Organizational Knowledge Creation: Nonaka's Theory - Essay Example

During the contemporary period, it can be d that organisations operate in a dynamic environment which is constantly changing and for them to remain viable, knowledge creation is a virtue and it has to be constantly managed. As far as international business strategy is concerned, organisations that are serious about their viability ought to put measures in place that are meant to promote knowledge creation and sharing through learning. Against this background, this reflective report seeks to critically evaluate the tenets of international business strategy and how knowledge management can be harnessed for the betterment of the organisation. The theory of organisational knowledge creation that was developed by Nonaka and others is mainly comprised of four stages namely socialisation, externalisation, combination and internalisation (SECI). The socialisation process in this model posits that knowledge conversion begins with the tacit acquisition of tacit knowledge by people who do not have it from people who do ( Nonaka 1991b: 98-9; Nonaka 1994: 19;). In view of this argument, it is my strong conviction that the end result of successful socialisation is a person who has adopted the values of an organisation as his or her own and acts according to them. In as far as international business is concerned, it can be noted that the macro environment in which businesses operate is dynamic and people from diverse backgrounds are often brought into contact where they will be working together. Their interaction which is a social process is very important in as far as knowledge creation is concerned. Externalization is the next step which involves conversion of tacit knowledge into explicit knowledge and is followed by combination which involves systematization of knowledge concepts into systems (Nonaka and Takeuchi 1995:67). Internalization is related to learning or learning by doing (Nonaka et al 1994:330). Usually, knowledge transfer may not be possible in the absence of learning. Thus, managers should put measures in place that treat the employee as a valuable asset to the organisation as a way of motivating them to do their best in as far as creation of new ideas and knowledge are concerned so as to put the organisation in a better position to keep pace with changes especially at international levels. Management strategies ought to be accommodative to different cultural values of different people from different cultural backgrounds since internationalisation of business globalisation promotes the migration of labour from different regions to the others. On top of this, Stonehouse,  Campbell and Hamill (2000) suggest that a global vision is an essential prerequisite to global and transnational strategy. In as far as international business is concerned, knowledge management in organisations is pivotal in order for them to achieve their stated goals. This can be aided by learning which is mainly concerned with creating, acquiring and transforming knowledge and transforming this knowledge to develop new insights as well as knowledge that is helpful to the organisations in a dynamic environment (Andriopoulos & Dawson 2009). It can also be noted that organisations should pay particular attention to continued learning which can lead the organisation to stay ahead of other rival competitors as far as innovation is concerned. Creativity and innovation are the essential elements for organisational learning and additionally, the ability of an organisation to grow is also dependent on the ability to generate new ideas and develop them into feasible innovative practices. Learning is enhanced through training and development meant to enable employees to gain important work related skills, knowledge and techniques. A study conducted by Tsang (2001) about Chinese Family businesses (CFB) illustrates the importance of knowledge creation especially through learning. These businesses are solely run by family members and trusted friends. They do well especially in mainland China where they have adapted to the culture. However, of notable concern is that these businesses face an uphill task as they try to venture into internationalisation. Adapting to the environments obtaining in different parts of the globe requires knowledge creation and transfer of which the CFBs are run solely on very conservative structures. The dictates of international business strategy suggests that there must be flexibility in organisational structures so as to facilitate easy and smooth transfer of knowledge. The other problem with the model of CFBs is that the trusted family members may lack the expertise to dispatch their duties properly in as far as international business is concerned. In contrast, establishing and maintaining trust among the partners in a JV is very crucial for its survival and viability (Beamish and Lupton 2001). It can be noted from the above argument that effective international business strategy is based on the notion that adaptive organisational forms which emphasize on the flexibility to adapt to change can enhance creativity while bureaucratic or rigid structures will inhibit creativity. In my opinion, I think that bureaucratic structures of CFBs unlike joint ventures (JVs) make it a bit difficult for them to operate effectively in international business environments unless they put adaptive structures in place. According to Beamish and Lupton (2001), employees are ought to be incorporated in this broader spectrum so that they can meaningfully contribute to the organisation. It can be noted that the aspect of organisational structure has a bearing in as far as meaningful transfer of knowledge is concerned. Employees should be given the autonomy to be in contact with the to be in touch with the outside environment and interact freely such that they can have mutual understanding where they can share creative and innovative ideas which are beneficial to the organisation as a whole. Young and Thyil (2004) suggest that if the individuals in an organisation are given the opportunity to be part of the decision making process where they can express ideas without fear, there will be likely chances that innovation and