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CHAPTER 2: Knowledge and
Management [IKUJIRO NONAKA & HIROTAKA TAKEUCHI]
[chapter review]
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Content Layout
1. What is knowledge?
2. 20th century challenges to the Cartesian split
3. The Japanese intellectual tradition
4. Knowledge in economic and management theories
5. Toward a new synthesis
6. Need for the theory of organizational knowledge creation
WHAT IS KNOWLEDGE?
PLATO VS ARISTOTLE
RENE DESCARTES
• Four general rules for rational thinking:
1. To accept nothing as true which I did not clearly recognize to be so.
2. To divide up each of the difficulties (by parts)
3. To carry on my reflections in due order (easy → hard)
4. To make enumerations so completely & reviews
• Devised “method of doubt” – questioning all beliefs in an attempt
to create his own philosophy.
• He discovered that one could question all beliefs except the
existence of the questioner.
• He argued that ultimate truth can be deduced only from real
existence of a thinking self.
• Thus, true knowledge about external things can be obtained by
the mind, not by the senses.
JOHN LOCKE
• In John Locke view, things existing in the real world are objective in
nature.
• If the sensory perception of things is illusory, it is undoubted evident
that something can be perceived.
• He compared the human mind to tabula rasa/white paper, which has
no priori idea.
• He argued that only experience can provide the mind with ideas.
• Sensation = sensory perception, which is the great source of most of
our ideas.
• Reflection = the perception of the operation of our own mind within us,
which is the other fountain from which experience furnisheth the
understanding with ideas.
EMMANUEL KANT
• Brought two streams of rationalism and empiricism.
• He agreed that the basis of knowledge is experience, but did not
accept the empiricist argument that experience is the sole source
of all knowledge.
• He argued that knowledge arises only when both the logical
thinking of rationalism and sensory experience of empiricism
work together.
• The human mind is not the passive tabula rasa but active in
ordering sensory experiences in time and space and supplying
concepts as tools for understanding them (Russell, 1961, p. 680)
• Kant believed that we could only know the “phenomenon” or our
sensory perception of the “transcendental object” or “thing in
itself,” which transcends experience. [transcendental idealism]
GEORG W.F. HEGEL
• Rejecting the concept of “things in itself” in Kantian Philosophy.
• He argued that both mind and matter are derived from the
“Absolute Spirit” through a dynamic, dialectical process.
• According to Hegel, dialectics is the creation of the synthesis by
reconciling thesis and antithesis or rejecting what is not rational
and retaining what is rational.
• Knowledge begins with sensory perception, which becomes more
subjective and rational through a dialectic purification of the
senses, and at last reaches the stages of self-consciousness of the
“Absolute Spirit”. (Russell, 1961, p. 704)
• Self-consciousness of the “Absolute Spirit” is the highest form of
knowledge. [Absolute Idealism]
KARL MARX
• Integrating Hegel’s dialectical dynamics and the emerging social
sciences of the day.
• He refuted Hegel’s abstract and idealistic philosophy because it
could not explain the dynamic and interactive relationship between
man and his environment.
• According to Marx, perception is an interaction between the
knower(subject) and the known(object).
• In the pursuit of knowledge, both subject and object are in a
continual and dialectic process of mutual adaptation.
• Object transformed into process of becoming known.
• Subject (“sensation” → “noticing”) to imply activity.
Cartesian Dualism [extra]
• The word ‘Cartesius’ is simply the Latin form of the name
Descartes. Thus, Cartesian dualism is Descartes concept of
dualism.
• Descartes famous saying, “cogito, ergo sum” (I think, therefore I
am).
• Descartes held that the immaterial mind and the material body
are two completely different types of substances and that they
interact with each other.
• He reasoned that the body could be divided up by removing a leg
or arm, but the mind or soul were indivisible.
20th century challenges to the Cartesian split
Cartesian dualism is assumption that the essences of
a human being based on rational thinking self.
Thinking self seeks knowledge by isolating from
the world and human being.
Cartesian split is an importance form of interaction
between self and outside world in seeking knowledge.
1. Focused on the relationship between thinking self and world.
2. Built foundation phenomenology which is philosophical
inquiry into human consciousness of self and other object.
3. He argued that certain knowledge can be describe with
interaction between pure consciousness and its object.
4. Pure consciousness can be obtain through phenomenological
reduction.
5. Phenomenological reduction is method that all factual
knowledge and reasons as assumptions about a phenomenon.
6. He against the idealism:
-The physical objectivism of modern science since
Galileo with the transcendental idealism established by
Kant.
-Highlighted the importance of conscious direct
experience.
Edmund Husserl
• Used the phenomenological method to analyze the mode of
human being from Dasein idealism.
• He believe that human are being in this world by having to
do with something.
Eg: Producing something or make use something. this practical
behavior or action must employ theoretical cognition.
• However for Heidegger, Dasein does not detached spectator
likes Descartes's thinking self but it close to the relationship
between knowledge and action.
• He reject the Cartesian dualism between thinking subject
and the objective world.
Martin Heidegger
• Relationship between knowledge and action was further
emphasized by a philosophical and literary movement known
as existentialism.
• Most phenomenologist argue that knowledge can be obtained
through reflection, existentialism stress that if people want
know about the world, they must act towards the end.
• Sartre was an existentialist stated that for human reality, the
intention is a choice of the end which reveals the world.
Jean-Paul Sartre
• Refuted Cartesian split between mind and body.
• He contended perception of bodily is a cognitive action
aimed at something and consciousness what we can, not
what we think that about something.
• He reproached empiricists for deducing the datum from
what happened to be furnished by the sense organs and
asserted that empirical theories based on such data could
never be the equivalent of knowledge
Maurice Merleau-Ponty
Refuted/disprove- to prove to be
in error
Ludwig Wittgenstein
• Twentieth-century philosophy movement also known as
analytical philosophy focused on the language to describe
phenomena.
