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Knowledge Management Processes and International Joint


Ventures
Andrew C. Inkpen, Adva Dinur,

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Andrew C. Inkpen, Adva Dinur, (1998) Knowledge Management Processes and International Joint Ventures. Organization
Science 9(4):454-468. http://dx.doi.org/10.1287/orsc.9.4.454
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Knowledge Management Processes and


International Joint Ventures
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Andrew C. Inkpen Adva Dinur


Thunderbird, The American Graduate School of International Management, Glendale, Arizona 85306
School of Business and Management, Temple University, Philadelphia, Pennsylvania 19122

nowledge creation is now recognized as a key, competitive advantage. In the global economy,
international joint ventures are increasingly important as the way of creating knowledge interorganizationally. Yet, research into interorganizational knowledge creation has been underdeveloped. This
paper offers insights about how international joint ventures can be integrated into a firms dynamic
system of knowledge creation.
Ikujiro Nonaka

Abstract
The management and processing of organizational knowledge
are increasingly being viewed as critical to organizational success. By exploring how firms access and exploit alliance-based
knowledge, the authors provide evidence to support the argument that the firm is a dynamic system of processes involving
different types of knowledge. Using data from a longitudinal
study of North American-based joint ventures (JVs) between
North American and Japanese firms, they address three related
research questions: (1) what processes do JV partners use to
gain access to alliance knowledge; (2) what types of knowledge
are associated with the different processes and how should that
knowledge be classified; and (3) what is the relationship between organizational levels, knowledge types, and the transfer
of knowledge?
Although many generalizations have been drawn about the
merits of knowledge-based resources and the creation of knowledge, few efforts have been made to establish systematically
how firms acquire and manage new knowledge. Moreover, prior
alliance research has not addressed in detail the nature of alliance knowledge and how knowledge is managed in the alliance
context. The authors examine the processes used by alliance
partners to transfer knowledge from an alliance context to a
partner context. They identify four key processestechnology
sharing, alliance-parent interaction, personnel transfers, and
strategic integrationthat share a conceptual underpinning and
represent a knowledge connection between parent and alliance.
Each of the four processes is shown to provide an avenue for
managers to gain exposure to knowledge and ideas outside their
traditional organizational boundaries and to create a connection
for individual managers to communicate their alliance experiences to others.

Although all of the knowledge management processes are


potentially effective, the different processes involve different
types of knowledge and different organizational levels. The primary types of knowledge associated with each process are identified and then linked with the organizational level affected by
the transfer process. From those linkages, several propositions
about organizational knowledge transfer and management are
developed. The results suggest that although a variety of knowledge management strategies can be viable, some strategies lead
to more effective knowledge transfer than others.

(Organizational Knowledge, Learning; Joint Ventures


and Alliances, Tacit Knowledge; Knowledge Management Processes)

Increasingly, the creation of new organizational knowledge is becoming a managerial priority. New knowledge
provides the basis for organizational renewal and sustainable competitive advantage (Prahalad and Hamel 1994,
Quinn 1992). We draw on recent work on knowledge
management (e.g., Grant 1996, Hedlund 1994, Nonaka
and Takeuchi 1995, Spender 1996b), to explore how
firms access and exploit alliance-based knowledge. Using
data from a longitudinal study of North American-based
joint venture (JVs) between North American and Japanese firms, we address three related research questions:
(1) What processes do JV partners use to gain access to
alliance knowledge, (2) what types of knowledge are associated with the different processes and how should that
1047-7039/98/0904/0454/$05.00

454

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Copyright 1998, Institute for Operations Research


and the Management Sciences

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

knowledge be classified, and (3) what is the relationship


between organizational levels, knowledge types, and the
transfer of knowledge? The first question provides a basis
for understanding how firms access and transfer knowledge across organizational boundaries. Given that the
firm can be viewed as a system processing different types
of knowledge (Spender 1996b), the second and third
questions are directed at exploring the organizational and
strategic implications of different knowledge types. Our
focus in examining the research questions is knowledge
management by the North American JV parents.
Over the past two decades, the formation of international strategic alliances has increased substantially. The
number of domestic and international alliances has grown
by more than 25 percent annually since 1990 (Bleeke and
Ernst 1995). Drucker (1995) suggested that the greatest
change in the way business is being conducted is the accelerating growth of relationships based not on ownership
but on partnership. Researchers seeking to explain the
alliance trend have argued that alliances provide a platform for organizational learning, giving partner firms access to each others knowledge (Grant 1996, Hamel 1991,
Kogut 1988, Westney 1988). Kogut (1988, p. 323) suggested that learning can be an alliance motive under two
conditions: one or all partner firms want to acquire the
others organizational knowledge, or one firm wishes to
maintain an organizational capability while benefiting
from a partners cost advantage or knowledge. The
knowledge is often organizationally embedded and causally ambiguous. If the alliance replicates partner experiential knowledge in a jointly owned organization, one or
all partners may have access to knowledge that would not
have been available in the absence of collaboration.
In the alliance context, knowledge useful to a parent
firm can be viewed from three perspectives. First, firms
may acquire knowledge useful in the design and management of other alliances (see Lyles 1988). Such knowledge may be applied to future alliances. Second, firms
may seek access to other firms knowledge and skills, but
without necessarily wishing to internalize the knowledge
in their own operations. As Hamel (1991) pointed out,
knowledge embodied only in the specific outputs of the
alliance has no value outside the narrow terms of the collaborative agreement. Third, an alliance may generate
knowledge that can be used by parent companies to enhance their own strategy and operations. Our current research pertains to that type of knowledge. Knowledge
useful to a parent may be knowledge transferred by an
alliance partner to the alliance. The knowledge may be
created independently by the alliance through its interactions with customers, competitors, and other firms. The

