! This is a graded discussion 30 points possibledue J

!
This is a graded discussion: 30 points possible
due Jun 11
Discussion 4
15 15
Prompt:
“On Power and inequality in the global political economy,”
https://www.youtube.com/watch?v=Sh7NbSmcLQ8
(https://www.youtube.com/watch?v=Sh7NbSmcLQ8)
Do you agree with the speaker in this video?
Required material for this Discussion:
1. Chapter 8
2. “On power and inequality in the global political economy,”

6/9/22, 9:22 PM
Page 1 of 27
3. “The deadly cost of fashion,”
https://www.youtube.com/watch?v=9Fkhzdc4ybw
(https://www.youtube.com/watch?v=9Fkhzdc4ybw)
(You are welcome to use other resources only after using the
required material. Even while using outside resources, ensure
that
you do not use online learning resources like lumens learning,
Wikipedia, study.com, Khan Academy, Quizlet, etc. You must
use
resources from reputable outlets like New York Times,
Guardian,
BBC, etc.)
Assignment Details:
Your initial posting should be two paragraphs long and 200-250
words
(10 more words fine), excluding citations and references. It

should
present your compelling response to the above prompt and
provide
strong evidence from the sources listed above to support your
position.
You should then make at least one posting, 100-150 words, that
engage
your peers' ideas/arguments.
Part I: Initial Post worth 20 points
Write an original post (similar to a short essay) with at least
two
6/9/22, 9:22 PM
Page 2 of 27
Write an original post (similar to a short essay) with at least
two
paragraphs that include sources and proper APA or Chicago or
MLA
citations and references.
*You must post the initial essay by Thursday. Penalty of 10%
for
late initial posts.

Part II: Follow up posts worth 10 points
Write at least one substantive posts which must be a compelling
response to one of your peers' (initial) posts. It MUST be a
substantive
reply (remember, this is your opportunity to demonstrate your
understanding of the material and earn the highest grade
possible).
Do not just write laudatory responses to your peers, challenge
them
and their arguments....move the discussion forward
*No discussion postings will be accepted after the deadline,
Saturday, 11:59 PM.
A Few Words of Advice...
Your argument should not be based on unfounded, preconceived
beliefs. Statements that start with or include "I believe that..."
are only
valid to the extent that they are followed and supported by well -
cited,
compelling evidence from reliable sources.
As with the other discussions in this class, your personal
opinion on

the issue at hand does not matter for grading purposes. (Our
grading is not influenced by your political leanings). The point
of this
discussion is to think about the (above) prompt and argue your
point in
a thoughtful manner, using evidence to support your position
and/or to
argue against your peers' position(s).
6/9/22, 9:22 PM
Page 3 of 27
Search entries or author
" Reply
argue against your peers' position(s).
Unread # $ % Subscribed
(https://canvas.fscj.edu/courses/56644/users/60316)
Zubaidah Al-Amear
Monday
!

6/9/22, 9:22 PM
Page 4 of 27
" Reply
Data on current global inequality is startling, well-known, and a
departure
from the norm. Economists lead the way in research and policy,
with a
focus on global poverty rather than inequality. Poverty is a
problem within
countries, but inequality is not; on a global scale, it is arguably
the other
way around. The international focus on poverty reduction
coexists with
neoliberal policies that exacerbate inequality at home and
abroad.
(Phillips, Nicola. “Power and Inequality in the Global Political
Economy.” )
As a result, a common notion is that within-country inequality
is highest
in poor countries, with the greatest disparity. The popular
wisdom holds
that neoliberal policies and free trade raise all boats; however,
the

countries and times where this strategy has been applied the
most
consistently exhibit the highest rise in inequality. Global
inequality
contributes to the perpetuation of domestic privilege. The cross-
border
effects of environmental degradation, migration and
transnational crime
contradict the idea that the hazards posed by global inequality
can be
managed at the global boundaries. Economic explanations
disregard
power imbalances when understanding global inequality.
Developmental
discipline, global integration, and marginalization and
confinement
strategies can all be seen as part of a single hierarchical
integration
process with turbulence built-in. In conclusion, I do agree with
the video
and yes labor can be another face of global inequality.
1. Phillips, Nicola. “Power and Inequality in the Global
Political Economy.”

OUP Academic, Oxford University Press, 1 Mar. 2017,
https://academic.oup.com/ia/article/93/2/429/2997439
(https://academic.oup.com/ia/article/93/2/429/2997439) .
2. FacultiTV. “On Power and Inequality in the Global Political
Economy.”
YouTube, YouTube, 26 Feb. 2019,
https://www.youtube.com/watch?
v=Sh7NbSmcLQ8.
6/9/22, 9:22 PM
Page 5 of 27
Jeromy Wilson
Tuesday
" Reply
!
Hi Zubaidah, great point about the countries with the most
rising
inequality being the ones with the popular free trade policies. I
wonder if the state of those countries before implementing such

policies has anything to do with that, or if it is genuinely a
direct
result of implementing these neo-liberal ideas? I am also
curious
what you think about this domestic privilege you mentioned.
That
could be read and interpreted a few different ways, and I am
having
trouble deciding what I think that means in the context
provided.
Otherwise, great post and I look forward to your answer, should
you
choose to respond. Have a nice day.
Malynn Nooney
Tuesday
!
I do agree with the speaker, but I’d like to hear her go more in-
depth on
the inequality she is referencing. I think that when most people
think of

inequality they automatically think about wages and the
inequality
between men and women. However, on an international scale, I
think that
goes much broader in terms of defining inequality. For example,
in third
6/9/22, 9:22 PM
Page 6 of 27
goes much broader in terms of defining inequality. For example,
in third
world countries over 90% of students do not possess the
necessary life
skills for a career and to sustain themselves. This can fall under
inequality, but only if it’s looked at comparatively to other
countries. The
American Economic Association states “A common narrative
frames
globalization as the cause of inequality: by shifting low -skilled
jobs from
wealthier countries to poorer countries, economic integration
has
increased inequality within countries while lowering inequality
between

them.” (Schoder, 2018) This explains that while the top 1% of
the world
are experiencing incredible gains, those less fortunate may not
be seeing
any improvement from economic globalization, thus
contributing to the
worldwide inequality. Globalization according to Luke Martell
is “the
integration of poor countries into a world economy of open
competition”
While this seems like a great idea, it may introduce an uneven
playing
field.
Word Count: 203
References:
Heinze, J. (2020, March 26). The impact of globalization on
poverty and
inequality in the Global South. E. Retrieved June 7, 2022, from
https://www.e-ir.info/2020/03/22/the-impact-of-globalisation-
on-
poverty-and-inequality-in-the-global-south/

PricewaterhouseCoopers. (n.d.). Six big challenges facing
governments in
2021. PwC. Retrieved June 7, 2022, from
https://www.pwc.com/gx/en/issues/reinventing-the-future/take-
on-
tomorrow/government-challenges.html
Schoder, D. (2018, June 18). Is a globalized world a less equal
world?
American Economic Association. Retrieved June 7, 2022, from
6/9/22, 9:22 PM
Page 7 of 27
" Reply
American Economic Association. Retrieved June 7, 2022, from
https://www.aeaweb.org/research/globalization-income-
inequality-trade-
policy
Victoria Blanchard
Tuesday

!
I agree with the speaker that there is inequality in the global
political
economy. Many large fashion companies that are known for
cheaper
fashionable clothes underpay their workers that are in another
country.
The business owners get to sit comfortably while the ones in
unsafe
warehouses, living in harsh conditions, and barely scraping by
get paid a
very small percentage of what the owner gets. The constant
greed of
large corporations feeds into inequality for these type of
workers. The
type of working conditions is unfair to these workers as there is
little to
no consideration for their safety as shown in the video "The
Deadly Cost
of Fashion." For those people, they are doing this as a living to
get out of
poverty but it pays so little it is hard to climb out of it.
Inequality also shows up in the United States. For example, in

the
education system, teachers do not get paid equal to the amount
of work
and time they invest into their classrooms, students, and now
with current
situations, putting their lives on the line to save these children
in case of
a shooting. With the economy getting worse nowadays, just the
regular
full time worker getting paid minimum wage cannot afford to
pay rent,
groceries, utilities, insurance, etcetera all at once. Large
American
6/9/22, 9:22 PM
Page 8 of 27
" Reply
groceries, utilities, insurance, etcetera all at once. Large
American
corporations want higher profits for themselves and investors
and seek
out the cheapest location for manufacturing these goods. Those
locations are usually out of the country.

(word count:246)
Sources:
“On Power and Inequality in the Global Political Economy.”
YouTube, 26
Feb. 2019,
www.youtube.com/watch?v=Sh7NbSmcLQ8
(http://www.youtube.com/watch?v=Sh7NbSmcLQ8)
(http://www.youtube.com/watch?v=Sh7NbSmcLQ8)
.
“Rana Plaza Collapse Documentary: The Deadly Cost of
Fashion | Op-
Docs | The New York Times.” YouTube, 15 Apr. 2014,
www.youtube.com/watch?v=9Fkhzdc4ybw.
Caitlyn Trombly (She/Her)
Tuesday
!
6/9/22, 9:22 PM
Page 9 of 27

" Reply
Hey Vicroia, the same as you, I agree with the speaker in the
video
about there being inequality in the global political economy. I
like
how you mentioned the word greed in your post when speaking
about
big time fashion organizations. I agree that all it can come down
to is
greed when exploiting human beings to the extent that they are
risking their lives to go to work and doing so for an undesirable
wage.
I read the comments on the video “The Deadly Cost of Fashion”
and
one girl made a great point. She said “why is this the first we
are
hearing of this?”. It's not the first time something like this has
happened but I never heard of this case. Makes you wonder if
the
companies want these situations to be swept under a rug so they
may
continue business as usual.

