Journal of Knowledge Management Practice, Vol. 13, No. 2, June 2012

The Genesis Of The Knowledge-Based View

Oliver Jan Mbhalati, Department of Education, South Africa

ABSTRACT:

The implementation of knowledge-based approaches in modern organisations has reached peak level throughout the world. Knowledge Management (KM) scholars have not lagged behind in trying to understand why modern entities have suddenly turned into knowledge as a way of achieving sustainable competitive advantage. There is now consensus amongst KM scholars that the Knowledge-Based View perspective is a better reflection of the modern entity. After an in-depth literature research, I traced the genesis of the Knowledge-Based View (KBV) from the contribution of classical scholars such as Socrates, Plato and Aristotle.

Keywords: Knowledge-based View, Knowledge management, Strategic asset.


1.   Introduction

The Knowledge-Based View (KBV), though is officially recognised as part of the post-World War II developments characterised by advances in information communication technologies, can be traced back to the pre-technology era. Proponents of the Knowledge-Based View agree that the KBV is an extension of the Resource-Based View (RBV). The RBV may be considered an off-shoot of Penrose’s classic, The Theory of the Growth of the firm (TGF). According to Penrose (1959: p24) a firm is more than an administrative unit, it is also a collection of productive resources. Thus, the size of a firm could best be measured by the productive resources it employs. The resource-based view perceives the firm as a “unique bundle of idiosyncratic resources and capabilities where the primary task of management is to maximise value through the optimal deployment of existing resources and capabilities, while developing the firm’s resource base for the future” (Grant, 1996: p110).

The resource-based view is applied to explain that differences in performance between and amongst firms depends on the valuable resources they possess (Curado & Bontis, 2006). These resources may be physical, human or organisational and tangible or intangible. In terms of the RBV, sustainable competitive advantage is achieved when a firm possess certain strategic assets (Halawi et al., 2005). Both the RBV and its off-shoot, the KBV, have deep roots in the field of strategic management. In line with the KBV, managers enhance a “firm’s capacity to produce efficiently by updating or advancing knowledge” (Nickerson & Zenger, 2004: p1).

The KBV defines knowledge as a strategic resource that does not depreciate in the same way traditional economic productive factors do since it has the capacity to generate increasing returns (Wang et al., 2009). According to the knowledge-based view of an organisation, knowledge and information have become the underlying sources of competitive advantage (Patton, 2007). This implies that knowledge stocks and the learning capabilities of organisations become key economic factors in the productivity of knowledge-based organisations (Martin de Castro et al., 2007).

This article traces the genesis of the knowledge-based view as it is popularly known in Knowledge Management (KM) literature. While the classical scholars such as Socrates, Plato and Aristotle have provided modern scholars with the theoretical  basis upon which they can base their views on knowledge, it were the seminal works of Drucker (1991) and Nonaka (1991) that led to modern organisations adopting a knowledge inclined strategy. Drucker (1991) developed a model for the systematic approach to the development of “craft and skill” for knowledge and service workers as part of his quest to improve the productivity of knowledge-based organisations.

While Drucker (1993) may be credited for coining the concepts “knowledge worker” and “knowledge work”, it was Nonaka (1991) who introduced the idea of a “Knowledge-creating company”. In his argument, a “knowledge-creating company” is defined by its ability to create new knowledge, disseminate the knowledge quickly throughout the organisation and embodying the knowledge into technologies and products. I hold the view that Drucker deserves to be called the father of the Western model on knowledge management and Nonaka should be rightly referred to as the grand master of the Japanese model on knowledge. Nonaka (1991) laid the basis for the distinction between the Western model and Japanese model when indicating that

“…creating new knowledge is not simply a matter of ‘processing’ objective information. Rather, it depends on tapping the tacit and often highly subjective insights, intuitions, and hunches of individual employees and making those insights available for testing and use by the company as a whole” (p97).

The two overlapping phases in the historical development of the knowledge-based view, as identified from KM literature, are described in this article in terms of the pre and post Information Communication Technology (ICT) knowledge views.

2.   The Pre-Information Communication Technology Knowledge View

Knowledge is as old as humankind. The classical scholars made great strides in explaining knowledge and the art of knowing (learning) before information communication technology came into existence. Among the classical scholars, Plato wrote extensively about knowledge in his work the Republic (380 BC). Being a disciple of the Greek philosopher, Socrates, Plato was schooled in the dialectic art used by Socrates. It is alleged by classical commentators that Socrates himself never wrote his own works, but that most of the views on Socrates’ thinking were written by Plato. “Plato writes where Socrates did not but he writes the words of Socrates” (Phillips, 2000: p46).

