David J. Pauleen Cross-Cultural Perspectives

Cross-Cultural
Perspectives on
Knowledge Management
David J. Pauleen
Editor
LIBRARIES UNLIMITED
CROSS-CULTURAL PERSPECTIVES
ON KNOWLEDGE MANAGEMENT
Cross-Cultural Perspectives
on Knowledge Management
Edited by David J. Pauleen
Libraries Unlimited Knowledge Management Series

Danny Wallace, Series Editor
Library of Congress Cataloging-in-Publication Data
Cross-cultural perspectives on knowledge management / edited by David J. Pauleen.
p. cm. — (Libraries Unlimited knowledge management series)
Includes bibliographical references and index.
ISBN 1–59158–331–4 (alk. paper)
1. Knowledge management. 2. Corporate culture. I. Pauleen, David, 1957–
HD30.2.C78 2007
658.4 ʹ 038—dc22 2006028274
British Library Cataloguing in Publication Data is available.
Copyright © 2007 by Libraries Unlimited
All rights reserved. No portion of this book may be

reproduced, by any process or technique, without the
express written consent of the publisher.
Library of Congress Catalog Card Number: 2006028274

ISBN: 1–59158–331–4
First published in 2007
Libraries Unlimited, 88 Post Road West, Westport, CT 06881

A Member of the Greenwood Publishing Group, Inc.
www.lu.com
Printed in the United States of America
The paper used in this book complies with the

Permanent Paper Standard issued by the National
Information Standards Organization (Z39.48–1984).
10 9 8 7 6 5 4 3 2 1
Contents
List of Figures vii

List of Tables ix
Foreword xi
Acknowledgments xiii
Introduction xv
SECTION 1: CONCEPTUAL APPROACHES TO CULTURE

AND KNOWLEDGE MANAGEMENT 1
1 Exploring the Relationship between National and

Organizational Culture, and Knowledge Management 3
David J. Pauleen, Ling-Ling Wu, and Sally Dexter
2 Culture: An Overlooked Key to Unlocking Organizational Knowledge 21

Robert Mason
3 The Art of Systems: The Cognitive-Aesthetic Culture of Portal Cities

and the Development of Meta-Cultural Advanced Knowledge Economies 35
Peter Murphy
SECTION 2: EFFECTS OF CULTURE ON KEY ASPECTS

OF KNOWLEDGE MANAGEMENT 65
4 Cultural Stretch: Knowledge Transfer and Disconcerting

Resistance to Absorption and Application 67
Gerhard Fink and Nigel Holden
vi Contents
5 From Concept to Context: Toward Social-Cultural

Awareness and Responsibility in the Organization of Knowledge 81
Chern Li Liew
6 Managing Innovative Knowledge: Cultural Perspectives on Patenting 95

Chad Saunders and Mike Chiasson
7 The Influence of National Culture on Knowledge Management

in Virtual Teams 111
Doug Vogel, Anne-Francoise Rutkowski, and Michiel
van Genuchten
8 People’s Twist: The Cultural Standard of Loyalty and Performance

in Former Socialist Economies 135
Gerhard Fink and Maren Lehmann
SECTION 3: RESEARCH AND CASES ON CULTURE

AND KNOWLEDGE MANAGEMENT 155
9 Institutional and Cultural Influences on Knowledge

Sharing in Russia and China 157
Kate Hutchings and Snejina Michailova
10 Asian Organizations Meet North American Management Theory:

The Case of Singapore and Senge 175
Kala S. Retna and Jane E. Bryson
11 The Peruvian Asparagus Cluster: Realizing Profitability from

Social Capital and Shared Knowledge Management in a
Traditionally Low-Trust Environment 195
Luis S. Chang
12 Research and Development Knowledge Transfer across

National Cultures 219
Marjolyn S. W. Thiessen, Paul H. J. Hendriks, and Caroline Essers
Afterword 245
Index 249
About the Editor and Contributors 255
List of Figures
1.1 Culture, values, attitudes, and behaviors (Adler 2002) 8
1.2 Extending Adler’s model to the level of organizations, groups, and teams 9
1.3 KM model emphasizing the development of knowledge sharing behavior 12
1.4 National culture, organizational culture, and KM 13
5.1 Klemke’s context typology 86
5.2 Structure of a cross-contextual knowledge organization system 90
7.1 Significant attitude change between the pre-test and post-test on the item
“Any kind of relationship had to be structured hierarchically to obtain har-
mony” on a 5-point scale (From –2 = Strongly Disagree to +2 =
Strongly Agree) 121
7.2 Convergence between the pre-test and post-test on the item “How much
is the presence of a leader in the group required?” on a 10-point scale,
from 1 = not at all, to 10 = very much 122
11.1 The Road to Frío Aéreo 211
12.1 Knowledge transfer model 227
12.2 Indicators of the impact of national culture on knowledge transfer 228
12.3 National cultures of the Netherlands, the United States, and India 233
List of Tables
5.1 Selected definitions of knowledge 86
7.1 Synchronous versus asynchronous communication activities 115
7.2 Experience of HK and Dutch respondents 119
7.3 Expected and encountered problems 120
7.4 Pre- and post-test characterization rankings 124
7.5 Between and within nationality comparisons on the item “leadership” 126
11.1 Culture and progress 197
12.1 The knowledge transfer cultures at Akzo Nobel Car Refinishes R&D units 235
12.2 Assessment of cultural differences and their impact on cross-cultural R&D

knowledge transfer at Akzo Nobel Car Refinishes 237
Foreword
What is knowledge management? To keep it simple, we could say “making sure you
know what you need to,” where you refers to some group or organization that manages
knowledge. Usually it is a company, but it could be a scientific community, or any other
social entity, so let us use the word organization for now. In order to manage knowl-
edge, the organization needs two things: a memory and means of communicating the
knowledge.
Knowledge management has been used as a synonym for information management.
In this case it usually revolves around the use of technology, both “memory” and com-
munication technologies. For others, knowledge management means the management
of practices—and, by extension, people—in the organization. This means that learning,
rather than technology, takes centre stage. The emphasis rests on managing organiza-
tional practice in such a way that people can learn what they need to know from one
another. According to either school, communication between people is a crucial aspect
of knowledge management.
In its emphasis on communication, knowledge management is similar to culture, if
we define culture as the set of implicit rules for the social game. Culture in this sense
would refer to the management of the tacit knowledge of a group of people. This is the
knowledge that specifies, for instance, when to see others as friends, competitors, ene-
mies, or potential loved ones, and how to treat them accordingly. Groups that have cul-
ture in this sense range from teams to societies. Very few people have explicit knowledge
of their culture; they take it for granted. This can happen even to those who are aware
that faraway people have different cultures. To accept that we are culturally embedded
ourselves can be even more difficult than to accept that others are.
If we accept that the notions of culture and knowledge management are similar in
their focus on communication, there is no escaping the idea that knowledge manage-
ment as a conscious activity must build on the sort of implicit rules of the game set by
culture. This book addresses a number of issues that come to the fore when one considers
xii Foreword
knowledge management as a culturally contingent activity. For instance, the very idea
that knowledge can be managed as an asset separate from relationships between people
is alien to most cultures in the world. Knowledge is always related to a person you have
a relationship with, and any other knowledge is simply not relevant. As a consequence,
to anybody who wishes to be socially visible, knowing people is still far more important
than knowing the sort of things that are usually called “knowledge.”
“Making sure you know what you need to” is dependent on culture in many ways.
In most countries, some knowledge that might be very relevant is not managed because
nobody could profit by doing so, or because powerful groups might take offence. In
some cases the state itself acts as a censor. There may be limited communication between
groups or between hierarchical levels. Organizations all over the world have a tendency
to inherit the knowledge management mechanisms that prevail in other institutions of
their society, such as the family and the state. Did you learn that it was wise to keep your
mouth shut in front of your father? This is a lesson about hierarchy. You will probably
do the same later, with your boss—despite knowledge sharing programs.
Knowledge management is often formally undertaken in order to support innova-
tion. But it is by no means a precondition for innovation that all members of the orga-
nization be engaged in knowledge management. Asian tiger countries have achieved
tremendous growth and innovation while maintaining very authoritarian business
models. When one looks at knowledge management across cultures, it turns out that
one size does not fit all.
This volume brings together a very readable collection of chapters that tackle the con-
nections between culture and knowledge management from various perspectives. They
are very different. Some I found creative, others thorough, most of them insightful; but
every one was well worth reading. Together, they include many parts of the world and
illustrate what I have just put forward—that knowledge management in its many facets
is intimately connected to culture. I am pleased to be able to invite you, the reader, to
enjoy this timely and important volume.
Professor Gert Jan Hofstede
Associate professor of Information Management in
International Chains Social Science Group Wageningen University
Acknowledgments
David J. Pauleen would like to acknowledge the help of all those involved in the col-
lection and review process of this book, without whose support the project could not
have been successfully completed. These include, first and foremost, the authors, but
also his colleagues at Victoria University of Wellington—in particular, Professor Gary
Gorman. Special thanks to Jackie Bell, who was instrumental in helping to prepare the
manuscript. A further note of thanks goes to the staff at Libraries Unlimited, which has
made the publication of this book possible.
Introduction
Companies, educational institutions, nongovernmental organizations, governments

and, of course, individuals work globally these days, and generally the modus operandi
of each is the gathering, synthesis, sharing and storage (in no particular order) of data,
information, and knowledge. In this global economy, knowledge is a critical resource
(Drucker 1995), and organizations are striving to capitalize on their knowledge assets
through effective knowledge management strategies and practices. Organizational
knowledge can be in the form of patents and processes (manufacturing, etc.), but per-
haps more importantly it is in the skills, knowledge, and experience in employees’ minds
and the ability of individuals and organizations to learn and adapt to new situations.
Most knowledge management is understood, and written about, from the perspec-
tive of the West and in particular the United States. This perspective tends to be scien-
tific—that is, objective, quantifiable, analytical. There is nothing wrong with this as far
as it goes, but it is limited and represents a form of cultural bias (Pauleen and Murphy
2005; Pauleen et al. 2006). And when we step outside a Western frame of reference, we
discover that knowledge is a global phenomenon, which may be managed differently in
different cultural contexts. To survive in a global age, we must understand this critical
point. The manifestation of global knowledge occurs in many forms: from how foreign
markets and financial systems operate, to why foreign people think and interact in par-
ticular ways that we cannot always understand or predict.
It is clear that seeing others from our own limited perspective will lead to inadequate
understanding and imperfect knowledge, lessening individual and organizational effec-
tiveness. How, then, can we learn to both expand our knowledge assets and effectively
manage knowledge in a global age?
The answer lies partly in perspective taking—the ability to understand other world-
views and to relate this understanding to knowledge management. Worldviews under-
pin the insight and knowledge generated by a particular community. As much of the
world’s knowledge is local in nature, we must learn to develop the ability to understand
what knowledge is from as many perspectives as possible. With perspective taking as
xvi Introduction
our foundation, we can then begin to develop more effective ways of managing knowl-
edge across multiple functional perspectives: engineering, psychology, management,
philosophy, religion, and many more.
This book looks at knowledge and knowledge management from a cultural perspec-
tive. We argue that culture fundamentally influences how entities—from individuals
to countries—understand and interact with information and knowledge. Culture has
been defined as a “collective programming of the mind that distinguishes the members
of one group from another” (Hofstede 1984, 21). This programming determines how
people think, what they count as knowledge, how they solve problems—indeed, how
they know and interact with the world. Such programming is rarely explored; yet it is
deeply embedded in all of us. As they say, “You can take the boy out of the country, but
you can’t take the country out of the boy.”
However, understanding the impact of culture on our daily lives requires significant
effort, and for this reason the study of culture is problematic in many areas of research
and practice. As mentioned previously, culture operates at our deepest individual and
societal levels and is generally not recognized in either researchers’ or practitioners’
worldviews. Some may be aware of the impact of cultural influences but place it in the
“too hard” basket, perhaps at best paying it lip service with some off-the-shelf program
or some basic cultural training, possibly in order to meet a prescribed regulation. Even
for the few who are cognizant of the underlying and often overwhelming influence of
culture on so much of what we do as individuals and organizations, it is a genuine chal-
lenge to recognize and learn the lessons of culture and apply them in even-handed and
effective ways.
This, then, is the challenge of this book: to introduce knowledge and knowledge man-
agement perspectives from different cultures, in different contexts, using different pro-
cesses for different purposes. The authors, who come from many different countries and
cultures, as well as a variety of backgrounds, have done a commendable job. Since the
iterations of culture and knowledge are nearly limitless, all we can do here is begin the
journey to increase awareness among those individuals and organizations wishing to
learn from and share with others. In the final analysis, it is for the reader to have a mind
open to the challenges and opportunities of culture.
THE STRUCTURE OF THE BOOK