Malynn Nooney
Yesterday
!
6/9/22, 9:22 PM
Page 10 of 27
" Reply
Victoria, the point you bring up about teachers is really
fantastic. I
have first-hand experience with this as my mother is a 20-year
veteran teacher, currently teaching first grade. She invests so
much
time and personal money into her classroom and students and
never
sees any type of compensation for it.
This also introduces another layer of teaching inequalities when
speaking on the difference in resources of well-funded versus
underfunded schools. A school in a poor neighborhood may not
have

the same quality of resources that a well-off school has, thus
creating
significant inequality in the level of education that students are
receiving. The teacher may feel responsible for this, causing
him or
her to invest their personal money to provide better materials
for the
children.
Inequality in education is a huge issue and is clearly not
discussed
often enough. Thank you for shedding light on this.
Word Count: 148
Joselyn De La Cruz (She/Her)
Yesterday
!
6/9/22, 9:22 PM
Page 11 of 27

" Reply
Hello Victoria,
You mentioned that currently, in our country many people are
struggling to pay for necessities even with a full-time job.
Corporations want the biggest sale by any means necessary.
These
corporations very well know that their business choices affect
the
consumers and laborers. Are these CEOs or owners obligated to
help
out their country, even though these big corporations win and
everyone else loses? Purchasing fairer labor, higher taxes, and
keeping consumer prices the same to even out the income class
difference could be beneficial. Should presidents and leaders
enforce
stricter regulations on corporations from distancing the income
class
even further? No matter who you are in this world or what your
job is
everyone is dispensable in this economic world. If one falls
from a

higher position to a menial job, would people then open their
eyes to
see the difference and inequality in this globalized world?
Word Count: 150
Caitlyn Trombly (She/Her)
Tuesday
!
6/9/22, 9:22 PM
Page 12 of 27
" Reply
I agree with the speaker in the video On Power and Inequality
in the
Global Political Economy, especially where she mentioned
“labor
exploitation and global production leads to the creation or
reinforcement
of inequalities across a number of different dimensions”. This
point is
further proven in the collapse documentary. People are dying to

make
cheap and quick turn over clothing for 1st world countries. The
fashion
industry not only uses and abuses its employees all over the
world but
they are also one of the top five polluters in the world. These
global
fashion companies, such as Shein, have been known to pay next
to
nothing to third world citizens in order to sell clothing in larger
countries
like America. The distribution of money in these companies is
unequal,
the owner or investor making millions and paying close to
pennies for
their workers depending on where the factory is. The conditions
in places
like these for work are unsanitary most of the time and the more
people
exploit, the more money they make. This leads to a never
ending cycle of
the investor increasing their wealth from exploitation as the
more money
they have the more workers they can exploit and so on.

Phillips, N. (2019, February 26). On Power and Inequality in
the Global
Economy . YouTube. Retrieved June 7, 2022, from
Ferdous, I., & Fitch, N. (2014, April 5). Rana Plaza collapse
documentary:
The deadly cost of fashion - youtube. YouTube. Retrieved June
7, 2022,
from https://www.youtube.com/watch?v=9Fkhzdc4ybw
Victoria Blanchard
6/9/22, 9:22 PM
Page 13 of 27
Yesterday
" Reply
!
Hello Caitlyn,

In relations to what you said about the distribution of money in
the
companies being unequal, these companies do their best to find
the
cheapest area to open those jobs knowing very well that those
people
are in desperate need of money. They take advantage of these
poor
people and exhaust them for pennies while they are also in
harms
way with the conditions they put them in. It is a cruel reality of
the
large companies in the world, constantly trying to find the
cheapest
workers to make the most profit off of them. Some of those in
power
have no consideration for the poor and do not mind using them
as
stepping stones.
(word count:119)
Jeromy Wilson

Tuesday
!
6/9/22, 9:22 PM
Page 14 of 27
" Reply
The inequality in the global market is indisputably real. The
issue of
labor exploitation is prevalent and urgently requires attention.
In a basic
chain of consequences, cheap (inhumane) labor forces attract
profit
driven corporations (for example Apple, Microsoft, etcetera)
and provide
irresistible incentives for such organizations to pull from this
labor force
to drive profits up and keep costs of the products lower. This
reinforces
and encourages the continuity and expansion of the underpaid
labor
force, attracting more companies to indulge in the use of this
force out of
necessity because it is the only way to keep up with

competitors. This
has a number of negative consequences.
The loss of jobs within the nation of origin of these
companies is
detrimental to the health of a nation. Lack of locally produced
goods
means loss of knowledge on how to produce those goods within
a
community, loss of income sources for local populations, and
loss of
resources because if the work needs to be done overseas, the
resources
needed to make the goods and do the work also need to be sent
overseas. This leads to a level of dependance on outside parties
to have
basic things needed for modern daily life. This also promotes a
scenario
where the locals do not know how to build what they need, but
they can
afford it, while the people who are doing the work can not even
afford to
purchase the goods they produce. This is unsustainable and
counterproductive to the prosperity of any nation, and it should

be
reversed as quickly as possible if any involved wish to have a
realistic
shadow of the future to plan for.
https://www.imf.org/~/media/Files/Publications/WP/2018/wp18
127.ashx
6/9/22, 9:22 PM
Page 15 of 27
Digna Turcios (She/Her)
Yesterday
!
I do agree with Nicola Phillips, she states that inequality is a
problem in
todays world and its mostly hysterical politics. She has done
research on
different angles of inequality and forms of inequality. She states
that
transnational companies, like huge corporations make all the
money and

it only goes toward one source. There are connections between
inequality
and the global political economy. In today's world we can see
how
exploitation of laborers in global production leads to the
creation of
inequality. Multinational companies are set in many locations
across the
world and have the ability to trade with other companies. These
companies ensure economic growth not only in their respective
country
but also in trading with their allies. The World Trade
Organization which
was formally named General Agreements on Tariffs and Trade
became a
formal institution in 1995. The World Trade Organization is
responsible
for 90% of all trades across the world. The WTO has two
procedures, the
first being Trade policy review, which monitors any trades made
from
member states. The second being the dispute settlement body,
which
handles any conflict between states. They listen to both sides

and have a
panel to give a fair resolve between both parties. Companies
like shein
exploit their workers and make very little profit off of the time
and
amount of work they are given. This is a big problem in today's
world,
corporations are the ones that make the most profit while their
workers
are treated as second class citizens and slave away just to make
ends
meet.
word count: 261
6/9/22, 9:22 PM
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Edited by Digna Turcios
(https://canvas.fscj.edu/courses/56644/users/29208) on Jun 8 at
5:29pm
" Reply
References:
On Power and inequality in the global political economy. (2019,
February

26). YouTube. Retrieved June 8, 2022, from
Mingst, K. A., & McKibben, H. E. (2021). Essentials of
International
Relations (Ninth Edition) (9th ed.). W. W. Norton & Company.
Joselyn De La Cruz (She/Her)
Yesterday
!
Yes, I do agree that there is inequality in the global political
economy.
Over the many decades, other countries have shared the upper to
lower
classifications. A possible reason that income inequality exists
is due to
our technological advances. Over time our technology has
gotten
advanced and that can lead to the replacement of human beings

with
possible robots or computers. Unfortunately, having lower
education
could potentially take away job opportunities which could lead
to
6/9/22, 9:22 PM
Page 17 of 27
personnel not having the required skills to do specific jobs. One
of our
popular products, Apple is manufactured in the most favorable
trade
country, China. China offers lower tariffs and cheaper labor.
“The
corporate tax rate in China is 25%. It’s 35% in India, 34% in
Brazil, and
30% in Mexico. Right off the bat, China is at least 5% cheaper”
(Rapoza).
Since the idea is to buy the cheapest deal from anywhere,
corporations
prefer to avoid having business deals with any Unions. Unions
favor the
workers by having better wages and working conditions. China

is chosen
again for its cheaper labor due to worker exploitation. “China
has
comparatively weak labor protections on one hand, and a
diverse pool of
talent on the other—from stitch-and-sew factory workers to
scientists and
other high tech, advanced machine tool operators are all at the
ready”
(Rapoza). Personnel can receive higher wages, but their cities
will adjust
the balance by increasing prices on goods or any everyday
necessities.
Inequality is inevitable in this globalized world and potential
fixes can be
people obtaining higher education to receive more job
opportunities and
distribution of wealth from the rich and powerful to help the
lower
classes.
Word Count: 207 (without citations or references) / 305 (with
citations
and references)