Socrates described knowledge as “care of the mind” and believed that the main reason why some people could not succeed in life was due to “bad training and bad company” (Ferguson, 1970: p. 293). Socrates laid the foundation that would later lead to the modern dichotomous reference of knowledge in terms of codified and tacit knowledge. It was Socrates who distinguished between true opinion (beliefs) and knowledge. Socrates believed that “true opinions do not stay long in our minds, but they can be fastened into our minds through recollection” so that they become knowledge (Cottingham, 1996: p12). True knowledge as defined by Socrates meets the same definition as that of tacit knowledge. Tacit knowledge is described as the knowledge that is primarily in the heads of people (Becker, 2007).

It is apparent when analysing the contribution of various classical writers (from Socrates to George Hegel) that the authors never disagreed to the definition of knowledge. They only differed on how people would acquire knowledge. But the disagreement into the process of knowing forced the majority of scholars to accept two forms of knowledge. Socrates, Plato and Aristotle would refer to beliefs (opinions) and knowledge while later (during the 18th century) the German philosopher Immanuel Kant in his Critique on Pure Reason would refer to the two forms of knowledge as a priori knowledge and empirical knowledge. A priori knowledge entails knowledge that is independent of sensory experience, and the empirical knowledge relates to knowledge possible through experience (Cottinham, 1996: p43). These two forms of knowledge were later to be adopted by modern writers when Nonaka introduced the concept codified and tacit knowledge in his work The Knowledge Creating Company in 1991.

Though Knowledge Management theory is presently steeped in this dichotomous debate of viewing particular aspect of knowledge as codified and another form as tacit, I argue that there is only one knowledge form, but with various dimensions. This is also supported by Soo et al. (2002) who argued that true knowledge, by definition is non-codified. They insisted that as soon as knowledge becomes codified and transmitted, it ceases to be knowledge and becomes data. The next sub-sections present the classical definition of knowledge and the classical art of knowing.

2.1.   The Classical Definition Of Knowledge

The classical definition of knowledge is “justified true beliefs”. In line with this definition, Socrates would argue that “true opinions (beliefs) can be aroused by questioning and turned into knowledge” (Cottingham, 1996: p12). The German philosopher, Jacob Friedrick Fries (writing during the 19th century) made a clear distinction between beliefs and knowledge in his work Wissen, Glaude und Ahndung (Knowledge, Beliefs and Aesthetic sense):

“In everyday consciousness belief is much weaker than knowledge, for knowledge forces itself upon us through the strength and evident nature of its intuitions and never leaves us as long as we live” (Richter, 1989: p69).

Thus, knowledge is of a higher degree when compared to beliefs and aesthetic sense. This is rooted in Plato’s argument that true knowledge is more stable and permanent and must relate to reality (Cottingham, 1996). Plato viewed “knowledge as the most powerful of all faculties” which is infallible, incorrigible and absolute (Vlastos, 1971: p72).

2.2.   The Classical Art Of Knowing

When analysing the views of various classical writers on the art of knowing, two groups of dichotomous theorists stand out:

·         The innatists (a priori knowledge): influenced by Plato’s idea of innate knowledge as that which is within us in the form of “true thoughts which only need to be awakened into knowledge by putting questions” (Cottingham, 1996: p1). Plato “thought our a priori knowledge was a result of an immediate acquaintance in a previous disembodied state with the relevant truths” (O'Connor & Carr, 1982: p9)

·         The empirists (posteri knowledge): emanating from Aristotle’s argument that knowledge develops “naturally from sense perception” (Cottingham, 1996: p19).

Phillips (2000: p62) appropriately observed that the Western thought throughout its formative stages has been dominated by these two “towering traditions”. According to Phillips, the innatists emphasised ideas, rationality and the mind while the empirists focused on the material things, sensible experience and bodily passions. It is apparent that the key building block behind knowledge according to the innatist is reflection, while sensation is regarded as the foundation of knowledge by the empirists. In line with the innatist theory, Plato indicated that “knowledge comes from teaching rather than persuasion, but from recollection rather than teaching” (Vlastos, 1971: p10). The influence of Plato’s innate knowledge theory is apparent in Polanyi’s work, The tacit dimension (1966).