The book is divided into three sections: Conceptual Approaches to Culture and
Knowledge Management, Effects of Culture on Key Aspects of Knowledge Manage-
ment, and Research and Cases on Culture and Knowledge Management. The reader will
soon discover that many of the issues raised in each of the chapters relate to and build
upon each other, like parts in a complex but challenging puzzle.
CHAPTER SUMMARIES
Chapter 1, “Exploring the Relationship between National and Organizational Cul-
ture, and Knowledge Management,” discusses and links the concepts of national cul-
ture, organizational culture, and leadership. The authors suggest that not only is culture
a critical factor in the understanding of knowledge management, but that complex
Introduction xvii
relationships exist between the different cultural contexts of national, regional/ethnic,

and organizational culture. These relationships affect knowledge management strategies
and processes at both national and organizational levels. They model these relationships
and discuss their implication for research and practice.
In Chapter 2, “Culture: An Overlooked Key to Unlocking Organizational Knowl-
edge,” the author argues that the multiple cultures of the people who comprise global
organizations represent a potential knowledge asset that should be managed like any
other organizational asset. He maintains that this can be done by understanding the
cultural basis of learning and knowledge. This chapter outlines the recursive relation-
ship between learning and knowledge, reviews recent research on the cultural founda-
tions of learning and knowledge, and proposes a model of boundary spanning that can
help global organizations meet the challenge of unlocking the knowledge represented
by their diverse membership.
Chapter 3, “The Art of Systems: The Cognitive-Aesthetic Culture of Portal Cities and
the Development of Meta-Cultural Advanced Knowledge Economies” is an essay that
leaps past current views of culture, suggesting new ways to understand the knowledge
dynamics of successful local economies. The article discusses the role of pattern think-
ing, aesthetics, and design in the rise and sustenance of economically powerful portal
cities, where knowledgeable people—regardless of culture—congregate and form part
of a greater whole.
Section 2 begins with a look at cultural factors in global knowledge transfer. Chapter
4, “Cultural Stretch: Knowledge Transfer and Disconcerting Resistance to Absorption
and Application” summarizes the findings of a number of case studies to determine
that time constraints and communication problems caused by cultural differences have
a negative impact on initially positive expectations between international partners. The
authors suggest it can take between two and seven years—or even longer—to achieve
a smooth transfer and acceptance of knowledge from one party to another, if ‘the right
people’ are deployed in the ‘right situation’. The right people are individuals who are
locally sourced and equipped with appropriate personality characteristics; the right
situation is a society which is open to the application of the knowledge being made
available.
Chapter 5, “From Concept to Context: Toward Social-Cultural Awareness and
Responsibility in the Organization of Knowledge” argues that human language—and
by extension information and knowledge—is highly context based. As such, it is det-
rimental to cross-cultural information retrieval and knowledge discovery systems if
diverse contexts are forced into a single representational system, as they currently tend
to be. The author argues that a hermeneutic approach could provide a promising avenue
for developing a more productive framework that would support free and open dialog
across competing heterogeneous contexts in the knowledge discovery environment.
Chapter 6, “Managing Innovative Knowledge: Cultural Perspectives on Patenting”
takes a cross-cultural perspective on patenting to explore differences and similarities
in the management of innovative knowledge over time. Patents operate at the nexus of
individual, legal, political, organizational, and societal interests and as such provide a
useful vantage point for exploring cultural perspectives in the management of knowl-
edge. The authors explore several interesting and critical tensions in the management
of knowledge across cultures in the global environment, including the ownership of
xviii Introduction
knowledge, effects on innovation and knowledge flows, and global enforcement, par-
ticularly in the area of the patentability of new innovations such as computer software,
genes, and so on.
Chapter 7, “The Influence of National Culture on Knowledge Management in Vir-
tual Teams” contends that knowledge management is now clearly a critical factor in
both organizational and academic settings in distributed contexts that increasingly
engage multiple national cultures. This chapter explores aspects of national culture with
respect to knowledge management in virtual teams based on the HKNET project, which
involved participants from three continents and continued for seven years. Using their
findings, the authors develop and present a model of the interaction dynamics associ-
ated with national culture, technology choice, and knowledge management processes
and outcomes.
In Chapter 8, “People’s Twist: The Cultural Standard of Loyalty and Performance in
Former Socialist Economies,” the authors use knowledge management as a lens to focus
on cultural standards, particularly with regard to issues of loyalty and performance in
the former socialist economies of Eastern Europe. They explain how people—in order
to survive—developed personal and internal knowledge management approaches in the
face of external and hierarchical state controls. One result was the concealment and shift
of knowledge from the state into private networks, thus establishing a form of market
rationality within the planning rationality of a socialist economy.
Section 3, “Research and Cases on Culture and Knowledge Management,” begins
with Chapter 9, “Institutional and Cultural Influences on Knowledge Sharing in Russia
and China.” This chapter, following up on the general topic of knowledge transfer intro-
duced in Chapter 4, takes an in-depth look at the challenges inherent in transferring
knowledge between western industrialized economies and the transition economies of
(former) communist nations such as Russia and China, particularly in the context of
home nation and subsidiary operations. Using interviews conducted with western and
local managers in Russia and China between 1996 and 2003, the chapter specifically
addresses the cultural and institutional factors that impede and facilitate knowledge
sharing in Russia and China.
Chapter 10, “Asian Organizations Meet North American Management Theory: The
Case of Singapore and Senge,” reviews the connection between knowledge manage-
ment and the learning organization, and argues that both concepts rely on culturally
embedded theories and practices. The authors present a case study of the use of Senge’s
learning organization concepts in one large Singaporean organization and reveal the
cultural challenges that emerged in the process of applying essentially Euro-American
management theories within an Asian culture. The chapter includes a discussion of the
practical implications of these cross-cultural challenges for Singaporean organizations,
multinational organizations, and transnational consulting.
Chapter 11, “The Peruvian Asparagus Cluster: Realizing Profitability from Social
Capital and Shared Knowledge Management in a Traditionally Low-Trust Environ-
ment” tells the story of the Peruvian asparagus cluster and how it became the world’s
top exporter of fresh asparagus. The case focuses on how collective action and a shared
knowledge management program tackled the problems of a complex asparagus logistic
chain in spite of the historical low levels of trust and social capital in Peru. The author
uses a three-pronged analysis to provide the background to understanding the basis for
Introduction xix
cooperation in traditionally noncooperative populations and signals hope for trust and
cooperation building in other clusters and possibly Peruvian society as a whole.
Finally, Chapter 12, “Research and Development Knowledge Transfer across
National Cultures” offers another look at the important topic of knowledge transfer,
this time focusing on the area of multinational corporations’ dispersal of research and
development activities across countries. The authors contend that the integration of the
dispersed research and development (R&D) knowledge via knowledge transfer across
cultural borders is essential for managing multinationals. The research confirms that
cross-cultural knowledge is very often problematic, but it also provides a more positive
outlook by showing that cultural differences are not just barriers to knowledge transfer;
rather, they can also provide a stimulus to learn from and with others from different
cultures. Interestingly, the research also shows that cultural differences tend to increase
the difficulties of transferring explicit knowledge more than that of tacit knowledge.
REFERENCES
Drucker, P. 1995. Managing in a time of great change. New York: Truman Talley Books/Plume.
Hofstede, G. 1984. Culture’s consequences: International differences in work related values. Beverly
Hills, CA: Sage.
Pauleen, D., and Murphy, P. 2005. In praise of cultural bias. Sloan Management Review 46(2):
21–22.
Pauleen, D., Everisto, R., Davison, R., Ang, S., Alanis, M. and Klein, S. (2006). Cultural Bias in IS
Research and Practice: Are you coming from the same place I am?. Communications of the
Association of Information Systems 17(17): 354–72.
SECTION 1
Conceptual Approaches to Culture
and Knowledge Management
1
Exploring the Relationship between
National and Organizational Culture, and
David J. Pauleen, Ling-Ling Wu, and Sally Dexter
ABSTRACT
Globalization and ICT have opened up opportunities for organizational knowledge to

be shared across national and cultural boundaries both intra- and interorganization-
ally. In this context, an understanding of national (societal) culture and its relationship
to knowledge management (KM) has become an essential requirement. In this chap-
ter we discuss the concepts of national culture, organizational culture, and leadership
and suggest that not only should culture be an element in the understanding of KM,
but that there are complex relationships between the different cultural contexts (na-
tional, regional/ethnic, and organizational) and the way in which they relate and inter-
relate to affect KM strategies and processes at both a national and an organizational
level. We then develop a conceptual model that shows the interrelationship of national
culture and organizational culture and their mutual influence on organizational KM.
We conclude with a discussion of implications for research and practice.
INTRODUCTION
The rise of the global knowledge economy has been greatly driven by rapidly advanc-
ing information and communication technologies (ICT). These technologies have
served to reduce traditional business boundaries and increase opportunities to partici-
pate in networks far beyond immediate physical locations (Barker 2000).
In this new economy, knowledge has become an extremely valuable resource (Drucker
1995; Nonaka 1994), and organizations are striving to capitalize on their knowledge
assets through effective knowledge management (KM) strategies and practices. Ini-
tial KM strategies relied heavily on ICT-based solutions to store and retrieve explicit
organizational knowledge. However, these ICT-based strategies often failed to deliver
meaningful results (Ambrosio 2000). Although technology is still a key component, this
4 Cross-Cultural Perspectives on Knowledge Management
single focus has been eclipsed by an increasing awareness of the importance of the orga-
nizational and social aspects of KM.
To date, much of the KM literature has focused on corporate and organizational cul-
ture, with relatively little attention paid to the implications of national culture. However,
KM, which is context embedded, is a particularly culturally dependent process (Glisby
and Holden 2003; Nonaka and Toyama 2003). Effective KM practices developed by
and for one culture may not necessarily be successfully used by other cultures (Pauleen
and Murphy 2005). This is an important point as cross-cultural knowledge sharing has
become more prevalent through the forces of globalization, advances in communica-
tions technology, and increasingly culturally diverse workforces (Cox 1991; Nemetz and
Christensen 1996), as well as through international mergers and acquisitions, Internet-
based e-commerce, and an increasing trend to global outsourcing. Meanwhile, domi-
nant Western cultural assumptions about knowledge and KM influence KM research
and development. Given these factors, an understanding of the influence of national
culture is now, arguably, a critical requirement in understanding and implementing
successful KM in organizations.
Although it has been suggested that globalization will act as an antecedent to cultural
homogeneity (Levitt 1983) and that cultural distinctiveness will be lost as global strate-
gies displace strategies that revolve around national, regional, and cultural differences,
a quick look at current world events may cause one to doubt the validity of this view,
at least for the present. Within the international management area in general, as well
as within the KM arena, this implicit culture-free assumption has been seriously chal-
lenged (Adler 2002; Glisby and Holden 2003; Holden 2002), and it is argued that cul-
tural context is an important KM dynamic.
This chapter expands on this argument by examining the relationship between
national culture, organizational culture, and KM. We suggest not only that national
culture is a significant factor in the understanding and practice of KM, but that com-
plex relationships between the different cultural contexts (national, regional/ethnic, and
organizational) and the way in which they relate and interrelate to affect KM strate-
gies and processes must also be considered. The role of leadership is also explored, and
we maintain that leaders who embody organizational culture and context may act as
mediators in the relationship between national culture and KM.
DEFINING CULTURE
There is a seemingly inexhaustible array of definitions of culture, with more than 160
definitions identified more than 50 years ago (Kroeber and Kluckhohn 1963). Although
this range of definitions could be interpreted as representative of the complex nature of
culture, in fact, the notion of culture is so deeply ingrained that it has become almost
synonymous with our identity to the extent that everyone believes they understand cul-
ture (Westrup et al. 2002).
Culture can be categorized in terms of three main elements: content, construction,
and sustainability. In terms of content, culture has been defined as “a system of ideas”
(Namenwirth and Weber, 1987, 8), “a distinctive, enduring pattern of behavior and per-
sonality characteristics” (Clark 1990, 66), and “collective programming of the mind that
distinguishes the members of one group from another” (Hofstede 1984, 21). In essence,
National and Organizational Culture, and Knowledge Management 5
the content of culture consists of a set of underlying norms and values of behavior,
shared by a group of people tied together by powerful affiliations or bonds.
The construction of culture, according to Schein (1985), results from the interaction
of people and their environment. In particular, Schein emphasized the aspect of problem
solving in culture, which is considered to be a valid way of thinking in order to respond
to the surrounding environment. That is, culture is a set of valid knowledge, created and
shared by a group of people, to solve the problems they face in their environment.
In terms of sustainability, culture is transmitted by symbols, rituals, and stories, passed
on from one generation to another (Kroeber and Kluckhohn 1963). The implicit (or
even tacit) part, as well as the explicit part of cultural knowledge is sustained and trans-
ferred through information expressed in various ways. In this vein, Hall and Hall (1990)
view culture as a system for creating, sending, storing, and processing information.
However, Barham and Heimer (1998) point out that the standard anthropologically
derived concepts of culture are out of touch with the connectivities and networks of the
modern global economy. Recent research highlights the active role of people and the
emergent, contested, and ongoing nature of culture, and people’s reaction to dynamic
contexts (Giddens 1984, 1990; Myers and Tan 2002; Walsham 2002). Holden (2001, 162)
calls for “a paradigmatic shift in the way culture is viewed and suggests that research-
ers reframe culture as infinitely overlapping and perpetually redistributable habitats of
common knowledge and shared meanings.”
NATIONAL CULTURE
There are a number of theories and models that have informed cross-cultural
research, both methodologically and philosophically. Many of these are centered on the
concept of national culture and are based on dichotomies or continuums of values, such
as individualism/collectivism (Hofstede 1984); high and low context (Hall 1976); and
monochronic/polychronic (Lewis 1996). These value-based models predict individual
and group attitudes and behaviors based on national culture. However, Corbitt and
colleagues (2004) suggest that such widely accepted structural frameworks may be too
reliant on categorical descriptions that ignore differentiation within cultures, as well as
the individual exceptions likely to be found to any general rule.
Several studies have identified national culture in terms of work-related attitudes and
values, to distinguish groups of people from other groups (Hofstede, 1984; Ronen and
Shenkar 1985; Smith et al. 1996). Hofstede (1984, 1988) proposed five dimensions of
national culture: individualism/collectivism, masculinity/femininity, power distance,
uncertainty avoidance, and long-term versus short-term orientation. Some researchers
have used this model to account for KM processes and found that the cultural dimen-
sions of the Hofstede model might play a role in the KM processes (Ford and Chan
2003; Rossen 2003).
The legitimacy of the concept of national culture, however, remains in question, as
evidenced by the continuing debate in the literature. Scholars argue that globalization
has enabled the emergence of the multicultural society, in which members of different
regional and ethnic groups live and work in the same shared environment. Therefore, an
identity based upon the notion of a nation-state does little to reflect regional and ethnic
differences (Holden 2001; Myers and Tan 2002; Westrup et al. 2002). Indeed, McCrone
(1998) asserts that the quest for regional identities and decentralization reflects the need
for the idea of national cultural identities to be challenged and usurped. The concept of
national sovereignty has been linked to the notion of a national cultural identity, and
it has been suggested that as globalization and economic, political, and cultural pres-
sures further negate the importance of national sovereignty, this will affect the idea of
a national cultural identity (Castells 1996, 1997; Featherstone 1990; Waters 2001). Hall
(1992) contends that instead of thinking of national cultures as unified, they should
rather be regarded as a discursive device representing difference as unity or identity.
Most authors agree that nations may contain different cultures or subcultures within
national borders, and that national borders do not necessarily represent culturally homo-
geneous populations (Groeschl and Doherty 2000). Rather than emphasize single national
cultural identities, the challenge is developing theory that furthers understanding of het-
erogeneous cultures (Mercer 1992). Doney, Cannon, and Mullen (1998) stress their view
that national culture is not a characteristic of individuals or nation-states but of a large
number of people conditioned by similar background, education, and life experiences.
Weisinger and Trauth (2002), through a combination of theoretical argument and practi-
cal research suggest that culture is, in fact, locally situated, behavioral, and embedded in
everyday social negotiated work practices—a view also subscribed to by Holden (2001).
Based on the social construction of reality theory (Berger and Luckman 1967), Corbitt and
colleagues (2004) argue that national culture can be more accurately understood by seek-
ing out the dominant social codes that frame a society’s values, attitudes, and behaviors.
The debate between proponents of national cultural models and those who favor
a more discrete or localized understanding of culture is unlikely to be resolved soon.
National culture models certainly help to simplify cross-cultural research, whereas a
more localized view of culture will more likely reflect the culture under study. An exam-
ple of a local description of culture is the fascinating analysis of the factors that shape
Taiwan’s character (as a people) by Yu and ChiangLin (2002).
Based on personal observation, a review of secondary sources (e.g., educational sta-
tistics), and reflection, Yu and ChiangLin described five life experiences that together
constitute a unique Taiwan experience: motorcycling, a belief in higher education, crisis
consciousness, compulsory military service, and studying abroad and returning well-
educated. Together, these life experiences heavily influence individual mental attitudes
and behavior and society as a whole.
For example, Yu and ChiangLin (2002, 354) argue that the overwhelming use of motor-
cycles in Taiwan, which—though often causing congestion and chaotic traffic condi-
tions—shapes motorcycle riders’ personalities and skills (including young children riding
with their parents) and the greater society in the following ways1 by training riders:
• to move accurately and swiftly with clear, specific goals