• He seen language as a picture of reality that corresponds
exactly to logic and rejected metaphysical as “nonsensical”
and as a game or interaction played by multiple persons
following rules.
• He said “we cannot speak about what we must pass over in
silence”.
• Knowing is a bodily action with a will give to bring about
change in the stated of affairs rather than with detached
stance toward the world.
• He argued that the grammar for ‘know’ is related to ‘can’ and
“is able to”. So the word “to know” we will said “Now I know”
same meaning that showed us “Now I can do it” or “Now I
understand”.
William James
• Relationship between knowledge and action can be found
in pragmatism.
• He argued that if any idea works showed it is true.
Insofar as it makes a differences to life in terms of cash
value showed it is meaningful.
Pragmatism- an approach that assesses the truth of
meaning of theories and belief in terms of the success
of their practical application.
John Dewey
• Developed further in pragmatism standpoint.
• He opposed the spectator theory of knowledge that separates
theory and practice, knowledge and action.
• Thus, pragmatism has attempted to develop an interactive
relationship between humans being and the world by means
of human, action, experiment and experience.
The Japanese
Intellectual
Tradition
Japanese approach to knowledge integrates:
• Teaching of Buddhism, Confucianism, and Western
philosophical thought.
Three distinction of Japanese intellectual tradition:
1. Oneness of humanity and nature
2. Oneness of body and mind
3. Oneness of self and other
Oneness of Humanity and Nature
Examples of this trait:
• The sympathy to nature (manyohsu)
• The notion of the beauty of change and transition (mono no aware)
• The delicate sentiment (kokin-wakashu)
• The stylish (iki) lifestyle and art in urban culture of 18-19th century
Yedo.
Illustrates Japanese tendency to deal with sensitive emotional
movement rather than abide by any fixed worldview or metaphysics.
• objects in nature- subtle but visual and concrete.
• Prevent objectification of nature and development of “sound skepticism”.
• Basic attitude
1. Japanese language.
- think visually and manipulate tangible images.
- statement made articulate certain concrete image –realistic to
the speaker.
2. flexible view of time and space.
- time as continuously flow of permanently updated “present”
- circular and momentalistic.
- ultimate reality is confined “here and now”
- space –free from fixed perspective.
Oneness of Body and Mind
• Emphasis on “whole personality”
• Knowledge – wisdom acquired from perspective of entire personality.
• Example: Zen Buddhism practitioners
- samurai education –develop wisdom through physical training.
- great emphasis on building up character (“a man of action”) over
prudence, intelligence, and metaphysics.
Nishida:
• Ultimate reality and existence lay in acquisition of
“fact from pure experience”
• Nishida philosophy:
1. True “directness” realized only within living reality of experience prior to
separation of subject and object.
2. True knowledge cannot be obtained by theoretical thinking but through
one’s total mind and body.
3. The perfect truth “cannot be expressed in words”
• Western –tend to accord highest values to abstract theories and
hypotheses (contribute to development of science)
• Japanese –tend to value embodiment of direct, personal experience (“on-
the-spot” personal experience in Japanese management)
Oneness of Self and Other
• Western views of human relationship –atomistics and
mechanistics.
• Japanese view –collective and organic.
• Emphasize on subjective knowledge and intuitive intelligence.
• Conceptualizing things by relating her/himself to other things or
persons. (tactile and interpersonal)
• Japanese language –communicated through context, not solely
self-complete grammatical code. (tacit knowledge is required)
• Difficult in expressing thought and feelings directly –you and I
two part of a whole.
• Western society –promote realization of individual self as goal
of life.
• Japanese ideal of life –exist among others harmoniously as
collective self.
Conclusion
• Japanese see reality typically in physical interaction with nature
and other human beings.
• Western view –thinking self seeks eternal idea as a detached
spectator.
• Japanese intellectual tradition – do not see distinctions as
either-or-dichotomy but as mutually complementary.
Dichotomy – Division into two parts
Knowledge in economic &
management theories
BY ADLIN SYAFEENA & HAFFIZZAH
What will we understand at the end of
this sub-topic?
• Review on major economic and management thinkers of the West.
• Knowledge in economic and management theories been made up to
overcome the limitations of existing theories that bounded by the
Cartesian split.
We will go through:-
• The treatment of knowledge of Alfred Marshall, the neoclassical economics. vs
Frederich von Hayek and Joseph A. Schumpeter, the Austrian school of economics.
• The firm as a knowledge repository: Penrose, Nelson and Winter.
KNOWLEDGE IN ECONOMIC
THEORIES
Knowledge in Economic Theories
• Knowledge is the important factor in economic phenomena.
• But knowledge been treated differently depends on the importance put on
knowledge, the type of knowledge to which attention is paid, and the ways to
acquire and utilize it.
• Economist focused on existing knowledge and neglect the active and subjective
creation of new knowledge by economic subjects maybe found in the strong
orientation toward the scientification of economics.
• They tend to accept the Cartesians view of knowledge that separates economic
knowledge and economic subject.
1. Alfred Marshall, the neoclassical economics
• “Capital consists in a great part of knowledge and organization… Knowledge is our
powerful engine of production… organization aids knowledge” (Marshall, 1965)
• But they (neoclassical economists) concerned with the utilization of existing knowledge
which is presented by price information.
• Thus, they neglected the knowledge held by economic subjects that is not represented in
form of price information.
• They were not concerned the creation of knowledge and did not put the firm as a
knowledge creator.
2. Frederich von Hayek & Joseph
A. Shcumpeter, the Austrian school of economics.
• Knowledge is subjective.
• They (Hayek & Schumpeter) focusing on the unique knowledge held by each economic
subject.
• Hayek classified knowledge into scientific knowledge (such as knowledge of general rules)
and knowledge of the particular circumstances of time and place.