Just like Plato who described knowledge as practical, Polanyi (1966) argued that tacit knowledge is rooted in practical operations. It is the tacit nature of knowledge that captured the imagination of Japanese scholars such as Nonaka (1991 and 1994), and Nonaka and Takeuchi (1995). The notion of innate knowledge as originated from Plato formed the basis of René Descartes’s Mediation on First Philosophy published in 1641. As reflected by Descartes, knowledge originates internally within the mind rather than away from the senses (Cottinham 1996: p26). As a reaction to the idea of innate knowledge, John Locke wrote in his Essay Concerning Human Understanding in 1690 that “the senses are the primary source of all knowledge” (Cottingham, 1996: p27).

John Locke’ ideas led to the development of the empirist conception of empeiria a Greek word meaning experience. He would argue that “observation via the senses, plus the mind’s subsequent reflection on the data so acquired, constitutes the basis of all knowledge we have, or can have”. While John Locke sought to disprove of the doctrine of the innatist, he succeeded in proving that the senses can improve the ‘innate capacities’ of the mind. Cottingham (1996) observed how Locke “sets out his own account” of how people come to knowledge of general propositions:

“… the senses first ‘let in particular ideas’ and furnish the ‘yet empty cabinet’ (the image here is of the mind as a chamber that is entirely empty until data from the senses enter it); the mind then gets to work on these materials, abstracting from the particular and learning the use of general names” (p27).

John Locke, just like his predecessor Aristotle, viewed the mind as a tabula rasa and that the senses and experience provided the inscriptions into the human mind (Cottingham, 1996). On the other hand, the German philosopher Gottfriend Leibniz defended the innate theory of knowledge in his New Essays on Human Understanding (Nouveaux Essais sur ľentendement humain) published in 1704. Leibniz sought to answer the question:

“Whether all truths depend on experience, that is on induction and instances or if some of them have some other foundation?” (Cottingham, 1996: p34).

Gottfriend Leibniz found as an answer to the above question that the senses though necessary for all our knowledge, they are not sufficient to provide all our knowledge. He agreed with John Locke that the “two sources of our knowledge” are the senses and reflection (Cottingham, 1996: p38). Locke and Leibniz only differed about which of the two deserved much emphasis. Locke maintained that the senses should dominate while Leibniz was of the view that reflection should be of paramount importance behind human knowledge.

David Hume, writing in his work An Enquiry concerning Human Understanding in 1748 argued that sense experience “must be the basis of all knowledge concerning matters of fact or existence” (Cottingham, 1996: p37). While Locke and Leibniz were more integrative in their approaches by accommodating the two dominant classical strands on knowledge, Hume was to argue that though the senses alone were not to be depended on, they were the proper criteria of truth and falsehood. According to David Hume, reason (reflection) should only be accommodated for the purpose of correcting any shortfall in the senses.

Amongst the work of classical authors who attempted to bridge the gap between the rationalists (innatists) and the empirists, the work of the German philosopher Emmanuel Kant Kritik der reinen Vernuft (Critique of Pure Reason) published in 1781 is much convincing. Kant illustrated that the two forms of knowledge (innate/priori knowledge and empirical/posteriori knowledge) were intertwined when arguing that “thoughts (priori) without content (posteriori) are empty; intuitions without concepts are blind, the understanding can intuit nothing, the senses can think nothing” (Cottingham, 1996: p44-45). Immanuel Kant was adamant that “true” knowledge could only arise through the union of the two forms. As such, he argued that “all analytical propositions are still a priori even if their concepts are empirical” (Allison & Heath 2002: p62). Emmanuel Kant believed that the two forms of knowledge emanated from a common root, namely sense and understanding.

 Considering the views of the various classical writers, it is apparent that knowledge and knowing cannot be comprehensive if viewed in terms of often diverge dichotomous theorist. I argue that the various theoretical strands of knowledge should be viewed as various stages of the common knowledge denominator. Hence the work of George Hegel, Phenomenology of the Spirit which became popular in the early half of the 19th century deserves more emphasis. Rather than debating the various approaches to knowing, Hegel indicated that knowledge “comes about via a process” (Cottingham, 1996: p46). Cottingham described Hegel’s four main stages of knowing as follows:

Stage 1: sense-consciousness - whereby a person comes into acquaintance with objects through the senses

Stage 2: perception - involving a cognitive grasp of the ‘world’ through making some judgement

Stage 3: understanding - a conception which involves recognising the causal powers underlying properties of things

Stage 4: self-consciousness - interacting with objects as purposeful and self-conscious agents. Hegel referred to this stage the “native land of truth”.