• to look for opportunities almost anywhere and anytime
• to be adaptive and flexible
• to be tough and take risks
• to act individually, with a small scale of vision
• not to strictly obey laws and regulations
Yu and ChiangLin’s five life experiences, although not proven in an experimen-

tal sense, nevertheless resonate with Taiwan residents and actually do go a long way
to providing an understanding of the local culture, one that is much more accurate
and relevant than Hofstede’s descriptions, which in the case of Taiwan may no lon-
ger be accurate. Two of the life experiences—belief in higher education and studying
abroad—point to a culture supportive of knowledge and knowledge acquisition from
other countries.2
National Culture and Knowledge

Drawing from psychology and cultural history, Nisbett and colleagues (2001) argue
that the considerable social differences that exist among cultures affect, among other
things, tacit epistemologies (theories of knowledge, including what counts as knowledge
and degrees of certainly about knowledge) and the nature of cognitive processes (the
ways by which people know the world). Comparing Eastern and Western traditions,
Nisbett and colleagues (2001) group the cognitive differences between ancient Chinese
and Greeks under the headings of holistic versus analytical thought. Holistic thought
involves an orientation to the “context or field as a whole, including in particular the
relationship between a focal object and the field and a preference for explaining and
predicting events based on the existing relationships” (Nisbett et al. 2001, 293). They
define analytic thought as detaching the object from its context, a tendency to focus
on attributes of the object, to assign it to categories, and a preference for using rules
about the categories to explain and predict the objects behaviour” (2001, 293). Nonaka
and Toyama (2003) and Glisby and Holden (2003) state that Eastern people tend to
think about their work in terms of the whole picture, whereas Western people tend to
think of their work from their own individual vantage point. These cognitive biases are
a major component of knowledge sharing and knowledge creation processes (Pauleen
and Murphy 2005).
According to Chia (2003), it has been a Western tradition to regard a knowledge-
able person not as someone who has the ability to perform a task, but as one who can
understand and render articulate and explicit—particularly in writing—the underlying
causes of events. In contrast, in traditional Chinese culture learning and knowing came
through direct, sustained, experimental practice. Chia (2003, 959) goes on to suggest
that “the current preoccupation with explicit knowledge creation and management may
need to be tempered by an equally important emphasis on direct experimental action as
a valuable source of meaning, innovation, productivity and enhanced performance.”
All that has been discussed here converges to support the major contention that
national culture deeply affects how people process information in their environment
and strongly suggests that this effect should be taken into serious account during the
development and implementation of KM initiatives, especially in global contexts.
Culture, Values, Attitudes, and Behaviors

Adler (2002) developed the model in Figure 1.1 to show how national culture influ-
ences the values of a culture and subsequently its attitudes and the behaviors of its mem-
bers. An example of this is the Japanese culture: it values social harmony, which in turn
creates an attitude of cooperation and subsequent behavior in which disagreements are
rarely openly expressed. In this model, national culture appears fully fledged and hence
Figure 1.1
Culture, values, attitudes, and behaviors (Adler 2002).
appears at the top, with values, attitudes, and behaviors following on from it. However,
it is clear from the model that culture is influenced by the other factors and can change
over time. This is illustrated when, for example, youth (as a subculture) behaviors
change and slowly exert change on the overriding national culture. Globalization and
the increasing pervasiveness of ICT tend to hasten cultural change in at least two ways:
through direct exposure to other cultures and by facilitating networks and relationships,
which allow new—and often transitory—cultural forms to emerge.
The Relationship between National and Organizational Culture

Prior to 1980, organizational culture was largely considered to be independent of
national culture (Ford and Chan 2003). This was epitomized by multinational compa-
nies, which managed national branch offices using expatriate managers and head office
management techniques. Since this time, many studies have compared national and
organizational culture, with the majority of the research focused on the link between
organizational and national culture and the extent to which one influences the other
(Clark and Mueller 1996; Morden 1995; Smith 1992). Earlier writers argue that the
influence of national culture on organizational culture will decline over time (Evan
1975), whereas later researchers suggest that the collective “mental maps” of national
culture seem to resist the convergence effects of international business practice (Clark
and Mueller 1996; Laurent 1983).
Others, in particular, Straub and colleagues (2002) use Social Identity Theory to
explain how different cultures—including professional, ethnic, organizational, and
national cultures—can coexist, and have different saliency with individuals at different
times. The focus on culture as a mechanism to produce “relationship to self’” amongst
members of an organization, suggests that its deployment as a governance technique
is closely bound up with questions of identity (Hall and du Gay 1996). Beulens, Kreit-
ner, and Kinicki (2002) contend that organizational culture is, in effect, a by-product of
national or societal culture. They assert that culture influences organizational behavior
in two ways: Employees bring their individual societal cultures in the form of customs
and language, and organizational culture in turn affects the values/ethics, attitudes,
assumptions, and expectations of an individual.
Here it is suggested that Adler’s model can apply equally to organizations. Within
organizations, the interplay of culture, values, attitudes, and behaviors is seen to be
occurring in a more time-compressed process. Organizational cultures exert a power-
ful influence on an organization’s values, attitudes, and behaviors, as well as the values,
Figure 1.2
Extending Adler’s model to the level of organizations, groups, and teams.
attitudes, and especially behavior of its employees. In organizations that have been
around for a very long time, it might appear that the organizational culture has also
appeared fully fledged. However, it is obvious when we look at organizational histories
that individuals, often in the form of founders and powerful leaders, have by the force
of their personalities influenced the organizational culture through their own behaviors,
attitude, and values. An example of this is how Konosuke Matsushita’s personality and
earlier life experiences greatly influenced the organizational culture (values, attitudes,
and behaviors) of the Matsushita company (Holden 2002). It is worth remembering
in this case, however, that a great deal of K. Matsushita’s values and attitudes derived
from the larger Japanese culture of which he was a part. (We will shortly return to the
importance of this interplay of culture, values, attitudes, and behaviors, and individual
actors.)
Likewise, in the same way that Adler’s model applies to organizations, it can be fur-
ther extended to groups, such as organizational functions (e.g., finance, sales), commu-
nities of practice, and even to teams if they exist long enough to form a team culture. In
these cases, the time compression is further evident and it can be more clearly seen how
individual actors can have an ever-greater influence on the culture of the group or team
and its values, attitudes, and behavior.
Finally, with regard to Adler’s model, the relationship between national culture and
organizational culture, as seen in the case of Matsushita, is evident: a relationship that
extends to the cultures of groups and teams, and ultimately, individuals themselves. This
notion is captured in Figure 1.2.
National Culture and the Influence of Leadership

in Organizations
As alluded to in the case of Konosuke Matsushita and his eponymous company,
the norms and values in national culture not only affect organizational culture, but
can also influence leadership and leadership processes in organizations (Ayman,

Chemers, and Fiedler 1995; Bass and Avolio 1993; Hofstede, 1984, 1993; Hunt, Boal,
and Sorensen 1990; Nikandrou, Apospori, and Papalexandris 2003; Triandis 1993).
For instance, clusters of European countries that share similar cultural values also
share similar leadership (Brodbeck and Frese 2000; Smith 1997). The leaders in Chi-
nese organizations tend to use patriarchal leadership, as distinct from the production-
oriented leadership or people-oriented leadership found in Western society. Brase
(2001) has shown that management behaviors have a direct effect on workplace
respect and cooperation.
National culture influences organizational leadership through its impacts on the val-
ues and beliefs of both leaders and followers. Leaders are more likely to be affected
and behave in the way that is accepted in their culture. Similarly, different expectations
toward how a leader should behave could be potentially rooted in cultural beliefs. That
is, followers hold common implicit expectations toward their leaders, which further
shape their perception, valuations of the leaders, and hence influence the behavior of
the leaders in that culture. For instance, people in cultures with high power distance are
more likely to accept and even expect that leaders have an autocratic leadership style
than others in cultures with low power distance. Moreover, business leaders in cultures
of higher uncertainty avoidance are more concerned about control than creativity and
innovation, and thus might be more likely to become transactional leaders instead of
transformational leaders, when compared with leaders in cultures with lower uncer-
tainty avoidance (Politis 2001).
Wiig (2004, 115) argues that leaders, and other influential people, wield enormous
influence in organizations by creating powerful reference models that “directly affect
the attitudes, mentalities, and culture within their organizations.” Employees look to
leaders as role models, often emulating their behavior. The mental models that these
leaders operate from are often unconscious, a result of deep-seated cultural values and
life experiences. In an empirical study of character traits of American and Taiwanese
chief executive officers (CEOs), Judge (2001, 63) found “robust differences between
these two sets of CEOs offering support for the ‘culture bound’ nature of leadership.”
Character traits are strongly linked to leadership credibility, which has an equally strong
impact on organizational trust and culture (Judge 2001).
Evidently national culture can have a significant effect on leadership, and leaders
can have a significant effect on attitudes and behavior throughout the organization
(Trompenaars 1993).
Knowledge Management, the Organization, and Culture

