Foundation Problems in Organizational Theory and Epistemology

Introduction to a Theory of Organizational Knowledge

The fundamental difference between individuals' and organizations' management of knowledge is that organizational knowledge and decision-making capabilities involve the collective memories and activities of many individuals separated in time and space, as well as transcendent organizational properties, routines, systems and knowledge that persist independently from any individual's memory or activities. Organizational theory (sometimes known as 'theory of the firm') should help to understand the differences and relationships between individual and organizational knowledge management. Organizational theory should also help us extrapolate likely properties and responses of firms when challenged by new technological aids to cognition as aids to the better management of organizational knowledge.

Michael Polanyi's Concepts of Personal Knowledge vs Popper and Kuhn

Here, I am assuming that readers are familiar with the ideas of Karl Popper and Thomas Kuhn as presented in my fugal Subject. In this section I introduce Michael Polanyi, a second major contributor to epistemology in the 20th Century, whose epistemology forms a part of the current paradigm of the knowledge management discipline. I compare Polanyi's ideas to those of Popper and Kuhn (Kuhn's contribution relates more to questions about historical reasons for belief rather than the epistemological basis or justification for belief).

For paradigmatic reasons, many readers with a knowledge management background will be more familiar with Polanyi's (1958, 1966) concepts of knowledge, and may be unfamiliar or uncomfortable with the Popperian paradigm that has formed the basis of this work so far. Conversely, readers familiar with the Popperian paradigm may be unaware of Polanyi's works208. The different paradigms exist as competing theories of knowledge for reasons relating to history and personalities of the major proponents rather than for any underlying theoretical reasons. 

Polanyi, a world renowned chemist in his time, completed his epistemology in the 1950's contemporaneously with Karl Popper while both were professors of philosophy in prestigious English universities. However, even today, Polanyi's approach to knowledge is relatively unknown in the scientific and academic community (Sheppard, 1999), and many people working in the OKM discipline appear to be unfamiliar with Popperian ideas. The OKM discipline has focused most of its attention on personal or tacit knowledge (e.g., Saint-Onge 1996; Sveiby 2000; Nonaka & Takeuchi 1995; Snowden 2002) to the detriment of understanding and managing persistent World 3 knowledge that transcend the involvement of individual people in the organizations. The implicit focus on Polanyi's ideas in OKM is possibly due to the reliance of pioneers in organization theory (e.g., Nelson & Winter 1982) and knowledge management (e.g., Sveiby 1994, 1997; Nonaka 1996) on Polanyi's (1958, 1966) works on personal and tacit knowledge. Subsequently, many practitioners seem to have simply followed pioneers' concepts of knowledge without ever considering for themselves the theories of knowledge underlying the discipline.

The current episode of my work combines the Popperian individualistic epistemology with insights from Polanyi to the collective and organizational level. However, there are historical reasons why Polanyi's followers are unaware of Popper, and vice versa.

An Epistemological Holy War

Popper and Polanyi developed strong antipathies towards one another, and the schools of epistemology that developed around each author ignored or dismissed work being done by the other school to the extent that two epistemologies developed independently as completely separate paradigms and definitive literatures (Richmond, 1998; Sheppard, 1999). As a result, concepts of knowledge developed in the two schools are largely unconnected by cross citations or comparative analyses209, and are at least in part incommensurable. It may help to understand the personal sources of the similarities and differences between the philosophers and the schools following their thoughts.

In the 1950's when they were completing their major works, Popper (Thornton 2000; Watkins 1997) and Polanyi (Mullins ????; Cash 1996) were separated by only 185 miles between London and Manchester - a reasonable day trip on the train. Both had similar cultural and academic histories. Both were from liberal Austro–Hungarian Jewish backgrounds assimilated into the Germanic intelligencia, and then fled Nazism to strongly oppose positivist philosophies and totalitarian societies in major philosophical and socio-political works.