I advocate a view that knowledge should not be approached from a single ideological framework. Knowledge should be embraced from both the innatists and empirists perspectives. Polanyi (1966: p6-7) justified this line of reasoning by pointing out that the wissen” and “können (in German) meaning knowledge of a more intellectual (innate knowledge) and practical (empirical knowledge) nature “have a similar structure and neither is ever present without the other.” As highlighted by Polanyi, there is only one art of knowing covering both the practical and theoretical aspects of knowledge.

Based on the above exposition, it is apparent that the classical scholars viewed knowledge as a valuable resource to the well-being of individuals in their society.

3.   The Post ICT Phase Knowledge View

While the classical writers could be described as focusing on the importance of knowledge to an individual, the post-ICT phase scholars are recognised for their role in observing the importance of knowledge in organisational performance. The Knowledge-Based View only gained currency in management literature when managers started to recognise that knowledge is a strategic asset which is rare, valuable, imperfectly imitable and non-substitutable (Halawi et al., 2005).

The “present emphasis” on Knowledge Management resulted from the economic, industrial and cultural developments which took place since World War II (Drucker, 1993 and Wiig, 1997). Wiig observed that the increasing important role of knowledge in the competitiveness and success of organisations started to gain ground around the mid-80s. This was accompanied by a flurry of publications and empirical studies which proved that knowledge has become a fundamental factor behind the success and all activities of an organisation. In line with the knowledge-based view, Wiig (1997: p6) argued that an organisation would become more competitive and successful if it could develop ‘a quality’ knowledge content. According to Wiig (1997), such ‘a quality’ knowledge content should be rooted in the expertise and competence of the organisation’s employees. The underlying assumption with the development of the knowledge-based view is that KM helps boost employee expertise and competence. Wiig (1997: p8-9) highlighted the historical developments leading to the knowledge-based view in six phases as follows:

Phase 1: The agrarian economies where people were solely producing products for consumption and exchange

Phase 2: The natural resource economies dominated by exploitation of mineral resources

Phase 3: The industrial revolution emphasising efficiency of the production process

Phase 4: The product revolution wherein emphasis had been on entrenching product leadership positions

Phase 5: The information revolution which emphasised IT as a tool to reinforce operational excellence and product leadership

Phase 6: The knowledge revolution which puts more focus on the application of human expertise to add competitive value to products and services.

The sixth phase has catapulted modern organisations into Drucker’s knowledge revolution. Drucker (1991: p69) appropriately observed that the knowledge revolution will dominate the ‘management agenda’ for several decades. The emphasis by modern organisations on knowledge and information could be traced to phases 5 and 6 of Wiig’s six phases in line with the historical developments of the knowledge-based view. Rademakers (2005) captured these six phases into three main economic revolutions:

1.      Agricultural revolution of over 8000 years (first wave)

2.      Industrial revolution of the 18th century (second wave)

3.      The knowledge revolution (third wave).

Rademakers (2005) observed that the knowledge revolution could be traced back to the 1950s. He insisted that due to the third wave revolution, knowledge has become a key force that holds over the competition, enabling innovation and organisational development.

Just as reflected by Drucker (1991), Rademakers (2005) pointed out that improved quality and productivity emanated from a more informed and knowledgeable workforce:

“Business leaders realise that continuously leveraging and renewing the corporate knowledge base makes the difference between excellent performance or muddling through- or even worse, failure” (p130).

Hence, Drucker (1991) alluded to the dominance of the productivity challenge in the modern management agenda. He reflected that the knowledge revolution’s main concern was about improving the productivity of knowledge workers. Drucker (1993: p8) referred to this as an “economic challenge”. It is an economic challenge as it relates to efforts by organisations to improve their productivity by improving the productivity of their knowledge workers. Furthermore, Drucker (1993: p6) called Rademakers’ third wave knowledge revolution phase a “post–capitalist new world order.” He argued that in the post-capitalist new world-order the real controlling resource would not be capital nor land nor labour, but knowledge. According to Drucker (1993), knowledge workers are the knowledge executives “who know how to allocate capital to productive use.” They “own the means” and “tools of production” in the form of their knowledge, which they “take” wherever they go.

