Knowledge Creation in Public Administrations

Innovative Government in Southeast Asia and Japan

Ayano Hirose Nishihara, Masaei Matsunaga, Ikujiro Nonaka, Kiyotaka Yokomichi, Ayano Hirose Nishihara, Masaei Matsunaga, Ikujiro Nonaka, Kiyotaka Yokomichi

• Publisher: Palgrave Macmillan
• Year: 2017
• Print ISBN: 9783319574776
• eBook ISBN: 9783319574783
• Topic: Politics & International Relations
• Subtopic: Public Affairs & Administration
• Index: Politics & International Relations

This book presents a new paradigm of innovative governments in Asia, at the municipal, regional and national levels, based on the knowledge creation theory in management, and leading to organizational transformation and policy reform in public administration. Focusing on Indonesia, the Philippines, Thailand, Vietnam, and Japan, the book is based on the findings of a joint research project established to identify the factors that impact the effectiveness or performance of public administration by applying the knowledge-based management theory that originates in private sectors to public sector management.

© The Author(s) 2018

Ayano Hirose Nishihara, Masaei Matsunaga, Ikujiro Nonaka and Kiyotaka Yokomichi (eds.)Knowledge Creation in Public Administrationshttps://doi.org/10.1007/978-3-319-57478-3_1

Begin Abstract

1. Knowledge-Based Management Theory

Ikujiro Nonaka¹ , Ayano Hirose Nishihara² and Hideki Kawada¹

(1)

Hitotsubashi University, Chiyoda-ku, Japan

(2)

Department of Global Business College of Business, Rikkyo University, Tokyo, Japan

Ikujiro Nonaka (Corresponding author)

Email: [email protected]

Ayano Hirose Nishihara

Email: [email protected]

End Abstract

Introduction

In 1990s, Peter Drucker proposed that knowledge is the only meaningful resource today. But, in doing so he observed that we do not yet fully understand how knowledge behaves as an economic resource, so we need an economic theory that puts knowledge into the center of the wealth-producing process, as this alone can explain innovation (Drucker 1993, 183). In this book, we show that management theory and practice in the twenty-first century are characterized by increasing attention to our use of knowledge in this field, and the Knowledge School has been developing theories centered on how we can create and manage this unique asset (Polyani 1966; Drucker 1993). Epistemological traditions tend to assert that knowledge is defined as “justified true belief” ; in particular the kind of belief that is marked by words such as universal, scientific, logical, and objective. This is another way of saying that knowledge is, in short, explicit. However, contrary to this perspective, which is prevalent in much of the mainstream management literature, we take the position that maintains that all knowledge is either tacit or is rooted in tacit knowledge , and is in particular artistic, aesthetic, and subjective. This is based on the theory introduced by Michael Polanyi (Polanyi 1966). Explicit knowledge , as it turns out, only represents a small part of a much larger holistic knowledge; in this sense, explicit knowledge is metaphorically similar to the tip of an iceberg visible above the water, while tacit knowledge spreads deep and wide under the water.

Accordingly, our view is roughly consistent with what is commonly described as the Austrian School of Economics , developed by authors such as Schumpeter and Hayek , rather than the Neoclassical School of Economics, which emphasizes an equilibrium that achieves an efficient or inefficient allocation of resources. The Austrian School was interested in the conditions surrounding disequilibria, that is, how existing equilibria become disrupted and move toward a new equilibrium. Joseph A. Schumpeter wrote about what is now known as creative destruction, in which innovation actively disrupts the existing equilibrium to generate new values. He defined innovation as a commercial or industrial combination of something new (Schumpeter 1912) . Later, Friedrich Hayek pointed out that the market is a place where people with limited information interact with one another to discover new meanings, using a dynamic trial-and-error process to find the right answer. Thus, in the market, an order emerges spontaneously (Hayek 1978) . In our terms, this is about tacit knowledge being embedded in the market, which consequently, provides a place for such discovery.

Knowledge-creation theory attempts to synthesize existing interdisciplinary theories and concepts of the past and present from Eastern and Western traditions to more fully understand human beings. This is because knowledge emerges from our beliefs , and needs to be justified as an objective truth. Beliefs demand our commitment and subjectivity, but unfortunately both these factors have been long neglected in management studies. To offset this, we define knowledge as a “dynamic social process of justifying personal belief towards truth, goodness, and beauty” (Nonaka and Takeuchi 1995).

The concept of knowledge we use in this book thus contains broader meanings than the term does when in general use. Nevertheless, there are a few key characteristics: first, knowledge is a human creation within and resulting from interactions among themselves and their environment ; second, knowledge is not a self-contained substance waiting to be discovered and collected. It is not already out there. Rather, it is something we must create from our internal self during our interactions with the outside world, and this is the essence of knowledge; and third, knowledge cannot exist in a vacuum, because knowledge without connection to actual context is merely information. Therefore, we need to internalize information within ourselves to transform it into knowledge.

From this perspective, we can say that organizations differ because beliefs and commitments envision different futures. To achieve an envisioned future we need to create new knowledge, and this is what management and strategy should be concerned about.