Knowledge management is the systematic and explicit management of knowledge-
related activities, practices, programs and policies within the enterprise (Wiig 2000) to
effectively apply an organization’s knowledge to create new knowledge to achieve and
maintain competitive advantage (Alavi and Leidner 2001).
Sveiby (2001) identifies two broad approaches to KM. One focuses on the “hard”
aspects such as the deployment and use of appropriate technology; the other focuses on
the “soft” aspect: the capture and transformation of knowledge into a corporate asset.
This second approach includes the management of people and processes.
The first categorization of KM is the management of information (Sveiby 2001). This

approach views knowledge as objects that can be handled by information management
systems. The key goal of this approach is to increase access to information through
enhanced methods of access and reuse of documents through, for example, hypertext
linking, databases, and full-text search. Networking technology in general (especially
intranets), and groupware in particular, are key solutions. This approach is based on the
idea that technology harnessed to a great volume of information will make KM work.
The second categorization is the capture and transformation of knowledge into a cor-
porate asset through the management of people (Sveiby 2001). This approach views
knowledge as a process: a complex set of dynamic skills and know-how that is constantly
changing. Commonly viewed as a management issue, approaches tend to focus more on
innovation and creativity, in the style of the “learning organization,” as advocated by
Senge (1999), where organizational behaviors and culture also need to be changed. To
make this approach work, a holistic view is required, and often theories of behavior
of large-scale systems are invoked. The aim here is to get people to share what they
know. Processes are more important here than technology. Wiig (2004, 218) argues that
a new generation KM (NGKM) is needed that provides guidance “to govern knowledge-
related investments, activities, and support systems that are people-focused and people-
friendly and frequently supported by IT.”
It is clear that KM is not simply a matter of managing information; it is essentially a
deeply social process, which must take into account human and social factors (Clarke
and Rollo 2001; McDermott 1999; Thomas, Kellogg, and Erickson 2001), as well as cul-
tural issues. Thomas, Kellogg, and Erickson (2001) argue that a successful KM system is
one that includes a knowledge community, where people can interact in the discovery,
use, and manipulation of knowledge. Fundamental to the notion of community in KM
is the understanding that community involves identifying and engaging in the social
practices and relationships that are operating in a particular context (Rooney 2005).
Nonaka and Toyama (2003) argue that the “knowledge process” occurs at the intercon-
nection between (organizational) structure and agents, and is dynamic and interlinked
from an individual-to-societal level.
With regard to organizational KM, Nonaka and Toyama (2003) dispute the notion of
the organization as a machine that solves problems, arguing rather that that the orga-
nization is an entity that creates knowledge through action and interaction within the
organization and with its wider environment. They go on to say that in “knowledge
creation, one cannot be free from one’s own context” (2003, 3), which we understand to
mean culture in its widest sense.
In terms of cross-cultural research, there are still relatively few studies that exam-
ine the relationship between national culture and KM (a major exception are the case
studies found in Holden 2002), even though the importance of national culture on KM
has recently been recognized. In Mason’s study of published reports of KM systems
(2003), he found that national culture and ethnic background of users are rarely men-
tioned with only one case directly discussing the importance of national culture. Mason
contrasts this with the attention given to culture in other information science studies
(Walsham 2002) and suggests that KM designers may be implicitly adopting the “cul-
ture-free” hypothesis as a basis for design. This hypothesis is based on the fundamental
premise that organizations are micro-social entities that exist without reference to the
Figure 1.3
KM model emphasizing the development of knowledge sharing behavior.
immediate societal environment, and in contrast to the idea that organizations match
their structures to fit their societal environment.
Of existing KM models, the most widely referenced is Nonaka’s SECI model (Nonaka
1994), which has been almost universally acclaimed and used by many organizations
worldwide as a starting point for KM practices and which deals with both tacit and
explicit knowledge. This model assumes that knowledge can be transferred through pro-
cesses of socialization. However, Glisby and Holden (2003) assert that the Japan-specific
cultural factors tacitly embedded in the model mean that it is not possible for it to be
successfully transferred to Western nations in its totality. They claim that in order for
the model to work in a Western setting, it might be necessary to first introduce Japanese
values and management techniques, which would embed the required cultural condi-
tions necessary for success of the model. Other KM models, including those of Boisot
(1987) and Chase (1997), are also bereft of any consideration of cultural issues.
Here it is suggested that the fundamental goal of organizational KM should be the
development of the individual employee who is willing and able to share knowledge.
Sharing behavior is what makes knowledge available to other individuals and the orga-
nization as a whole. With this mind, KM can be divided into two parts, which can be
referenced in current business parlance as the upstream and downstream of knowledge-
sharing behavior (Figure 1.3). The upstream management of knowledge can also be
thought of as nurturing knowledge sharing. It includes commonly accepted prerequi-
sites and processes of KM such as developing social capital. This includes an organiza-
tional culture that encourages risk-taking and transparency, allows mistakes, sets up
appropriate rewards and motivations that encourage knowledge sharing, and provides
the time and space necessary for knowledge sharing, and where leaders champion KM
and managers lead by example (e.g., Cohen and Prusak 2001; Davenport and Prusak
1998; Horwitz et al. 2003; Mason and Pauleen 2003; Senge 1999; Thomas, Kellogg,
and Erickson 2001; Wiig 2004). The downstream management of knowledge can be
thought of as the harvesting of knowledge sharing. From a cultural perspective, this
again includes the time and space for individuals to share knowledge, as well as the
information and communication technologies that facilitate knowledge sharing behav-
iors and allow organizations to capture, hold, and disseminate knowledge (e.g., Alavi
and Leidner 2001; Sveiby 2001).
In this chapter, the concern is not so much with the downstream management of
knowledge, but rather with the development of an organizational culture, which pro-
vides upstream KM values, attitudes, and behaviors that support and encourage knowl-
edge sharing behavior in individuals.
Model of National Culture, Organizational Culture, and

A model is proposed here to explain the influence of national culture on organiza-
tional KM processes, and in particular knowledge sharing behavior (Figure 1.4). The
model proposes that national culture affects organizational KM processes both directly
and indirectly. It is based on the literature presented earlier and acknowledges the
mutual influence of organizational culture and individual actors, including leaders and
managers.
The main propositions of this model state the following:
• National culture will directly affect knowledge-sharing behavior in individuals through
its influence on the values and attitudes of individuals. The influence of national culture
will be seen in how individuals perceive their roles and responsibilities with regard to
knowledge sharing as they interact in organizations, groups, teams, and dyads.
• Organizational culture may mediate the effects of national culture on knowledge-
sharing behavior in individuals through its influence on the values and attitudes of
individuals.
• Leadership and management values, attitudes, and behaviors with regard to knowledge-
sharing behaviors may have a particularly strong influence on both organizational cul-
ture and individual knowledge sharing behaviors.
• Purposeful organizational KM may influence both organizational culture and individ-
ual knowledge sharing behavior.
Figure 1.4
National culture, organizational culture, and KM.
CONCLUSIONS AND IMPLICATIONS

The notion of collective mental maps (Clark and Mueller 1996; Laurent 1983) and the
assertion of culturally determined biases regarding KM practices (Chia 2003; Pauleen
and Murphy 2005) are based on deep underlying metaphysical assumptions. Knowledge
and its relationship to decision making and action point to a critical link between shared
cultural values and attitudes toward knowledge and KM processes and the development
of successful organizational KM processes. This link signals the need to develop “alterna-
tive conceptualizations and practical understandings of the strategic priorities, decisional
imperatives, and modes of management operating in diverse geographical locations
throughout the world (Chia 2003, 957). These alternative conceptualizations may be
reflected in differing organizational attitudes toward education, cooperation, innovation,
and creativity as well as specific practices in learning, training, and teamwork.
There is little doubt that cross-cultural research is gaining increasing importance in the
business arena. This derives from two main trends: diverse organizational workforces and
globalization. More recently, globalization and the increased capacity of ICTs have her-
alded the arrival of the new knowledge economy where knowledge is the new rate of cur-
rency. However, despite an increasing international focus on KM and the importance of
cross-cultural considerations in the transfer of knowledge (Wensley 2002a, 2002b, 2002c),
there has been relatively little research on KM and cross-cultural issues.
Implications for Culture, Practice, and Research