creativity will be promoted in the organisation which leads to knowledge creation and transfer. This will give them a positive attitude to become part of the organisation whereby a sense of belonging will be created which enhances knowledge management. The international business environment is constantly changing which requires the continuous creation of knowledge that is mainly concerned with keeping pace with the changes that may be obtaining on the ground. It can be seen that open systems that promote participation and interaction are good recipes for free flow of information which promotes mutual understanding among the employees which in turn influences knowledge transfer. I find the aspect of internalisation a bit confusing given that it is characterised by many processes. Learning itself is a process and it is my belief that it must take precedence with regards to the aspect of knowledge creation. Nonaka’s theory overlooks some of the important concepts such as the level understanding of human beings in different international businesses. However, in view of the above reflection of my own perspective, I can conclude that international business strategy is primarily concerned with creation of knowledge to keep pace with the changes taking place in a dynamic environment in which they operate. References Andriopoulos C & Dawson P. (2009). Managing change, creativity and innovation [ebook] Available at: http://books.google.com.au/books?hl=en&lr=&id=z4pgZlMoD_wC&oi=fnd&pg=PR15&dq=managing+change,+creativity+and+innovation&ots=qfM5NHX0BQ&sig=xf335DOw5Qba8ancu2KkA08LIyM#v=onepage&q&f=false [Accessed 12 November 2010] Bartlett, C.A. and Beamish, p.w. (2011) Transnational management: text, cases, and readings in cross-border management. Sixth edition. New York and London: McGraw-Hill/Irwin. HILL, C.W.L. (2011) International business. Eighth edition. New York and London: McGraw-Hill/Irwin. MINTZBERG, H., LAMPEL, J., QUINN, J.B. and GHOSHAL, S. (2003) The strategy process: concepts, contexts, cases. Second European edition. Harlow: Pearson Education. Nonaka SECI Model (N.D.) Available at: http://editthis.info/jsarmi/Nonaka_SECI_Model [Accessed on 15 November 2010] Nonaka, I. (1991) The Knowledge-Creating Company. Harvard Business Review, November/December, Volume 69, Issue 6. PENG, M.W. (2009) Global business. London: Cengage Learning. PORTER, M.E. (1998) The competitive advantage of nations. Reprint of 1990 edition, with a new introduction. Basingstoke: Palgrave. Schultz et al (2003). Organisational behaviour. CT. Van Schaik Publishers. STACEY, R.D. (2007) Strategic management and organisational dynamics: the challenge of complexity. Fifth edition. Harlow: Pearson Education. Tsang E.W.K (2001)Internationalizing the Family Firm: A Case Study of a Chinese Family Business. Available at http://www.allbusiness.com/management-companies-enterprises/780806-1.html [Accessed 15 November 2010] Young S and Thyil V. Governance, employees and CSR: Integration is the key to unlocking value. Asia Pacific Journal of Human Resources 2009; 47; 167 http://apj.sagepub.com/cgi/content/abstract/47/2/167 [Accessed 13 November 2010] Appendix 1 Global and transnational business:  strategy and management, By George Stonehouse, David Campbell, Jim Hamill The article entitled “Global and transnational business” is mainly concerned with the relationship between globalisation and culture since it has a bearing on the business strategy of transnational organisations. The concept of culture cannot be ignored as far as globalisation is concerned. The globalisation of the market in some cases reflects the culture of the people in the target market on a global scale. With regards to the industry, the culture of the parent company is retained though it might operate in various parts of the globe. There are various cross factors that cause globalisation such as the removal of trade barriers. As noted already, the importance of culture cannot be overemphasised. What is interesting about the reading is that business first internationalises then it will globalise. Improved technology and transport of infrastructure have made movement of people and products between different points relatively easy and the recent development in information and communication technology has improved the globalisation jigsaw. Improved communication technology has made it possible for people to conduct their business globally. Communication technology such as satellite technology has improved the customer needs and awareness of the products and brands across the globe. It is interesting to note that the world has not yet become a global economy since the powerful nations control the means of production while other areas like Africa, Latin America and Asia are marginalised. What is difficult to understand is the concept of globalisation of markets as well as that of industries. It is pretty difficult to have a market with homogenous customers who have the same interests but in fact their needs are keeping on changing. Globalisation of industries suggests that businesses can configure and coordinate their productive value. What is also difficult to understand is the reason why other countries are poor while others are rich while they have equal opportunities to invest in any country across the globe. The tenets of globalisation posit to the effect that the removal of trade barriers have also encouraged the free flow of investment and wealth but what is surprising is that some regions remain marginalised while others can freely roam the globe and can invest anywhere they like. Appendix 2: Managing joint ventures. By Paul W. Beamish and Nathaniel C. Lupton An article entitled “Managing Joint Ventures,” by Paul W. Beamish and Nathaniel C. Lupton (2009) is mainly concerned about outlining and evaluating some of the challenges that are encountered in managing joint ventures. A joint venture (JV) is a company managed by two or more parent companies and there may be challenges in managing such kind of an organisation particularly when it comes to international business strategy where aspects such as management styles as well as business practices may differ among the parties involved. Issues related to management of JVs include the