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

alliance may also create a forum for interactions between


the parents that is itself a source of new knowledge.
Two examples help illustrate how firms learn through
alliances. Much has been written about how General Motors struggled to learn from its New United Motor Manufacturing, Inc. (NUMMI) joint venture with Toyota
(Badaracco 1991, Keller 1989, Mahoney and Deckop
1993). In recent years, knowledge has been transferred
successfully from NUMMI to other General Motors divisions and plants. In particular, General Motors has used
its NUMMI experience as a catalyst for several successful
international greenfield plants (Miller 1993).1 The knowledge transferred has been primarily in the areas of manufacturing process and human resource management. As a
second example, Sony, a firm with a culture of independence in product development, has formed various alliances with computer and telecommunications firms in an
effort to forge new technology linkages for its consumer
electronics products (Hamilton 1995). The alliances give
Sony access to a wealth of new knowledge, such as how
to manage product development cycles that are much faster in the computer industry than in consumer electronics.
In forming the alliances, Sony has enabled personnel at
various organizational levels to gain access to new
knowledge. The challenge for Sony and other firms involved in alliances, and for all firms seeking access to
knowledge beyond their boundaries, is to incorporate disparate pieces of individual knowledge into a wider organizational knowledge base.
A still rather small but growing body of research
(Dodgson 1993, Doz 1996, Hamel 1991, Inkpen and
Beamish 1997, Inkpen and Crossan 1995, Kogut 1988,
Makhija and Ganesh 1997, Mowery et al. 1996, Parkhe
1991, Pucik 1991, Simonin and Helleloid 1993, Westney
1988) is addressing the issue of alliances and learning.
Researchers have begun to explore some of the important
questions associated with how organizations exploit alliance learning opportunities but have not examined in
detail the nature of alliance knowledge and how knowledge is managed in the alliance context. In organizational
studies in general, knowledge management has received
limited attention, perhaps because dominant theoretical
paradigms are inappropriate for addressing the issue
(Hedlund 1994). Therefore, we explore alliance knowledge with the objective of developing a framework that
integrates knowledge states and knowledge management
processes with the organizational levels involved in the
transfer processes.
We focus on alliance forms that combine resources
from more than one organization to create a new organizational entity (the child) distinct from its parents. In

455

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

most of the cases, such an alliance is an equity joint venture. Examining that type of alliance allows for a clear
delineation of the partner relationship and the nature of
alliance knowledge. Siecor, an alliance between Siemens
and Coming, is an example. The partners in that alliance
brought together their complementary capabilities in telecommunications and glass technology to build an independent organization with its own headquarters, CEO,
board of directors, and staff.

Conceptual Background
Types of Organizational Knowledge
In developing an understanding of organizational knowledge, we begin with the distinction between tacit and explicit knowledge. Tacit knowledge was defined by
Polanyi (1962) as knowledge that is nonverbalizable, intuitive, and unarticulated. Spender (1996a) suggested that
tacit knowledge could be understood best as knowledge
that has not yet been abstracted from practice. It is knowledge that has been transformed into habit and made traditional in the sense that it becomes the way things are
done around here (Spender 1996b) Tacit knowledge is
highly context specific and has a personal quality, which
makes it difficult to formalize and communicate (Nonaka
1994). Explicit knowledge is knowledge that is transmittable in formal, systematic language and may include explicit facts, axiomatic propositions, and symbols (Kogut
and Zander 1992). It can be codified or articulated in manuals, computer programs, training tools, and so on.
The distinction between explicit and tacit should not
be viewed as a dichotomy but rather as a spectrum with
the two knowledge types at either end. Winter (1987)
identified other taxonomic dimensions of knowledge, including complex versus simple, not teachable versus
teachable, and not observable in use versus observable in
use. Similarly, we argue that although the distinction between tacit and explicit is important, it does not allow us
to consider any gray areas between completely tacit and
completely explicit knowledge. Knowledge types, therefore, must be classified on a continuum that ranges from
explicit knowledge embodied in specific products and
processes to tacit knowledge acquired through experience
and use and embodied in individual cognition and organization routines.
Nonaka and Takeuchi (1995) argued that a key challenge for organizations is the conversion of tacit knowledge to explicit knowledge. Knowledge that is tacit and
highly personal has little value until it can be converted
into explicit knowledge that other organizational members can share. However, such a conversion process exposes the knowledge to the hazard of imitation by other

456

firms. Zander and Kogut (1995) discussed the tradeoff


between the need to share and transfer knowledge internally and the risk of exposing the knowledge to imitation.
To address the knowledge conversion dilemma, there is
a need for a better, broader taxonomy of both tacit and
explicit knowledge.
Recognizing that firms idiosyncratic knowledge consists mostly of tacit, difficult to imitate knowledge,
Spender (1996b) developed a more comprehensive typology of organizational knowledge encompassing individual and social levels. Whereas individuals have
knowledge that is practical, communities have knowledge
that constitutes the socialization and social activities of
the individuals within them (Spender 1996b). Individuals
constantly acquire knowledge, share it with their organizational community, and thus increase the collective
store of knowledge, while maintaining a common individual knowledge with their coworkers.
In Spenders (1996b) typology, explicit knowledge
stored in databanks, standard operating procedures, manuals, and so on is referred to as objectified knowledge.
Tacit knowledge is separated into three subtypes: conscious, automatic, and collective. Individual tacit knowledge can be either conscious or automatic.2 Automatic
knowledge is implicit knowledge that happens by itself
and is often taken for granted. Conscious knowledge may
be codified, perhaps as a set of notes, and is potentially
available to other people. Collective knowledge is tacit
knowledge of a social or communal nature.
Organizational Levels and Knowledge Movement
Clearly, organizations are repositories of knowledge. The
important question is how individual and group interactions contribute to organizational knowledge creation.
Organizations cannot create knowledge without individuals, but unless individual knowledge is shared with other
individuals and groups, the knowledge will have a limited
impact on organizational effectiveness. Hence, organizational knowledge creation should be viewed as a process whereby the knowledge held by individuals is amplified and internalized as part of an organizations
knowledge base (Nonaka 1994). As knowledge is transformed from an individual to a collective state, organizational knowledge is created (Nonaka and Takeuchi
1995). The transformation occurs in a dynamic process
involving various organizational levels and carriers of
knowledge. Specific learning processes are at work at
each level. At the individual level, the critical process is
interpreting and sense making; at the group level it is
integrating; and at the organization level it is integrating
and institutionalizing (Inkpen and Crossan 1995). To capture the dynamic movement of knowledge across the levels, Nonaka (1994) developed the concept of a spiral of

