A reaction paper

To the article “The knowledge-creating company” by I.Nonaka
This article is devoted to the topic of knowledge management in the company — the important issue of modern management.

The article discusses the mechanisms for the creation of new knowledge on the example of successful Japanese companies. According to the author, formalized knowledge is the source of competitive advantage and the secret of companies’ success. Nonaka believes that this is the main factor of success, as in today’s business innovation is important factor for continuous success.

Nonaka speaks about Japanese corporations and their specific approach to business and management. He argues that the centerpiece of the Japanese approach is the recognition that creating new knowledge is based on the employees’ subjective insights, that are valuable for the company. The main idea is that the key to this process is personal commitment of employee, his sense of identity with the company, and that commitment must become the most effective tool for the successful work. (p. 96)

Practical application of this approach involves two questions: first question concerns the relationship between the individual and the company. According to the author, the s key process of knowledge creation lies in the “commitment and identification officer with the mission of the company» (p.91).

At the basis of theoretical considerations of the author lies the idea of the structure of the company as a living organism that needs to constantly change and adapt to business environment. According to Nonaka the company is not just a living organism, but the thinking and feeling organism, which has its own ideals, goals and principles that are realized through the products and services. Thus, the company does not just adapt to the environment, but also creates its own environment, with its rules, values and principles. This approach has two important implications:

— The main purpose of the organization is not the profit, but the maximum satisfaction of all stakeholders;
— Between individuals and the organization there are not contractual but personal relations, which imply a commitment to common ideals and values, as well as the joint realization.

So, the main idea of the author is that personal commitment – is the most important factor for the company’s success, and it is true for the Japaneses corporations. As for the Western companies, the relations between employees and organization are not so related to the emotional and ethical factors. Such a difference in the relationship primarily due to historical and cultural processes in Japan.

In that respect, the knowledge-creating company pays much attention to the ideas and ideals, that fuels innovations, because the essence of innovation is to “re-create the world according to a particular ideal”. (p. 98)

Thus Nonaka also compares relationship building in Western companies and Japanese corporations. The concept of the author is based on the fact that companies are actively working on a process of knowledge sharing between employees, and constructing new knowledge. But in the framework of contractual relations, so that relations in Western companies, these processes are difficult. These ideas are based on the opinions of the author’s about style of thinking of people which depends on cultural factors of certain countries.

Thus the article and the views of Nonaka represent one of the foundations of the theory of knowledge management in modern management. This article is very important to understand the concept of knowledge creation and knowledge management. That is why all managers who want to study this concept and put it in action in their work must consider the viewpoints of Nonaka to have the full understanding of what knowledge management is.


Nonaka , I. (1991) “The knowledge-creating company”. Harvard Business Review, №69. Pp. 96-104.