Polanyi (about 10 years older than Popper) became a Catholic around the time he completed his graduate work210. He trained in medicine (MD in 1913) and physical chemistry (PhD in 1917) before taking a position in Germany in 1920 to begin an eminent career in physical chemistry211. Polanyi left Germany in 1933 to take the Professorship of Chemistry at Manchester University, and with the rise of Nazism in Germany began to shift his interests from chemistry to publish in philosophy in the late 1930's and 1940's (Cash 1996). In 1948 Polanyi resigned the professorship in chemistry to take up the newly created chair of social studies/philosophy at Manchester (Mullins ????, Nye 1996).

Popper was baptized a Lutheran at birth (Edmonds & Eidinow 2001), earned his PhD in Philosophy in 1928, left Austria in 1937 - a year prior to Anschluss, to take a philosophy lectureship in New Zealand (Munz 2002). He was appointed Reader in Philosophy at the London School of Economics in 1945, and Professor of Logic and Scientific Method in 1949 (Watkins 1997).

Despite the name of his first book (1934, 1959), Popper's research program in epistemology explicitly dismissed the subjective aspects of scientific discovery and focused exclusively on how to build "objective" knowledge (Popper 1972b) – i.e., to increase the quantity and value of that which can explicitly be evaluated against external reality. Popper thought that his program of critical rationality offered the main protection against the positivist dangers of credulism as promoted by the demagogic dictators (Popper 1945, 1976). Polanyi, in addition to his practical experience creating scientific knowledge, developed increasingly strong interests in subjective ("personal" or subjective) sources of "knowledge" that he believed contributed to scientific discovery. Polanyi also believed that these personal sources of knowledge provided an essential protection against the dangers of positivistic objectivism and demagogic dictators (Mullins ????, Cash 1996).

Despite their similar backgrounds, following on from Polanyi's presentation of a paper in 1952 in one of Popper's seminars at the London School of Economics, they apparently developed deep mutual antipathies related to their epistemological stances. The younger Popper apparently made it clear that he did not consider Polanyi to be a worthy peer, and Polanyi – who had been a truly eminent scientist – was "gravely offended" by such treament212. In any event, the two protagonists and their followers to the present day rarely reference or acknowledge each other's works (Watkins, 1997; Sheppard, 1999213)214. Even academic philosophers (e.g., Feyerabend 1975; Lakatos 1978) who attack Popper's ideas about the development of scientific knowledge from subjective and sociological points of view largely ignore Polany's contributions. The contrary circumstance exists with writers on organizational knowledge, where Polanyi is the most commonly referenced epistemological writer and Popper is rarely referenced.

Knowledge: The Explicit - Tacit Dimension

Polanyi's (1958, 1966) most important contribution to an understanding of knowledge in the OKM discipline was his focus on personal or "tacit" knowledge based on experience, practice, intuition and faith. Polanyi argued that a substantial fraction of the human knowledge underlying successful (adaptive) responses to the world (i.e., "knowing how" or scientific intuition) can not be readily articulated explicitly in words: "We know more than we can tell"215 (Barberio ????). Tacit knowledge as used in OKM theory:

...includes all the genetic, bodily, intuitive, mythical, archetypical and experiential knowledge the human being has, even though it cannot be expressed by means of verbal concepts. Tacit knowledge is present in the human being as a whole: it includes manual skills, knowledge of the skin and of thoughts. Tacit knowledge present in the individual guides his or her choices in the information flow." [Koivunen, 1997]216.

This is contrasted to explicit knowledge that has been assimilated, articulated, tested and written down – i.e., the kinds of knowledge I have discussed in previous sections.

The term "tacit" is used throughout the organizational literature, often separated from its epistemological foundations, to describe "knowledge" that people have not articulated, contrasted to "explicit" knowledge that has been expressed in tangible objects.