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

knowledge creation. In the spiral, knowledge moves upward in an organization, starting at the individual level,
moving to the group level, and then up to the firm level.
As the knowledge spirals upward in the organization, it
may be enriched and amplified as individuals interact
with each other and with their organizations.
Hedlund and Nonaka (1993), in their analysis of Japanese and Western knowledge management, proposed a
model linking organizational levels and types of knowledge. Their objective was to develop an understanding of
how different knowledge types travel and change between individuals and organizations. On the basis of the
Hedlund and Nonaka (1993) model, we propose Figure 1
as a framework for an empirical examination of knowledge management processes. In the framework, the organization is seen as a repository of various knowledge
types in different organizational locations. The vertical
dimension refers to knowledge tacitness and the horizontal dimension distinguishes between the organizational
levels where knowledge resides. In Figure 1, knowledge
tacitness is a continuum in which explicit knowledge has
very low tacitness. The figure implies that as knowledge
becomes more tacit, it becomes less teachable, less codifiable, and hence, less transferable (Kogut and Zander
1992).
The key assumption underlying this framework is that
organizations have a range of types of knowledge and
carriers of knowledge. Where organizations differ is in
their view of the importance of different types of knowledge and their ability to transform and move knowledge
across organizational levels. For example, Hedlund and
Nonaka (1993) argued that Western firms lose much of
their potential for knowledge creation by overemphasizing explicit knowledge and the development of complex
managerial hierarchies, systems, and standardization. Using JVs as the empirical context, we examine the linkages
between knowledge transfer processes, knowledge types,
and organizational levels. The next section is an overview
of JVs and learning.
Figure 1

Knowledge Transfer Classification Framework

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

Knowledge Management and Learning Through JVs


In arguing that strategy making is a learning process,
Mintzberg (1990) suggested that strategic initiatives create experiences, actions, and strategic choices that provide the foundation for learning. The focus of our study
is a particular strategic initiativethe formation of a JV.
The JV experience can be the action that triggers learning
because it provides new stimuli that may force changes
in the mental maps of the organization (Nonaka and
Johansson 1985). An underlying assumption is that managers have some understanding of the causal relationships
associated with knowledge, action, and outcomes.
Following Inkpen and Crossan (1995) and Nonaka
(1994), we view knowledge creation through JVs as a
multi-stage process, analogous to the innovation diffusion
process (e.g., Tushman and Scanlon 1981). The first stage
begins with the formation of the JV and interactions between individuals from the two (or more) partners. The
second stage and our primary focus is the transfer of
knowledge from the JV to the partners. Huber (1991) referred to that process as grafting, whereby organizations increase their store of knowledge by internalizing
knowledge not previously available within the organization. For internalization to occur, the parents must first
engage in efforts to transfer partner skill-related knowledge from the JV to themselves. Those efforts create the
connections through which individuals can share their
observations and experiences (Von Krogh et al. 1994).
The intensity of a parent firms learning efforts reflects
the degree to which the parent is actively trying to internalize the skills and capabilities of its partner.
Knowledge connections are formed through both formal and informal relationships between individuals and
groups (Inkpen 1996). Those internal managerial relationships facilitate the sharing and communicating of new
knowledge and provide a basis for transforming individual knowledge to organizational knowledge. When one
individuals or groups knowledge connects with other
knowledge, it can be discussed, debated, and possibly discarded. The knowledge may be further developed and
move upward in the organization. Individual knowledge
is inherently fragile and therefore, without knowledge
connections, new knowledge may be ignored or viewed
as irrelevant (Von Krogh et al. 1994). Grant (1996) argued that organization structures can be designed to maximize the efficiency of knowledge integration. In the literature on innovation, specialized personnel such as
technological gatekeepers (Katz and Tushman 1980)
and specialized organizational structures such as transfer
groups (Katz and Allen 1988) have been shown to have
a significant effect on the transfer of information between
organizations. When a JV partner has a strategic objective

457

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

of acquisition and proprietary control over alliance


knowledge, knowledge connections are the mechanisms
for knowledge acquisition.
Although the transfer of alliance knowledge is a necessary condition for knowledge creation, the parent must
ensure that the transferred knowledge is moved and
shared within the parent organization. The risk, particularly with tacit knowledge, is that knowledge transferred
from a JV to a parent will dissipate as it spirals up to the
organization level. The rate of dissipation will be influenced by a variety of factors. For example, when confronted with learning opportunities, successful firms may
see little need to change behavior and thus, may become
trapped by their distinctive competence (Levinthal and
March 1993). The strength of a firms learning intent will
help determine the organizational resources committed to
learning (Hamel 1991). Alliance control mechanisms
may influence the transfer of knowledge (Makhija and
Ganesh 1997). The type of knowledge creation mechanisms plays a key role in how new knowledge is managed by alliance parent firms (Hedlund and Nonaka
1993). Finally, managerial belief systems permeate all
levels of knowledge creation and correspondingly, contribute to knowledge dissipation (Inkpen and Crossan
1995).
In summary, our study examines the processes used by
firms to gain access to and transfer different types of
alliance-based knowledge. Although much of the learning
literature addresses the product or content of learning, the
process of learning and the types of knowledge are also
very important. A focus solely on content ignores the
complex cognitive and behavioral changes that must occur before a learning outcome can be identified. Given
that the question of whether or not organizations learn is
controversial, studying knowledge creation may provide
a more valid foundation for understanding how knowledge travels and changes within organizations (Hedlund
and Nonaka 1993).