Works Cited
Rapoza, K. (2021, June 29). Why American companies choose
China over
everyone else. Forbes. Retrieved June 7, 2022, from
https://www.forbes.com/sites/kenrapoza/2019/09/03/why-
american-
companies-choose-china-over-everyone-else/?sh=1f48bab571de
6/9/22, 9:22 PM
Page 18 of 27
" Reply
Frances Martinez (She/Her)
Yesterday
!
Nicola Phillips presents a point that historically has been
proven to be
right. We have seen time and time again, from the slave trade
until now

that human beings have been exploited for the gain of power.
They have
been used to increase profit in many areas from the industrial
age to the
ongoing crisis of labor related human trafficking. Companies
many times
seek to offset their costs by taking their business interests
abroad, which
in turn has a horrific side effect, human exploitation. Human
trafficking is
the most profitable business in the world, which furthermore
proves the
downside of Free trade.
Capitalism, which is the belief of economic liberals, is based on
the idea
that free trade is the best way to create growth in an economy.
It gives
the opportunity to foreign investors to expand their capital
beyond their
borders. They believe in lesser government regulation and can
provide
access to better quality goods. Those with lower incomes can
have the
opportunity to have access to a myriad of products. The

downside is that
free trade, unlike we have been led to believe, doesn't create
new jobs.
Statistically is has proved to be responsible for over 20% of job
loss that
occurs worldwide. It creates a disparity within communities and
presents
a higher risk of a state currency being influenced for the
advantage of a
state to benefit their economy. Developing countries, which are
usually
used to mass produce for Multinational Corporations typically
don't have
6/9/22, 9:22 PM
Page 19 of 27
" Reply
used to mass produce for Multinational Corporations typically
don't have
laws to protect against labor exploitation and the marginalized
continue
to be at a disadvantage in this economical structure.
Word Count: 266

Resources:
https://www.statisticser.com/human-trafficking-statistics/
(https://www.statisticser.com/human-trafficking-statistics/)
https://futureofworking.com/6-advantages-and-disadvantages-
of-
free-trade/ (https://futureofworking.com/6-advantages-and-
disadvantages-of-free-trade/)
6/9/22, 9:22 PM
Page 20 of 27
Andrea Cedeno Barcia

3:46pm
!
As explained in the video "On Power and inequality in the
global political
economy," an quoting the words of Professor Nicola Phillips
"inequality is
the defining problem of our age." It is sad to admit but it is
true, and I
agree with this statement, according to the papers Professor
Nicola
Phillips has published, focusing on the labor issues in a micro
scale and
explaining the situations in Latin America as well as India, is
shocking
but at the same time there is a clear need to learn and
understand about
this topic, and that is that the path globalization is taking is
impacting
for the worse the lives of many unfortunate individuals to have
been born
on the upcoming countries that are fighting to have a place in
this race,
also known as globalization and many are suffering and even

loosing
their lives in the process.
Additionally, according to the article "Income Inequality and
Global
Political Polarization: The Economic Origin of Political
Polarization in the
World," the authors explain that "[Income inequality]has
increased in
nearly all regions in the world since the turn of the century." As
previously
mentioned globalization is now perceived as a race and its
growth is
currently being built on the wrong foundation, which leads to
assume that
it will not be sustainable in the long run, which is never a good
sign when
building something new.
WORD COUNT: 232
Resources
6/9/22, 9:22 PM
Page 21 of 27

Edited by Andrea Cedeno Barcia
(https://canvas.fscj.edu/courses/56644/users/26325) on Jun 9 at
3:47pm
" Reply
Gu, Y., & Wang, Z. (2021, November 23). Income inequality
and global
political polarization: The economic origin of political
polarization in the
world - journal of chinese political science. SpringerLink.
Retrieved June
9, 2022, from https://link.springer.com/article/10.1007/s11366-
021-
09772-1
Mingst, K. A., & McKibben, H. E. (2021). Essentials of
International
Relations. W. W. Norton & Company.

6/9/22, 9:22 PM
Page 22 of 27
Valerie Martin
9:09pm
!
I agree with the speakers in both videos. As stated by Nicola
Phillips,
"There is no question of the saliency of the issue" of global
inequality.
When we look into the specifics that would answer her question
of, "
What are the connections between inequality and the global
political
economy?", (Nicola Phillips, Faculti, 2/26/2019), we find
answers in video
#2, the Rana collapse where 1,100 people died and 2,500 were
injured.
When large states or MNC's are able to penetrate the labor

markets of
lesser developed countries, in attempt to cut prices for the
consumer, we
see the effect on people like the workers in the garment
factories in
Bangladesh. To paraphrase our textbook, MNC's find the
countries with
the cheapest source of labor, with governments that are willing
to make
labor concessions, in markets close to their target consumer,
and to set
up production. This also allows them to circumvent taxes and
import
barriers. This is done to satiate the consumer desire for lower
prices and
maximize the MNC's goal of profitability (Karen A. Mingst and
Heather
Elko McKibben, 2021). But, this combines for situations like in
Bangladesh where the government standards for building
regulation and
worker protection are low. Some of the MNC's involved were
Walmart, JC
Penny, and Cato Clothing. Companies that combine to be worth
billions,

paying people low wages to risk their lives making clothes that
cost more
per item, than they make in a month. Then when there is an
accident the
MNC's are protected by the concessions that were made by the
government and are able to leave the workers (or their surviving
relatives)
to fend for themselves after making a company a considerable
amounts
of money. As pointed out in the video about the collapse, "The
Rana
Plaza Donors Trust Fund, which supports victims and their
families, needs
an additional $25 million to cover lost of income and medical
costs."
(Ismail Ferdous and Nathan Fitch, New York Times, 2014) As
reported in
6/9/22, 9:22 PM
Page 23 of 27
2021, Walmart's net income (meaning after expenses were paid
out) was
$37 million per day (Jeff Burton, The Small Business

Times,12/18/2021).
For less than one day of profit, Walmart alone could have
shored up the
needs of the trust fund.
[Jeff Burton "How Much Money Does Walmart Make a Day?"
(The Small
Business Times,12/18/202 )
https://thesmallbusinesstimes.com/how-much-money-does-
walmart-make-a-day/ (https://thesmallbusinesstimes.com/how-
much-
money-does-walmart-make-a-day/) ]
[Nicola Phillips, "On Power and Inequality in the Global
Political
Economy", Faculti, 2/26/2019)
]
[Ismail Ferdous and Nathan Fitch, "Rana Plaza Collapse
Documentary:
The Deadly Cost of Fashion" (The New York Times, 4/15/2014)

(https://www.youtube.com/watch?v=Sh7Nb SmcLQ8)
]
6/9/22, 9:22 PM
Page 24 of 27
" Reply
[Karen A. Mingst and Heather Elko McKibben, "Essentials of
International
Relations", Ninth Edition,, (New York: W. W. Norton, (2021)]
(https://canvas.fscj.edu/about/15236)Mary Grace Floresca
(https://canvas.fscj.edu/about/15236)
9:21pm
!
Hello Professor and Class,
I agree with the speaker in the video. Inequality is a significant
problem
that faces many people. The global production processes reflect

the
dynamics of global inequality. Transnational corporations such
as Apple
have high concentration of assets and wealth. Many companies
have
been investing in third world countries. For example, Coca-Cola
has
invested in many African countries. The companies utilize
cheap labor in
third world countries to maximize profits. They acquire more
wealth by
exploiting cheap labor in other countries.
The Rana Plaza collapse is a perfect example of the problem of
inequality. The collapse relates to American lives. The factories
in Rana
Plaza were associated with brands and companies such as
Walmart,
Mango and Joe Fresh. When the building collapsed, there were
clothing
labels that were photographed. The clothing labels were found
in various
US stores. This showed that many Americans were able to
access clothes

at low prices because of individuals working in countries such
as
6/9/22, 9:22 PM
Page 25 of 27
at low prices because of individuals working in countries such
as
Bangladesh. Those in the Rana Plaza were working for first
world
countries. The Bangladesh workers were toiling in sweatshops
for low
wages. The building collapse was a proof that the workers were
subjected
to unsafe working conditions. This shows that there isa problem
of
inequality as laborers in other countries work under poor
working
conditions and low wages to benefit transnational companies. It
also
shows that there is labor exploitation in global production that
leads to
inequalities.
Works Cited

“On Power and inequality in the global political economy.”
YouTube,
uploaded by Faculti, Feb 27, 2019.
“Rana Plaza Collapse Documentary: The Deadly Cost of
Fashion | Op-
Docs | The New York Times.” YouTube, uploaded by The New
York Times,
April 16, 2014.
6/9/22, 9:22 PM
Page 26 of 27
" Reply
6/9/22, 9:22 PM
Page 27 of 27

ARTICLE IN PRESS
0268-4012/$ - se
doi:10.1016/j.iji
�
Correspond
E-mail addr
International Journal of Information Management 26 (2006)
302–312
www.elsevier.com/locate/ijinfomgt
Innovation and knowledge creation:
How are these concepts related?
Silvio Popadiuk
a,�
, Chun Wei Choo
b
a
Management Post-graduation Program, Universidade
Presbiteriana Mackenzie [Mackenzie Presbyterian University],
Rua da Consolac-ão, 896, Conjunto 76, São Paulo 01302-907,
Brazil
b
Faculty of Information Studies, University of Toronto, 140 St.
George Street, Toronto, Ont., Canada M5S 3G6
Abstract

