The perils of information - Evidences from a family MNC

2. LITERATURE REVIEW
 
 
“If I have seen further than others,
it is by standing on the shoulders of giants.” 
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This chapter aims to provide to the reader a theoretical perspective of scientific 
arguments that will discussed afterwards, in order to build solid foundations to 
applied and empirical researches proposed.
 
 
2.1 Knowledge
Historically source of debate in epistemology, knowledge was firstly defined in 
Plato’s Theaetetus (369 BC) as nothing but perception, as true judgement and 
finally as a true judgement with an account. In others words, a statement – to be 
considered knowledge – must be justified, true, and believed. Philosophers (e.g., 
Nozick, and Kirkham) over centuries claimed that these conditions are not
sufficient: this just to premise that, up to now, the idea of knowledge is not 
adequately captured by any definition (Gottschalk-Mazouz, 2008): it has different 
meanings to different individuals (McKinsey & Company, 2000).
Although different definitions, according to McDermott (1999), main knowledge’s 
features are:
 It requires always at least a person that knows;
 It comes from individual’s experience;
 It is invisible and it usually emerges just when a necessity arises;
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Retrieved from Isaac Newton, letter wrote to Robert Hooke on February 5
th
, 1667
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It flows among communities and generations;
 It is transferred using stories, meetings and other not documented practices;
 It is generated at the border of the existing one: it is incremental.
For the scope of this work, knowledge is be generally defined as (Oxford 
dictionary, 2015):
“Facts, information, and skills 
acquired by a person through experience or education.”
This definition implies the involvement of two parts: a source and a recipient unit 
(“a person”, the latter important to distinguish knowledge from information).
Knowledge represents the organizations’ intangible asset par excellence. Nonaka 
(1994) defined it, in an organization-view approach, as:
“Truth believed and justified translatable into capacity to act effectively.” 
The definition employ a contingency perspective (Ambos & Ambos, 2008) on the 
value of knowledge: organizations do not want just theoretical knowledge, unless 
it supports effective actions that generate assessed benefits for the recipient unit.
Hence, the contingency perspective implies – as diffused between scholarly 
thinking – that it is the benefit, relevance or performance rather than the mere 
occurrence of knowledge flows that matters (Ambos & Ambos, 2008; Chini et al., 
2005; Haas & Hansen, 2005; Mahnke & Pedersen, 2004; Schulz, 2003):
knowledge must be effective. Hence – for my purposes – I conceptualize 
knowledge as (Kogut & Zander, 1992):
“Accumulated practical skill or expertise 
that allows one to do something smoothly and efficiently.” 
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To reach effective organizational knowledge, organizations must collect data, and 
then transform them into information. Information elaborated and applied to reality 
is called knowledge. Hence, I rough practically define knowledge as “the result of 
processing available information about a particular real situation, which can 
permit to develop possible scenarios, manage uncertainty, and decide
consciously”.
Figure 5 – Hierarchic taxonomy of knowledge (readapted from it.wikipedia.org)
The last definition includes the term “information”. To define it, a hierarchic 
taxonomy is introduced (figure 5). Starting from the bottom, data are defined as 
“object or event’s attributes that describe physical states” (Boisot, 1998), and they 
do not implicate subjective interpretations and judgements. Information is defined 
as a specific and explicit statement on the world’ status quo, an inference, or an
identity derived from selection and organization of data. Last – at the top of the
pyramid – wisdom represents knowledge distilled and synthetize by intuition and 
experience. 
In order to reach information from the lower level of the pyramid, data must be 
(Tiwana, 2000): contextualized, categorized, mathematically or statistically 
computed, corrected, and aggregated. Then, information is converted in 
knowledge. Knowledge – respect to information – includes (Campisi & Passiante, 
2007):
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Hypothesis on data. Usually, hypothesis are shared among people of the 
some functional unit: they are tacit. From here, the problem of discover and 
maintain the hypothesis on data along time and different individuals.
 Subjectivity. Information and data are objective, knowledge instead has a 
certain degree of subjectivity (e.g., an opinion).
 Experience. Previous experiences are one of the filers that people use to 
transform information in knowledge.
 Values and beliefs. Usually introduced in organization by founders, they 
represent another type of perceptive filter of information.
 Intellectual component
When knowledge is used to make decisions, improve the organization and 
increase learning, it transforms informed firms in intelligent firms.
 
Figure 6 – Generation of information (retrieved from Boisot, 1998)
 
Within organizations, individuals and groups’ knowledge can assume four levels 
of awareness (Lundvall & Johnson, 1994):
 Know-what. It refers to “knowledge of facts”, and it is very similar to what
before I called information (e.g., the employee knows that the mechanical 
part in front of him is a connecting rod).
 Know-why. It refers to “scientific knowledge”, which is associated to 
knowledge of reasons and causes (e.g., the employees knows that the 
connecting rod is installed here because of…)
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Know-how. It refers to the ability to operate in a specific context using
accumulated skills and experience (e.g. the employee knows how install the 
connecting rod).
 Know-who. It refers to “social capabilities”, which permits to their owner
to get access and to use other individuals’ knowledge through a 
combination of professional and personal networks (Eraut et al., 1998).
 
