Knowledge Emergence: Social, Technical, and Evolutionary Dimensions of Knowledge Creation Ikujiro Nonaka Toshihiro Nishiguchi, Editors OXFORD UNIVERSITY PRESS KNOWLEDGE EMERGENCE This page intentionally left blank KNOWLEDGE EMERGENCE Social, Technical, and Evolutionary Dimensions of Knowledge Creation EDITED BY Ikujiro Nonaka Toshihiro Nishiguchi 1 2001 1 Oxford New York Athens Auckland Bangkok Bogotá Bombay Buenos Aires Calcutta Cape Town Dar es Salaam Delhi Florence Hong Kong Istanbul Karachi Kuala Lumpur Madras Madrid Melbourne Mexico City Nairobi Paris Shanghai Singapore Taipei Tokyo Toronto and associated companies in Berlin Ibadan Copyright © 2001 by Oxford University Press, Inc. Published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016 Oxford is a registered trademark of Oxford University Press. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Library of Congress Cataloging-in-Publication Data Knowledge emergence : social, technical, and evolutionary dimensions of knowledge creation / Ikujiro Nonaka, Toshihiro Nishiguchi, editors. p. cm. ISBN 0-19-513063-4 1. Knowledge management. 2. Information society. I. Nonaka, Ikujiro, 1935– II. Nishiguchi, Toshihiro. HD30.2 .K6363 2000 658.4'038—dc21 00-042795 987654321 Printed in the United States of America on acid-free paper Foreword The Sasakawa Peace Foundation (SPF), a private nonprofit organization, was es- tablished in September 1986 for the stated purpose of “working for world peace through continual and concerted efforts to promote international understanding, exchange, and cooperation.” SPF pursues this mandate by making grants in sup- port of projects both in and outside Japan and by carrying out its own self-operated projects. In April 1995, SPF initiated a three-year, self-operated project entitled “Interna- tional Comparative Study of Knowledge Creation,” in which three joint research groups, comprising eminent researchers and practitioners, were organized with an aim at exploring and finding solutions to issues related to knowledge creation. Their respective focus was placed on the following three themes: 1) organization and knowledge creation, 2) impact of technology advancement on knowledge creation, and 3) knowledge creation in relationship to suppliers. Giving impetus to the project was a growing awareness of the strategic impor- tance of knowledge as a key resource in the quickly approaching twenty-first cen- tury. Knowledge has unique properties, and many facets of its creation have yet to be fully explored. Knowledge is, for example, very different from tangible assets in that it can be possessed but not easily hoarded. Knowledge is also, in an inherent sense, a common good, and, as such, how to optimize its generation, transfer, and use is a challenge of far-reaching consequence to all human beings. In this context as well, the study of the mechanisms and dynamics of knowledge creation will pro- vide essential keys for enhancing society in the twenty-first century. With these challenges in mind, the project’s joint research groups conducted their investigations and then met together in an international academic conference in Hawaii in December 1996 to report, discuss, and consolidate their results. The con- ference was jointly supported by SPF and the Japan-America Institute of Manage- ment Science (JAIMS). The substance of its presentations, discussions, and outcomes is compiled in the pages of this book. For the instrumental guidance and assistance they provided the research groups over the course of this project, SPF wishes to express its deepest gratitude to Dr. Ikujiro Nonaka, Professor of Knowledge Science at Japan Advanced Institute of Science & Technology (JAIST), and to Dr. Toshihiro Nishiguchi, Professor of Man- agement at Hitotsubashi University. We also wish to extend our sincere apprecia- tion to Dr. Glenn K. Miyataki, President of JAIMS, who so generously gave of his time to assist us in organizing and convening the Hawaii conference. Furthermore, vi Foreword our thanks go to each of the paper contributors, whose names appear herein, for their helpful inputs in the compilation of this volume. Finally, we would be very pleased if this book should contain useful hints or point- ers for other individuals and groups grappling with the challenges of knowledge creation in various fields and domains. Akira Iriyama President, The Sasakawa Peace Foundation Contents Contributors ix 1. Introduction: Knowledge Emergence 3 IKUJIRO NONAKA TOSHIHIRO NISHIGUCHI PART I KNOWLEDGE, BA, AND CARE 2. Emergence of “Ba”: A Conceptual Framework for the Continuous and Self-transcending Process of Knowledge Creation 13 IKUJIRO