Innovation and knowledge creation—these two concepts have a
strong relationship but this relationship has not been
examined systematically. This paper reviews the important
theoretical work in both streams of research, highlighting the
fundamental similarities and differences. Four major models of
innovation are compared, and the distinction between
radical and incremental innovation is examined. The nature of
organizational knowledge and the process of knowledge
creation are presented. We then compare the principal findings
of the research on innovation and knowledge creation, and
conclude with a new framework that differentiates types of
innovation based on a knowledge creation perspective.
r 2006 Elsevier Ltd. All rights reserved.
Keywords: Radical innovation; Incremental innovation;
Knowledge management; Knowledge creation
1. Introduction
Since the beginning of the last decade when the competitive
environment went through a major
transformation due to globalization, business organizations have
intensified their search for strategies that will
give them a sustainable competitive advantage. Such strategies
generally require that the firm continuously
differentiates its products and services, that is, firms must
constantly be innovative. This continuous innovation
requires a well-planned system of knowledge management that
enables the firm to excel in technological,
market and administrative knowledge creation. Innovation and
knowledge creation are two concepts that have

a strong but complex relationship that is not often examined.
This article reviews both concepts in an attempt
to show how they are fundamentally different yet deeply
connected.
The next two sections of the paper discuss the theory of
innovation and knowledge creation. The following
section analyzes the relationship between innovation and
knowledge creation, and concludes with a theoretical
synthesis.
e front matter r 2006 Elsevier Ltd. All rights reserved.
nfomgt.2006.03.011
ing author. Tel.: +55 11 211 48597; fax: +55 11 211 48600.
esses: [email protected] (S. Popadiuk), [email protected] (C.W.
Choo).
www.elsevier.com/locate/ijinfomgt
dx.doi.org/10.1016/j.ijinfomgt.2006.03.011
mailto:[email protected]
mailto:[email protected]
ARTICLE IN PRESS
S. Popadiuk, C.W. Choo / International Journal of Information
Management 26 (2006) 302–312 303
2. Innovation: concepts and models
In the research literature, the definition of innovation includes
the concepts of novelty, commercialization
and/or implementation. In other words, if an idea has not been
developed and transformed into a product,
process or service, or it has not been commercialized, then it
would not be classified as an innovation.

Definitions of innovation can be found in Rowe and Boise
(1974), Dewar and Dutton (1986), Rogers (1983),
Utterback (1994), Afuah (1998), Fischer (2001), Garcia and
Calantone (2002), McDermott and O’Connor
(2002), Pedersen and Dalum (2004), Frascati Manual (2004).
We suggest that the definition proposed by
Urabe (1988) is appropriate for our discussion here:
‘‘Innovation consists of the generation of a new idea and its
implementation into a new product, process or
service, leading to the dynamic growth of the national economy
and the increase of employment as well as
to a creation of pure profit for the innovative business
enterprise. Innovation is never a one-time
phenomenon, but a long and cumulative process of a great
number of organizational decision-making
process, ranging from the phase of generation of a new idea to
its implementation phase. New idea refers to
the perception of a new customer need or a new way to produce.
It is generated in the cumulative process of
information-gathering, coupled with an ever-challenging
entrepreneurial vision. Through the implementa-
tion process the new idea is developed and commercialized into
a new marketable product or a new process
with attendant cost reduction and increased productivity’’
(Urabe, 1988, p. 3).
Afuah (1998) refers to innovation as new knowledge
incorporated in products, processes, and services. He
classifies innovations according to technological, market, and
administrative/organizational characteristics, as
shown in Table 1 below.
Technological innovation is the knowledge of components,
linkages between components, methods,

processes and techniques that go into a product or service. It
may or may not require administrative
innovation. It can be a product, a process, or a service. Product
or service innovations should be new products
or services aiming at satisfying some market needs. Process
innovation is concerned with introducing new
elements into an organization’s operations such as input
materials, task specifications, work and information
flow mechanisms, and equipment used to produce a product or
render a service (Afuah, 1998).
The OECD’s Frascati Manual (2004) and Oslo Manual (2004)
present a set of activities in technological
innovation. These manuals consider R&D as only one activity
that may be carried out at different phases of
the innovation process, acting not only as the original source of
inventive ideas but also as a form of problem-
solving that can be called on at any point up to implementation.
Market innovation refers to the new knowledge embodied in
distribution channels, product, applications, as
well as customer expectations, preferences, needs, and wants
(Afuah,1998). The main idea is the improvement
of the components of the marketing-mix, that is, product, price,
promotion and place (Kotler & Armstrong,
1993). The Frascati Manual (2004) specifies that market
innovation concerns marketing of new products and
covers activities in connection with the launching of a new
product. These activities may include market tests,
adaptation of the product for different markets and launch
advertising, but exclude the building of
distribution networks for market innovations.
Administrative innovation involves innovations that pertain to
the organizational structure and
administrative processes. In this case it can be specifically

related to strategies, structure, systems, or people
in the organization.
Table 1
Generic classification of innovation (adapted from Afuah, 1998)
Generic classification of innovation
Technological Market Administrative
Product Product Strategy
Process Price Structure
Service Place Systems
Promotion People
ARTICLE IN PRESS
Management 26 (2006) 302–312304
2.1. Technology and market perspectives
A number of authors have combined technology and market
perspectives in their development of
theoretical models of innovation. We compare four influential
models by Abernathy and Clark (1985),
Henderson and Clark (1990), Tushman, Anderson, and O’Reilly
(1997), and Chandy and Tellis (1998). These
models are outlined in Fig. 1.
(1) Abernathy and Clark’s model (1985) classifies innovations
according to their impact on the market
knowledge and technological capabilities of the firm:

differentiating between the preservation or destruction of
this knowledge and capability. A firm’s technological
capabilities could become obsolete while its market
capabilities remain intact. Even if the technological capabilities
have been destroyed, a firm can use its market
knowledge to take advantage over a new entrant. From the
combination between market knowledge and
technological capabilities four kinds of innovation arise: (a)
Regular innovation when it builds on the
manufacturer’s existing technological capabilities and the
market knowledge; (b) Niche innovation if it
preserves technological capabilities but market knowledge is
rendered obsolete; (c) Revolutionary innovation
if it turns technological capabilities obsolete but preserves
market knowledge; (d) Architectural innovation if
both technological and market capabilities become obsolete.
(2) Henderson and Clark’s model (1990) argue that to build
products demands two kinds of knowledge:
knowledge of a product’s components and knowledge of the
linkages between components. They call the latter
architectural knowledge, ‘‘that change the way in which the
components of a product are linked together,
while leaving the core design concepts (and thus the basic
knowledge underlying the components) untouched.’’
(p. 10). They explain that the distinction between the product as
a whole—the system—and the product in its
parts—the components, have a long history in literature. A
component is defined as a physically distinct
portion of the product that embodies a core design concept and
performs a well-defined function. According
to them a successful product development requires both types of
knowledge. The combination of component
and architectural knowledge produces four kinds of innovation:
(a) Incremental innovation, where both
architectural and component knowledge are enhanced

simultaneously; (b) Radical innovation, where both
types of knowledge are ‘‘destroyed’’; (c) Architectural
innovation, where component knowledge is enhanced
but architectural knowledge is destroyed;(d) Modular
innovation, where component knowledge is destroyed
but architectural knowledge is enhanced.
(3) Tushman et al.’s model (1997), while discussing technology
cycles and innovations streams, also
considers types of innovation according to impact on market
knowledge and technology. Market knowledge
is considered as ‘‘new’’ or ‘‘existing’’ which are not so
different from the two levels of ‘‘destroyed’’ and
‘‘existing’’ proposed by Abernathy and Clark above. The
second dimension is also concerned with technology
(1) ABERNATHY and CLARK MODEL (1985) (2)
HENDERSON and CLARK MODEL
(1990)
Technical capabilities Architectural knowledgeMarket
knowledge Preserved Destroyed
Component
knowledge Enhanced Destroyed
Preserved Regular
innovation
Revolutionary
Innovation
Enhanced
Incremental
innovation
Architectural

innovation
Destroyed
Niche
innovation
Architectural
Innovation
Destroyed
Modular
innovation
Radical
innovation
(3) TUSHMAN et Al. MODEL (1997) (4) CHANDY and
TELLIS MODEL (1998)
Technology – (R & D) Customer need fulfillment
per dollarMarket
Incremental Radical
Newness
of
technology Low High
New
Architectural
innovation
Major product,
service innovation

Low
Incremental
innovation
Market
breakthrough
Existing
Incremental
product, service,
process
Major process
innovation
High
Technological
breakthrough
Radical
innovation
Fig. 1. Four models of innovation.
ARTICLE IN PRESS
Management 26 (2006) 302–312 305
but here, it is classified as ‘‘incremental’’ or ‘‘radical’’. Using
these dimensions, four kinds of innovation are
identified: (a) Architectural innovation—new markets are
created but with an incremental improvement in
technology (Canon’s small copier, Sony’s portable radio); (b)
Incremental products, service or process

innovation—the markets are the same, based on incremental
improvement in technology; (c) Major product
or service innovation—a radical change in technology and the
creation of new markets (DOS to Windows;
Analog to Digital); (d) Major process innovation—a radical
change in technology but the market remains
the same. The authors also suggest a fifth kind of innovation,
generational innovation, (indicated by a circle
in Fig. 1, model 3) which represents an intermediate phase,
where both market and technology are going
through continuous changes.
(4) Chandy and Tellis’ model (1998) again suggest that two
common dimensions underlie most definitions of
innovations: technology and markets. The first dimension
determines the extent to which the technology
involved in a product is new or different from previous
technologies. The second dimension determines the
extent to which the new product fulfills key customer needs
better than existing ones. Combining these two
dimensions leads to four types of product innovations, as shown
in Fig. 1 above: (a) if the newness of
technology is low and the customer need fulfillment per dollar
is low, we see an incremental innovation; (b)
low newness of technology and high customer fulfillment per
dollar means a market breakthrough; (c) high
newness of technology and low customer need fulfillment per
dollar is a technological breakthrough; and (d)
radical innovation is associated with the combination between
high newness of technology and high customer
need fulfillment per dollar.
2.2. Radical and incremental innovations
In the models presented above, a common thread is the
distinction between incremental and radical
innovation. We examine this distinction in greater detail in this