Continue…
• Changing circumstances continually redefine the relative advantage of knowledge
held by different individuals.
• The function of the price mechanism is to communicate information and the market
is the process through which individual knowledge is mobilized socially.
• Failed to grasp the important role of the conversion of such context-specific
knowledge.
Continue…
• Schumpeter, develop a dynamic theory of economic change (the tentative & unfolding nature
of the capitalist economy).
• And see the process of change in the economy as a whole.
• Emphasized the importance of combining explicit knowledge.
• New combination of knowledge emerged new product, production methods, markets,
materials, and organization.
The Firm as a Knowledge Repository:
Penrose, Nelson, and Winter
• Edith P. Penrose (1959), focused in the growth of individual firms.
• Firms as both an administrative organization and a collection of productive resources.
• Planning process as a central determinant of the growth of firms.
• Corporate planners create “images” (mental models of the firm and its environment)
by appraising the firms strengths and weaknesses in terms of its productive services
and the environment opportunities and constraints.
Continue…
• Images emerge from experience and knowledge within the firm.
• Nelson and Winter, knowledge stored as “regular and predictable behavioural patterns” of
business firms.
• Innovation is an inherently unpredictable “mutation” of routines.
• Devised concept of natural trajectory, a path of technological evolution that is decided by a “
technology regime” defined as “cognitive beliefs”.
Knowledge in Management &
Organization Theories
• Strong orientation on humanization.
• Management researchers have strong interest in management practices.
• Divided into 2 lines, scientific line (Taylor to Simon to contemporary preoccupation with
scienctification of strategy) and the other one, humanistic line (Mayo to Weick to recent
attention to organizational culture)
“Scientific Management” vs. Human
Relations Theory
• Scientific management was founded by Frederick W. Taylor, who tried to eliminate the “soldiering” of
workers and to replace “rules of thumb” with science, and managed to increase efficiency production.
• The “scientific management” was an attempt to formalize workers experiences and tacit skills into
objective and scientific knowledge.
• But failed to become aware the experiences and judgements of the workers as a sources of new knowledge.
• The responsibility to create new work method depending on the managers. They being burden with the
chore of classifying, tabulating, and reducing the knowledge into rules and formulae and applying them to
daily work.
Hawthorn experiments
• Social factors such as morale, a sense of belonging to a work group, and interpersonal
skills to understand human behaviour improved productivity.
• (Mayo, F. J. Roethlisberger and others) developed new management theory of human
relations. They criticized the Taylorist view of management for treating the worker as an
atomized economic man.
• Also argued that human beings are social animals who should be understood and treated
in the context of social group.
• Managers should develop social human skills to facilitate interpersonal communication
within formal and informal group of the work organization.
Barnard’s attempt at a Synthesis
• Synthesize management in two camps:-
1. Mechanistic rationally (scientific)
2. Human factors (humanistic)
• Try to build a science of organization -recognized the importance of organization in
business management.
• Knowledge is not the issue, but it can be condensed into:
1. Knowledge is logical, linguistic, ‘behavioral’.
2. Leaders create values, beliefs and ideas-maintain the soundness of knowledge system and
manage the organization as a cooperative system.
• Knowledge is essential-securing cooperative rationality.
• Recognized the importance of the integration of logical and non-logical processes of
human mental activity (scientific & behavioral) and (managerial & moral function
of executives).
• Problem: how to convert organizational members’ implicit, behavioral knowledge
organizational knowledge, how best to implement the knowledge.
Simon’s Information – Processing Paradigm
• Investigated the nature of human problem solving & decision making & developed a
view of organization “INFORMATION-PROCESSING MACHINE”
• Built a computer model of human thought process as a form of information
processing:-
1. Extract ‘meaning structure’ (input) store as new knowledge/used as decision.
• Organizational structure & function characteristic of human problem-solving
process & rational choices – problem that are faced by organization must be minimize
to reduce the information load on them.
• Problem:
1. overemphasized the logical aspect and the limitations of human cognitive capacity.
2. Knowledge is NOTHING.
3. Argued that information processing was possible only if: problem are simplified and
organizational structure are specialized.
4. Viewed the organization’s relation to its environment is passive.
Garbage Can Model and the Theory of Sensemaking
• Proposed by Cohen ,March, Olsen (1972) and March & Olsen (1976)-:
1. Irrational and ambiguous nature of human problem solving & decision making.
2. Organization: collection of choices looking for problems, issues and feeling seeking
decision situations and solution searching for issue that may be the answer and
decision makers looking for work.
• GARBAGE CAN MODEL is:
1. “GARBAGE”- selection opportunities
2. “GARBAGE CAN”- problem, solution, decision makers
3. Organization system of perception that assigns meaning to what happened
retrospectively
4. Noted the role of ambiguity in the organization
5. Contained no valid insight on the learning among individuals and organizations
6. Neglected to integrate organizational behavior with systematic organizational
learning
7. Assumed that individuals involved in organizational learning hit on relevant ideas
more or less randomly
• This theory also can be found in Weick’s theory of organizational
“sensemaking”:
1. Shared information, behaviors and meaning become structured and
organizations- development of shared meaning & understanding that the
cycles of structured behavior themselves become sensible & meaningful.
2. Emphasized the importance of ‘enactment’.
3. Still passive and lacks of proactive view.
Science of Business Strategy
• Started from concept of “EXPERIENCE CURVE EFFECT”, suggested by
Boston Consulting Group (BCG) that argue a firm should produce as much
as possible and increase market share.
• 1960, Profit Impact if Marketing Strategy (PIMS) technique: explaining and
forecasting business result.
• 1980, Porter developed a framework for understanding how firms create and
sustain competitive advantage, and make TWO choices:
• Industry attractiveness:
“five-forces” model ( entry barriers, bargaining power of buyers, bargaining power of
suppliers, threat of substitute products/services & rivalry among existing competitors)-
provide understanding of the structure of the industry and how it is changing.