Research Methods and Data


We designed a two-stage study. The first stage established
the industry context and basis for the selection of cases
for longitudinal study. In the second stage we used an
open-ended approach of grounded theory building
(Glaser and Strauss 1967) to examine types of knowledge
and processes of alliance-based knowledge management.
The industry, alliance, and partner contextual data from
stage I were critical in interpreting the case study data
from stage 2.
Stage 1: Context Definition
The initial research stage was designed to provide contextual understanding of the alliance learning issues and

458

to gain a cross-sectional perspective on the basic dimensions of alliance learning. A sample of North American
Japanese JVs located in North America provided the empirical base.3 The primary data collection method for
stage 1 was field interviews with 58 managers associated
with 40 two-partner JVs. Most managers held positions
such as JV president or JV general manager and were
either employed by the American partners or appointed
by the American partners to senior management positions
in the JVs. Geringer and Hebert (1991) found that such
managers are a valid source of JV data. Being at the
boundary between the JV and parent firms, those managers were expected to have an important influence on
parent access to and management of alliance knowledge.
(For more detail on the stage one methodology, see
Inkpen, 1995a and 1995b.)
All JVs were suppliers to the automotive industry and
only one had less than 50 percent of its sales to automotive customers. The primary JV motive for the majority of the American partners was access to the Japanese
transplant market in the United States. Most of the JVs
were direct suppliers to the automotive assemblers (i.e.,
tier-one suppliers). With two exceptions, all JVs were
startup or greenfield organizations. In terms of ownership,
17 ventures were 50-50, in 15 ventures the Japanese partners had majority equity, and in 8 ventures the American
partners had majority equity.
Stage 2: Longitudinal Case Study
Stage 1 of the research yielded evidence that the JVs created important learning opportunities for the American
JV parents. The American firms were provided an excellent window into their Japanese partners capabilities.
The window had two main sources of potential value.
First, all but five JVs were transplant suppliers, and generally the products supplied to the transplants were similar to products manufactured by the Japanese partners in
Japan. The JVs gave the American partners access to
skills created by the Japanese partner for the Japanese
market and also access to how those skills could be
adapted to the North American work style and infrastructure. Second, the JVs were often the American partners
initial experience in supplying Japanese automakers. In
most cases the Japanese partners had established relationships with the Japanese automakers. Therefore, the JVs
afforded the American partners an opportunity to learn
how to manage a long-term Japanese customer relationship, albeit adapted to the North American context.
Stage 1 also provided the foundation for an emerging
understanding of alliance knowledge management. The
second research stage explored the knowledge management process in detail. An emphasis on process suggested

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

the need for a longitudinal approach that would provide


deep and extensive access to the individuals involved in
collaborative exchange. Therefore, a multiple case study
design was used. It was based on theoretic replication
(Yin 1989) because the choice of cases was directed by
the emerging theory developed from stage 1. For efficiencies in data collection and to capitalize on established
industry contacts, we selected a subset of five of the cases
from stage 1. We used several criteria to select the cases,
with the objective of finding variance across several dimensions. Table 1 reports case characteristics. Of particular interest was the learning potential created by the JVs.
It was important because it influenced the knowledge

Table 1

management processes initiated by the JV parents and the


motivation of the American parents to exploit the learning
potential. To evaluate learning potential, we considered
such factors as the nature of partner contributions to the
JV, the functional similarity of products produced by the
JV and the American parent, manufacturing quality differences between the JV and the American parent, geographic proximity of the JV plant to the American parent,
and the willingness of the Japanese partner to share its
technology. For example, the Alpha JV was classified as
creating high learning potential because (1) the Japanese
partner contributed key manufacturing process technology and the customer contact, (2) the JV and American

Case Characteristics

Characteristic

Alpha

Beta

Gamma

Kappa

Sigma

American partner
learning potential

High

Medium

Medium

High

Low

JV performance

Low

Medium

High

Medium

High

Partner history

None prior to
technology
assistance
agreement signed in
1988

Limited; 10-year
technology
relationship

Limited; licensing
agreement from
1980

Extensive; 25-year
relationship
between partner
presidents

None

Senior JV
management

President from outside; Japanese president;


Japanese VP
American COO and
plant managers

Japanese chairman; American


American president
president/GM;
and COO;
Japanese VP
Japanese sales
manager

American president
and plant
managers;
Japanese sales
managers

Equity shares

50/50

50/50

50/50

Key partner
contributions

Japanese:
Japanese:
Japanese:
Japanese:
Japanese: sales
manufacturing
manufacturing
manufacturing
manufacturing
support. American:
process and
process and
process and
process and
manufacturing
engineering,
engineering, product
engineering,
engineering
process, plant
customer contacts,
design, customer
product design,
customer contacts.
startup, plant
product design,
contacts. American:
customer contacts.
American: raw
management,
access to raw
plant startup, plant
American: plant
materials, JV
administrative
materials. American:
management,
startup,
management and
support.
plant startup, access
administration
administration
plant management,
to American partner
support
support HR, legal,
startup support
manufacturing
finance), plant
equipment, plant
management
management,
administration
support

Customers

Primarily Japanese
automakers

65% Japanese, 35%


American

Japanese and JV
automakers

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

Primarily Japanese
automakers

50/50

Japanese and U.S.


automakers

Mix of Japanese and


American
Customers

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

parent produced similar products, (3) the Japanese parent


was open in its willingness to share technology, (4) the
JVs quality record was superior to that of the American
parent, and (5) the JV plant was located in an unused
American facility a short distance from the American parent headquarters. JV performance was evaluated from the
perspective of the American parent and was based on the
American parents overall satisfaction with performance.
Partner history reflects the extent of previous collaborative relationships between the partners.
Building on the data collected in the first stage, we
began second stage site visits and interviews in May 1993
and continued to September 1994. The interviews in stage
2 were usually 90 minutes to two hours long, although a
few were a half day or more. For the cases studied in this
stage of the research, a total of 20 interviews were conducted with senior American managers in the JVs and
parent organizations. Including the first stage interviews,
observations were collected over a period of three and
one-half years.

