Overview of Nonaka and Takeuchi’s Theory of Organizational Knowledge Creation
In their 1995 book titled The Knowledge-Creating Company, Nonaka and Takeuchi proposed a theory to explain the phenomenon of organizational knowledge creation. They defined knowledge as “justified true belief” (p. 21) to reflect the context in which knowledge exists. Organizational knowledge creation was defined as “…the capability of a company as a whole to create new knowledge, disseminate it throughout the organization, and embody it in products, services and systems” (p. 3). Nonaka and Takeuchi argued that knowledge is initially created by individuals and that the knowledge created by individuals becomes organizational knowledge through a process described by the theory (see Figure 1). They described two dimensions of organizational knowledge creation—epistemological and ontological. On the epistemological side, the authors recognize two types of knowledge—tacit and explicit. Explicit knowledge is the knowledge that can be written down and relatively easily transferred from one person to the next. Tacit knowledge on the other hand is more difficult to articulate because it often arises out of experience. The ontological dimension ranges from the individual at one end of the range and moves from there to team, group, organization and beyond. “A spiral emerges when the interaction between tacit and explicit knowledge is elevated dynamically from a lower ontological level to higher levels” (Nonaka & Takeuchi, 1995, p. 57). This spiral is created by the four modes of knowledge conversion through which knowledge is converted from one knowledge type to another. The modes of knowledge conversion include socialization (from tacit to tacit knowledge), externalization (from tacit to explicit knowledge), combination (from explicit to explicit knowledge), and internalization (from explicit to tacit knowledge). Their theory also explains how individual knowledge is “amplified” into and throughout the organization through these four modes and under five conditions that enable and promote organizational knowledge creation. These conditions include Intention, Autonomy, Fluctuation and Creative Chaos, Redundancy, and Requisite Variety. Finally, the theory consists of a five-phase organizational knowledge creation process. These five phases are: 1) sharing tacit knowledge, 2) creating concepts, 3) justifying concepts, 4) building an archetype, and 5) cross-leveling knowledge. In developing this theory,