• Competitive positioning within an industry
“value chain” model- systematic theory of examining all the activities of firm performs
and how they are linked to each other.
• Limitations:
1. Not able to deal with questions of value and belief and has precluded
the possibility of creation of a new vision or value system.
2. Presupposes the top-down style of management.
3. Do not pay due attention to the role of knowledge as a source of
competitiveness.
4. Similar to that Taylorism.
Taylorism - A factory management system developed in the late 19th century to
increase efficiency by evaluating every step in a manufacturing process and breaking
down production into specialized repetitive tasks.
Studies of Organizational Culture
• Early 1980s- many Western firm preoccupied with the “scientific”, quantitative
approach to strategy making and inflicted with the “analysis paralysis”, began to lose
their dynamism and competitiveness.
• Peters & Waterman (1982)- proposed “humanistic” approach – observed that “excellent
company” created its own unique “corporate culture” that determines how the
company thinks and behave.
• Schein (1981)- culture is a pattern of basic assumptions (invented, discovered,
developed) has worked well enough to be considered valid, therefore to be taught to
new members as the correct way to perceive, think, and feel in the relation to those
problems.
• Pfeffer (1981)-importance of beliefs, organizational culture as consisting of beliefs and
knowledge shared by the members of the organizations.
• Able to shed light on organization as epistemological system.
• Underscored the importance of human factors as values, meaningsm commitments,
symbols and beliefs.
• Recognized that organization (shared meaning) can learn, change itself, evolve over
time.
• Limitations:
1. Most of these studies have not paid enough attention to the potential and
creativity of human beings.
2. Human being is seen as information processor not a information creator.
3. Organization is portrayed as rather passive in its relation to the
environment, neglecting its potential to create and to change.
Toward a New Synthesis
• New attempt at synthesizing the scientific and humanistic
approaches. [Since 1980s]
Drucker on the Knowledge Society
• Earliest thinker who noticed a sign of the great transformation
Coined the term “knowledge work” or “knowledge worker”
• Most important challenges for every organization in the knowledge
society:
1. To build systematic practices for managing self transformation .
2. Be prepared to abandon knowledge that has become obsolete and learn
to create a new things through:
Continuing improvement of every activity
Development of new application from its own success
Continuous innovation
Has to raise productivity of knowledge and service worker
3. Recognized the importance of tacit knowledge .
Organizational Learning
• Learning consist of two kinds of activity:
1. Obtaining know-how.
2. Establishing new premises.
• “Learning organization” is a practical model in order to cure the “learning
disabilities” diseases and enhance the organization’s capacity to learn…
1. Adopt “system thinking”.
2. Encourage “personal mastery” of their own lives.
3. Bring prevailing “mental models” to the surface and challenge them.
4. Build “a shared vision”.
5. Facilitate “team learning”.
Obtaining
know how to
Establishing
new premises
• Limitations of “organizational learning”
1. Lack “the view that knowledge development constitutes learning”.
2. Most of them still use the metaphor of individual learning.
3. There is widespread agreement that organizational learning is an
adaptive change process that is influenced by past experience, focused on
developing or modifying routine.
4. Related to the concept of “double-loop learning” or “unlearning”.
• Theory of organizational learning.
• Double-loop learning – the questioning and rebuilding of
existing perspectives, interpretation frameworks, decision
premises can be very difficult for organizations to implement by
themselves.
Argyris
Donald Schön
A New Resource-based Approach to Strategy
• To help companies compete more effectively in the ever-changing and
globalizing environment of the 1990s.
• Sees competencies, capabilities, skills, or strategic assets as the source of
sustainable competitive advantage for the firm.
• Core competence:
1. ‘Dynamic capabilities’ or the ability of an organization to learn, adapt, change and
renew over time, which involves search, problem finding, and problem solving. (
Teece, Pisano and Shuen,1991)
2. The collective learning in the organization, especially how to coordinate diverse
production skills and integrate multiple streams of technologies. (Prahalad and
Hamel,1990)
• The Core Competence of the Corporation.
• A harmonized combination of multiple
resources and skills that distinguish a firm
in the marketplace.
• Core competence criteria:
1. Provides potential access to a wide
variety of markets.
2. Should make a significant contribution
to the perceived customer benefits of the
end product.
3. Difficult to imitate by competitors.
Stalk, Shulman and Evans
Book: Capabilities-based competition [1992]
• Developed the concept of “ Dynamic capabilities”
• The ability of an organization to learn, adapt,
change, and renew over time plus search, problem
finding and problem solving (at organizational
level).
Teece
Gary Pisano
Amy Shuen
Difference between our theory and the
resource-based approach
• Treat knowledge only implicitly.
• The example given do not shed much light on how the companies
actually went about building core competence or capabilities.
• Regarding middle managers.
• Has not yet reached the stage of being able to build a
comprehensive theoretical framework.
Need for the Theory of Organizational
Knowledge Creation
• Organizations deals with uncertain environments not merely
through passive adaptation, but through active interaction.
• One need to create information and knowledge instead of merely
process them efficiently.
• Organizational members must be active agents of innovation.
• Organization recreates itself by destroying the existing
knowledge system and innovating new ways of thinking and
doing things.
• To understand how organizations create new knowledge that
makes the creation of new products, new methods and new
organizational forms possible [chapter 3].
Chapter Conclusion
• Japanese and Western have different culture.
• Rationalism and empiricism.
• Western philosophy of knowledge [explicit knowledge] is based
on manuals and printed materials. While Japanese practiced a
tacit form of knowledge creation.
• Tacit knowledge cannot be communicated through manuals or
theories. It is best communicated through experience.
• It is the use of such tacit knowledge that enabled Japanese
companies to break the mould and produce repeated innovations
for competing in the international market.