following, performance, knowledge management, internationalization, cultural differences, governance and control as well as valuing a JV. These are somehow interrelated and they have a bearing on the kind of management of the JVs. They also influence the goals of the JV which can only be achievable through effective cooperation. Establishing and maintaining trust among the partners in a JV is very crucial for its survival and viability. To achieve the full benefit of forming a JV, management control should usually be split according to the partners’ functional expertise. What I find most interesting in reading this article is that JVs perform well even in uncertain international markets as a result of the benefits provided by the local partners. The customers in the host country can identify with the company operating locally while the other partners will help with investment. Indeed, if there are measures in place that are meant to ensure that partners adhere to what they have agreed on , JVs can perform very well even among partners coming from different places. It is interesting to note that even different people can have the same purpose and cause regardless of the differences in their backgrounds. What is also interesting about the aspect of JVs is that partners can agree on the same goal despite their cultural differences. What is interesting is that as the globally economy evolve, firms continue to see sense in working together to create value. Neither countries, nor firms, nor managers can go it alone without sacrificing the advantages of good partnerships. What I find difficult to understand in this article is that parent companies engaged in a JV may differ in terms of their objectives and their cultures may also be different. What is difficult to understand in this case is how they will reach a compromise in order to reach a common understanding. Some firms may need to deliberately manipulate the gains to their advantage. Knowledge transfer especially during the current period is a prerequisite for the organisations operating internationally to survive. It may be difficult to facilitate this if there is no trust among the parent firms hence this JV will face different challenges. Thus, the management of JVs is often not an easy task and what is difficult to understand is how these partners reach a compromise and put their differences aside and effectively manage their knowledge which is very important especially with regards to international business strategy. Appendix 3 The knowledge creating company, By Ikujiro Nonaka The article entitled knowledge creating company is about the importance of knowledge creation as a source of long term solution for organisations to gain competitive advantage in an economy that is characterised by uncertainty and ever changing environment. The companies which are quick to create new knowledge in response to the changes obtaining on the ground have a competitive advantage over those which are slow to respond to these changes. In essence, creating new knowledge is about re-creating the company and the individuals to meet a particular vision or ideal. Knowledge creation is not a specialised event but it is treated as a preserve for every worker. This is not limited to a particular department since the notion of the knowledge creating company posits to the effect that every employee has a role to play as far as this concept is concerned in an organisation. A critical analysis of the article shows that the success of an organisation is mainly influenced by its ability to keep pace with changes taking place in the business environment and this is aided by knowledge creation. Examples can be drawn from the cases of Canon as well as many Japanese companies which manufacture cars such as Toyota. The most interesting part of reading this article is that knowledge creation is not only limited to the processing of objective information but it involves taking into consideration highly subjective insights of the individual employees and make them available to be tested and can be used by the company as a whole. The main purpose of this stance is to create a sense of belongingness to the company among the employees. If the members of an organisation are given the autonomy to be part of decision making through knowledge creation, they will develop a sense of belonging to the company which will give it the much needed competitive urge. This requires managers with open, participatory and democratic leadership styles in order to instil commitment among the employees to the company. This is probably and interesting part of the article in that employees may not be that committed to the organisation to simply bring in new ideas that are beneficial to the organisation. There is need for the managers to create an enabling environment so as to be able to facilitate the employees to be flexible as far as creation of new knowledge is concerned. There is also need to make the information readily available to the other members of the organisation where the managers continually challenge the employees to re-examine what they often take for granted. What I find difficult to agree with after reading this article is that not all the employees in an organisation are equal and their levels of motivation differ depending on the positions held. Therefore, positively contributing towards knowledge creation depends on ones level of commitment to the organisation. Others may be reluctant to share their knowledge which may be a bit challenging to have an environment which enables knowledge to be constantly created. It may be difficult to convey the knowledge to the other people who have more authority as far as implementation of the decision made is concerned. For instance, the floor workers may not be in constant touch with the senior management of the organisation and their ideas may be intercepted by the other influential workers to suit their own interests and needs. What I find difficult to understand in this article is the process of knowledge creation. The concepts used to describe the stages involved in the process of knowledge creation such as figurative language, metaphors, analogy as well as model are a bit confusing to understand. Read More