creation, with four modes of knowledge conversion. The Matsushita company is used to illustrate the process model of organization knowledge creation. The two traditional styles of management (top-down and bottom-up) are shown not to be effective in fostering the dynamic necessary to create organizational knowledge, and a new organization structure considered most conducive to knowledge creation is proposed. (TNM)