section.
Radical innovations are fundamental changes that represent
revolutionary changes in technology. They
represent clear departures from existing practice (Ettlie, 1983;
Ettlie, Bridges, & O’Keefe, 1984). Dewar and
Dutton (1986) argue that a theoretical model of innovation
should consider three kinds of variables: (a) the
distribution of knowledge: the depth and diversity of knowledge
and extent of exposure to information
obtained from external sources; (b) attitudes of the
organization’s management: the value they place on
change; (c) organizational structure: effects of the
centralization upon adoption behavior.
For Urabe, (1988, p. 3) ‘‘innovation includes both major and
minor changes. Extremely major change is
called a radical innovation, although it is interpreted as radical
in a technological sense. [y] It is usually
the case that in the early stages of a new industry radical
product innovation is the prevalent mode of
innovation, but it has little if any economic impact, because
product design is still in flux and the market is
uncertain’’.
For Pedersen and Dalum (2004), radical innovation is a major
change that represents a new technological
paradigm. It implies that the codes developed to communicate
changing technology will become inadequate .
Radical change creates a high degree of uncertainty in
organizations and industry. It also sweeps away
significant parts of previous investments in technical skills and
knowledge, designs, production techniques,
plants and equipment. The change is not necessarily delimited
by the supply side. It comes from a change on
the demand side and in the organizational or institutional

structure.
Incremental innovations. The OECD’s Oslo Manual (2004)
classifies incremental innovation as other
changes in products and processes like changes which are
‘‘insignificant,’’ minor, or do not involve a sufficient
degree of novelty. Novelty refers to the aesthetic or other
subjective qualities of the product. For example, the
introduction of drip-dry shirts, or ‘‘breathable’’ waterproof
mountain gear, is an incremental product
innovation. In the travel industry, on-line booking and
information services, or a telephone service in trains
would also be incremental innovations.
Stamm (2003) details differences between incremental and
radical innovation according to nine perspectives,
summarized in Table 2 below.
Since innovation can be understood as a result of knowledge
creation and application, we next discuss
major concepts in the management of organizational knowledge
creation and use.
ARTICLE IN PRESS
Table 2
Difference between incremental and radical innovation (Stamm,
2003)
Focus Incremental Radical
Time frame Short term—6 to 24 months Long term—usually 10
year plus

Development trajectory Step after step from conception to
commercialization, high levels of certainty
Discontinuous, iterative, set-backs, high levels of
uncertainty
Idea generation and
opportunity recognition
Continuous stream of incremental improvement;
critical events large anticipated
Ideas often pop up unexpectedly, and from
unexpected sources, slack tends to be required;
focus and purpose might change over the course
of the development
Process Formal, established, generally with stages and
gates
A formal, structured process might hinder
Business case A complete business case can be produced at the
outset, customer reaction can be anticipated
The business case evolves throughout the

development, and might change; predicting
customer reaction is difficult
Players Can be assigned to a cross-functional team with
clearly assigned and understood roles; skill
emphasis is on making things happen
Skill areas required; key players may come and
go; finding the right skills often relies on informal
networks; flexibility, persistence and willingness
to experiment are required
Development structure Typically, a cross-functional team
operates within
an existing business unit
Tends to originate in R&D; tends to be driven by
the determination of one individual who pursues
it wherever he or she is
Resource and skill
requirements
All skills and competences necessary tend to be

within the project team; resource allocation
follows a standardized process
It is difficult to predict skill and competence
requirements; additional expertise from outside
might be required; informal networks; flexibility
is required
Operating unit involvement Operating units are involved from
the beginning Involving operating units too early can again lead
to great ideas becoming small
Management 26 (2006) 302–312306
3. Knowledge creation in organizations: concepts and models
3.1. Categories of organizational knowledge
Knowledge has been defined as ‘‘justified true belief’’ that
increases an organization’s capacity for effective
action (Nonaka, 1994; Nonaka & Takeushi, 1995). Knowledge
relevant to business organizations would
include facts, opinions, ideas, theories, principles, models,
experience, values, contextual information, expert
insight, and intuition (Mitri, 2003). Davenport and Prusak
(1998) describe knowledge as a fluid mix of framed
experiences, values, context information, and expert insight that
provides a framework for evaluating and
incorporating new experiences and information.
Nonaka and Takeushi (1995) view knowledge as composed of

two dimensions: tacit and explicit, based on
the work of Polanyi (1967). The tacit dimension is based on
experience, thinking, and feelings in a specific
context, and is comprised of both cognitive and technical
components. The cognitive component refers to an
individual’s mental models, maps, beliefs, paradigms, and
viewpoints. The technical component refers to
concrete know-how and skills that apply to a specific context.
The explicit dimension of knowledge is
articulated, codified, and communicated using symbols (Nonaka
& Takeushi, 1995). The explicit dimension
may also be classified as object based or rule-based. Knowledge
is object based when it is codified in words,
numbers, formulas, or made tangible as equipment, documents,
or models. It is rule based when the
knowledge is encoded as rules, routines, or standard operating
procedures (Choo, 1998). Cyert and March
(1992) discuss four types of rule-based procedures (a) task
performance rules that specify methods for
accomplishing organizational tasks and are important because
they embody and facilitate the transfer of
learning; (b) record-keeping rules on what records and how such
records should be maintained by the
organization; (c) information-handling rules that define the
organization’s communication system, including
ARTICLE IN PRESS
Management 26 (2006) 302–312 307
how to distribute and summarize internal and external
information; and (d) planning rules that guide the
planning process and the allocation of resources among the
activities of the organization.

Choo (1998) also discusses a third kind of knowledge: cultural
knowledge. This refers to the ‘‘assumptions
and beliefs that are used to describe, and explain reality, as well
as the conventions and expectations that are
used to assign value and significance to new information’’
(p.112). Cultural knowledge is not codified but is
diffused over the ties and relationships that connect a group.
Although Nonaka and Takeushi (1995) do not
mention cultural knowledge, they distinguish between
knowledge of the individual and the collective.
Individual knowledge is created by and exists in the individual
according to her beliefs, attitudes, opinions,
and the factors that influence her personality formation. Social
knowledge is created by and resides in the
collective actions of a group. It involves the norms that guide
intra-group communication and coordination.
Considering a particular context, collective knowledge could be
related to cultural knowledge.
Alavi and Leidner (2001) suggest different classification of
knowledge depending on its use or usefulness.
For example, according to Zack (1998), knowledge could be
classified as procedural (know-how), causal
(know-why), conditional (know-when), and relational (know-
with). A more pragmatic approach classifies
knowledge according to its usefulness to organizations. In this
case, knowledge refers to the understanding of
customers, products, processes, and competitors, that is, the
components of the organization’s value chain
(Porter, 1985). These approaches are compared in Fig. 2.
3.2. Knowledge creation
One of the most influential theories of organizational
knowledge creation is that developed by Nonaka and
Takeushi (1995). In their analysis, an organization creates new

knowledge through the conversion and
interaction between its tacit and explicit knowledge.
Understanding the reciprocal relationship between these
two kinds of knowledge would be the key to understand the
knowledge-creating process. The conversion of
tacit and explicit knowledge is a social process between
individuals and is not confined to a single person.
Knowledge conversion occurs in four modes: socialization—
from tacit knowledge to tacit knowledge,
externalization—from tacit knowledge to explicit knowledge,
combination—from explicit knowledge to
explicit knowledge, and internalization—from explicit
knowledge to tacit knowledge, whence the acronym
SECI. Table 3 shows these four modes of knowledge conversion
and Table 4 lists their main features.
According to Nonaka and Nishiguchi (2001) knowledge is often
in the eye of the beholder, and one gives
meaning to a concept through the way one uses it. As justified
true belief, knowledge is a construction of
reality rather than something that is true in an objective or
universal way. Knowledge is both explicit and tacit
and effective knowledge creation depends on an enabling
context. Such context can be physical, virtual,
mental, or—more likely—all three. Knowledge is dynamic,
relational, and based on human action; it depends
upon the situation and people involved rather than on absolute
truth or artifacts.
INDIVIDUAL
COLLECTIVE
INTERNAL AND/OR
EXTERNAL VALUE CHAIN
PROCEDURAL: Know how

CAUSAL: Know why
CONDITIONAL: Know when
RELATIONAL: Know with
TACIT
Cognitive
Technical
EXPLICIT
Object based
Rule based
Task performance rules
Record keeping rules
Information handling rules
Planning rules
CULTURAL
Beliefs about the identity and
business of the firm
Beliefs about what
knowledge is valuable to firm
SELECTED KNOWLEDGE CLASSIFICATION
Fig. 2. Categories of organizational knowledge.
ARTICLE IN PRESS

Table 3
Knowledge conversion between tacit and explicit knowledge
(Nonaka & Takeushi, 1995)
Knowledge conversion modes
To Tacit knowledge To Explicit knowledge
From Tacit knowledge Socialization Externalization
From Explicit knowledge Internalization Combination
Table 4
Features of each knowledge conversion mode (Nonaka and
Takeushi, 1995)
Knowledge conversion mode Main features
Socialization Joint activities—shared experiences—spending
time, living in the same environment—
apprenticeship—observing, imitating, practicing the works—
informal meetings outside the
workspace—worldview, mutual trust, pure experience. It
involves capturing knowledge
through direct interactions with suppliers and customers and
walking around inside the
organization, dialogues with competitors, interaction with
external experts, and creation of
a work environment that allows peers.