 
 
2.1.1 Knowledge classification
Academic literature classifies knowledge according to three main key dimensions 
(Campisi & Passiante, 2007):
1. Nature of knowledge;
2. Localization of knowledge;
3. Dependence from the source.
Classification of knowledge according to its nature
According to this classification, scholars identify two categories of knowledge: 
explicit knowledge and tacit knowledge (Polanyi, 1966).
 Explicit knowledge. It is knowledge that can be easily articulated, codified, 
accessed and verbalized (Helie & Sun, 2010), and it generates the 
“organization’s memory” (Walsh & Ungson, 1991). Explicit knowledge
can be transmitted among individuals – in a formal and systematic way –
using words and numbers in the form of data, scientific formulas, and 
specifications (Nonaka & Konno, 1998). Transfer of explicit knowledge is 
ensured using data storage devices, both tangible forms (e.g. textbooks and 
manuals) and intangible ones (e.g. digital pdf documents). This last kind of 
knowledge transfer form also can be in audio-visual, for example a tutorial 
video.
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Tacit knowledge. It is knowledge that is highly personal and hard to 
formalize, making it difficult to communicate or share with others, as 
intuitions and subjective insights. This concept was first introduced by 
Michael Polanyi, who summarized it in one of his work (The Tacit 
Dimension, 1966) with the assertion that:
“We can know more than we can tell.”
Several features characterize tacit knowledge:
 It is difficult to write down and to formalize (Nonaka, 1991);
 It is personal, naturally embedded into the individual (Ravetz, 1971);
 It is practical (Sternberg, 1994) and it describes a process. In this 
context, it is useful introduce the term capability, i.e. process by
which the resources are utilized, where instead the resources refers 
to input of a process;
 It is context specific, typically acquired on the job (Sternberg, 1994).
There are two dimensions for tacit knowledge (Nonaka & Konno, 1998):
1. Technical dimension, which includes abilities and informal arts 
usually encompassed into the term “know-how”.
2. Cognitive dimension, which includes beliefs, perceptions, ideals, 
values, schemas and mental models that are deeply ingrained in the 
individual and often taken by people for granted. This second 
dimension shapes the way people perceive the world and the 
organizations.
Table 1 summarizes the previous considerations, comparing explicit to tacit 
knowledge.
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Explicit knowledge Tacit knowledge
Highly objective Highly subjective
It comes from rationality It comes from experiences
Written and codified Highly linked to individuals
Easy to formalize and share among the 
organization
Difficult to formalize and share among the 
organization
It is learned by individuals and applied in 
specific context
It resides in individuals’ minds and it is 
lost with their departure from organization
Table 1 – Main differences between explicit and tacit knowledge (retrieved from Nonaka & Takeuchi, 1995)
Classification of knowledge according to its localization
According to this second classification, knowledge can reside:
 Inside organizations;
 Outside organizations.
In such situations, it is important understand integration modes between 
knowledge’s different forms that comes from different sources and face the firms’ 
permeability problem: how much is the optimal net flow of knowledge for a 
specific company?
Classification of knowledge according to its source
According to this last classification, knowledge can be:
 Dependent by its creator and/or owner;
 Independent by its creator and/or owner.
In this context, knowledge mobility refers to ability to transfer knowledge from its 
owner to others individuals without losing its original meaning. Knowledge 
increases mobility using codification: in particular, nowadays, electronic 
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codification represents the method that can generate the high degree of sharing 
between creators, owners and users.
Figure 7 – Knowledge taxonomy (adapted from Campisi & Passiante, 2007)
 
 
 
2.1.2 Knowledge creation: the SECI model
According to Japanese academic literature – which has influenced heavily the 
development of knowledge as scientific research field – new knowledge creation 
is a spiral process of interaction between explicit and tacit knowledge. According 
to Nonaka and Takeuchi (1997), it is possible identify positive externalities into 
organizations that can generate innovation through knowledge and learning
(Antonelli & Amidei, 2011). In their model, Nonaka and Tekeuchi focalize their 
effort on operative knowledge in a dynamic view, breaking the Western paradigm 
of the Cartesian dualism proposed by the French philosopher René Descartes in 
his opera “Meditations on First Philosophy” (1641), which try to separate the 
knower from the known, i.e. the organization from the environment where it 
operates. The two Japanese authors said the Cartesian dualism is source of stillness 
and not sufficient to understand the origin of innovation, while the Easter approach 
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