The debate on national culture, summarized in this chapter, begins to indicate just
how problematic it can be to define culture and its boundaries when factoring in the cul-
tural impact on a research or managerial problem. Although it is reasonable to conclude
that culture will have some impact on how people understand and communicate knowl-
edge, and therefore on how knowledge may be effectively managed in any given culture,
the challenge to management and researcher alike is how to define culture and to deter-
mine what measures to use. We believe that cultural boundaries between nations are
often indistinct and that different sub-cultures can exist within a single nation (Fuku-
yama 1995). Thus, similar to the concept of national culture defined by Doney, Cannon,
and Mullen (1998), we do not necessarily equate national culture with the geographical
boundaries of a nation. We do not assert that all groups in the population of a nation
share the same set of values, attitudes, and behavior.
We believe that in broad terms culture is transmitted from one generation to another
by learning the information embedded in symbols, rituals, and stories; however, given
the reality of the ever increasing interconnectedness of organizations and individuals,
we agree with the view that organizations and individuals can be quite fluid and adapt-
able in creating effective ‘working’ cultures to suit localized, situated contexts.
Knowledge management is acknowledged as a complex field that cannot be conducted
with technology alone. Rather, integrated approaches that feature organizational, social,
and technological emphases have become the trend for organizations who seek to create,
use, and share knowledge to gain competitive advantage as well as foster creativity and
innovation. Most research to date has been predominantly focused on the organization
as the level of analysis in KM studies. The importance of national culture and its impact
on KM strategies and process is gathering momentum and some researchers are ques-
tioning the culture-free assumption that has long been accepted within KM (Glisby and
Holden 2003). Furthermore, national culture can be seen to have important implica-
tions in concepts closely linked to KM success, including topics such as social capital,
innovation, and creativity. Despite recognition of the importance of national culture,
there remains a dearth of research in the area of KM, and almost none that has been
carried out at a grassroots level.
In this chapter we have developed an argument that national culture can directly
influence organizational culture and KM processes. We contend that organizational
culture can mediate the influences of national culture on KM processes. We also suggest
that actors, such as leaders, also play a part in mediating and changing the structures
of national and organizational culture. We developed a model that illustrates both the
direct and indirect relationships between national culture, organizational culture, and
knowledge sharing behaviors. It is up to researchers and practitioners to seek to under-
stand and implement effective KM strategies that incorporate national cultural influ-
ences into organizational settings.
NOTES
1. Motorcycle riding in Taipei, as in many other large—particularly Asian—cities, is a phe-
nomenon not easily explained; it needs to be experienced. The authors have had the experience
and can attest to its personality shaping potential.
2. Yu and ChiangLin’s analysis provides an excellent description of a country that has expe-
rienced significant cultural change in a relatively short span of time. While still retaining many
traditional cultural values, Taiwan has been willing to incorporate many institutions associated
with other cultures, such as democracy, a globally integrated economy, and so on.
REFERENCES
Adler, N. J. 2002. International dimensions of organizational behavior. 3rd ed. Cincinnati: South-
Western.
Alavi, M., and D. Leidner 2001. Knowledge management and knowledge management systems:
Conceptual foundations and research issues. MISQ Review 25 (1): 107–36.
Ambrosio, J. 2000. Knowledge management mistakes. Computer World (July 3), 44.
Ayman, R., M. M. Chemers, and F. E. Fiedler 1995. The contingency model of leadership effective-
ness: Its levels of analysis. Leadership Quarterly 6 (2): 147–67.
Barham, K., and Heimer, C. 1998. ABB The dancing giant. London: Financial Times/Pitman
Barker, C. 2000. Cultural studies: Theory and practice. London: Sage.
Bass, B. M., and B. J. Avolio 1993. The transformational leadership: A response to critiques.
In Leadership theory and research: Perspectives and directions, ed. M. M. Chemers and
R. Ayman, 49–80. San Diego, CA: Academic Press.
Berger. P., and Luckman, T. 1967. The social construction of reality. New York: Anchor/Double-
day.
Boisot, M. 1987. Information and organisations: The manager as anthropologist. London: Fon-
tana/Collins.
Brase, W. C. 2001. Sustainable performance improvement. www.abs.uci.edu/spi/index/html.
Brodbeck, F. C., and M. Frese 2000. Cultural variation of leadership prototypes across 22 Euro-
pean countries. Journal of Occupational and Organizational Psychology 73, 1–29.
Beulens, M., R. Kreitner, and A. Kinicki. 2002. International OB: Managing across cultures from
organizational behavior. New York: McGraw Hill Education.
Castells, M. 1996. The rise of the network society. The information age: Economy, society and cul-
ture, Volume 1. Oxford: Blackwell.
———. 1997. The power of identity. . The information age: Economy, society and culture, Volume
2. Oxford: Blackwell.
Chase, R. 1997. The knowledge-based organization: An international survey. Journal of Knowl-
edge Management 1 (1): 38–49.
Chia, R. 2003. From knowledge-creation to the perfecting of action: Tao, Basho and pure experi-
ence as the ultimate ground of knowing. Human Relations 56 (8): 953–81.
Clark, P., and F. Mueller 1996. Organizations and nations: From universalism to institutionalism?
British Journal of Management, 7, 125–39.
Clark, T. 1990. International marketing and national character: A review and proposal for an
integrative theory. Journal of Marketing 54 (4): 66–79.
Clarke, T., and C. Rollo 2001. Corporate initiatives in knowledge management. Education and
Training 43 (4/5): 206–14.
Cohen, D., and L. Prusak 2001. In good company: How social capital makes organizations work.
Cambridge: Harvard Business Press.
Corbitt, B, K. Peszynski, S. Intranond, T. Thanasankit, T., and B. Hill 2004. Culture, information
and code systems. Journal of Global Information Management 12 (3): 65–85.
Cox, T. 1991. The multicultural organization, Executive 5 (2): 34–37.
Davenport, T.H., and L. Prusak 1998. Working knowledge: How organizations manage what they
know. Boston: Harvard Business School Press.
Doney, P.M., J. P. Cannon, and M. R. Mullen 1998. Understanding the influence of national
culture on the development of trust. The Academy of Management Review 23 (3):
601–21.
Drucker, P. 1995. Managing in a time of great change. New York: Truman Talley Books/
Plume.
Evan, W. 1975. Measuring the impact of culture on organizations. International Studies of Man-
agement and Organizations 5, 91–113.
Featherstone, M. ed. 1990. Global culture: Nationalism, globalisation and modernity. London:
Sage.
Ford, D. P., and Y. E. Chan. 2003. Knowledge sharing in a multi-cultural setting: A case study.
Knowledge Management Research and Practice 1, 11–27.
Fukuyama, F. 1995. Trust: The social virtues and the creation of prosperity. New York: Free Press.
Giddens, A. 1984. The constitution society: Outline of a theory of structuration. Cambridge: Polity
Press.
———. 1990. The consequences of modernity. Cambridge: Polity Press.
Glisby, M., and N. Holden 2003. Contextual constraints in knowledge management theory: The
cultural embeddedness of Nonaka’s knowledge-creation company. Knowledge and Process
Management 10 (1): 29–36.
Groeschl, G., and L. Doherty 2000. Conceptualising culture. Cross-Cultural Management 7 (4):
12–17.
Hall, E. T. 1976. Beyond culture. New York: Doubleday.
Hall, E. T., and M. R. Hall 1990. Understanding cultural differences. Yarmouth, ME: Intercultural
Press.
Hall, S. 1992. The Question of Cultural Identity. In Modernity and its futures, ed. S. Hall, D. Held
and A. McGrew, 273–325. London: Polity Press.
Hall, S., and P. du Gay 1996. Questions of cultural identity. London: Sage.
Hofstede, G. 1984. Culture’s consequences: International differences in work related values. Beverly
Hills: Sage.
———. 1988. Confucius and economic growth: New trends in culture’s consequences. Organiza-
tional Dynamics 16 (4): 4–21.
———. 1993. Cultural constraints in management theories. Academy of Management Executive 7
(1): 81–94.
Holden, N. 2001. Knowledge management: Raising the spectre of the cross-cultural dimension.
Knowledge and Process Management 8 (3): 155–63.
———. 2002. Cross-cultural management: A knowledge management perspective. Upper Saddle
River, NJ: Pearson Education.
Horwitz, F., T. H. Chan, and A. Quazi 2003. Finders, keepers? Attracting, motivating and retain-
ing knowledge workers. Human Resource Management Journal 13 (4): 23–44.
Hunt, J. G., K. B. Boal, and R. L. Sorensen 1990. Top management leadership: Inside the black
box. The Leadership Quarterly 1, 41–65.
Judge, W. Q. 2001. Is a leader’s character culture-bound or culture-free? An empirical compari-
son of the character traits of American and Taiwanese CEOs. The Journal of Leadership
Studies 8 (2): 63–78.
Kroeber, A. L., and C. Kluckhohn 1963. Culture: A critical review of concepts and definitions. New
York: Vintage Books.
Laurent, A. 1983. The cultural diversity of western conceptions of management. International
Studies of Management and Organization 13, 75–96.
———. 1986. The cross-cultural puzzle of international human resource management. Journal of
Human Resource Management Spring, 91–102.
Levitt, T. 1983. The globalization of markets. Harvard Business Review (May–June), 1–11.
Lewis, R. D. 1996. When cultures collide. London: Nicholas Brealey.
Mason, D., and D. Pauleen 2003. Perceptions of knowledge management: A qualitative analysis.
Journal of Knowledge Management 7 (4): 38–48.
Mason, R. 2003. Culture-free or culture-bound? A boundary spanning perspective on learning
in knowledge management systems. Journal of Global Information Management 11 (4):
20–37.
McCrone, D. 1998. The sociology of nationalism. London: Routledge.
McDermott, R. 1999. Why information technology inspired but cannot deliver knowledge man-
agement. California Management Review 41 (4): 103–17.
Mercer, N. 1992. Culture, context and the construction of classroom knowledge. In Context and
cognition , ed. P. Light and G. Butterworth, 28–46. Hemel Hempstead, UK: Harvester-
Wheatsheaf.
Morden, T. 1995. National culture and the culture of the organization. Cross-Cultural Manage-
ment: An International Journal 2 (2): 3–12.
Myers, M., and F. Tan 2002. Beyond models of national culture in information systems research.
Journal of Global Information Management 10 (1): 24–32.
Namenwirth, J. Z., and R. B. Weber 1987. Dynamics of culture. Boston: Allen and Unwin.
Nemetz, P. L., and S. L. Christensen 1996. The challenge of cultural diversity: Harnessing a di-
versity of views to understand multiculturalism. Academy of Management Journal 21,
434–62.
Nikandrou, I., E. Apospori, and N. Papalexandris 2003. Cultural and leadership similarities and
variations in the southern part of the European Union. Journal of Leadership and Organi-
zational Studies 9 (3): 61–84.
Nisbett, R., K. Peng, I. Choi, and A. Norenzayan 2001. Culture and systems of thought: Holistic
vs. analytic cognition. Psychological Review 108, 291–310.
Nonaka, I. 1994. A dynamic theory of knowledge creation. Organizational Science 5 (1): 14–37.
Nonaka, I., and H. Takeuchi 1995. The knowledge-creating company. New York: Oxford Univer-
sity Press.
Nonaka, I., and R. Toyama 2003. The knowledge-creating theory revisited: Knowledge creations
as a synthesizing process. Knowledge Management Research and Practice 1, 2–10.
Pauleen, D., and Murphy, P. 2005. In praise of cultural bias. Sloan Management Review 46 (2):
21–22.
Politis, J. D. 2001. The relationship of various leadership styles to knowledge management. The
Leadership and Organizational Development Journal 22 (8): 354–64.
Ronen, S., and O. Shenkar 1985. Clustering countries on attitudinal dimensions: A review and
synthesis. Academy of Management Review 10 (3): 435–54.
Rooney, D. 2005. Knowledge, economy, technology and society: The politics of discourse. Tele-
matics and Informatics, 22, 405–422.
Rossen, E. 2003. Cross-cultural inequality in IS: A preliminary exploration of Scandinavia and
France. Cross-cultural workshop at ICIS 2003, Seattle.
Schein, E. H. 1985. Organizational culture and leadership. , San Francisco: Jossey-Bass.
Senge, P. 1999. The dance of change. New York: Doubleday.
Smith, P. 1992. Organizational behaviour and national cultures. British Journal of Management
3: 39–51.
Smith, P. B. 1997. Leadership in Europe: Euro-management or the footprint of history? European
Journal of Work and Organizational Psychology 6: 375–86.
Smith, P. B., S. Dugan, and F. Trompenaars 1996. National culture and the values of organiza-
tional employees. Journal of Cross-Cultural Psychology 27 (2): 231–63.
Straub, D., K. Loch, R. Evaristo, E. Karahanna, and M. Srite 2002. Toward a theory-based mea-
surement of culture. Journal of Global Information Management 10 (1): 13–23.
Sveiby, K. 2001. What is knowledge management? http://www.sveiby.com/articles/Knowledge-
Management.html.
Thomas, C, W. A. Kellogg, and T. Erickson 2001. The knowledge management puzzle: Human
and social factors in knowledge management. IBM Systems Journal 40 (4): 863– 84.
Triandis, H. C. 1993. The contingency model in cross-cultural perspective. In Leadership theory
and research: Perspectives and directions , ed. M. M. Chemers and R. Ayman, 167–88. San
Diego: Academic Press.
Trompenaars, F. 1993. Riding the waves of culture: Understanding cultural diversity in business.
New York: McGraw Hill.
Walsham, G. 2002. Cross-cultural software production and use: A structurational analysis. MIS
Quarterly 26 (4): 359–80.
Waters, M. 2001. Globalisation. 3rd ed. London: Routledge.
Weisinger, J. Y., and E. M. Trauth 2002. Situating culture in the global information sector. Infor-
mation Technology and People 15 (4): 306–20.
Wensley, A. 2002a. Plato’s philosopher kings and knowledge management. Knowledge and Pro-
cess Management 9 (4): 203–4.
Wensley, A. 2002b. Book review of Cultural management: A knowledge management perspective
by N. Holden. Knowledge and Process Management 9 (2): 129.
Wensley, A. 2002c. Book review of The social life of information by J. S. Brown and P. Duguid.
Knowledge and Process Management 9 (4): 264.
Westrup, C., S. Al Jaghoub, H. El Sayed, and W. Liu 2003. Taking culture seriously: ICTS, cultures
and development. In The Digital Challenge: Information Technology in the Development
Context, ed. S. Krishna and S. Madon, 13–27. Aldershot, UK: Ashgate.
Wiig, K. 2000. Knowledge management: An emerging discipline rooted in a long history. In Knowl-
edge Horizons ed. C. Dupres and D. Chauvel, 3–26. Boston: Butterworth-Heinemann.
——— 2004. People-focused knowledge management. Burlington, MA: Elsevier Butterworth-
Heinemann.
Yu, P. L,. and C. Y. ChiangLin 2002. Five experiences that shape Taiwan’s character. In Made in
Taiwan: Booming in the Information Technology Era ed. C. H. Chang and P. L. Yu, 347–77.
Singapore: World Scientific Publishing.
2
Culture: An Overlooked Key to Unlocking
Organizational Knowledge
Robert Mason
ABSTRACT
In the knowledge-based view of the firm, knowledge is a potentially strategic asset

and should be managed as any other asset. A global organization comprising mem-
bers from multiple cultures and ethnic groups has a potential asset in the knowl-
edge of these different members, yet prior knowledge management approaches have
ignored the cultural dimension of knowledge. Unlocking the asset represented by
the cultural differences in an organization requires an understanding of the cultural
basis of learning and knowledge. Recent research on the early development of the
brain suggests a strong connection between how one learns and one’s early cultural
environment, suggesting the need for rethinking the knowledge management effort.
This chapter outlines the recursive relationship between learning and knowledge,
reviews recent research on the cultural foundations of learning and knowledge, and
proposes a model of boundary spanning that can help global organizations meet the
challenge of unlocking the knowledge represented by the different cultural and ethnic
backgrounds of their members.
“Once people have learned to learn in a given way it is extremely difficult

to learn in any other way. … Culture reflects the way one learns” (Hall
1990, 47).
BACKGROUND
This chapter addresses the issue of culture and ethnic background as dimen-
sions of knowledge management and the learning organization. The discussion that
follows stipulates that the twenty-first century business and economic environment
is increasingly global and that an organization’s knowledge has become a strategic

asset (Grant 1996). Learning, if not the only sustainable competitive advantage (Stata
1989), as a minimum can be considered to be one of the most important factors in
competitiveness. Consequently, organizations have considerable motivation to man-
age their knowledge asset effectively and to use this asset as the basis for further learn-
ing. Toward this goal, many organizations have established systems of knowledge
management. The interest in knowledge management, as indicated by the number
of research articles on the subject, does not seem to follow the kind of increase, peak,
and decrease pattern that has been observed in other management fads (Ponzi and
Koenig 2002).
Most knowledge management systems (KMSs) have the explicit or implicit goal of
enabling the organization to have access to all relevant available knowledge (Alavi and
Leidner 2001). However, a review of published reports of KMSs indicates that organi-
zational members’ cultural and ethnic backgrounds are not considered in the design
and operation of most KMSs, which take a Western (and mostly North American)
approach (Mason 2003). This means that KMSs as currently envisioned and designed
have a significant cultural gap that can lead to underutilizing some of the organization’s
knowledge assets—those assets represented and embedded in the persons who are not
from mainstream Western cultures. The systems as currently designed may unwit-
tingly place barriers to knowledge access by those from non-Western cultures, and the
knowledge of organizational members who are not from Western cultures may not be
captured or communicated by the KMS. For example, as organizations become more
global and comprise members who have distinct national and ethnic backgrounds, the
organization could use these members’ knowledge to help tailor the organization’s
sales and marketing efforts to meet the preferences of the distinct groups from which
these members came.
Bridging this cultural gap in KMS design requires an understanding of the recursive
relationship between learning and knowledge, the significance of the tacit dimension
of knowledge in this relationship and in knowledge transfer, and how differences in
cultural and ethnic backgrounds affect knowledge and learning. To develop this under-
standing, the chapter posits the following:
• Individual learning is a necessary (but possibly not sufficient) process for organiza-
tional learning and knowledge retention.
• The relationship between knowledge and learning is recursive; each affects the other.
• In this learning–knowledge relationship, the tacit dimension of knowledge performs a
critical role.
• The early cultural environment of an individual affects how the individual learns; if one
is to learn in a different way after childhood, external intervention may be required.
These propositions provide a foundation on which we might develop a set of prin-

ciples that can guide the design of a culture-sensitive KMS. The following discussion
summarizes the principles as postulates, which can be further examined through
a model of boundary spanning at the syntactic, semantic, and pragmatic levels.
The paper concludes with a discussion of the implications of the postulates and a
model for the design of KMSs that might enable learning across and among multiple
cultures.
Culture 23
DATA, INFORMATION, KNOWLEDGE, AND LEARNING

This section develops the previously mentioned propositions in more detail and pro-
vides the foundation for the model of boundary spanning outlined in the subsequent
section. Although the following discussion may discuss individual and social aspects of
learning and knowledge separately, the integration of both perspectives is necessary for
a full understanding of the interrelationships among knowledge, learning, and culture.
Individual and Organizational Learning and Knowledge

Learning occurs when an entity has interpreted information in a way that enables the
entity to change the range of behaviors that it may consider (Huber 1991). Note that
in this viewpoint, learning can either enlarge the range of options (the entity sees new
possibilities) or narrow the range of options (the entity can eliminate some actions from
further consideration).
Some researchers have argued that when an individual in an organization learns, the
organization itself has learned (Huber 1991). Although one might debate this strong
statement, as it equates individual learning with organizational learning without con-
sidering the need either for applying the individual’s learning or for communicating this
learning to others, this position does emphasize that an individual—not an organiza-
tion—is central to the process of learning. Organizational learning occurs as individuals
in that organization make sense of data and information and apply their interpretation
to the vision, strategy, standards, procedures, and operational activities that are com-
municated and implemented throughout the organization. As a consequence, we posit
that individual learning is necessary for an organization to learn, but this may be an
insufficient condition: The individual may need to act on this learning through commu-
nication with others, design and implementation of strategies or tactics, or the imple-
mentation principles that embed the new knowledge into organizational procedures.
The communication of individual learning to others in the organization is also neces-
sary for the organization to mobilize around its goals and strategy for pursuing these
goals. Such communication is perhaps more challenging for Western organizations
than Japanese or other Eastern organizations. In the latter, learning experiences and the
sharing of knowledge are more integrated into the organizational routine (Nonaka and
Takeuchi 1995).
The Nature of Data, Information, Knowledge, and Learning