Externalization Knowledge is crystallized and can be shared by
others by using metaphors, concepts,
hypothesis, diagrams, models, or prototypes. Discrepancies and
gaps between images and
expressions while using these kinds of language’s resources can
help promote "reflection"
and interaction between individuals.
Combination Documents, meetings, telephone conversations, or
computerized communication networks.
Reconfiguration of existing knowledge through sorting, adding,
combining, and
categorizing knowledge. Diffusion, and systematization are the
keys. Collection,
combination, dissemination of knowledge among the
organizational members through
presentations or meetings; edition or processing of knowledge
in the organization to make it
more usable.
Internalization Learning by doing. Knowledge created is shared
throughout organization. Knowledge
internalized into individuals’ tacit knowledge in the form of
share mental models or
technical know-how becomes valuable assets. Activities:

training programs, simulations or
experiments, cross functional development teams; search and
sharing of new values and
thoughts; facilitation of prototyping and benchmarking;
facilitation of challenging spirit;
results shared with the entire department.
Management 26 (2006) 302–312308
Nonaka and Takeushi (1995) stress that the role of the
organization in knowledge creation is to develop
the conditions that would enable knowledge creation at the
individual, group, organizational, or
inter-organizational levels. One enabling condition is to
articulate an organizational intention. This may
be expressed as a knowledge vision which allows the
organization to assess the relevance and usefulness
of new knowledge. Another condition is to foster individual and
group autonomy, encouraging indivi-
duals and groups to share information and act on their own as
far as circumstances permit. Fluctuation
and creative chaos is a deliberate ‘‘breaking down’’ of routines,
habits, or cognitive frameworks, to create a
chaotic situation. Individuals then have to reconsider their basic
perspectives and may need to engage in
dialogue with people inside and outside the organization. Yet
another condition is based on the prin-
ciple of requisite variety which suggests that the internal
diversity of an organization (in terms of its
information, operations, and mental models) should match the
external variety of the environment for
effective adaptation.

4. Innovation and knowledge creation
Table 5 summarizes our discussion of innovation and knowledge
creation and juxtaposes the key
concepts that characterize the research in these two areas. Our
review of the literature suggests a number
of ways that innovation depends on knowledge creation.
Innovation consists of new ideas that have
ARTICLE IN PRESS
Table 5
Comparison of innovation and knowledge creation
Innovation Knowledge creation
Definition Generating ideas and implementing them to produce
value for the
organization, suppliers and consumers
Sharing mental, emotional and active
knowledge in such a way that the results lead
to aggregated value
Generic
classification
Technological: product, process, service; Market: product,
price,

promotion, place; Administrative: strategy, structure, systems,
culture
Tacit
Explicit
Cultural
Specific selected
classification
Two dimensions Market knowledge + technical capabilities
Individual – collective
Component + architectural knowledge Based on value chain
Market orientation + Change in technology Procedural, causal,
conditional, relational
Radical, incremental, architectural, regular, niche
Perspective Technological—Market—Administrative Individual,
group, organizational, inter-
organizational
Principles Combination of resources and capabilities aiming at
the generation of
sustainable competitive advantage
Sharing experiences, learning

Process Idea phase, feasibility phase, capability phase, launch
phase SECI Model: Socialization, externalization,
combination, and internalization—creating
concepts, justifying concepts, building
prototype, cross-leveling knowledge
Time frame Continuous or ad hoc—short or long term
Continuous
Drivers Competitive environment, dynamic of the market,
leadership,
positioning, differentiation, politics, strategy, effectiveness,
changes,
crisis
Planning, decision making, learning,
sensemaking, understanding, adapting,
interacting, need to be innovate, crisis
Where does it
happen?
Usually in functional areas of companies—more localized The
whole company including technology,
processes, management, implantation,
culture, systems, structure

How does it
happen?
Planned process considering the micro and macro social,
cultural,
political, and economical impacts. Meeting, discussions,
seminars
A continuous process of learning. Training,
meeting, discussions, seminars, lateral
thinking, brainstorms
Enabling conditions Organizational intention, autonomy,
fluctuation and creative chaos,
information redundancy, requisite variety, core capability,
systems,
processes, structures, resources and capabilities.
Organizational intention, autonomy,
fluctuation and creative chaos, information
redundancy, requisite variety, core capability
Sources of: Internal value chain, external-added chain of
suppliers, customers,
universities, government, private laboratories, competitors,
related

industries
Internal value chain, external-added chain of
suppliers, customers, and universities,
government, private laboratories,
competitors, related industries
Outputs New concrete products, processes, services New ideas,
challenges, innovativeness
Measurement Profit, revenues, market share, consumer
satisfaction, image Employee satisfaction, climate, training
hours/employee, employee retention,
autonomy, new ideas
Management 26 (2006) 302–312 309
been transformed or implemented as products, processes or
services, generating value for the firm. Ideas are
formed through a deep interaction among people in
environments that have the conditions to enable
knowledge creation.
Based on our analysis, we may now introduce the role of
knowledge and knowledge creation into the
classification of types of innovation that we presented in
Section 2.1. Two knowledge-based dimensions are
especially germane to innovation: the organization’s
capabilities in knowledge creation; and its knowledge
about the market. As discussed, knowledge creation is a process

that involves tacit and explicit knowledge.
Tacit knowledge in turn is closely related to knowledge
exploration while explicit knowledge is more concerned
with knowledge exploitation. Thus, organizations ‘‘engage in
exploration—the pursuit of new knowledge, of
things that might come to be known. And they engage in
exploitation—the use and development of things
already known.’’ (Levinthal and March 1993, p.105).
Exploration involves discovery and experimentation—
absorbing or creating new concepts or technologies, and
developing new capabilities that may be outside the
ARTICLE IN PRESS
Management 26 (2006) 302–312310
realm of the firm’s current specializations. On the other hand,
exploitation is achieved through accumulating
experience in a small number of specializations, and by
increasing proficiency through repeated practice and
the formalization of knowledge. Using Nonaka and Takeushi’s
SECI model, we may expect exploration to
involve primarily the creation and use of tacit knowledge
through the processes of socialization and
externalization. Conversely, we may expect exploitation to
apply explicit knowledge that has been codified and
formalized in practice through the processes of combination and
internalization.
Both forms of knowledge creation (exploration through the
socialization and externalization of tacit
knowledge, and exploitation through the combination and
internalization of explicit knowledge) take place in
a context where the use of this knowledge is given meaning and
significance. When we are considering

innovation by firms, the relevant context is the market, since
innovations are defined as new ideas that have
been commercialized as products or implemented as processes.
Thus, in addition to knowledge creation, the
other knowledge-based dimension is the organization’s
knowledge about its market. Drawing upon the
innovation models in Section 2.1, we make the distinction
between ‘‘new market knowledge’’ and ‘‘existing
market knowledge.’’
Table 6 below shows how the two dimensions of Knowledge
Creation and Market Knowledge form a
generic classification of types of innovation that is compatible
with the classic innovation models developed in
the research literature on organizational innovations.
In the first quadrant, the firm creates new knowledge through
exploration that is based on tacit knowledge,
and commercializes this knowledge by making use of new
market knowledge. This scenario is one of Radical
Innovation (see Section 2.2), where new ideas often appear
unexpectedly from unexpected sources, usually
through the insight of some experienced individual or group.
The business case for commercializing the new
idea may require addressing new customer needs and entering
new markets (Stamm, 2003). Radical
Innovation here is related to the categories of Architectural
Innovation in Abernathy and Clark (1985); Major
Product, Service Innovation in Henderson and Clark (1990); and
Radical Innovation in Tushman et al. (1997)
and Chandy and Tellis (1998).
In the second quadrant, new knowledge generated through
exploration is applied in the context of existing
market knowledge. A typical scenario in this case would be one
of Major Process Innovation as described by

Tushman et al. (1997) where there is a significant change in
technology, but the market remains the same
(Section 2.1). Major Process Innovation here is related to the
categories of Revolutionary Innovation in
Abernathy and Clark (1985); Architectural Innovation in
Henderson and Clark (1990); and Technological
Breakthrough in Chandy and Tellis (1998).
Table 6
Generic classification of innovation in a knowledge creation
perspective
Knowledge creation
Tacit knowledge Explicit knowledge
Socialization and externalization Combination and
internalization
Market knowledge (Exploration) (Exploitation)
New market knowledge Architectural innovation
a
Niche innovation
a
Radical innovation
b
Modular innovation
b
Major product/service innovation
c

Architectural innovation
c
Radical innovation
d
Market breakthrough
d
Existing market knowledge Revolutionary innovation
a
Regular innovation
a
Architectural innovation
b
Incremental innovation
b
Major process innovation
c
Incremental product, service, process innovation
c
Technological breakthrough
d
Incremental innovation
d
a
Abernathy and Clark, 1985.