Findings
Knowledge Management Processes
For each of the cases, we collected data on the knowledge
management processes used by the American parents.
From the data, four critical processes were identified:
technology sharing, JV-parent interaction, personnel
transfers, and strategic integration. The four processes
share a conceptual underpinning in that each represents a
knowledge connection, which creates the potential for individuals to share their observations and experiences.
Each of the four processes provided an avenue for managers to gain exposure to knowledge and ideas outside
their traditional organizational boundaries and created a
connection for individual managers to communicate their
JV experiences to others. In that sense, the four processes
represent the locus of knowledge creation because it is
through those processes that different types of knowledge
converge and become accessible.
On the basis of the interview data, the cases were evaluated individually on the intensity of the processes for
transferring knowledge (Table 2). The high, medium, and
low classifications are a function of comparison across
the cases. Low means that we found no evidence of a
knowledge management process. Medium means that
the process was occurring but at a lower intensity than it
was in at least one of the other high cases. For example,
we observed that all of the knowledge management processes were present for Kappa and were occurring at a
high intensity level. Alpha was classified as low for three
processes and medium for one. To provide examples of

460

actual knowledge management, Table 3 summarizes


some of the knowledge management activities associated
with the Kappa JV. Similar data were collected for each
of the cases. In the following sections, each of the processes is described in detail and additional examples are
provided. We then link the processes with knowledge
types and the parents organizational levels affected by
the processes.
Technology Sharing. American parent firms instituted various technology sharing processes to gain access
to technology resident in the JV and in the Japanese partner. The most evident knowledge transfer approach was
through structured meetings between JV and parent managers. In Gamma, monthly meetings were held, with the
location alternating between the JV and one of the American parent plants. In attendance at the meetings were
plant managers, heads of quality control, R&D managers,
the VP manufacturing at the American parent head office,
and several senior JV managers. In addition, quarterly
R&D meetings were held involving the JV and American
parent. The manufacturing vice president of one of the
American parents said that while [he] hated to admit it,
the quality of the JV product was superior to that in the
parent. As a result, a program was initiated with plant
managers to address the need to improve quality and customer service.
Access to partner technology skills also was available
through direct linkages between Japanese and American
partners. In both Kappa and Sigma, American parent personnel regularly visited Japanese parent facilities. To capitalize on the Japanese partners fabrication knowledge
and ability to operate with fewer equipment operators,
Kappa managers invited several Japanese engineers to the
United States to train parent engineers. The Japanese engineers brought very detailed equipment designs that
would enable the American firm to replicate their manufacturing process. When no visible progress was made in
designing new equipment, the American president decided to contract equipment design and manufacturing to
the Japanese partner. An American engineer would be
sent to Japan to learn about the equipment so it could be
installed in the United States.
In another case, the partners signed a very broad global
technology agreement. Both partners agreed to be completely open in sharing both product and manufacturing
technology. For product technology, explicit terms on licensing and royalties were established. For manufacturing technology there were no terms. For example, the
American parent might ask to borrow a Japanese partner
engineer for a few weeks. When that had happened in the
past there had been no financial considerations because
it all comes out in the wash. The American partner

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

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Table 2

Knowledge Management in the Five Cases

Technology sharing
Interorganizational interaction
Personnel transfers
Strategic integration

Alpha

Beta

Gamma

Kappa

Low
Medium
Low
Low

Low
Medium
Medium
Low

High
High
Medium
High

High
High
High
High

recognized the need for reciprocal commitment (cf.


Gulati et al. 1994) and tried to make the technology sharing a two-way relationship.
JV-parent Interactions. Individual knowledge and
perspectives remain personal unless they are amplified
and articulated through social interaction (Nonaka 1994).
Interactions between parent and JV managers beyond
specific technology initiatives can create the social context necessary to bring JV knowledge into a wider arena.
In this study, the interactions were primarily social and
involved a variety of groups. In effect, the JV-parent interactions provided the foundation for evolving communities of practice (Brown and Duguid 1991). Community
members share knowledge and may be willing to challenge the organizations conventional wisdom.
Visits and tours of JV facilities were an effective and
simple interactive means for parent managers to learn
about their JVs. The JV managers were generally convinced that the differences embodied in the JV were visible and parent managers would appreciate the differences
if they spent time in the JV. However, visits were not
always perceived as effectively utilized, as various managers indicated. A utilization of a JV visit that produced
an observable change occurred when an American parent
sent several managers to visit its JV to study the JVs
human resource management systems. In contrast to most
of the American parent plants, the JV was a nonunion
operation with a hybrid mix of Japanese and American
human resource practices. The American parent was establishing a new nonunion operation and decided to use
the JV as a model. With the JV managers support, the
visiting managers spent several days studying the JV and
then incorporated much of their knowledge in the new
nonunion plant. One explanation for the success of the
knowledge transfer is that learning was focused on a discrete system that could easily be replicated.
Customer-supplier relationships between the JV and
the American parent also created a basis for extensive,
although not always amicable, interaction. In the Alpha
case, the JV acted as both supplier and customer for the
American parent. Neither relationship was considered

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

Table 3

Sigma
Medium
High
Medium
Medium

Examples of Knowledge Management Processes in


Kappa

1. The American parent (AP) studied various aspects of the JVs


operation, including its use of employee involvement programs,
kaizen teams, and scheduling system. The AP has also studied
some of the JVs process innovations, one of which the JV considers proprietary.
2. Several JV managers were promoted to positions within the AP.
One manager was promoted into an AP staff training position at
AP HQ. Several engineers were also promoted.
3. AP senior managers were committed to the JV and to an Asian
connection. The JV is the strongest Asian connection. The president of the AP had a very close relationship with the former Japanese parent chairman.
4. The AP set up what it called gatekeepers, units of the company
responsible for certain aspects of manufacturing. The gatekeeper
was expected to be available to all units of the company on the
specific process or technology. The JV was asked to be the gatekeeper for JIT.
5. The AP had several engineers temporarily working in Japan in the
Japanese parent organization.
6. The AP and the Japanese parent initiated a joint engineering project. A piece of manufacturing equipment was to be made by the
Japanese partner in Japan, with an American engineer visiting
Japan during the project period.
7. More than 15 employees in the JV visited Japan.