A Knowledge-Creating Theory for the Public Sector

This book is one of the outcomes of a joint research project carried out by JICA , GRIPS , and Hitotsubashi ICS that started in 2013, and led us to believe that Knowledge-Creation theory is particularly useful when it comes to attempting to understand and contribute to the functioning of the bureaucracies of ASEAN countries. This section will familiarize readers with the fundamentals of Knowledge-Creation theory that are found to be applicable also to the public sector, as identified by our current research project.

Two Types of Knowledge: Tacit Knowledge and Explicit Knowledge

Two types of knowledge—tacit and explicit—are under our consideration in this book. tacit knowledge has a subjective and experiential nature, and is not expressible with symbols and verbal characterizations. It is also context specific , being characterized by cognitive and technical skills that are embedded in individuals. The other is explicit knowledge ; characterized as objective, rational knowledge that can be expressed clearly. Unlike tacit knowledge , explicit knowledge tends to be free from contexts in which the knowledge itself is under consideration. Examples include concepts, logic, theories, problem-solving methods, manuals and databases, or any other modes of expression that portray objective qualities.

This is illustrated in a drawing by Raphael now in the Apostolic Palace, Vatican City—“The School of Athens” (Dussler 1971). The drawing shows Plato and Aristotle , the two main figures in the center, pointing in two different directions. Plato is pointing to the sky and Aristotle to the ground, or the earth. Plato’s gesture represents his deductive idealism; in other words, universal quality resides in ultimate forms or ideas. Aristotle’s, on the other hand, indicates his inductive pragmatism that realized that universal quality resides here on earth, and can only be perceptible through our five senses. Plato is contemplating explicit knowledge , while Aristotle is focusing on a pragmatically grounded knowledge that includes qualities other than concrete ideas—in other words, tacit knowledge.

These two types of knowledge have contrasting characteristics and a continuous and inter-convertible relationship. This inter-conversion process functions as an engine for generating new knowledge collectively (Fig. 1.1). In Knowledge-Creation theory , we emphasize the importance of tacit knowledge , but this does not mean that we are neglecting explicit knowledge . In fact, both must be regarded as having adequate weight, so that the conversion process between tacit and explicit knowledge can further enrich both types of knowledge. The intention is to free us from the prejudice that objective, scientific, and explicit knowledge is the only type of knowledge. We need to restore our perspective on knowledge, which will balance subjective beliefs and rationality, tacit and explicit knowledge , and art and science, through the notion that knowing requires individual-based commitment.

Fig. 1.1

Two types of knowledge: tacit knowledge and explicit knowledge.

Source Nonaka (2014)

Polanyi (1966) contributed to the construction of a new paradigm that allows us to think of knowledge as a process —this is best seen from his idea of expressing knowledge using a verb, as in tacit knowing. Polanyi’s theory depicts the mechanism by which individuals perceive things and obtain new knowledge, and in this sense, is also a good guide to understanding how organizations obtain new knowledge. Yet, the implications are far from obvious, and there is a lack of explanation within a comprehensible model that can potentially elucidate this process. Our theory of knowledge creation aims to fulfill this gap, focusing exclusively on how knowledge is created organizationally, and borrowing insights from a wide variety of subjects in the humanities and social sciences, to build a new theory on top of Polanyi’s. Therefore, the focus of our theoretical work is to present a model of knowledge creation in which tacit knowledge is obtained, converted to explicit knowledge , and eventually creates new knowledge.

Tacit knowing is an integrative process that subsumes various particulars in the unifying whole, and eventually generates meanings out of their relationships. This is called the act of understanding, in which particulars (subsidiary awareness) , and the whole (focal awareness), interact to generate higher-dimensional meanings from lower-dimensional particulars. Polanyi uses the term emergence to describe this phenomenon, in which a higher dimensional being appears from its subordinate lower-dimensional being, even though neither of them alone will suggest the emergent being itself. These layers infinitely extend themselves upwards and downwards in a dynamic of tacit knowing.

The SECI Model: An Organizational-Knowledge Creation Process

Relentless conversion between the two types of knowledge—tacit and explicit—facilitates the creation of new knowledge. But for this process to function properly, the conversion must happen in both directions, in the context of their dialectic relationship. Our SECI Model essentially demonstra...

Table of contents

• Cover
• Frontmatter
• 1. Knowledge-Based Management Theory
• 2. Case Study 1: Mayor Belmonte and Quezon City
• 3. Case Study 2: Toward Surabaya Cyber City: From GRMS to e-Sapawarga (2004–2014)
• 4. Case Study 3: Tono Style Community Development
• 5. Case Study 4: Institutionalized Innovation in Jembrana Regency Under Regent I. Gede Winasa (2000–2010)
• 6. Case Study 5: Thinking Big for the Common Good: A Case Study of the Household Block-Grant Initiative in Agricultural Management in Vietnam
• 7. Case Study 6: Co-Creating the Census Serbilis, a Study of the Philippines National Statistics Office
• 8. Case Study 7: Dr. Sanguan Nitayarumphong and Public Healthcare Reform in Thailand
• 9. Case Study 8: Redefining Reality: A Case Study of the Emerging Leadership of Truong Chinh
• 10. Knowledge-Based Public Sector Reform: The Philippine Experience
• 11. Leadership and Management Development: The Indonesian Experience
• 12. A Knowledge-Based Paradigm of Public Sector Reforms in Asia
• 13. To Become the Nation and the Region for Knowledge-Creating Enterprises
• Backmatter