It is “generally accepted in theory that the workers’ knowledge of their job is the starting point for improving productivity, quality and performance” (Drucker, 1991: p77). As part of solving the productivity challenge, Rademakers (2005) argued that companies should continuously and rapidly renew their knowledge base. According to Rademakers, organisations still playing by the “old rules of the game of industrialisation” are slowly being displayed by those with new business models and organisational systems tuned to the requirements of a knowledge-driven economy. Rademakers (2005) went further into the knowledge-based view debate by analysing the third wave of the knowledge revolution phase into two distinct but overlapping phases:

·         Initial phase: this is driven by information collection, adaptation and distribution

·         2nd phase: emphasises knowledge transfer, exchange and creation.

The two phases of the knowledge revolution have led to the dichotomous views wherein information management practices are sometimes confused with Knowledge Management practices. This is reminiscent of the classical scholars’ views on knowledge. Metaxiotis, el al. (2005) noted that the Knowledge Management literature should separate information and knowledge. Nonaka (1994) addressed this divide by distinguishing between information and knowledge as follows:

“Information is a flow of messages, while knowledge is created and organised by the very flow of information, anchored on the commitment and beliefs of its holder” (p45).

The divide between information and knowledge contributed to the explicit-tacit knowledge dimension (Nonaka, 1991). Nonaka suggested that the starting point in the process of knowledge creation was tacit knowledge and the end point explicit knowledge. Nonaka and Takeuchi (1995) described the whole process of knowledge creation in terms of the SECI model. The SECI model refers to four modes (Socialisation, Externalisation, Internalisation and Combination) of the knowledge conversion process. The SECI model would not be explained in this article because it is already popular in KM literature.

This article assumes the view that knowledge is different from information. Nevertheless, increased ICT connectivity enhances the flow of information. There is no doubt in KM literature that ICTs play a crucial role in the knowledge-based economy. ICT connectivity allows organisations to tap information without restrictions imposed by time and space (Coakes, 2006). The key question that needs to be asked here is whether widespread ICT connectivity constitutes Knowledge Management or information management. Rademakers (2005: p131) argued that corporate success is “to a large measure determined by the knowledge resources enabling them to make sense of the information chaos.” What Rademakers was arguing was that Knowledge Management is different from information management, and the knowledge revolution has never been about “just information” management, but is about “making sense” of the information at an organisation’s disposal. Drucker (1993) referred to this when describing his ‘post-capitalist society’:

“But in the knowledge society into which we are moving, individuals are central. Knowledge is not impersonal, like money. Knowledge does not reside in a book, a databank, a software programme; they contain only information. Knowledge is always embodied in a person; carried by a person; created, augmented or improved by a person; applied by a person; taught and passed by a person; used or misused by a person” (p210).

In this regard, Drucker (1993) insisted that the educated person would become the knowledge society’s representative. The knowledge revolution has already dominated the management agenda ever since Drucker made his prediction about the ‘post-capitalist society’. I believe that Drucker’s views laid a solid focus for a knowledge-based agenda of the modern organisation.

Conclusion

In this article, I have chronicled the historical roots of the Knowledge-Based View. There is no doubt that the classical scholars have provided KM scholars with the theoretical foundations upon which the KBV theory later developed. When analysing the classical definition of knowledge as “justified true beliefs,” one is compelled to point out that it was unnecessary to confuse Knowledge Management with Information Management. In this regard, the Socratic view was that a distinction should be made between ‘true opinions’ and ‘true beliefs’. This dichotomy between true opinions and true beliefs blessed KM theory with the explicit-tacit knowledge paradigm.

 Similarly, two strands of knowledge have been observed by the classical knowledge theorists. The innatists (building on Plato’s idea of innate knowledge) referred to a priori knowledge to explain knowledge that could be acquired independent of sensory experience. On the other hand, the empirists (influenced by Aristotle’s views) defined knowledge acquired through experience as posteri knowledge. The reference made by modern KM scholars to both tacit and explicit knowledge is clearly rooted in the a priori and posteri knowledge paradigm. Thus, the knowledge-based view owes its origin to the views of the classical scholars.

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About the Author:

Dr Oliver Jan Mbhalati is currently a Deputy Chief Education Specialist at the Department of Education in the Republic of South Africa. He completed a Doctorate in Business Leadership at the University of South Africa in 2011. His thesis is titled, Knowledge Management Practices In Rural Areas Of South Africa.

E-mail: oliverj@webmail.co.za