b
Henderson and Clark, 1990.
c
Tushman et al., 1997.
d
Chandy and Tellis, 1998; see Section 2.1.
ARTICLE IN PRESS
Management 26 (2006) 302–312 311
In the third quadrant, the firm creates new knowledge through
exploitation that combines existing explicit
knowledge, and commercializes this knowledge by using new
market knowledge. In product development, an
important source of innovation is the knowledge that has been
codified (i.e. made explicit) about the product’s
components and how they may be linked together.
Reconfigurations of component architectures can lead to
new products for new markets. Thus, a typical scenario in this
case would be one of Architectural Innovation as
described by Tushman et al. (1997) where new markets are
created based on incremental improvement in
technology. Architectural Innovation here is related to the
categories of Niche Innovation in Abernathy and
Clark (1985); Modular Innovation in Henderson and Clark
(1990); and Market Breakthrough in Chandy and
Tellis (1998).
Finally, in the fourth quadrant, the firm creates new knowledge
through the exploitation of explicit
knowledge, and commercializes this knowledge with existing
market knowledge. This scenario is one of
Incremental Innovation (see Section 2.2), where changes in

products and processes are relatively minor, and do
not involve a high degree of novelty. The business case for
commercialization is often clear, and customer
reaction can be anticipated (Stamm, 2003). Incremental
Innovation here is related to the categories of Regular
Innovation in Abernathy and Clark (1985); Incremental
Innovation in Henderson and Clark (1990) and
Chandy and Tellis (1998); and Incremental Product, Service,
Process Innovation in Tushman et al. (1997).
We conclude with a call for more research in order to develop a
fuller understanding of the interaction
between innovation and knowledge creation. Our discussion
here suggests that knowledge creation is focused
on the generation and application of knowledge that leads to
new capabilities for the firm. Innovation, on the
other hand, is also concerned with how these new capabilities
may be turned into products and services that
have economic value in markets. Knowledge about markets
becomes a critical component of the innovation
process. It is this continuous interaction of technical knowledge
and market knowledge that will define a firm’s
capacity to innovate and therefore to prosper in an increasingly
competitive environment.
Acknowledgements
The authors would like to thank CAPES, Coordenac-ão de
Aperfeic-oamento de Pessoal de Nı́vel Superior,
Ministério da Educac-ão, Brası́lia, DF, Brazil, 70351-970,
http://www.capes.gov.br/capes/portal/, Universi-
dade Presbiteriana Mackenzie [Mackenzie Presbyterian
University], www.mackenzie.com.br, Faculty of
Information Studies, University of Toronto,
http://www.fis.utoronto.ca/.
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Silvio Popadiuk is a Professor of the Management Post
Graduation Program at Universidade Presbiteriana Mackenzie
[Mackenzie
Presbyterian University], São Paulo, Brazil:
www.mackenzie.com.br. His research interests include studies
of knowledge management,
knowledge creation, innovation, information systems, research
methods, statistics, decision making, and ontology. His papers
were
published in several Brazilian journals, national and
international conferences. He holds a Ph.D. in management
from University of São
Paulo, Brazil, and worked for 15 years, from 1984 to 1999, at
Eletropaulo, the biggest power company in Brazil.
Chun Wei Choo is a professor at the Faculty of Information
Studies, University of Toronto. His research interests are
information
management, information seeking, and organizational learning.
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http://www.oecd.org/dataoecd/35/61/2367580.pdf
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bocconi.it/papers.php?tric=Pedersen&cric=author&Inv
ia=SEARCH&Invia=SEARCH
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related?IntroductionInnovation: concepts and
modelsTechnology and market perspectivesRadical and
incremental innovationsKnowledge creation in organizations:
concepts and modelsCategories of organizational
knowledgeKnowledge creationInnovation and knowledge
creationAcknowledgementsReferences
Instant Diagnosis
Since 1954, troopers have used breathalyzers to determine
whether drivers have imbibed--and just how much. Jun Ye, a
physicist at the University of Colorado, has transported the
concept into an entirely new realm: medical diagnostics. The
device he's designed detects thousands of different biological
molecules in a single exhalation, creating a snapshot of the
breath's contents that could signal the presence of illnesses,
from cancer to cystic fibrosis. This split-second diagnosis is

powered by a laser called an "optical frequency comb," which
emits a wide spectrum of lightwaves that interacts with airborne
compounds. "You have this rainbow of light coming out in a
regularly spaced comb pattern," Ye says. "When breath
molecules fly through the rainbow, they set off resonant
frequencies that make the comb look like it has missing teeth."
If the resulting pattern shows the presence of carbon monoxide,
hydrogen peroxide and nitric oxide, for example, the exhaler
may be suffering from asthma. "You don't have to wait days for
test results," Ye says. "Within a minute, you know what's going
on."
Targeted Delivery
Pills may treat symptoms of the illness they're designed to fight,
but when they're absorbed into the bloodstream indiscriminately
they can also trigger debilitating side effects. Chemotherapy
agents, for instance, cause nausea and hair loss, while
antibiotics can trigger fatigue and shortness of breath. To help
patients avoid side-effect doldrums, researchers at Philips's
pharmaceutical division are developing the medical equivalent
of a targeted missile-delivery system. Philips scientists place
particles of drugs inside microscopic bubbles of fluorocarbon
gas and then inject them into a patient's bloodstream. After the
bubbles have reached the area flagged for treatment, a
technician administers a high-energy ultrasound pulse. "When
you hit a certain ultrasound resonance, the bubbles break, and
that disperses the particles," says Christopher Hall, lead
researcher on the project. Hall hopes doctors will someday be
able to use bubble-encased drugs to treat prostate, breast and
brain cancers, eliminating the grueling physical toll usually
associated with such therapies. "Microbubbles let you give a
dose in a more rational way," he says. "You can deliver a high
concentration of the right drug to the spot where you want it."
Invisible skyscraper

Pasadena-based firm GDS Architects’ new building in Incheon,
South Korea, is guaranteed not to be an eyesore. Last August
the South Korean government granted approval for Tower
Infinity, a 1476-foot-tall invisible skyscraper. The Infinity will
be built near the Incheon International Airport, but Tower
Infinity will be located outside of aviation corridors and will
have standard aviation-warning lights. While cities such as
Dubai and Shanghai are competing for the status of building the
biggest skyscrapers, the Infinity seeks to be the most novel.
“Instead of symbolizing prominence as another of the world’s
tallest towers, our solution aims to provide the w orld’s first
invisible tower to showcase South Korean innovation,” says
GDS’s principal designer, Charles Wee.
Here's how it works. A series of 18 optical HD cameras are
placed at three levels along the tower’s height. The six cameras
at each level take live feeds of the surrounding views, and then
the images are digitally processed, scaled, rotated, and merged
to form one panoramic view. Rows of LED screens opposite
each camera then project the view onto the glass facade,
blending the tower seamlessly into the skyline.
Cub Cadet RZT-S Zero Mower ($4500)
The RZT-S Zero combines cutting-edge innovations: It's a
steering-wheel-controlled, zero-turn mower that is entirely
electric-powered. A 48-volt battery pack powers four brushless
motors—two for the rear wheels and two for the blades inside a
42-inch deck. The design enables 60 minutes of near-silent
operation, which is ideal for early-morning mowing, when
temperatures are cooler. A steering wheel, rather than
traditional lap bars, operates all four wheels for ultra-
responsive control. Once the mower is fully discharged, it plugs
into a standard wall outlet for overnight recharging.
Poo-Pourri is Working When Nobody Knows When You Go
April 25, 2014
by Elisha Marshall

0 Comment
Spray before you go and no one else will ever know. Poo-Pourri
is a blend of essential oils that prevents unwanted bathroom
odors from showing up in the first place. Just spray a few
squirts in the toilet-bowl and a protective layer of oils form.
This personal care innovation is changing the daily routines of
people worldwide. Poo-Pourri is nominated in the Consumer
Goods, Personal Care category for the 2014 Edison Awards.
Learn more about how Poo-Pourri works its magic.
1/4
-EN
Disruptive innovation means to reinvent a technology, business
model, or simply
invent it all together. There are many great example for
disruptive innovation, but our
three favorites are Waze, Airbnb and Uber. Disruptive
innovation generates
new markets and values, in order to disrupt existing ones.
Disruptive innovators significantly alter and improve a product
or service in ways
that the market did not expect. Thus, firstly by discovering new
categories of
customers, and secondly by lowering costs and enhancing
quality in the existing
market. They do this partly by harnessing new technologies but
also by developing
new business models and exploiting old technologies in new

ways.
As opposed to disruptive innovation, sustaining innovation,
seeks to improve
existing products. Meaning, it does not create new markets or
values, but rather
merely develop existing ones.
The “innovator’s dilemma” is the tough choice any company
faces when it has to
choose between holding onto an existing market by doing the
same, yet slightly
better (sustaining innovation), or capturing new markets by
embracing new
technologies and adopting new business models (disruptive
innovation).
In order to achieve cutting-edge innovation within a company
while creating a long-
lasting business advantage, the latter should aspire to achieve
both revolution and
evolution. In other words, disruptive innovation and sustaining
innovation do not
necessarily need to be alternative to one another, but rather
complementary
measures.
Disruptive and Sustaining Innovation
Develop evolutions while seeking revolutions
Perspectives
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us.html?icid=top_contact-us
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Summary.
Disruptive Innovation
What Is Disruptive Innovation?
by Clayton M. Christensen, Michael E. Raynor, and Rory
McDonald
From the Magazine (December 2015)
For the past 20 years, the theory of disruptive innovation has
been
enormously influential in business circles and a powerful tool
for predicting which
industry entrants will succeed. Unfortunately, the theory has
also been widely
misunderstood, and the “disruptive” label has been applied too
carelessly anytime
a market newcomer shakes up well-established incumbents.
In this article, the architect of disruption theory, Clayton M.
Christensen, and his
coauthors correct some of the misinformation, describe how the
thinking on the
subject has evolved, and discuss the utility of the theory.

