Global Applicability of Nonaka’s Knowledge Conversion Theory
As early as 1990s, there has been keen interest on the topic of knowledge especially as regards its creation, management and sharing in organization as well as value development in business. Ikujiro Nonaka and his co-workers developed consistent body of concept that is now known as Knowledge Conversion Theory. This theory is based on four main ideas of knowledge creation namely (1) knowledge creation at individual level, (2) knowledge conversion processes, (3) knowledge creation at organizational level, and (4) shared space for knowledge creation. As explained by Lam (1997, p 23), at individual level, knowledge is created through continuous dialogue between explicit and tacit information. Nonaka proposed four basic processes of knowledge conversion namely externalization, internalization, socialization, and combination. Nonaka and his co-worker further proposed that at the organization level knowledge is created based on spiral driving force and four conversion processes.
The Nonaka knowledge conversion theory was found to have a strong correlation with the success of Japanese companies in the global market. The novelty of this idea and the success of Japanese companies made Nonaka knowledge conversion model became a new significant paradigm of consideration in the dynamics of organizational knowledge. Although Nonaka’s knowledge conversion theory is inspired by the experience of Japanese firms, its model is, to a larger extent, universally applicable to all companies across the globe. This paper investigates the extent to which Nonaka knowledge conversion theory is universally applicable despite being inspired by the success of Japanese firms.
Universal applicability of Nonaka Theory
This discussion starts by considering arguments in support of global applicability of Nonaka’s knowledge conversion theory. There are several arguments that support universal applicability of Nonaka’s knowledge conversion theory as we shall reveal. The first argument for universal applicability of this theory is enhanced by the usual international migration and knowledge transfer phenomenon. With respect to economic contribution of individuals, migrants are largely formulated in terms of skills they have to offer, which is translated in knowledge. Furthermore, within the existing body of research, the focus of migrants has been confined on mobility within transnational corporations. Migration is a universal phenomenon that occurs continuously as people move from one location to another for various purposes in life. The application of Nonaka’s knowledge conversion theory is useful for understanding some precepts of migrant knowledge transfer such as its selectivity and distinction. In addition, it is useful for understanding and managing some barriers to migrant knowledge transfer as well as its implication to firms and individual migrants in a global perspective.
Apparently, it is quiet easy to assume that Nonaka’s knowledge conversion theory applies only to what are recognized as ‘knowledge firms’. In this case, ‘knowledge firms’ are firms that are based on knowledge. The market value of such firms outstrip their conventional asset by far and rest majorly on the size of their intellectual capital. Furthermore, based on their industrial context, it is easy to assume that only Japanese firms are knowledge based while their western counterparts are not. With such assumption, it is easy to argue that Nonaka’s knowledge conversion cannot be applied globally because most firms are not knowledge-based. However, a closer look at all firms on the global perspective reveals that even western firms are knowledge-based just like their Japanese counterparts. This is the case because all firms irrespective of their industrial context and location are in essence knowledge organizations.
Nonaka’s theory of knowledge conversion is based on the principles of strategic adaptation and continuous change in an organization. As illustrated by Brown and Duguid (1998, p 33), strategic adaptation and continuous change is a typical feature of all firms irrespective of their industrial context and location. In essence, all firms whether western or Japanese are governed by the principle of strategic adaptation and continuous change. This implies that Nonaka’s theory of knowledge conversion can be applied with equal measure of success to western firms in like manner to the Japanese firms because their structure is based on the same principle of continuous change and strategic adaptation. The managerial actions combined with strategic choices paly crucial role in shaping the organizational change and facilitating knowledge transfer.
Despite the marked differences in industrial context between western firms and Japanese firms, there are some overlapping approaches which pave way for the possible universal application of Nonaka’s knowledge conversion theory. For instance, the overlapping approach between the two is purely dependent on the intensiveness of knowledge sharing and human communication-based network. In such case, the application of this theory allows firms to achieve project coordination through mutual adjustments as well as regular reciprocal communications which leads to rapidly exchange of information and knowledge. This platform is less dependent on rigorous review and formal planning thus can be applied by various industries across the globe.
While discussing the extent of universal applicability of Nonaka’s theory, it is essential to consider that all firms have knowledge-based view irrespective of their nature of business and location across the global. The knowledge-based view of firms makes Nonaka’s knowledge conversion theory more applicable in the global arena because they have the same platform. As illustrated by Andreeva and Ikhilchik (2011, p 13), all firms do better in knowledge generation and transfers than markets, an essential feature that is enhanced by the Nonaka’s theory. Because all firms, in this perspective, can be categorized as knowledge organization, Nonaka’s knowledge conversion theory is to greater extent applicable to all firms universally. The theory can be used to explain and enhance formal transfer of knowledge within firms at the global level simply because they all have knowledge-based view.