satisfactory, although the JV was a rich source of knowledge for the American parent. In another example, the
American parent substantially increased its quality because of pressure from the JV customer, which in turn
was under pressure from its Japanese transplant supplier.
Until the JV was formed, the American parent had not
had any extensive interactions with Japanese customers.
In supplying the JV, and indirectly becoming a transplant
supplier, the American parent was forced to evaluate
some of its manufacturing operations.
Meetings, such as monthly sales meetings between parent divisions and the JV, were also a means of interacting

461

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

and exchanging knowledge. Finally, in several cases the


JV relied extensively on the American parent for various
services, such as purchasing, accounting, human resource
management, and in one case laboratory facilities. Consequently, the American parent managers had no choice
but to be involved with the JV.
Personnel Transfers. Personnel transfers can be considered a process of organizational reflection (Hedlund
and Nonaka 1993) and a means of mobilizing personal
knowledge. Transfers and rotation of personnel help
members of an organization to understand the business
from a multiplicity of perspectives, which in turn makes
knowledge more fluid and easier to put into practice
(Nonaka 1994, p. 29). The rotation of managers through
JV positions and back to the parent may encourage the
bleedthrough of ideas from the venture to the parent
(Harrigan 1985).
None of the cases studied had a structured process of
rotation between the JV and the parent. However, Kappa
had an extensive informal system of personnel transfers
between the organizations. For example, the American
parent promoted a Kappa manager to a staff training position at parent headquarters. Several engineers also were
promoted. In four of the cases, senior managers in the JV
had been transferred to the JV when it was formed. The
careers of the managers were considered closely linked
to the American parent and not just the JV. In Gamma,
the chief operating officer of the JV came from the American parent to act as mentor for the younger JV managers
and will eventually return to the American parent. In
Beta, two plant managers spent time in the JV and then
returned to plant management positions in American parent plants.
Strategic Integration. Doz (1996) argued that the
partner interface is critical to the parents appreciation of
the differences between the partners. A narrow and distant interface was found to be an obstacle to learning (Doz
1996). The process through which a JV strategy is linked
with a parent strategy is termed strategic integration
(Harrigan and Newman 1990). A JV perceived as peripheral to the parent organizations strategy is likely to yield
few opportunities for the transfer of alliance knowledge
to the parent. A JV closely related to the parent strategy
may receive more attention from the parent organization,
leading to substantial parent-JV interaction and a greater
commitment of resources to the management of the collaboration. As Hamel (1991) argued, receptivity to learning is enhanced if the parent and its alliance are closely
related. Note the assumption that the linkages are consistent with the strategic goals of the parents and JVs.
Through strategic linkages between the JV and the parent, the partners can gain important insights into each

462

others businesses. For example, one of the American parents won a contract to supply a part but was unable to
meet the target cost. The parent decided to use its JV to
produce the part because of the JVs superior process
technology. Such a linkage indicates that the American
parent management had internalized the knowledge associated with differences between the parent and JV. The
linkage also opened the door for more knowledge sharing
and cooperation in the future.
To maximize exposure to strategic knowledge, alliance
partners must go beyond the narrow confines of the JV
agreement. In Gamma and Kappa, the JV functioned like
a related division of the American parent, with the parent
focused on managing the partner relationship, not just the
JV itself. The JV was incorporated into the parents strategic planning processes and was expected to contribute
new ideas and provide leadership in a particular technology area. The relationship between the partners was becoming much tighter. For Kappa, the JV was formed
strictly as a transplant supplier that was relatively independent of its American parent, relying extensively on
the Japanese partner for product technology and marketing support. Over the years, Kappa became less independent as ties between the two partners increased. For
Gamma, the JV was initially presented to the transplant
customers as a Japanese company. The JV evolved into
a much less Japanese firm and, through its American
parents contact, developed a substantial amount of business with domestic customers. The objective, as a Gamma
manager remarked, was for both the JV and the parents
to benefit.
Types of Knowledge
Building on the preceding description of the knowledge
management processes, the primary types of knowledge
associated with each process were identified. Table 4,
based on Spenders (1996b) typology, shows the classification and provides examples of each type of knowledge. Because the table is based on our observations of
knowledge types, it does not include certain knowledge
types that might be associated with the processes in different research settings. For example, technology sharing
in our study involved knowledge with low tacitness.
Clearly, technology could be viewed as having a significant tacit dimension, but in the cases studied, the knowledge transferred (and the knowledge of apparent interest
to the American partners) had a minimal tacit dimension.
The knowledge associated with technology sharing
was classified as explicit, objectified knowledge because
it was related primarily to product designs or specific
manufacturing processes. For example, knowledge about
quality control processes and factory scheduling systems

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

was of potential interest to most of the American partners.


For the technology-based knowledge, a strong explicit
memory component was embodied in the practices of the
JV and, because much of the knowledge in the JV originated in Japan, also in the practices of the Japanese parent.
Most knowledge shared through JV-parent interactions
was objectified, although there was a high potential for
sharing tacit, collective knowledge, such as that associated with a commitment to product quality. We view
product quality knowledge as tacit because it was associated with a culture and philosophy about business and
was not based on specific rules or guidelines.4 The JVparent interactions provided an excellent opportunity for
the American parents to acquire such knowledge, but considerable resistance to it was evident at the American parent level. In one case, the value of quality process knowledge was discounted by the parent (even after the
Japanese parent had offered to facilitate the knowledge
transfer) with the argument that what the JV does would
never work here, even though the JV and parent were
producing very similar products.
Personnel transfers had the potential to transfer tacit,
difficult to articulate knowledge, such as beliefs and
norms of behaviors. For example, an important belief in
the JVs was that Japanese transplant customers had
greater expectations about customer satisfaction than
American customers. Because that belief was usually
shared across levels of the organization, it is classified as
collective knowledge within the JV. Other types of
knowledge were more personal, such as the nature and
importance of Japanese partner approaches to human resource practices. Because our focus was managerial
movements between the JV and parent, the type of individual knowledge of greatest potential for transfer was
conscious knowledge. Had we addressed the transfer of
personnel below the managerial level, we undoubtedly
would have identified instances of automatic knowledge
transfer.
Although strategic integration creates linkages that are
organizational, our findings suggest that potential knowledge transfers may involve both social and individual
knowledge. Through strategic cooperation, JV partners
can gain access to objectified, explicit knowledge as well
as to culture-related, communal knowledge about organizational behaviors and norms. The knowledge may also
be of a tacit, individual nature because there is no consensus about the strategic value of the information. In this
study, individual JV managers learned much about the
Japanese partners interorganizational or keiretsu relationships. Such knowledge had potential strategic value,