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Chapter 2

  • 1. CHAPTER 2: Knowledge and Management [IKUJIRO NONAKA & HIROTAKA TAKEUCHI] [chapter review] 1. MOHD TAUFIK BIN ABU SALIM -SEF120019- 2. NOR IFFAH SYAKIRAH BT ABU SULAIMAN -SEF140008 - 3. ANISA BT ABDURROHMAN -SEF140002 - 4. NUR ADLIN SYAFEENA BT NAZIFUNNUR -SEF120023- 5. HAFIZZAH HAZZWANI BT HAMLIE -SEB120008- 6. WAN NUR WAHEEDAH BT WAN ABDULLAH -SEF120036- 7. NURUL NAJWA BT MOHD FAIZ - SEF120027-
  • 2. Content Layout 1. What is knowledge? 2. 20th century challenges to the Cartesian split 3. The Japanese intellectual tradition 4. Knowledge in economic and management theories 5. Toward a new synthesis 6. Need for the theory of organizational knowledge creation
  • 5. RENE DESCARTES • Four general rules for rational thinking: 1. To accept nothing as true which I did not clearly recognize to be so. 2. To divide up each of the difficulties (by parts) 3. To carry on my reflections in due order (easy → hard) 4. To make enumerations so completely & reviews • Devised “method of doubt” – questioning all beliefs in an attempt to create his own philosophy. • He discovered that one could question all beliefs except the existence of the questioner. • He argued that ultimate truth can be deduced only from real existence of a thinking self. • Thus, true knowledge about external things can be obtained by the mind, not by the senses.
  • 6. JOHN LOCKE • In John Locke view, things existing in the real world are objective in nature. • If the sensory perception of things is illusory, it is undoubted evident that something can be perceived. • He compared the human mind to tabula rasa/white paper, which has no priori idea. • He argued that only experience can provide the mind with ideas. • Sensation = sensory perception, which is the great source of most of our ideas. • Reflection = the perception of the operation of our own mind within us, which is the other fountain from which experience furnisheth the understanding with ideas.
  • 7. EMMANUEL KANT • Brought two streams of rationalism and empiricism. • He agreed that the basis of knowledge is experience, but did not accept the empiricist argument that experience is the sole source of all knowledge. • He argued that knowledge arises only when both the logical thinking of rationalism and sensory experience of empiricism work together. • The human mind is not the passive tabula rasa but active in ordering sensory experiences in time and space and supplying concepts as tools for understanding them (Russell, 1961, p. 680) • Kant believed that we could only know the “phenomenon” or our sensory perception of the “transcendental object” or “thing in itself,” which transcends experience. [transcendental idealism]
  • 8. GEORG W.F. HEGEL • Rejecting the concept of “things in itself” in Kantian Philosophy. • He argued that both mind and matter are derived from the “Absolute Spirit” through a dynamic, dialectical process. • According to Hegel, dialectics is the creation of the synthesis by reconciling thesis and antithesis or rejecting what is not rational and retaining what is rational. • Knowledge begins with sensory perception, which becomes more subjective and rational through a dialectic purification of the senses, and at last reaches the stages of self-consciousness of the “Absolute Spirit”. (Russell, 1961, p. 704) • Self-consciousness of the “Absolute Spirit” is the highest form of knowledge. [Absolute Idealism]
  • 9. KARL MARX • Integrating Hegel’s dialectical dynamics and the emerging social sciences of the day. • He refuted Hegel’s abstract and idealistic philosophy because it could not explain the dynamic and interactive relationship between man and his environment. • According to Marx, perception is an interaction between the knower(subject) and the known(object). • In the pursuit of knowledge, both subject and object are in a continual and dialectic process of mutual adaptation. • Object transformed into process of becoming known. • Subject (“sensation” → “noticing”) to imply activity.
  • 10. Cartesian Dualism [extra] • The word ‘Cartesius’ is simply the Latin form of the name Descartes. Thus, Cartesian dualism is Descartes concept of dualism. • Descartes famous saying, “cogito, ergo sum” (I think, therefore I am). • Descartes held that the immaterial mind and the material body are two completely different types of substances and that they interact with each other. • He reasoned that the body could be divided up by removing a leg or arm, but the mind or soul were indivisible.
  • 11. 20th century challenges to the Cartesian split Cartesian dualism is assumption that the essences of a human being based on rational thinking self. Thinking self seeks knowledge by isolating from the world and human being. Cartesian split is an importance form of interaction between self and outside world in seeking knowledge.
  • 12. 1. Focused on the relationship between thinking self and world. 2. Built foundation phenomenology which is philosophical inquiry into human consciousness of self and other object. 3. He argued that certain knowledge can be describe with interaction between pure consciousness and its object. 4. Pure consciousness can be obtain through phenomenological reduction. 5. Phenomenological reduction is method that all factual knowledge and reasons as assumptions about a phenomenon. 6. He against the idealism: -The physical objectivism of modern science since Galileo with the transcendental idealism established by Kant. -Highlighted the importance of conscious direct experience. Edmund Husserl
  • 13. • Used the phenomenological method to analyze the mode of human being from Dasein idealism. • He believe that human are being in this world by having to do with something. Eg: Producing something or make use something. this practical behavior or action must employ theoretical cognition. • However for Heidegger, Dasein does not detached spectator likes Descartes's thinking self but it close to the relationship between knowledge and action. • He reject the Cartesian dualism between thinking subject and the objective world. Martin Heidegger
  • 14. • Relationship between knowledge and action was further emphasized by a philosophical and literary movement known as existentialism. • Most phenomenologist argue that knowledge can be obtained through reflection, existentialism stress that if people want know about the world, they must act towards the end. • Sartre was an existentialist stated that for human reality, the intention is a choice of the end which reveals the world. Jean-Paul Sartre
  • 15. • Refuted Cartesian split between mind and body. • He contended perception of bodily is a cognitive action aimed at something and consciousness what we can, not what we think that about something. • He reproached empiricists for deducing the datum from what happened to be furnished by the sense organs and asserted that empirical theories based on such data could never be the equivalent of knowledge Maurice Merleau-Ponty Refuted/disprove- to prove to be in error
  • 16. Ludwig Wittgenstein • Twentieth-century philosophy movement also known as analytical philosophy focused on the language to describe phenomena. • He seen language as a picture of reality that corresponds exactly to logic and rejected metaphysical as “nonsensical” and as a game or interaction played by multiple persons following rules. • He said “we cannot speak about what we must pass over in silence”. • Knowing is a bodily action with a will give to bring about change in the stated of affairs rather than with detached stance toward the world. • He argued that the grammar for ‘know’ is related to ‘can’ and “is able to”. So the word “to know” we will said “Now I know” same meaning that showed us “Now I can do it” or “Now I understand”.