For several years since its intervention, questions have been asked concerning the ability of Nonaka’s knowledge conversion theory to work under different cultural context. Answering this question appropriately would also improve our understanding of whether the theory can be applied universally. First, it is important to consider the two major different cultural contexts that Nonaka’s theory might be exposed to – the western and the Japanese culture. The Japanese culture or tradition is concerned about the whole personality by looking at practical values experienced rather than intellectual abstractions. In essence, the Japanese culture tends to enhance the bodily experience by imitating moves of the master to enhance learning and knowledge transfer. This is quite different from the western culture which is based on Cartesian dualism, that is, the separation between subject and object, the known and the knower and so on. In essence, the western culture assumes that true knowledge can only be obtained by the mind, which is quite different from the Japanese culture. These differences have enhanced the thinking that Nonaka’s knowledge conversion theory only works for the Japanese firms. However, despite the different cultural setting, Nonaka’s theory can work efficiently for firms based in western culture. This is because, through practice, the western firms can subsequently adopt the Japanese cultural setting thus enhancing the applicability of Nonaka’s knowledge conversion theory. In addition, the western culture is not static and firms are not destined to adhere with them forever.
Another important factor to consider when determining whether Nonaka’s knowledge conversion theory can be applied universally is the industrial context. Most people who say that Nonaka’s theory is not applicable universally argue that it was developed and designed to suit Japanese industrial context, which is quite different from the rest of the world. They use this basis to further the argument that Nonaka’s knowledge conversion theory can only work effectively in Japanese firms and not the rest of the world. However, despite the global location, there are few differences between Japanese firms and western firms in terms of industrial context. The industrial setting in Japanese and western countries are relatively similar thus it can be confidently concluded that since Nonaka’s theory has successfully worked for Japanese firms, it can be equally applied to western firms and achieve equal measure of success. With this perspective in mind, it is obvious that Nonaka’s theory is applicable globally to all types of firms irrespective of their location and industrial context.
New researches on global cooperative ventures have highlighted significant importance of knowledge structure and work system in every industry, not only within the Japanese but also the western industrial context. Knowledge structure of the firm directly influences its success in the market. Frost (2014, p 21) stated that Nonaka’s theory has been highly successfully in Japanese firms because it focuses on enhancing knowledge structure as well as work system. Independent analysis of both western and Japanese industrial context indicates all firms need to improve their knowledge structure. When it comes to knowledge structure and transfer, both firms use the same structure and content. This similarity is a clear indication that Nonaka’s knowledge conversion theory is not only application to Japanese firms but also western firms thus can be applied to all firms universally without any limitation.
Based on empirical analysis, both the Japanese firms and western firms have illustrated significant ability to socially imbed the nature of knowledge that can potentially impede collaboration of work and transfer of knowledge across the border. A research by McLean (2004, p 8) that was designed to analyze the main differences of friction points between Japanese and British firms indicated that both organizations hold the dominant form of knowledge, that is, the way in which knowledge is structured, transmitted and utilized as well as its tacit ability. These similarities further affirm our arguments that, since Nonaka’s knowledge conversion theory has successfully worked for Japanese firms, it can well be applied to western firms and achieve equal measure of success rate.
The nature and structure of the labor market can be used to further the argument that Nonaka’s knowledge conversion theory is applicable globally beyond the limits of Japanese firms only. In the global economy, the professional model of knowledge formation and transfer is commonly associated with a typical external labor market that put significance to acquisition of standardized and general knowledge. The primary method that is used to achieve this is skill formation either through training or formal education. As examined by Gourlay (2004, p 20), knowledge which is acquired through formal training tends to be more theoretical and abstract in nature. In addition, such knowledge is standardized and developed to fit best practice in the profession rather than meet specific requirements of the company. This method has been successfully used to transfer knowledge across the globe.
On the contrary, for Nonaka’s theory to be applied globally, firm’s knowledge must be easily transferred and shared without any limitation. However, despite this requirement for global transferability of knowledge, a lot of firm’s knowledge is characterized by social embeddedness. Following this consideration, Lam (2004, p 7) argued that a large part of firm’s knowledge is bound within a specific context and is tacit in nature and highly specific to the firm in consideration. With this argument, it is obvious that there are limits to which firms can effectively articulate and transfer knowledge. Because some knowledge is specific to firms and tacit in nature, they cannot be transferred to other firms, especially those falling within different industrial context. However how small its effects might seem, this argument creates potential limit to the universal applicability of Nonaka’s knowledge conversion theory.