They start by clarifying what classic disruption entails—a small
enterprise targeting
overlooked customers with a novel but modest offering and
gradually moving
upmarket to challenge the industry leaders. They point out that
Uber, commonly
hailed as a disrupter, doesn’t actually fit the mold, and they
explain that if
https://hbr.org/topic/disruptive-innovation
https://hbr.org/search?term=clayton%20m.%20christensen
https://hbr.org/search?term=michael%20e.%20raynor
https://hbr.org/search?term=rory%20mcdonald
managers don’t understand the nuances of disruption theory or
apply its tenets
correctly, they may not make the right strategic choices.
Common mistakes, the
authors say, include failing to view disruption as a gradual
process (which may lead
incumbents to ignore significant threats) and blindly accepting
the “Disrupt or be
disrupted” mantra (which may lead incumbents to jeopardize
their core business as
they try to defend against disruptive competitors).

The authors acknowledge that disruption theory has certain
limitations. But they
are confident that as research continues, the theory’s
explanatory and predictive
powers will only improve.
JUST FOR SUBSCRIBERS
The theory of disruptive innovation, introduced in these pages
in
1995, has proved to be a powerful way of thinking about
innovation-
driven growth. Many leaders of small, entrepreneurial
companies
praise it as their guiding star; so do many executives at large,
well-
established organizations, including Intel, Southern New
Hampshire
University, and Salesforce.com.
Unfortunately, disruption theory is in danger of becoming a
victim of
its own success. Despite broad dissemination, the theory’s core
concepts have been widely misunderstood and its basic tenets
frequently misapplied. Furthermore, essential refinements in the

theory over the past 20 years appear to have been overshadowed
by
the popularity of the initial formulation. As a result, the theory
is
sometimes criticized for shortcomings that have already been
addressed.
There’s another troubling concern: In our experience, too many
people who speak of “disruption” have not read a serious book
or
article on the subject. Too frequently, they use the term loosely
to
invoke the concept of innovation in support of whatever it is
they
wish to do. Many researchers, writers, and consultants use
“disruptive innovation” to describe any situation in which an
industry
is shaken up and previously successful incumbents stumble. But
that’s
much too broad a usage.
close
The Ubiquitous “Disruptive

Innovation”
Visual by Clayton M. Christensen ,
Michael E. Raynor , and Rory McDonald
The problem with conflating a
disruptive innovation with any
breakthrough that changes an
industry’s competitive patterns is
that different types of innovation
require different strategic
approaches. To put it another way,
the lessons we’ve learned about
succeeding as a disruptive
innovator (or defending against a
disruptive challenger) will not apply to every company in a
shifting
market. If we get sloppy with our labels or fail to integrate
insights
from subsequent research and experience into the original
theory,
then managers may end up using the wrong tools for their
context,

reducing their chances of success. Over time, the theory’s
usefulness
will be undermined.
This article is part of an effort to capture the state of the art.
We begin
by exploring the basic tenets of disruptive innovation and
examining
whether they apply to Uber. Then we point out some common
pitfalls
in the theory’s application, how these arise, and why correctly
using
the theory matters. We go on to trace major turning points in the
evolution of our thinking and make the case that what we have
learned allows us to more accurately predict which businesses
will
grow.
https://hbr.org/visual-library/2015/12/the-ubiquitous-disruptive-
innovation
First, a quick recap of the idea: “Disruption” describes a
process

whereby a smaller company with fewer resources is able to
successfully challenge established incumbent businesses.
Specifically,
as incumbents focus on improving their products and services
for
their most demanding (and usually most profitable) customers,
they
exceed the needs of some segments and ignore the needs of
others.
Entrants that prove disruptive begin by successfully targeting
those
overlooked segments, gaining a foothold by delivering more-
suitable
functionality—frequently at a lower price. Incumbents, chasing
higher profitability in more-demanding segments, tend not to
respond vigorously. Entrants then move upmarket, delivering
the
performance that incumbents’ mainstream customers require,
while
preserving the advantages that drove their early success. When
mainstream customers start adopting the entrants’ offerings in
volume, disruption has occurred.

Is Uber a Disruptive Innovation?
Let’s consider Uber, the much-feted transportation company
whose
mobile application connects consumers who need rides with
drivers
who are willing to provide them. Founded in 2009, the company
has
enjoyed fantastic growth (it operates in hundreds of cities in 60
countries and is still expanding). It has reported tremendous
financial
success (the most recent funding round implies an enterprise
value in
the vicinity of $50 billion). And it has spawned a slew of
imitators
(other start-ups are trying to emulate its “market-making”
business
model). Uber is clearly transforming the taxi business in the
United
States. But is it disrupting the taxi business?
According to the theory, the answer is no. Uber’s financial and
strategic achievements do not qualify the company as genuinely

disruptive—although the company is almost always described
that
way. Here are two reasons why the label doesn’t fit.
Disruptive innovations originate in low-end or new-market
footholds.
Disruptive innovations are made possible because they get
started in
two types of markets that incumbents overlook. Low-end
footholds
exist because incumbents typically try to provide their most
profitable
and demanding customers with ever-improving products and
services, and they pay less attention to less-demanding
customers. In
fact, incumbents’ offerings often overshoot the performance
requirements of the latter. This opens the door to a disrupter
focused
(at first) on providing those low-end customers with a “good
enough”
product.
In the case of new-market footholds, disrupters create a market
where

none existed. Put simply, they find a way to turn nonconsumers
into
consumers. For example, in the early days of photocopying
technology, Xerox targeted large corporations and charged high
prices in order to provide the performance that those customers
required. School librarians, bowling-league operators, and other
small customers, priced out of the market, made do with carbon
paper or mimeograph machines. Then in the late 1970s, new
challengers introduced personal copiers, offering an affordable
solution to individuals and small organizations—and a new
market
was created. From this relatively modest beginning, personal
photocopier makers gradually built a major position in the
mainstream photocopier market that Xerox valued.
A disruptive innovation, by definition, starts from one of those
two
footholds. But Uber did not originate in either one. It is
difficult to
claim that the company found a low-end opportunity: That
would

have meant taxi service providers had overshot the needs of a
material number of customers by making cabs too plentiful, too
easy
to use, and too clean. Neither did Uber primarily target
nonconsumers—people who found the existing alternatives so
expensive or inconvenient that they took public transit or drove
themselves instead: Uber was launched in San Francisco (a
well-
served taxi market), and Uber’s customers were generally
people
already in the habit of hiring rides.
Uber has quite arguably been increasing total demand—that’s
what
happens when you develop a better, less-expensive solution to a
widespread customer need. But disrupters start by appealing to
low-
end or unserved consumers and then migrate to the mainstream
market. Uber has gone in exactly the opposite direction:
building a
position in the mainstream market first and subsequently
appealing

to historically overlooked segments.
Disruptive innovations don’t catch on with mainstream
customers until quality catches up to their standards.
Disruption theory differentiates disruptive innovations from
what are
called “sustaining innovations.” The latter make good products
better
in the eyes of an incumbent’s existing customers: the fifth blade
in a
razor, the clearer TV picture, better mobile phone reception.
These
improvements can be incremental advances or major
breakthroughs,
but they all enable firms to sell more products to their most
profitable
customers.
Disruptive innovations, on the other hand, are initially
considered
inferior by most of an incumbent’s customers. Typically,
customers
are not willing to switch to the new offering merely because it
is less

expensive. Instead, they wait until its quality rises enough to
satisfy
them. Once that’s happened, they adopt the new product and
happily
accept its lower price. (This is how disruption drives prices
down in a
market.)
Most of the elements of Uber’s strategy seem to be sustaining
innovations. Uber’s service has rarely been described as inferior
to
existing taxis; in fact, many would say it is better. Booking a
ride
requires just a few taps on a smartphone; payment is cashless
and
convenient; and passengers can rate their rides afterward, which
helps ensure high standards. Furthermore, Uber delivers service
reliably and punctually, and its pricing is usually competitive
with (or
lower than) that of established taxi services. And as is typical
when
incumbents face threats from sustaining innovations, many of
the taxi

companies are motivated to respond. They are deploying
competitive
technologies, such as hailing apps, and contesting the legality
of some
of Uber’s services.
Why Getting It Right Matters
Readers may still be wondering, Why does it matter what words
we
use to describe Uber? The company has certainly thrown the
taxi
industry into disarray: Isn’t that “disruptive” enough? No.
Applying
the theory correctly is essential to realizing its benefits. For
example,
small competitors that nibble away at the periphery of your
business
very likely should be ignored—unless they are on a disruptive
trajectory, in which case they are a potentially mortal threat.
And
both of these challenges are fundamentally different from
efforts by
competitors to woo your bread-and-butter customers.
As the example of Uber shows, identifying true disruptive

innovation
is tricky. Yet even executives with a good understanding of
disruption
theory tend to forget some of its subtler aspects when making
strategic decisions. We’ve observed four important points that
get
overlooked or misunderstood:
1. Disruption is a process.
The term “disruptive innovation” is misleading when it is used
to
refer to a product or service at one fixed point, rather than to
the
evolution of that product or service over time. The first
minicomputers were disruptive not merely because they were
low-
end upstarts when they appeared on the scene, nor because they
were
later heralded as superior to mainframes in many markets; they
were
disruptive by virtue of the path they followed from the fringe to
the

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