Both Karl-Eric Sveiby (1994, 1997) and Ikujiro Nonaka (Nonaka 1991, Nonaka and Takeuchi 1995)217, recognised pioneers of organizational knowledge management, explicitly based much of their thinking on Polanyi's concepts of tacit knowledge218, as have a number of other OKM commentators. For example, Nelson and Winter's (1982) revolutionary work in organizational and economic theory is based strongly on the Polanyian concept of tacit knowledge.

Tacit knowledge may also be compared to Kuhn's (1962) concepts of "paradigm" that share some common aspects (Forster 1998; Richmond, 1998; Kaghan and Phillips 1998). How closely similar the two concepts are in any particular writer's work is at times difficult to determine unless the authors have themselves attempted to differentiate the two terms. My usage of the term tacit will be made clear in the following discussion. However, it is much more useful to begin by comparing the concepts of explicit and tacit knowledge. My interpolations in the quoted passages are shown in square brackets "[]".

Saint–Onge (1996) distinguished explicit and tacit knowledge as follows:

Explicit knowledge is articulated knowledge – the words we speak, the books we read, the reports we write, the data we compile. The greater level of knowledge in an organization, however, is tacit–unarticulated. Tacit knowledge includes the intuition, perspectives, beliefs, and values that people form as a result of their experiences. Out of the beliefs and assumptions in our individual mindsets, we make decisions and develop patterns of behavior for everything we do. Our mindsets feed on themselves both positively and negatively – we believe what we see, and we see what we believe.

At the individual level, tacit knowledge forms a mental grid – a unique set of beliefs and assumptions through which we filter and interpret what we see and do. The grid guides our "auto–pilot" and our behavior. It acts like a lens that filters our interpretation and understanding of our personal experiences and communication and places boundaries around our behavior. In this way it delimits our performance and, thus, our results.  [This statement is actually quite close to Kuhn's (1962) paradigm concept.]

In an organization, tacit knowledge is made up of the collective mindsets of everyone in the organization. Out of its experience, the organization assumes a unique set of beliefs and assumptions through which it collectively filters and interprets how it sees the world and reacts to it.

Nelson and Winter (1982) further distinguish between the tacit knowledge of individuals taken collectively and organizational tacit knowledge that results from the establishment within the organization of undocumented routines, shared contexts contexts and connections.

I have found a third descriptive term along the tacit-explicit dimension to be useful: "implicit" to denote knowledge able to be made explicit that has not. How tacit, explicit and implicit knowledge are related is explained by Nickols (2000). Nickols's scheme is shown (with slight modifications) in Figure 14.

Figure 14. Framework for thinking about the knowledge in knowledge management (Nickols 2000).

In Nickols's framework, explicit knowledge is that which is already expressed in documents of various kinds or other tangible (objective) forms. Implicit knowledge is knowledge that is able to be expressed but hasn't. Tacit knowledge can be transmitted by "doing" and "observing" even though it may not be possible for the doers to directly articulate the knowledge in the form of documents. In this framework, explicit knowledge exists in Popper's (1972b) World 3, implicit knowledge is knowledge that can be produced in World 3, while tacit knowledge is constrained to exist only within World 2.

Nickols (2000), states that declarative knowledge consists of things like descriptions of facts and things or of written methods and procedures, and is essentially synonymous with explicit knowledge. Procedural knowledge manifests itself in the doing of something; yet we cannot always reduce the knowing of how to do into "mere words". Nickols chooses "to classify all descriptions of knowledge as declarative and only apply procedural to situations in which the knowing may be said to be in the doing. Indeed, as Nickols shows, declarative knowledge ties to "describing" and procedural knowledge ties to "doing". Nickols is "comfortable" viewing all procedural knowledge as tacit and all declarative knowledge as explicit. As I discuss below, important components of organizational knowledge are quite explicit, and many kinds of tacit knowledge are actually implicit219, which can be captured and made explicit by computer systems in terms of workflows, decision trees, annotations and the formation of hyperlinks.