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

Table 4

Knowledge Management Processes and Types of


Knowledge

Knowledge
Management
Processes

Types of
Knowledge

Examples of
Knowledge
Potentially
Useful to American
JV Parents

Technology sharing

Explicit/objectified

Quality control
processes
Product designs
Scheduling systems

JV-Parent
interactions

Explicit/objectified

Specific human
resource
practices

Tacit/collective

Quality
Commitment

Tacit/collective

Continuous
improvement
objectives
Commitment to
customer
satisfaction

Tacit/conscious

Meaning of quality
from Japanese
partner
perspective

Explicit/objectified

Market intelligence
Partners keiretsu
relationships

Tacit/collective

JV competitive
advantage

Tacit/conscious

Visions for the


future
Implications of the
partners keiretsu
relationships

Personnel transfers

Strategic integration

although our study suggests that American partner managers were generally unsure of how to capture the value.
Organizational Levels
Learning and knowledge creation occur through a process
involving various organizational levels and actors. For
each of the knowledge management processes, Figure 2
provides a multidimensional view linking the primary
knowledge type and organizational levels in the parent
firms. Like Table 4, the figure summarizes the findings
for the five cases and is based on the identified (as opposed to ideal) knowledge transfer. As Table 3 shows, in

463

ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

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Figure 2

Knowledge Management Processes and Type of Knowledge Transferred

two of the cases little knowledge was transferred from the


JV to American parent.
The boxes in Figure 2 can be interpreted by height,
width, and volume. The height of the box represents the
range of knowledge types associated with the knowledge
management process. The higher the box, the greater the
range of knowledge types. Box width represents the range
of organizational levels affected by the knowledge management process. Box volume provides an indication of
the overall intensity of the process.
The technology sharing process involved primarily explicit, social knowledge that could be transferred to the
group and organizational levels within the American parents. The personnel transfers process involved mainly
knowledge with medium to high tacitness that influenced
individual and group levels. Based on our findings, we

464

conclude that only a limited amount of knowledge associated with personnel transfers spiraled beyond the
group level to the organizational level. Strategic integration involved knowledge ranging from low to high in tacitness that penetrated mainly the group-organization levels. Strategic integration also generated some individual
knowledge. The JV-parent interaction process had the potential to transfer knowledge with similar tacitness to that
transferred by strategic integration, but on a more limited
scale and at lower organizational levels. Resistance in the
American parents to the costs of learning limited the effectiveness of the process at the organization level. One
explanation for that resistance was that American parent
organizations were so lean that little time was available
to invest in learning. This supports the view that Western
organizations try to learn in large, discrete steps (Hedlund

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

and Nonaka 1993) and often fail to recognize the value


of incremental learning.5

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Discussion
This study contributes to the literature on knowledge and
the firm by examining knowledge management in an alliance context. We have sought to systematically establish how firms acquire and manage new knowledge. We
identified specific knowledge management processes by
examining firms efforts to exploit JV learning opportunities and linked those processes with types of knowledge
and organizational levels.
Proposition Development
Several propositions about organizational knowledge
transfer and management can be derived from the findings. Two pertain to relationships between knowledge
tacitness, organizational level, and transfer effectiveness,
and three pertain to transfer effectiveness when the core
of knowledge transferred is highly tacit.
First, we can predict that the more tacit the knowledge,
the lower the organizational level through which successful transfers will occur. Highly tacit knowledge is intuitive, nonverbalizable, and related to individual experiences. First-hand experiences with tacit knowledge are
critical to its successful transfer. Knowledge that is low
in tacitness is often related to product and process technology transfers that can occur on a higher, more collective level. Hence, Proposition 1.
PROPOSITION 1. The tacitness of transferred knowledge will have an inverse relationship to the organizational level where initial transfer takes place; the greater
the tacitness, the more likely individuals will be the primary knowledge transfer agents.
Similarly, we can argue that when knowledge transfers
are initiated at the group and organization levels, perhaps
through team visits or group seminars, the transfers will
be less effective when the knowledge has a high tacit
element.
PROPOSITION 2. The effectiveness of knowledge
transfers initiated at the collective level will be negatively
related to the tacitness of the knowledge.
Figure 2 shows that the identified knowledge transfer
processes are primarily in quadrant 2, with personnel
transfers occupying the top half of quadrant 3. Clearly,
the American firms were focused on explicit knowledge.
This is consistent with the argument that in their approach
to organizational learning, Western firms tend to focus on
explicit knowledge that can be created through analytical
skills and concrete forms of oral and visual presentation

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

(Nonaka and Takeuchi 1995). Although in all the cases


the American firms formed JVs with an objective of
learning from their Japanese partners, the learning expectations revolved around what the Japanese knew, rather
than how and why the Japanese firms knew what they
knew. In other words, initial emphasis was on explicit
knowledge. The American firms expected to find visible
differences in the JV that could be analyzed and incorporated in the parent. The absence of highly visible differences in systems and processes was often equated with
low learning potential.
Because of the focus on explicit knowledge, the American firms often began their collaboration with the view
that the knowledge management processes based on technology sharing and interorganizational interaction were
the most viable. However, in one of the cases, the focus
on narrow, technology-related learning objectives resulted in an early abandonment of technology sharing efforts. Hence, Proposition 3.
PROPOSITION 3. Firms that focus their initial learning efforts on explicit knowledge will tend to ignore tacitknowledge-based learning opportunities, thereby increasing their propensity to undervalue overall learning
potential.
Earlier we noted that knowledge connections create the
potential for individuals to share their observations and
experiences. The firms most successful in knowledge
transfer recognized that important knowledge could not
be internalized without substantial interaction between
the people in the parent and those in the JV. This was
particularly true when the knowledge had a high level of
tacitness.
PROPOSITION 4. The more successful the transfer of
tacit knowledge, the greater the individual interactions
between the learning organization and the teaching
organization.
Firms increasingly saw the need for strategic relationships between the two organizational units as a means of
solidifying the knowledge linkages. The strategic integration process involved less visibly defined objectives
than the technology sharing process and in that sense,
enabled the communication of more tacit knowledge.
PROPOSITION 5. The more successful the transfer of
tacit strategic knowledge, the greater the strategic relationship between the learning organization and the
teaching organization.
Managerial Implications
Spender (1996b) argued that the most strategically important feature of a firm is its body of collective knowledge. We identified several knowledge management processes that firms use to exploit alliance learning