The conceptualization of knowledge, long discussed by philosophers, has enjoyed
renewed interest since researchers have taken seriously the resource-based view of the
firm (Barney 1996; Barney, Wright, and Ketchen 2001; Penrose 1959;) and have recently
proposed that knowledge is a key resource for the firm (Grant 1996). The traditional
view of knowledge is that it fits into a hierarchical model: Knowledge is at the top of a
pyramid whose middle layer is information and whose lowest level is comprised of data.
In this model, knowledge is an accumulation of interpreted and organized information
(Davenport and Prusak 1998), and information comes from data within a context. One
generally imagines a flow to this hierarchy, with “raw” data that are arranged in ways
that are meaningful in order to produce information, and then this information is con-
solidated into coherent frameworks to form knowledge. In this view, generally taken as
typical (Alavi and Leidner 2001), data are precursors, or building blocks, of information
and information is the source for knowledge. In this model, learning is the process by
which the entity increases its awareness of context, creates meaning, and thereby is able
to transform new information and experiences into knowledge.
This model is consistent with the notion that a KMS is intended to support four
steps of knowledge management: knowledge creation, knowledge storage and access,
knowledge transfer, and knowledge application (Alavi and Leidner 2001).
This model has been recognized as limiting and incomplete. Without some prior
knowledge—knowledge that enables one to direct one’s attention to what is salient—it
is difficult to distinguish data from noise. This suggests a reverse hierarchy, one in which
knowledge is required to interpret data and create information (Tuomi 1999). Such a
reverse hierarchical model emphasizes that an entity does not simply begin with an
empty store of knowledge and build up a knowledge base, but rather it starts with a
foundation of prior knowledge.
Perhaps the most meaningful conceptual framework within which to view the rela-
tionships among learning, knowledge, information, and data is to visualize a hermeneu-
tic, recursive process in which each is enriched and made meaningful by a consideration
of the others. Discerning data from noise necessitates a prior knowledge framework that
anticipates possible signals. Given such a framework, data can be interpreted to create
meaning and resolve questions (information) and thus the entity learns. Information is
the basis of communication between and among entities that can agree on interpreta-
tions and abstract concepts that can be the basis for new knowledge, which in turn can
help recognize and interpret new data. At the same time, multiple schemata may be
applied to develop alternative interpretations of data, providing for the construction of
different meanings. One learns by using prior experience to continually select and sort
signals from the environment, interpreting these signals (data) so that the new informa-
tion can be incorporated in a way that enables the entity to make sense of both prior
knowledge and new information.
In considering this recursive model, the purposes of an organizational KMS have
been articulated as contributing to three critical organizational processes (Choo 1998):
1. Sense making (understanding and interpreting data about the environment)
2. New knowledge creation (thus improving all organizational processes)
3. Decision making (applying the knowledge to affect the environment).
Systems of knowledge management for a particular organization may focus on one or

more of these goals. However, the recursive nature of data, information, and knowledge
demonstrates the inadequacy of simple models that would create knowledge from infor-
mation and information from data. This recursive aspect also suggests multiple roles
for a KMS and suggests that an effective KMS enables both individual and organiza-
tional learning through the creation of meaning and significance from the interactions
of (prior) knowledge schema, (new) data, and (flows of) information.
This viewpoint emphasizes the internal processes of organizational sense making and
knowledge creation. In addition to the internal processes, the organization is engaged in
a recursive information exchange with its environment. This exchange also affects the
Culture 25
organization’s sense making, particularly helping the organization to understand the

external values within which it is operating.
This discussion suggests that knowledge can be viewed in two ways, and neither is
adequate by itself. Knowledge can be viewed as a store of accumulated and interpreted
information, but it also can be viewed as a social process by which individuals and orga-
nizations continually apprehend and make sense of information based on prior knowl-
edge. The recursive aspect of knowledge and learning means that the stored knowledge
affects how the individual (entity) screens and interprets flows of information. Learn-
ing—the process of understanding, interpreting, and representing new information and
new experiences so that this stored knowledge can be changed or reinforced—is thus
affected by the existing knowledge.
This suggests an initial postulate on which we might build a framework for a cultur-
ally sensitive KMS:
P1: An effective KMS not only enables an organization to store knowledge, it enables flows
of data and information among its members and supports them in interpreting and
representing these data and information and thus enables them to create new knowl-
edge by considering multiple interpretations of new data using alternative schema.
Dimensions of Knowledge: Explicit and Tacit

Today, the concepts of tacit and explicit have been explored in much of the writing
about knowledge management and knowledge creation. Discussing and communi-
cating about the explicit dimension is straightforward, and there is little controversy
about it. The explicit dimension of knowledge is expressed in words and can be
communicated to others using language, diagrams, or other tangible artifacts. Con-
sequently, the information technology infrastructure of a KMS will typically have a
knowledge base containing text, tables, models, and other information that can be
expressed explicitly.
However, much of what has been written with respect to the tacit dimension has
misunderstood and misinterpreted Polanyi’s phrase, “we know more than we can tell”
(Polanyi 1967, 4). Particularly, many have interpreted this to mean that knowledge is of
two types: tacit and explicit. In taking this approach, some of the more popular writers
on knowledge management have suggested transformations from one type to another
(Nonaka and Takeuchi 1995; von Krogh, Ichijo, and Nonaka 2000). However, Polanyi
was clear in his view that all knowledge comprises a tacit dimension; he does not discuss
a tacit type of knowledge, only a dimension of knowledge that one is unable to articu-
late. Nonetheless, the notion of two types of knowledge is widespread and underlies
much of the literature on knowledge management. A recent review of several dozen
papers indicates that about 90 percent of them refer to two types of knowledge (Keane
and Mason 2006). This emphasis on types rather than dimensions means that the holis-
tic and integrated aspect of knowledge has not been studied sufficiently. It is no surprise
that those who construct KMSs, without a research foundation on which to build, have
inadequately accounted for the tacit dimension in their designs.
The tacit dimension may represent physical skills, such as riding a bicycle, but it also
reflects concepts of values and facts that are commonly known (sometimes referred
to as common sense) to a society or group. These commonly known values and facts
are socially constructed and transmitted, as through apprenticeships (learning from a
few masters) and through the broader cultural environment. The cultural environment,
whether national or ethnic, contributes to an individual’s tacit dimension of knowledge
and aspects of this dimension and may be difficult to change (Hall 1990).
If one considers that one objective of a KMS is to enable individuals to have access to
the widest range of available knowledge, it should provide for access to the tacit as well
as the explicit dimension of knowledge. This leads to our next postulate:
P2: For a KMS to be effective across multiple cultures, it should recognize both dimensions
of knowledge and enable access and transfer of the entirety of knowledge held by the
organization’s members.
CULTURE AND LEARNING

Culture has been defined as “the system of shared beliefs, values, customs, behav-
iors, and artifacts that the members of society use to cope with their world and with
one another, and that are transmitted from generation to generation through learning”
(Bates and Plog 1990, 7). Culture is both individual (it is manifested as individual traits
that are learned) and collective (it emerges over time from the shaping of behavior and
practices through the combined efforts of a society).
The importance of culture to learning can hardly be overstated. This chapter opens
with the quote from Hall (1990, 47) on the relationship between learning and culture.
Vygotsky, Rieber, and Carton (1987) proposed that learning can best be understood by
taking an explicit culture-centered approach. Others have agreed with this perspective
and developed the culture-centered approach further (Forman, Minick, and Stone 1993;
Kozulin 1998). This perspective posits that culture (the collective) is a source of differ-
ences in cognition as (individual) cognitive processes are formed through sociocultural
activities. Cole (1971) and others developed a contextual theory of cognitive functions,
which posits that different cultures have different systems of mediated learning experi-
ences (MLEs). Such systems and the resulting MLEs are important to cognitive develop-
ment, thus leading to differences that become evident when a learner makes a transition
from one system to another.
A recent book focuses on the different cognitive processes between Asian thought
and Western thought (Nisbett 2003). The book is filled with examples of how Asians
and Westerners think differently. For example, when asked about themselves, Asians
see themselves as part of a group and Westerners see themselves as individuals. Simi-
larly, when viewing a picture of an object in the physical environment, Asians see the
object in context and in relationship to the environment; Westerners perceive it more
as a separate object and do not refer to the context in describing it.
Nisbett outlines a conceptual model of how meaning is constructed by someone who
has grown up in a particular culture. In this model, social structure (e.g., family and fam-
ily relationships) is an antecedent to attention processes, metaphysics (including “folk
metaphysics)” and epistemology (2003, 33). In other words, according to this model,
the social structure in which one grows up affects (or effects) how one makes sense
of the world and how one knows what one knows. It is significant that the differences
Culture 27
Nisbett notes are not simply differences in a factual knowledge base but are differences
in cognitive structure and, more basically, how these structures are formed: In other
words, there are differences in how an individual learns and makes sense of new experi-
ences.
The evidence for a cultural difference in perception and cognition has been raised
before by comparative linguists. The Sapir-Whorf hypothesis posits that language is
associated with how people perceive the world. Although individuals can find a word
in their native language that will correspond to each object they perceive in the physi-
cal world, their language directs attention to different aspects of the physical world and
enables them to perceive (and communicate) relationships between and among these
physical objects. The perceived relationships differ depending on the language (Whorf
and Carroll 1956).
This language-directed attention, which begins very early in a child’s life (Kuhl
2001), shapes how the child learns and consequentially affects learning later in life. In
his study of young adults, Kozulin (1998) found that individuals who grew up in one
culture and were engaged in learning tasks in another culture had specific learning dif-
ficulties. The difficulties were associated with coding schemata, concepts, and graphic
and symbolic devices used in communication of ideas (e.g., tables, ordering, plans,
maps). The difficulties extended to cognitive activities such as the ability to identify or
define problems (the ability to apply already acquired knowledge to a set of data and
infer the implicit question or issue that needed to be resolved) and the ability to work
with multiple sources of information. In short, because of the cultural environment
(and the accompanying learning that was associated with this environment), the young
adults were missing cognitive antecedents that would enable them to excel in their new
environment.
Kozulin concluded, “Cross-cultural differences in cognition are most probably related
to learning practices characteristic of different cultures and subcultures,” and “two major
determinants of cognitive prerequisites are conceptual literacy and facility with other sym-
bolic psychological tools, and a mediated learning experience responsible for the integra-
tion of these tools into the cognitive system of the student” (1998, 129). Kozulin’s research
went further and showed that intervention could help the learners develop the basic skills
and concepts that would enable them to learn effectively in the new environment.
There is a neurological basis for these differences in epistemology and in how these
differences evolve. Some of the most relevant research on this topic is interdisciplinary,
work that engages neuroscientists, cultural anthropologists, language psychologists, and
learning theorists (Kuhl 2001), and this work continues to contribute to our under-
standing of how the mind develops.
At the time of birth, a baby has roughly the same number of neurons (brain cells)
in its brain as an adult—about 100 billion. However, there are only about 50 trillion
synapses, or connections among these neurons. In the first three years, the number of
synapses grows twentyfold, to one quadrillion. Synapses are potential learning pathways,
so this explosion of connectivity within the brain in the early years equips the child to
learn from the range of new stimuli that the child experiences in these early years. The
“brain as sponge” metaphor has been used; others describe “the scientist in the crib”
(Gopnik, Meltzoff, and Kuhl 2001) because of the child’s exploration of the world and
the discovery of new facts.
Even before the maximum number of synapses is reached around age three, the
child is observing the surrounding environment and beginning to selectively sort out
different stimuli. Studies of infants show that at about 7 months, children give equal
attention to changes in sound regardless of the language. However, by the age of 11
months, the infants already are beginning to be selective about which sounds are differ-
ent and interesting. For example, at the age of 7 months, Japanese and American infants
are equally perceptive of the differences between the sounds of /ra/ and /la/, sounds
that are easily distinguished in English but more difficult for Japanese speakers. At 11
months, the infants in an English learning environment have improved their perception
of the difference between the sounds, but the infants in a Japanese learning environ-
ment have lost some of their ability to perceive the difference in sounds. A similar study
with American and Taiwanese infants, using sounds in Mandarin, showed a similar
tendency, with the Taiwanese infants improving their ability to distinguish the Chinese
sound and the American infants decreasing in their ability to make the distinction. In
summary, in both cases, infants demonstrated a significant increase in native-language
phonetic perception and a decrease in foreign-language phonetic perception over this
short period of time (Kuhl 2001).
These infant studies suggest the importance of early cultural environment to learn-
ing. Learning begins by making distinctions, seeing differences in the environment, and
using these differences to interpret and remember experiences. The explosive period of
synapse growth provides the infant with many opportunities to learn—everything from
how to walk and interact with the physical environment to communicating with others
in the environment. However, the growth of synapses slows quickly, and the number
of synapses remains about the same from age three until the child is about eight years
old. At this point, the number begins to be “pruned” in order for the remaining paths
to be reinforced and become more efficient. From birth to the age of eight, the brain is
being programmed to learn—in a computer analogy, the brain is being “wired” to learn
in a particular way (Kuhl 2001, 2002). This programming determines fundamental per-
ceptual and cognitive frames or schemata that are used thereafter to interpret and learn
from experience, and these schemata have substantial staying power. As noted in an
online encyclopedia of religion, “the Jesuit maxim, ‘Give us a child until [s]he’s seven,
and [s]he’s ours forever,’ has been quoted until it is a cliché, but that is because experi-
ence seems to suggest it is true” (Bailey 1998).
This early development of learning abilities shapes the perception and interpreta-
tion of experiences throughout a person’s life. It has been acknowledged for some time
that knowledge and its acquisition is path dependent (Hayek 1952; Kelly 1955), but the
recent advances in neurobiology are providing a better look at how this path depen-
dency arises.
The relationship between and among culture, learning, and personal knowledge sug-
gests that knowledge management techniques that are appropriate in one culture may
not be effective for organizations that comprise members from multiple cultures or
organizations that seek to serve multiple cultures. A global organization that seeks to
tap into the knowledge of all its members would benefit from understanding that the
knowledge embedded in members from different cultures may have different structures
(schemata), and individuals who can benefit from having access to this knowledge may
Culture 29
have difficulty in accessing this knowledge without intervention. This suggests two other
propositions:
P3: For a KMS to encompass knowledge by individuals from different cultures, it should
provide for multiple schemata by which the knowledge can be organized and struc-
tured in the individuals’ native formats.
P4: If a KMS is to be effective for learning by individuals with different cultural backgrounds,
it should either (a) have culturally sensitive access mechanisms or (b) provide for skill-
building that enables acquisition of knowledge classified and structured in non-native
formats.
The preceding discussion shows the limitations of KMSs for global organizations, and
the propositions provide guidance for the characteristics that a more culturally encom-
passing KMS might exhibit. What appears to be required is a different way of thinking
about knowledge management in an organization that seeks to combine different cul-
tures. The following discussion proposes one such approach: thinking of the knowledge
management task as one of boundary spanning across cultures. The discussion draws on
earlier articles that discuss this approach to thinking about designs for KMSs and digital
libraries that seek to serve multiple cultures (Mason 2003, 2005).
A BOUNDARY SPANNING MODEL FOR KNOWLEDGE