For Nonaka’s knowledge conversion theory to be applicable at the global level, all forms of firm’s knowledge must be migratory in nature. Another argument proposed by Tung (2008, p 26) is that some knowledge being created by firms are not migratory in nature thus does not conform to the principles of Nonaka’s theory of knowledge conversion. He used the term ‘embedded knowledge’ to describe all forms of firm’s knowledge which cannot be transferred easily. He argues that some knowledge that is being created by firms around the world cannot be migrated simply because they are embedded within social interactions which are highly complex. In addition the highly complex team relationships in most organizations also limit the migratory nature of most knowledge being created by firms around the world. Embedded knowledge created by firms across the world is extremely sticky and cannot be easily encapsulated into formulas or various forms of documents such as blueprints and manuals.
Most organizations around the world are depicted as bundles of embodied knowledge which is characterized by specific procedures, technologies, hierarchical relationships as well as organizational structures thus making the transfer of knowledge slow and limited. With these characteristics, it is not easy to transfer complete knowledge from one firm to another especially when they come from different industrial contexts thus the universal applicability of Nonaka’s knowledge conversion theory is limited. A study by Prasad and Prasad (2013, p 34) indicated that the knowledge architecture of most organization have specific systematic structure that suit their own firm’s activities. This implies that different firms have different knowledge architecture. As illustrated by Freeman (2010, p 11), the differences in knowledge architecture between different firms directly inhibit knowledge transfer thereby limiting the ability to apply Nonaka’s theory globally.
There are some differences between Japanese and western firms which further the argument that Nonaka’s knowledge conversion cannot be applied to all firms globally. For instance, unlike their western counterparts, Japanese firms strongly emphasize on the use of multifunctional project teams in their daily operation. Such functional teams are designed to have high degree of cross-functional knowledge integrated in the product development. Such cross-functional knowledge integration is significantly lacking in the western culture (Williams, 2007, p 7). As such, the structure of Japanese firms in which the Nonaka model was designed is quite different from the western firms thus it cannot be effectively applied across board.
The structure and industrial context of Japanese firms requires a little flexibility in the division of labor as well as the flow and transfer of knowledge across all function, a key element which is apparently missing in the western firms especially those based on the British industrial context. In particular, based on their industrial context, western firms are designed to require flexibility in the division of labor and transfer and flow of knowledge across all functions. This would be battling because the fundamental principles of Nonaka’s theory require limited flexibility in the division of labor and flow of knowledge across all functions thus making its applicability in the western industries problematic.
As explained by Lam (2000, p 15), the context of Japanese firms differs significantly with regards to approaches that companies may employ. For instance, the Japanese firms employ integrated approach in their operation while the western firms employ sequential approach. As illustrated by Brown and Duguid (1991, p 43), the sequential approach employed by the western firms is quite different and in contrast with the integrated approach employed by the Japanese. The question that arises is whether the Nonaka’s knowledge conversion theory can work effectively in the sequential approach as it does in the integrated approach. With this in mind, some argues that the design of Nonaka’s knowledge conversion theory best suits the integrated approach rather than the sequential approach which is employed mostly by western firms. In the sequential approach, a firm organizes product development in line with functional specialization and clear division of labor.
Due to the contrasting knowledge organization and structure, Japanese firms have adopted a method of coordination which is quite different from the rest of the world. This is also exemplified in different methods of knowledge transmission that is used by Japanese firms through the project life cycles. These differences in the method of knowledge transmission and coordination are other strong basis for the argument that Nonaka’s knowledge conversion theory cannot be applied to other firms except the Japanese’s. In the western firms, information and knowledge that is required for each stage of product development is discrete and resides with individuals that hold specific functions. This kind of structure is not compatible with the principles of Nonaka’s knowledge conversion theory because it requires complete interaction of every stage (Nonaka, 2002, p 10).
The use of Nonaka’s knowledge conversion theory in analysis of knowledge transfer amongst the migrant group is informed by three main premises namely the importance of examining migration cycles, the value of adopting knowledge and skills, and lastly the need for considering extra-firm, intra-firm, and inter-firm migration mobility platform. The significance of this approach is widely acknowledged in the modern economies since it leads to deeper understanding of knowledge transfer and exchange in the firm’s activities. As explained by Williams (2007, p 7), the ultimate sustainable and competitive advantage of Nonaka’s knowledge conversion theory is the ability to learn and transfer that learning quickly across other component in the business sphere – this characteristic makes the Nonaka’s knowledge conversion theory most applicable universally.
At the global level, a wide variety of vehicles of knowledge transfer and learning is needed and the Nonaka theory focuses on the social suitability and importance of localized as compared to establishment of distanced or virtual relationships. Ideally, Nonaka’s theory would play significant role in enhancing and effecting localized knowledge transfers which makes it more applicable in the global arena. One possible major application of Nonaka’s theory is the modeling of knowledge transfers amongst migrant group especially where international borders acts as huge source of cultural and economic barriers. Alternative, it can be used globally where corporeal proximity and coherence are very essential in tact knowledge transfer as well as enhancing learning process (Nonaka & Takeuchi, 1985, p 29).
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