  • 17. William James • Relationship between knowledge and action can be found in pragmatism. • He argued that if any idea works showed it is true. Insofar as it makes a differences to life in terms of cash value showed it is meaningful. Pragmatism- an approach that assesses the truth of meaning of theories and belief in terms of the success of their practical application.
  • 18. John Dewey • Developed further in pragmatism standpoint. • He opposed the spectator theory of knowledge that separates theory and practice, knowledge and action. • Thus, pragmatism has attempted to develop an interactive relationship between humans being and the world by means of human, action, experiment and experience.
  • 20. Japanese approach to knowledge integrates: • Teaching of Buddhism, Confucianism, and Western philosophical thought. Three distinction of Japanese intellectual tradition: 1. Oneness of humanity and nature 2. Oneness of body and mind 3. Oneness of self and other
  • 21. Oneness of Humanity and Nature Examples of this trait: • The sympathy to nature (manyohsu) • The notion of the beauty of change and transition (mono no aware) • The delicate sentiment (kokin-wakashu) • The stylish (iki) lifestyle and art in urban culture of 18-19th century Yedo. Illustrates Japanese tendency to deal with sensitive emotional movement rather than abide by any fixed worldview or metaphysics.
  • 22. • objects in nature- subtle but visual and concrete. • Prevent objectification of nature and development of “sound skepticism”. • Basic attitude 1. Japanese language. - think visually and manipulate tangible images. - statement made articulate certain concrete image –realistic to the speaker. 2. flexible view of time and space. - time as continuously flow of permanently updated “present” - circular and momentalistic. - ultimate reality is confined “here and now” - space –free from fixed perspective.
  • 23. Oneness of Body and Mind • Emphasis on “whole personality” • Knowledge – wisdom acquired from perspective of entire personality. • Example: Zen Buddhism practitioners - samurai education –develop wisdom through physical training. - great emphasis on building up character (“a man of action”) over prudence, intelligence, and metaphysics. Nishida: • Ultimate reality and existence lay in acquisition of “fact from pure experience”
  • 24. • Nishida philosophy: 1. True “directness” realized only within living reality of experience prior to separation of subject and object. 2. True knowledge cannot be obtained by theoretical thinking but through one’s total mind and body. 3. The perfect truth “cannot be expressed in words” • Western –tend to accord highest values to abstract theories and hypotheses (contribute to development of science) • Japanese –tend to value embodiment of direct, personal experience (“on- the-spot” personal experience in Japanese management)
  • 25. Oneness of Self and Other • Western views of human relationship –atomistics and mechanistics. • Japanese view –collective and organic. • Emphasize on subjective knowledge and intuitive intelligence. • Conceptualizing things by relating her/himself to other things or persons. (tactile and interpersonal) • Japanese language –communicated through context, not solely self-complete grammatical code. (tacit knowledge is required)
  • 26. • Difficult in expressing thought and feelings directly –you and I two part of a whole. • Western society –promote realization of individual self as goal of life. • Japanese ideal of life –exist among others harmoniously as collective self.
  • 27. Conclusion • Japanese see reality typically in physical interaction with nature and other human beings. • Western view –thinking self seeks eternal idea as a detached spectator. • Japanese intellectual tradition – do not see distinctions as either-or-dichotomy but as mutually complementary. Dichotomy – Division into two parts
  • 28. Knowledge in economic & management theories BY ADLIN SYAFEENA & HAFFIZZAH
  • 29. What will we understand at the end of this sub-topic? • Review on major economic and management thinkers of the West. • Knowledge in economic and management theories been made up to overcome the limitations of existing theories that bounded by the Cartesian split.
  • 30. We will go through:- • The treatment of knowledge of Alfred Marshall, the neoclassical economics. vs Frederich von Hayek and Joseph A. Schumpeter, the Austrian school of economics. • The firm as a knowledge repository: Penrose, Nelson and Winter. KNOWLEDGE IN ECONOMIC THEORIES
  • 31. Knowledge in Economic Theories • Knowledge is the important factor in economic phenomena. • But knowledge been treated differently depends on the importance put on knowledge, the type of knowledge to which attention is paid, and the ways to acquire and utilize it. • Economist focused on existing knowledge and neglect the active and subjective creation of new knowledge by economic subjects maybe found in the strong orientation toward the scientification of economics. • They tend to accept the Cartesians view of knowledge that separates economic knowledge and economic subject.
  • 32. 1. Alfred Marshall, the neoclassical economics • “Capital consists in a great part of knowledge and organization… Knowledge is our powerful engine of production… organization aids knowledge” (Marshall, 1965) • But they (neoclassical economists) concerned with the utilization of existing knowledge which is presented by price information. • Thus, they neglected the knowledge held by economic subjects that is not represented in form of price information. • They were not concerned the creation of knowledge and did not put the firm as a knowledge creator.