MANAGEMENT IN MULTICULTURAL ORGANIZATIONS
Boundary spanning has been recognized as a necessary component in processes that
require coordination and translations among diverse groups (Star and Greisemer 1989)
and different functional groups, or “thought worlds” (Dougherty 1992). Carlile’s (2002)
study of boundary spanning objects in a new product development (NPD) process sug-
gests a useful framework for examining the functions of KMSs. Carlile’s ethnographic
study of teams performing four primary functions in the creation of a new product
(sales/marketing, design engineering, manufacturing engineering, and production)
identified the difficulties of communication and coordination of the different knowl-
edge and value systems represented by the team members. He examined how the teams
worked together and how the team dealt with the specialized knowledge of each area.
Each of the four functional areas had localized and embedded knowledge, structured in
a way that made sense to that area, much as we envision the localized and embedded
knowledge of a culture. This knowledge specialization presented a barrier to the effec-
tive operation of the NPD team—the team found it difficult to exchange and synthe-
size knowledge as necessary for the successful development of a new product. Carlile
observed that the team overcame this barrier by using boundary spanning objects that
operated at three different levels: syntactic, semantic, and pragmatic.
At the syntactic level, shared repositories enabled communication of facts and agreed-
upon tasks and actions. At the semantic level, standardized forms and methods enabled
not only communication of facts but also provided a way for the different groups to
clarify differences in meaning. The objects at this semantic level (standard forms and
methods) enabled the team to translate the localized knowledge embedded in one group
into forms that other groups could understand. At the pragmatic level, objectives, maps,
and models enabled each group to transform embedded knowledge into knowledge that
the entire team (and others not in the group) could understand.
In earlier studies of communities, Brown and Duguid (1998) pointed out the roles of
boundary spanning activities and noted particularly the need for translators between
communities. In commenting on Carlile’s model, Brown (2002) suggests that Carlile’s
three levels correspond to three different levels of knowledge ambiguity among com-
munities of practice. At each level, different types of boundary objects are necessary for
communication, knowledge transfer, and learning.
At the syntactic level, the differences across the boundaries are explicit, clear, and
stable. A shared syntax is a necessary (but not necessarily sufficient) condition for shar-
ing knowledge under these conditions. Taxonomies and classification (e.g., shared data-
bases) provide this syntax and enable the sharing and transfer of knowledge among
groups that have a clear understanding of their differences and understand that these
differences are relatively stable. For a multicultural organization, this condition might be
represented by an organization that has been relatively stable over time, so that the dif-
ferent cultures within the organization have a clear understanding of their differences.
Under these conditions of explicit and clear differences, this syntactic level is a neces-
sary condition for knowledge sharing in a multicultural organization. Agreements on
syntax are required for data to be exchanged between cultures and communities. As
a minimum, agreements at this syntactic level deal with technical standards and data
architecture. Although data can be shared at this level, as Carlile and Brown both note,
the sharing of data is insufficient for the exchange of knowledge and learning.
At the semantic level, the differences across the boundaries may be neither clear nor
stable (Brown 2002). The solution to spanning the boundary at this level requires a
method of translating meanings across boundaries. At this level, Carlile (2002) observed
the use of standardized forms and methods as boundary objects.
For a KMS in an organization that comprises, or seeks to serve, multiple cultures, this
semantic level is an additional necessary, but insufficient, prerequisite for knowledge
sharing. For groups that have similar cultures, in which concepts are similarly named
and relationships among concepts are similar, relatively simple translations that involve
mapping of concepts from one language or mental model to another may be sufficient.
In some cases, the models may need to be dynamic and agile. For example, if the tech-
nology for exchanging information between groups is critical to an exchange (e.g., as
in a technology transfer), or if technology is the focus for exchanging knowledge, the
dynamic nature of technology may require the models employed in the exchange to be
agile and to enable interpretation of flexible and evolving concepts. Even more difficulty
may be expected if the different cultures are experiencing different rates of progress. In
such situations—and any situation in which the differences are neither clear nor sta-
ble—frequent communication between the groups may be necessary to assure currency
in meaning and to assure that new concepts are absorbed by both groups.
At the semantic level, if there has been agreement at the syntactic level, and there is the
basis for a shared communication language, metaphors may be a useful approach to com-
municating new ideas (Lakoff and Johnson 1980), if such metaphors can be apprehended
by both cultures. For groups that have more distinct cultures, with few shared concepts,
such translations or mappings may not be feasible without additional explorations at the
pragmatic level. Indeed, even the metaphorical concept of a library, widely used in most
Western cultures, may not be shared across some cultural boundaries (Duncker 2002).
Culture 31
The pragmatic level provides a level for exploring other differences across boundar-
ies. However, explorations at this level require some degree of agreement at the other
two levels. In his discussion of this model, Brown (2002) notes that the knowledge of
one group is not neutral to the knowledge of another group or community. Different
communities may have different values and/or power relationships, and this level of
difference requires boundary objects that provide additional capability beyond the first
two levels. At the pragmatic level, the groups must transform their knowledge and cre-
ate new (shared) knowledge rather than simply exchanging or transferring knowledge.
Resolution of group differences requires objects such as models and maps, objects that
enable the surfacing of assumptions, tacit knowledge, and values. At this level, shared
syntax and meaning must be sufficient to permit the sharing of methods of thinking and
the development of a shared basis for understanding each group’s values and mental
schemata. It is at this stage that intervention, perhaps by someone who has experience
with both cultures, may be necessary.
In this model of boundary spanning, the lower two levels are necessary but insuf-
ficient for complete sharing of knowledge and the development of mutual understand-
ings that would enable the creation of new knowledge. The mutual understandings and
the associated trust that comes from these understandings may be necessary if a KMS
is to support an organization comprising users from multiple cultures. This suggests a
fifth proposition:
P5: For a KMS to be effective in a multicultural organization, it should provide boundary
spanning mechanisms and processes at the syntactic, semantic, and pragmatic levels.
Mechanisms and processes at the syntactic and semantic levels of this model are read-
ily apparent in observations of commercially based KMSs implemented at individual
organizations, but corresponding processes at the pragmatic level are rare. The few cases
in which such pragmatic level processes were reported noted the use of face-to-face
meetings and structured forums in which distinct groups discussed values and differ-
ences. Some incentives and standards, designed to transform the executive level goals
and values (e.g., the use of the KMS) into practice at the operational level of the firm,
were judged to be pragmatic boundary spanning activities in which the boundary was
hierarchical rather than a national, cultural, or ethnic (Mason 2003).
Access to all the knowledge available within an organization is constrained when a
KMS does not explicitly plan for the inclusion of multiple cultures in the creation, stor-
age, and transfer of knowledge. A KMS designed by and for a particular organizational
culture by its nature restricts the range of schemata by which knowledge is classified and
stored, and thus the creation of new knowledge is limited to discussions within the meta
framework provided by the collective combination of these schema.
CONCLUSION AND DISCUSSION

Prior work in KMSs has not been sensitive to either the value of knowledge that may be
embedded and localized in different cultural groups or to ways in which this knowledge
might be made accessible. This lack of sensitivity means that global organizations, orga-
nizations that seek to make use of the knowledge of all their members and that seek to
serve multiple external clients, are inadequately prepared to do so with current models
and implementations of KMSs. The theoretical goals of KMSs—to enable access to the
widest range of knowledge and to provide the capability to create new knowledge from
existing knowledge—are not being realized in today’s global organizations.
Recent interdisciplinary research involving neuroscientists, cultural anthropologists,
language psychologists, and learning theorists has contributed to our understanding of
how the mind develops. This work has provided evidence for the opening quote from
Hall that emphasizes the cultural dimension of learning and knowledge creation. The
early cultural environment affects the wiring of the brain so that later learning is shaped
and guided by these native cultural experiences.
If organizations are to benefit from the recent understanding of brain development
and are to create KMSs that support global efforts and enable knowledge creation
and exchange among multiple cultures within the organization, new approaches are
required. One approach is to consider distinct cultures as different learning communi-
ties and to think of a KMS as a boundary-spanning process. This chapter suggests that
the three-level boundary-spanning model proposed by Carlile can help guide the devel-
opment of mechanisms for incorporating different cultures in an organizational KMS.
Each level presents different challenges. The syntactic and semantic levels are more
easily amenable to the application of current information technologies. However, these
are simply necessary levels and are not sufficient for a multicultural KMS. Completing
the model requires these levels to be used to work at the third (pragmatic) level of the
model. It is at this level that the culturally specific tacit dimension of knowledge may
be reflected, and it is at this level that the organization that seeks to encompass mul-
tiple cultures must provide social mechanisms by which the issues of different values
can power can be negotiated. Only then can a global organization unlock the knowl-
edge embedded in its culturally diverse members and realize the original vision of a
KMS that enables ready access to the full range of knowledge within the organization’s
boundaries.
REFERENCES
Alavi, M., and D. E. Leidner. 2001. Review: Knowledge management and knowledge management
systems: Conceptual foundations and research issues. MIS Quarterly 25 (1): 107–36.
Bailey, E. I. 1998. Religious education. In Encyclopedia of religion and society, ed. J. W. H. Swatos.
Walnut Creek, CA: AltaMira Press, http://hirr.hartsem.edu/ency/ReligiousE.htm.
Barney, J. B. 1996. The resource-based theory of the firm. Organization Science 7 (5): 469.
Barney, J., M. Wright, and D. J. Ketchen Jr. 2001. The resource-based view of the firm: Ten years
after 1991. Journal of Management 27 (6): 625–41.
Bates, D. G., and F. Plog. 1990. Cultural anthropology . New York: McGraw-Hill.
Brown, J. S. 2002. An epistemological perspective on organizations and innovations. Paper pre-
sented at the Organizational Knowledge and Learning Conference, Athens, Greece.
Brown, J. S., and P. Duguid. 1998. Organizing knowledge. California Management Review 40 (1):
90–111.
Carlile, P. R. 2002. A pragmatic view of knowledge and boundaries: Boundary objects in new
product development. Organization Science 13 (4): 442–55.
Choo, C. W. 1998. The knowing organization. New York: Oxford University Press.
Cole, M. 1971. The cultural context of learning and thinking: An exploration in experimental
anthropology. New York: Basic Books.
Davenport, T. H., and L. Prusak 1998. Working knowledge: How organizations manage what they
Culture 33
Dougherty, D. 1992. Interpretive barriers to successful product innovation in large firms.

