Theory of Organizational Knowledge Creation

Abstract In the previous chapter, we saw that the distinctive approach of Western philosophy to knowledge has profoundly shaped the way organizational theorists treat knowledge. The Cartesian split be tween subject and object, the knower and the known, has given birth to a view of the organization as a mechanism for “information processing.” According to this view, an organization processes information from the external environment in order to adapt to new circumstances. Although this view has proven to be effective in explaining how organizations function, it has a fundamental limitation. From our perspective, it does not really explain innovation. When organizations innovate, they do not simply process information, from the outside in, in order to solve existing problems and adapt to a changing environment. They actually create new knowledge and information, from the inside out, in order to redefine both problems and solutions and, in the process, to re-create their environment.