It is worth emphasizing that an underlying or unstated paradigmatic assumption held by many who use the term "tacit" in their writing about knowledge is that the only true knowledge exists inside a human mind. As should be clear, I do not accept this. Because of this common paradigmatic belief that knowledge made explicit outside of the human mind becomes mere information, the present discipline of organizational "knowledge" management (as consciously contrasted by its practitioners to the ideas of "data" or "information" management) is particularly concerned to identify and manage organizational knowledge that is not expressed explicitly (or "articulated") in records and documents.

This point of view is clearly expressed by Stenmark (2001a), who reviews a number of usages of the term "tacit" and "explicit" knowledge in the KM literature, and concludes that different authors claiming to trace their definitions from Polanyi come to contradictory conclusions as to whether there is a real difference between explicit and tacit knowledge. However, the consensus in the knowledge management discipline seems to be that all human knowledge contains at least a component that is tacit – i.e., according to many, true "knowledge" cannot exist outside of the human brain. Stenmark concludes,

Information requires knowledge both to be created and to be understood, but although information and knowledge are related, the information per se contains no knowledge. Routines, procedures, rules, manuals, and books all need knowledge to be decoded and are therefore not explicit knowledge but information"; [i.e., anything explicit can only be information]250.

Stenmark (2001a) also reviews several definitions of the terms data, information and knowledge along what I have called the qualitative dimension. These are presented in Table 2.

Table 2. Qualitative information value terms used in knowledge management (reproduced from Stenmark 2001a)





Wiig 1993

Facts organised to describe a situation or condition

Truths, beliefs, perspectives, judgments, know–how and methodologies

Nonaka & Takeuchi, 1995

A flow of meaningful messages

Commitments and beliefs created from these messages

Spek & Spijkervet, 1997

Not yet interpreted symbols

Data with meaning

The ability to assign meaning

Davenport, 1997

Simple observations

Data with relevance and purpose

Valuable information from the human mind

Davenport & Prusak, 1998

A set of discrete facts

A message meant to change the receiver’s perception

Experience, values, insights, and contextual information

Quigley & Debons, 1999

Text that does not answer questions to a particular problem

Text that answers the questions who, when, what, or where

Text that answers the questions why or how

Choo, Detlor, & Turnbull, 2000

Facts and messages

Data vested with meaning

Justified, true beliefs

In the present work, where I am concerned with proven and potential roles for computer systems in managing organizational knowledge – and where the organization is considered to be an adaptive entity in its own right, I think it is useful to retain Coombe's simple definition that knowledge is "assimilated information reflecting experience" (see Figure 1 and the associated text). In this sense, explicit knowledge is information reflecting experience in the real world that has been assimilated by people, and then written down and recorded in documents, applications and in other forms where the result is available in persistent form for retrieval and use by other people or for computer processing.

In my usage, in a predominately Popperian framework, the assumption is that anything deserving the name "knowledge" relates in some tested/tangible way to the real world by comparison to unsubstantiated belief or faith. In other words, in my usage, knowledge represents understanding/experience of things (objects, activities, etc.) that exist in the real world external to the entity claiming or assumed to have the knowledge. This knowledge can be articulated in documents or enacted in processes. I am also happy to accept as knowledge tacit "performance routines", skills, or other learning developed through trial, error and practice, as this is also assimilated information that has survived testing against the real world. However, unlike Polanyi (1958), I do not accept untested claims to know based on intuition or faith as any form of knowledge, tacit or otherwise. (This is not to say that myths and stories don't need managing or have no impact on organisational performance; e.g., see Snowden 2000, 2002.)

Organizations as Transcendent Entities

Some relevant references: 

Oliver Wilson - The Theory of the Firm as Governance Structure: From Choice to Contract - http://

Book Review : Donaldson, Lex: American Anti-Management Theories of Organization 1995, Cambridge: Cambridge University Press, 263 pages. -

Foss, Lando & Thomsen (1998) The Theory of the Firm. -