465

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ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures

opportunities. Although all of the processes are potentially effective, we found that the different processes involved different types of knowledge and different organizational levels. Organizations create, store, transfer, and
discard various types of knowledge. Therefore, organizations must engage in a variety of knowledge management processes.
Personnel transfers can be an effective process through
which to acquire tacit knowledge that can be acquired
only through time and experience. The risk with personnel transfers is that if the knowledge remains individual,
the potential social impact of the learning is lost. To maximize the effectiveness of personnel transfers, systems
may have to be established to ensure that knowledge goes
beyond the individual level. Strategic integration can be
an effective higher level knowledge sharing tool. It enables meaningful communication and collaboration between organizations at the group and organizational levels rather than at the individual level. Personnel transfer
schemes and strategic integration suggest a long-term basis for knowledge sharing and potentially allow for the
largest amounts of knowledge to travel interorganizationally. Additionally, such long-term processes create the
potential for a continuous flow of knowledge, which in
turn can lead to continuous learning and change. However, as we found, personnel transfers do not always result in significant organization level knowledge transfer.
The other two processes, technology sharing and JVparent interactions, are based on shorter term knowledge
relationships and as such, are less effective in transferring
tacit knowledge. Nevertheless, this study shows that they
can be effective as a means of acquiring explicit, objectified knowledge. Moreover, given that the decision to
initiate knowledge creation efforts must be balanced with
the cost of doing so, technology sharing and JV-parent
interaction processes may be less costly than strategic integration and personnel transfers. Visits and tours of JV
facilities were identified as a simple and effective means
for parent managers to interact with JV managers.
In summary, this research suggests that organizations
must be aware of the different types of knowledge and
design appropriate systems to process the knowledge.
Clearly, firms will attach different values to JV knowledge, and therefore knowledge creation and processing
strategies will differ across organizations and also evolve
over time. We found that a variety of knowledge management strategies can be useful, although some strategies lead to more effective knowledge transfer than others. For example, in four of the five cases (all but Sigma),
the Japanese partner was responsible for the manufacturing process and product technology, which obviously influenced the type of technology knowledge that could be

466

exchanged between the partners. Also, industry conditions can influence learning intent and managerial commitment. When our research began in 1990, the U.S. automotive industry was under serious attack by Japanese
firms. Suppliers had to cope with new competitors, and
their traditional customers were losing market share. By
1994, the situation had changed dramatically. The domestic auto industry was recapturing some of its market
share, and suppliers were reaping the benefits. The learning imperative that prevailed in 1990 was no longer as
critical. That change highlights one of the problems with
cross-sectional research, namely that firms and industries
are in constant evolution. Longitudinal research captures
the evolutionary patterns in the underlying research context.

Conclusion
There are several underlying assumptions in the paper.
First, there can be a significant payoff in cooperating,
namely knowledge creation. Although not all knowledge
creation efforts will have immediate performance payoffs, over the long term successful knowledge creation
should strengthen and reinforce a firms competitive strategy. Second, each alliance partner has knowledge that, at
least in part, should be considered valuable by the other
partner(s). Third, knowledge creation is a dynamic process involving interactions at various organizational levels and an expanding community of individuals that enlarge, amplify, and internalize the alliance knowledge.
Finally, knowledge creation and the upward movement
of knowledge through the different organizational levels
can be at least partially responsive to managerial influence.
To be successful, organizations must not only process
information but also create new information and knowledge. This study explored how organizations involved in
alliances can use their alliance experience as the basis for
managing and creating knowledge. We provide some empirical evidence to support the conceptual arguments
made by Hedlund (1994) and Spender (1996b) about the
firm as a dynamic system of processes involving different
types of knowledge. Further research is needed to probe
deeper into the relationships between organizational levels, types of knowledge, and organizational processes. In
particular, there is a need to study how organizations
manage highly tacit knowledge that resides at the collective level of the organization. Such an orientation can
help capture the dynamics of knowledge management and
greatly enrich understanding of how firms acquire and
transfer knowledge.
Acknowledgments
Grants to the first author from the Carnegie Bosch Institute for Applied
Studies in International Management, Temple Universitys Center for

ORGANIZATION SCIENCE /Vol. 9, No. 4, JulyAugust 1998

ANDREW C. INKPEN AND ADVA DINUR Knowledge Management Processes and International Joint Ventures
East Asian Studies, and the Thunderbird Business Research Center are
gratefully acknowledged. The authors thank Rob Grant, Ikujiro
Nonaka, and J. C. Spender for their helpful comments.

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Endnotes
1
Confirmed through discussions between the first author and several
General Motors managers.
2
Spender (1996b) emphasized that the boundaries between the types of
knowledge are imprecise.
3
Although the sample included two Canadian firms, for brevity we refer
to the sample as American rather than North American.
4
In contrast, specific quality control systems or processes that involve
rules and guidelines would be classified as objectified knowledge.
5
For a detailed discussion of Western versus Japanese knowledge management processes, see Hedlund and Nonaka (1993). Nonaka and
Takeuchi (1995, ch. 8) use several Japanese company examples to describe how organizational knowledge creation takes place on a global
scale.

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Accepted by Ikujiro Nonaka; received November 5, 1996. This paper has been with the authors for one revision.

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