  • 33. 2. Frederich von Hayek & Joseph A. Shcumpeter, the Austrian school of economics. • Knowledge is subjective. • They (Hayek & Schumpeter) focusing on the unique knowledge held by each economic subject. • Hayek classified knowledge into scientific knowledge (such as knowledge of general rules) and knowledge of the particular circumstances of time and place.
  • 34. Continue… • Changing circumstances continually redefine the relative advantage of knowledge held by different individuals. • The function of the price mechanism is to communicate information and the market is the process through which individual knowledge is mobilized socially. • Failed to grasp the important role of the conversion of such context-specific knowledge.
  • 35. Continue… • Schumpeter, develop a dynamic theory of economic change (the tentative & unfolding nature of the capitalist economy). • And see the process of change in the economy as a whole. • Emphasized the importance of combining explicit knowledge. • New combination of knowledge emerged new product, production methods, markets, materials, and organization.
  • 36. The Firm as a Knowledge Repository: Penrose, Nelson, and Winter • Edith P. Penrose (1959), focused in the growth of individual firms. • Firms as both an administrative organization and a collection of productive resources. • Planning process as a central determinant of the growth of firms. • Corporate planners create “images” (mental models of the firm and its environment) by appraising the firms strengths and weaknesses in terms of its productive services and the environment opportunities and constraints.
  • 37. Continue… • Images emerge from experience and knowledge within the firm. • Nelson and Winter, knowledge stored as “regular and predictable behavioural patterns” of business firms. • Innovation is an inherently unpredictable “mutation” of routines. • Devised concept of natural trajectory, a path of technological evolution that is decided by a “ technology regime” defined as “cognitive beliefs”.
  • 38. Knowledge in Management & Organization Theories • Strong orientation on humanization. • Management researchers have strong interest in management practices. • Divided into 2 lines, scientific line (Taylor to Simon to contemporary preoccupation with scienctification of strategy) and the other one, humanistic line (Mayo to Weick to recent attention to organizational culture)
  • 39. “Scientific Management” vs. Human Relations Theory • Scientific management was founded by Frederick W. Taylor, who tried to eliminate the “soldiering” of workers and to replace “rules of thumb” with science, and managed to increase efficiency production. • The “scientific management” was an attempt to formalize workers experiences and tacit skills into objective and scientific knowledge. • But failed to become aware the experiences and judgements of the workers as a sources of new knowledge. • The responsibility to create new work method depending on the managers. They being burden with the chore of classifying, tabulating, and reducing the knowledge into rules and formulae and applying them to daily work.
  • 40. Hawthorn experiments • Social factors such as morale, a sense of belonging to a work group, and interpersonal skills to understand human behaviour improved productivity. • (Mayo, F. J. Roethlisberger and others) developed new management theory of human relations. They criticized the Taylorist view of management for treating the worker as an atomized economic man. • Also argued that human beings are social animals who should be understood and treated in the context of social group. • Managers should develop social human skills to facilitate interpersonal communication within formal and informal group of the work organization.
  • 41. Barnard’s attempt at a Synthesis • Synthesize management in two camps:- 1. Mechanistic rationally (scientific) 2. Human factors (humanistic) • Try to build a science of organization -recognized the importance of organization in business management. • Knowledge is not the issue, but it can be condensed into: 1. Knowledge is logical, linguistic, ‘behavioral’. 2. Leaders create values, beliefs and ideas-maintain the soundness of knowledge system and manage the organization as a cooperative system. • Knowledge is essential-securing cooperative rationality. • Recognized the importance of the integration of logical and non-logical processes of human mental activity (scientific & behavioral) and (managerial & moral function of executives). • Problem: how to convert organizational members’ implicit, behavioral knowledge organizational knowledge, how best to implement the knowledge.
  • 42. Simon’s Information – Processing Paradigm • Investigated the nature of human problem solving & decision making & developed a view of organization “INFORMATION-PROCESSING MACHINE” • Built a computer model of human thought process as a form of information processing:- 1. Extract ‘meaning structure’ (input) store as new knowledge/used as decision. • Organizational structure & function characteristic of human problem-solving process & rational choices – problem that are faced by organization must be minimize to reduce the information load on them. • Problem: 1. overemphasized the logical aspect and the limitations of human cognitive capacity. 2. Knowledge is NOTHING. 3. Argued that information processing was possible only if: problem are simplified and organizational structure are specialized. 4. Viewed the organization’s relation to its environment is passive.
  • 43. Garbage Can Model and the Theory of Sensemaking • Proposed by Cohen ,March, Olsen (1972) and March & Olsen (1976)-: 1. Irrational and ambiguous nature of human problem solving & decision making. 2. Organization: collection of choices looking for problems, issues and feeling seeking decision situations and solution searching for issue that may be the answer and decision makers looking for work. • GARBAGE CAN MODEL is: 1. “GARBAGE”- selection opportunities 2. “GARBAGE CAN”- problem, solution, decision makers 3. Organization system of perception that assigns meaning to what happened retrospectively 4. Noted the role of ambiguity in the organization 5. Contained no valid insight on the learning among individuals and organizations 6. Neglected to integrate organizational behavior with systematic organizational learning 7. Assumed that individuals involved in organizational learning hit on relevant ideas more or less randomly
  • 44. • This theory also can be found in Weick’s theory of organizational “sensemaking”: 1. Shared information, behaviors and meaning become structured and organizations- development of shared meaning & understanding that the cycles of structured behavior themselves become sensible & meaningful. 2. Emphasized the importance of ‘enactment’. 3. Still passive and lacks of proactive view.