NONAKA NOBORU KONNO RYOKO TOYAMA 3. Bringing Care into Knowledge Development of Business Organizations 30 GEORG VON KROGH KAZUO ICHIJO IKUJIRO NONAKA PART II TECHNOLOGY AND COOPERATION 4. The Influence of New 3-D CAD Systems on Knowledge Creation in Product Development 55 KENTARO NOBEOKA YASUNORI BABA 5. The Impact of Technology on Knowledge Creation: A Study of Experimentation in Integrated Circuit Design 76 STEFAN H. THOMKE 6. The Temporal Dynamics of Knowledge Creation in the Information Society 93 MARTIN KENNEY viii Contents 7. Focusing Creativity: Microsoft’s “Synch-and-Stabilize” Approach to Software Product Development 111 MICHAEL A. CUSUMANO 8. Cooperation and Knowledge Creation 124 GIORGIO DE MICHELIS PART III TRANSNATIONAL KNOWLEDGE CREATION 9. Multinational Enterprises and Cross-Border Knowledge Creation 147 D. ELEANOR WESTNEY 10. Knowledge Creation and the Internationalization of Japanese Companies: Front-Line Management Across Borders 176 KENICHI YASUMURO D. ELEANOR WESTNEY PART IV INTERFIRM RELATIONS 11. Coevolution of Interorganizational Relations 197 TOSHIHIRO NISHIGUCHI 12 “Co-opetition” in the Japanese Aircraft Industry 223 SIGRUN CASPARY TOSHIHIRO NISHIGUCHI 13. Shukko (Employee Transfers) and Tacit Knowledge Exchange in Japanese Supply Networks: The Electronics Industry Case 247 JAMES R. LINCOLN CHRISTINA AHMADJIAN 14. Absorptive Capacity, Co-opetition, and Knowledge Creation: Samsung’s Leapfrogging in Semiconductors 270 LINSU KIM 15. Conclusion: Social, Technical, and Evolutionary Dimensions of Knowledge Creation 286 IKUJIRO NONAKA TOSHIHIRO NISHIGUCHI Index 291 Contents ix Contributors Christina Ahmadjian Haas School of Business, University of California, Berkeley Yasunori Baba Professor, Research into Artifacts Center for Engineering, University of Tokyo Sigrun Caspary Associate Professor, Institute for Comparative Research into Culture and Economic Systems, Witten/Herdecke University Michael A. Cusumano Professor, Sloan School of Management, Massachusetts Institute of Technology Giorgio De Michelis Professor, Laboratory for Cooperation Technologies, Department of Informatics, Systems and Communication, University of Milan-Bicocca Kazuo Ichijo Associate Professor, Faculty of Social Sciences, Hitotsubashi University Martin Kenney Professor, Department of Human and Community Development, University of California, Davis and Senior Research Associate, Berkeley Roundtable on the International Economy, University of California, Berkeley Linsu Kim Professor, Korea University and Chairman, Government Reform Council Noboru Konno President, Column, Inc. James R. Lincoln Professor, Haas School of Business, University of California, Berkeley Toshihiro Nishiguchi Professor, Institute of Innovation Research, Hitotsubashi University Kentaro Nobeoka Professor, Research Institute for Economics and Business Administration, Kobe University Ikujiro Nonaka Professor, Japan Advanced Institute of Science and Technology Stefan H. Thomke Associate Professor, Harvard Business School Ryoko Toyama Assistant Professor, Japan Advanced Institute for Science and Technology Georg Fredrik von Krogh Professor and Director, Institute of Management, University of St. Gallen D. Eleanor Westney Professor, Sloan School of Management, Massachusetts Institute of Technology Kenichi Yasumuro Professor, Kobe Commerce University ix This page intentionally left blank KNOWLEDGE EMERGENCE This page intentionally left blank 1 Introduction Knowledge Emergence IKUJIRO NONAKA TOSHIHIRO NISHIGUCHI The importance of knowledge as a key source of competitive advantage is now well established in management studies, as suggested by the growing literature focus- ing on knowledge creation and transfer (Kogut and Zander, 1992; Nonaka and Takeuchi, 1995; Strategic Management Journal Winter Special Issue, 1996). How- ever, although concepts such as tacit knowledge and organizational knowledge unify much of this emerging research, there remains much variety in terms of angles and approaches chosen to examine the knowledge-creation process. This book is no exception. A wide variety of concepts, hypotheses, and case studies are proposed, often in a tentative manner. This diversity reflects the advancement of the field of knowledge creation is still at an infant stage. It also reflects the complex and multi- dimensional nature of knowledge, making research on knowledge creation a diffi- cult yet fascinating endeavor. This book is the result of a conference held in Honolulu in December 1996.1 During the three days of the conference, researchers from a wide range of aca- demic backgrounds and nationalities exchanged insights and proposed new av-