  • 45. Science of Business Strategy • Started from concept of “EXPERIENCE CURVE EFFECT”, suggested by Boston Consulting Group (BCG) that argue a firm should produce as much as possible and increase market share. • 1960, Profit Impact if Marketing Strategy (PIMS) technique: explaining and forecasting business result. • 1980, Porter developed a framework for understanding how firms create and sustain competitive advantage, and make TWO choices: • Industry attractiveness: “five-forces” model ( entry barriers, bargaining power of buyers, bargaining power of suppliers, threat of substitute products/services & rivalry among existing competitors)- provide understanding of the structure of the industry and how it is changing. • Competitive positioning within an industry “value chain” model- systematic theory of examining all the activities of firm performs and how they are linked to each other.
  • 46. • Limitations: 1. Not able to deal with questions of value and belief and has precluded the possibility of creation of a new vision or value system. 2. Presupposes the top-down style of management. 3. Do not pay due attention to the role of knowledge as a source of competitiveness. 4. Similar to that Taylorism. Taylorism - A factory management system developed in the late 19th century to increase efficiency by evaluating every step in a manufacturing process and breaking down production into specialized repetitive tasks.
  • 47. Studies of Organizational Culture • Early 1980s- many Western firm preoccupied with the “scientific”, quantitative approach to strategy making and inflicted with the “analysis paralysis”, began to lose their dynamism and competitiveness. • Peters & Waterman (1982)- proposed “humanistic” approach – observed that “excellent company” created its own unique “corporate culture” that determines how the company thinks and behave. • Schein (1981)- culture is a pattern of basic assumptions (invented, discovered, developed) has worked well enough to be considered valid, therefore to be taught to new members as the correct way to perceive, think, and feel in the relation to those problems. • Pfeffer (1981)-importance of beliefs, organizational culture as consisting of beliefs and knowledge shared by the members of the organizations. • Able to shed light on organization as epistemological system. • Underscored the importance of human factors as values, meaningsm commitments, symbols and beliefs. • Recognized that organization (shared meaning) can learn, change itself, evolve over time.
  • 48. • Limitations: 1. Most of these studies have not paid enough attention to the potential and creativity of human beings. 2. Human being is seen as information processor not a information creator. 3. Organization is portrayed as rather passive in its relation to the environment, neglecting its potential to create and to change.
  • 49. Toward a New Synthesis • New attempt at synthesizing the scientific and humanistic approaches. [Since 1980s]
  • 50. Drucker on the Knowledge Society • Earliest thinker who noticed a sign of the great transformation Coined the term “knowledge work” or “knowledge worker” • Most important challenges for every organization in the knowledge society: 1. To build systematic practices for managing self transformation . 2. Be prepared to abandon knowledge that has become obsolete and learn to create a new things through: Continuing improvement of every activity Development of new application from its own success Continuous innovation Has to raise productivity of knowledge and service worker 3. Recognized the importance of tacit knowledge .
  • 51. Organizational Learning • Learning consist of two kinds of activity: 1. Obtaining know-how. 2. Establishing new premises. • “Learning organization” is a practical model in order to cure the “learning disabilities” diseases and enhance the organization’s capacity to learn… 1. Adopt “system thinking”. 2. Encourage “personal mastery” of their own lives. 3. Bring prevailing “mental models” to the surface and challenge them. 4. Build “a shared vision”. 5. Facilitate “team learning”. Obtaining know how to Establishing new premises
  • 52. • Limitations of “organizational learning” 1. Lack “the view that knowledge development constitutes learning”. 2. Most of them still use the metaphor of individual learning. 3. There is widespread agreement that organizational learning is an adaptive change process that is influenced by past experience, focused on developing or modifying routine. 4. Related to the concept of “double-loop learning” or “unlearning”.
  • 53. • Theory of organizational learning. • Double-loop learning – the questioning and rebuilding of existing perspectives, interpretation frameworks, decision premises can be very difficult for organizations to implement by themselves. Argyris Donald Schön
  • 54. A New Resource-based Approach to Strategy • To help companies compete more effectively in the ever-changing and globalizing environment of the 1990s. • Sees competencies, capabilities, skills, or strategic assets as the source of sustainable competitive advantage for the firm. • Core competence: 1. ‘Dynamic capabilities’ or the ability of an organization to learn, adapt, change and renew over time, which involves search, problem finding, and problem solving. ( Teece, Pisano and Shuen,1991) 2. The collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies. (Prahalad and Hamel,1990)
  • 55. • The Core Competence of the Corporation. • A harmonized combination of multiple resources and skills that distinguish a firm in the marketplace. • Core competence criteria: 1. Provides potential access to a wide variety of markets. 2. Should make a significant contribution to the perceived customer benefits of the end product. 3. Difficult to imitate by competitors.
  • 56. Stalk, Shulman and Evans Book: Capabilities-based competition [1992]
  • 57. • Developed the concept of “ Dynamic capabilities” • The ability of an organization to learn, adapt, change, and renew over time plus search, problem finding and problem solving (at organizational level). Teece Gary Pisano Amy Shuen
  • 58. Difference between our theory and the resource-based approach • Treat knowledge only implicitly. • The example given do not shed much light on how the companies actually went about building core competence or capabilities. • Regarding middle managers. • Has not yet reached the stage of being able to build a comprehensive theoretical framework.
  • 59. Need for the Theory of Organizational Knowledge Creation • Organizations deals with uncertain environments not merely through passive adaptation, but through active interaction. • One need to create information and knowledge instead of merely process them efficiently. • Organizational members must be active agents of innovation. • Organization recreates itself by destroying the existing knowledge system and innovating new ways of thinking and doing things. • To understand how organizations create new knowledge that makes the creation of new products, new methods and new organizational forms possible [chapter 3].
  • 60. Chapter Conclusion • Japanese and Western have different culture. • Rationalism and empiricism. • Western philosophy of knowledge [explicit knowledge] is based on manuals and printed materials. While Japanese practiced a tacit form of knowledge creation. • Tacit knowledge cannot be communicated through manuals or theories. It is best communicated through experience. • It is the use of such tacit knowledge that enabled Japanese companies to break the mould and produce repeated innovations for competing in the international market.