Organization Science 3 (2): 179–202.
Duncker, E. 2002. Cross-cultural usability of the library metaphor. International Conference on
Digital Libraries archive. Proceedings of the 2nd ACM/IEEE-CS Joint Conference on Digital
Libraries Portland, 233–40. New York: ACM Press.
Forman, E. A., N. Minick, and C. A. Stone. 1993. Contexts for learning: Sociocultural dynamics in
children’s development. New York: Oxford University Press.
Gopnik, A., A. N. Meltzoff, and P. K. Kuhl. 2001. The scientist in the crib: What early learning tells
us about the mind. New York: Perennial.
Grant, R. M. 1996. Toward a knowledge-based theory of the firm. Strategic Management Journal
17 (Winter): 109–22.
Hall, E. T. 1990. The silent language. New York: Anchor Books/Doubleday.
Hayek, F. A. v. 1952. The sensory order: An inquiry into the foundations of theoretical psychology.
Chicago: University of Chicago Press.
Huber, G. 1991. Organizational learning: The contributing processes and literatures. Organization
Science 2 (1): 88–115.
Keane, B. T., and R. M. Mason 2006. On the nature of knowledge: Rethinking popular assump-
tions. Hawaii International Conference on System Sciences, Kauai, Hawaii. CD-ROM. Los
Alamitos, CA: Computer Society Press of the IEEE.
Kelly, G. A. 1955. The psychology of personal constructs. New York: Norton.
Kozulin, A. 1998. Psychological tools: A sociocultural approach to education. Cambridge, MA:
Harvard University Press.
Kuhl, P. K. 2002. Born to learn: Language, reading, and the brain of the child. Early Learning
Summit for the Northwest Region, Boise, Idaho, http://www.ed.gov/teachers/how/early/
earlylearnsummit02/kuhl.doc.
Kuhl, P. K., F. M. Tsao, H. M. Liu, Y. Zhang, and B. De Boer. 2001. Language/culture/mind/brain:
Progress at the margins between disciplines. Annals of the New York Academy of Science
935: 136–74.
Lakoff, G., and M. Johnson 1980. Metaphors we live by. Chicago: University of Chicago Press.
Mason, R. M. 2003. Culture-free or culture-bound? A boundary spanning perspective on learning
in knowledge management systems. Journal of Global Information Management 11 (4):
20–36.
———. 2005. The critical role of librarian/information officer as boundary spanner across cultures:
Humans as essential components in global digital libraries. World Library and Informa-
tion Congress: 71st IFLA General Conference and Council, Oslo. The Hague: International
Federation of Library Associations, http://www.ifla.org/IV/ifla71/papers/013e-Mason.
pdf.
Nisbett, R. E. 2003. The geography of thought: How Asians and Westerners think differently—and
why. New York: Free Press.
Nonaka, I., and H. Takeuchi 1995. The knowledge-creating company. New York: Oxford Univer-
sity Press.
Penrose, E. T. 1959. The theory of the growth of the firm. Oxford: Blackwell.
Polanyi, M. 1967. The tacit dimension. Garden City, NY: Anchor Books.
Ponzi, L, and Koenig, M. 2002. Knowledge management: another management fad? Information
Research 8 (1), paper no. 145, http://InformationR.net/ir/8–1/paper145.html.
Star, S. L., and J. R. Greisemer 1989. Institutional ecology, “translations” and boundary objects:
Amateurs and professionals in Berkeley’s Museum of Vertebrate Zoology, 1907–39. Social
Studies in Science 19: 387–420.
Stata, R. 1989. Organizational learning: The key to management innovation. Sloan Management
Review 30 (3): 63–74.
Tuomi, I. 1999. Data is more than knowledge: Implications of the reversed knowledge hierar-
chy for knowledge management and organizational memory. Journal of Management
Information Systems 16 (3): 103.
von Krogh, G., K. Ichijo, and I. Nonaka. 2000. Enabling knowledge creation. New York: Oxford
University Press.
Vygotsky, L. S., R. W. Rieber, and A. Carton. 1987. The collected works of L.S. Vygotsky. New York:
Plenum Press.
Whorf, B. L., and J. B. Carroll. 1956. Language, thought, and reality: Selected writings. Cambridge,
MA: Technology Press of Massachusetts Institute of Technology.
3
The Art of Systems: The Cognitive-
Aesthetic Culture of Portal Cities and the
Development of Meta-Cultural Advanced
Knowledge Economies
Peter Murphy
ABSTRACT
Knowledge economies are the most powerful economies in the world. What makes
them possible? This article discusses the origin of knowledge in pattern thinking and
the source of pattern thinking in aesthetic forms. In addition, the author notes the
concentration of knowledge economies in specific geographic zones—in portal city
regions. These various phenomena are confluent. The art cultures of portal cities, and
their intense concentrations of designing intelligence, contribute to the long-term
accumulation of knowledge in these places. There is a strong parallelism between
aesthetic culture and the demands of long-distance portal economies. Aesthetic form
lends itself to the management of uncertainty—it facilitates the discovery of pattern
in the midst of chaos. At the same time, powerful economies arise out of the same
kind of ability to manage high levels of contingency and risk. The city is the most
potent point of intersection of these various capacities. Arts-and-science cities, also
normally portal cities, self-organize through mimetic aesthetic forms to meet these
challenges. Portal cities, characterized by high levels of import and export, are among
the most proficient users of pattern forms to manage data flows. Firms and organiza-
tions, where the management of knowledge occurs, mirror this. Successful firms and
organizations deal with the continuous influx of information generated by contin-
gency. They use pattern thinking and designing intelligence to make sense of those
information flows and to obviate the risks inherent in operating in environments that
are characterized by high levels of uncertainty and rapid shifts in direction.
INTRODUCTION
There are two ideas of culture. One is romantic (Murphy and Roberts 2004): Culture
in the romantic sense is a function of nations. Nations are defined by territory, language,
and social norms. Nations possess incommensurable characteristics—different ways of

doing things and creating things, and different mind-sets, that provide advantages in
global economic and social competition. In particular, the “genius” of a nation produces
innovation. A second, and older, idea of culture equates culture with the civilization of
cities. This idea precedes the modern romantic idea of nationhood. Culture as a function
of the civilization of cities is less the expression of incommensurable qualities and habits
and is more the consequence of the universals of shape, pattern, and form.
These are universals in the sense of their reach. They can be understood irrespec-
tive of nationality, and acquired and stored as knowledge, they can be widely imitated
and are applicable in many domains. A little like nations, however, this kind of pattern
knowledge does not emerge just anywhere. Nor is it most potently applied just any-
where. Its natural ecology is the city, especially as we indicate subsequently, the porous
environment of great portal cities. Portal cites combine busy ports (sea, land, and rail
ports) with large metropolises. They are characterized by intensive import and export of
goods, money, people, and information. Despite the importance of modern rail, road,
and air transport, most successful portal cities are still located on coasts and rivers. The
emergence of pattern knowledge is closely associated with the aesthetics of these littoral
cities and the high-quality design cultures that such cities invariably produce. In the sec-
ond model of culture, then, it is the art, design, power, and beauty of cities that produces
innovation.
Japan exemplifies the two meanings of culture. It has a strong, easy-to-recognize set
of national characteristics. The Japanese way of doing things is often used to explain the
wealth of Japan’s economy. But, long before Europe, archipelagic Japan was a highly
urbanized society that had a refined aesthetic culture and that relied on the intensive
importation of knowledge even when, from a national perspective, Japan was “closed”
to the world. Today the 41 universities of Kyoto, and its huge industrial research park
infrastructure, owe considerably more to the urban culture of art and knowledge than
they do to the national difference of Japan. This is especially so at the sociocultural level
of fundamental far-reaching innovation. National culture has a significant role in the
identity formation of linguistic or territorial groups. Yet, as an innovation driver—a
shaper of technological, economic, and social forms with a high propensity for export—
national difference is much less significant. The largest part of human innovation has for
the longest time been tied to the culture of cities.
THE ART OF SYSTEMS

The particular significance of all of this is that, although the human species has always
on some level innovated, in the past 200 years, innovation has become a core economic
and social force. What we have come more recently to call the knowledge economy
is simply a reflex of this. Knowledge, it must be emphasized, is not per se innova-
tive. Mostly knowledge is something that is secondhand: It passes from one person to
another. Yet, sometimes, the act of knowledge produces something new—something
unheard of or something unprecedented. Newness is not such an important quality in
itself. Where it is important is where knowledge that is new produces something that
gives shape to the world. This kind of knowledge patterns what we make and how we
manage, what we say and how we feel, what we do and how we behave in the world. Let
The Art of Systems 37
us call this formative knowledge or pattern knowledge. The amount and the influence
of this kind of knowledge have grown sharply in the past 200 years. Usually, it begins
obscurely enough and normally in some domain of art or science. What is impressive
is how quickly pattern knowledge now moves from the quieter corridors of the arts and
sciences into the bustling thoroughfares of the wider society.
One of the reasons for this is that a large number of modern institutions—ranging
from corporations to governments—routinely absorb and apply, utilize and spread,
promote and develop new knowledge (Heller 1985). Another reason is the growth of
self-organizing systems in the modern world. Observing and mimicking patterns is
a human trait. The mimetic power of social systems and information systems in the
modern world has expanded significantly. Since the Industrial Revolution, economy
activity based on applied science and applied art has grown at an enormous rate. Gov-
ernance based on the social sciences and cultural industries based on the humanities
have expanded in tandem. Modern institutions—ranging from manufacturing corpo-
rations to government departments to film studios—have become adept at modeling
and restructuring using pattern knowledge. Despite this, our “knowledge of knowledge”
remains elusive. It is a far trickier question to explain how pattern knowledge emerges
than to describe its impact on economic behavior and social organization.
The classic philosopher’s paradox—that knowledge is ignorance—indicates just how
difficult it can be to precisely answer the question “What is knowledge?” One of the
oldest confusions is to equate knowledge with opinion. We still do this, and we do it
alongside all of the newer idols of knowledge we have invented, not least the idea that
the accumulation of information is the same as knowing things. The fallacy of equating
knowledge and information is illustrated by a very simple example. Stock investors who
ignore the financial news and who pay attention solely to profit and loss results make
better investment decisions (Surowiecki 2004). The opinions of pundits and the 24/7
flow of information get in the way of making good financial judgments. So often, in
the case of knowledge, less is more. Knowledge is always economical. There is a good
reason why this is so. Knowledge—as opposed to opinion, expression, or information—
fixes on the form or shape of things. Knowledge is a function of system or architectonic
arrangement. Knowledge is intimately connected to the art of systems, the art of how
things are systematically arranged so as to be most pleasing, useful, efficient, economi-
cal, just, inspiring, or moving. Knowledge is the comprehension of form. Information,
opinion, and expression are often superfluous to the essentials of form. They just get in
the way. Considered as a unified field, then, knowledge is aesthetic. Knowledge, in the
strongest sense, is the aesthetic or art of systems. Self-reflexive accounts of high-level
knowledge creation tend to conclude on a very repetitive note: Knowledge begins with
an image. It starts with the intuition of an image, a shape—a sketch of something in the
mind. The aesthetic quality or art of systems cuts across economy and emotions, work
and entertainment, politics and imagination. It is common across all of the compart-
ments and spheres of human action and cognition. Thus, to know something is also to
know how to arrange something or how something is arranged. Aesthetic qualities, we
must always remember, are not simply social phenomena. The art of systems plays its
role in the formation of societies and economies. But systemic aesthetic qualities are
also pervasive in the physical and biological domain as well. Characteristics like sym-
metry are built into the fabric of the universe (Greene 2004). It is unsurprising, then,
that knowledge economies are functions of both the arts and the sciences. Beauty is to
be found in self, society, and nature. Knowledge, in the sense of the art of systems, is
knowledge of the commons. It is, at its root, the mind’s grasp of the common forms or
common morphologies of self, society, and nature.
The aesthetic or art of systems may be explicit or tacit. We can explain “what” we
know, but more often we rely on inarticulate assumptions of knowing “how” to do
something. Knowledge breakthroughs usually make what is inexplicit explicit. We give
an account of what we know. But most knowledge remains implicit in the structures or
systems we build or that we discover around us. In the most advanced economies and
societies, we are surrounded by ever-deepening layers of knowledge embedded in com-
plex systems. Yet we do not very often read a manual to make sense of a software system,
any more than we read a travel guide to make sense of a city. We buy these code books
for reassurance, but in practice our deepest knowledge comes through reconnaissance
and navigation of these systems as we identify their aesthetic or systemic properties, and
match them with our intuitions of the same.
Knowledge in the sense of the aesthetic ordering or art of systems is not, and has
never been, equally distributed across the face of the earth. There are knowledge clus-
ters: there are knowledge-rich societies and knowledge-poor societies. Some economies
interpolate high levels of systems knowledge; others exist literally hand-to-mouth. The
explanation of why this is so is, at least partially, a function of place. In certain definable
places, knowledge concentrates, which also means that in these places high-level aes-
thetic regimes emerge. The chief nodal points in which knowledge concentrates are por-
tal cities and sea regions. The powerhouse examples of portal societies or portal regions
in history are to be found around the Mediterranean (e.g., ancient Greece, Renaissance
Florence and Venice), the North Sea (e.g., the Low Countries, southern England since
the Renaissance, and the Scottish Lowlands in the eighteenth and nineteenth centuries),
the seaboards and Great Lakes of North America since the sixteenth century, and the
China Seas in the nineteenth and twentieth centuries. Adding to these maritime regions
the inland peninsulas of Europe—especially the Île-de-France and the triangular regions
bounded by the Elbe and Salle Rivers, the Maas and Rhine Rivers, and the Rhine and
Danube Rivers—we find that these societies, in their golden epochs, are responsible
for most of the human species’ towering artistic, literary, political, economic, scientific,
and technological inventiveness. In the cases of post-1400 Europe and post-1800 North
America, this intellectual geography is vividly mapped by Murray (2003, 301–6). Unsur-
prisingly, then, portal regions have also emerged as the principal incubators of modern
kinds of intellectual capital (Murphy 2005a). Advanced economies over the past 150
years have put great effort into transforming tacit knowledge into explicit knowledge
and turning explicit knowledge into forms of intellectual property, especially patents
and copyrights (Howkins 2001). Intellectual property, like generic knowledge, clusters
in littoral, insular, peninsula, and riverine zones, regions, and states.
This recent history echoes deeper patterns in the distribution of knowledge. Scattered
step-like across the past 2,500 years of human history, there have appeared a series of
geographical regions distinguished by exceptionally high levels of intellectual innovation
and the ability to use this groundbreaking capacity to generate economic wealth, social
prosperity, and geopolitical influence. Each of these regions has been characterized by
two or more ‘world cities’ that mirror each other, a maritime or riverine geography, and
a precocious ability to trade, communicate, and project themselves over long distances.
Each region has developed a portal character; that is to say, each is an intensive importer
and exporter of one or more of the following: goods, money, people, or information. A
condition of this is that each develops porous systems that complement more conven-
tional social systems based on rules and hierarchies.
PORTAL SOCIETIES
Porous systems, especially those with global reach, emerge where a society is good
at encouraging designing intelligence. Portal societies are characterized by powerful
cultures of design that are proficient in deploying the morphological resources of the
commons. Beautiful, elegant, fair, efficient, and economic structures and processes are
created by acts of design. Design represents a distinctive mode of economic and social
production, distribution, and interaction. Designing intelligence finds its epitome in
high-level arts and sciences. The pursuit of aesthetic beauty and mathematical elegance
mirrors the pursuit of lucid laws and social fairness.
A recurring characteristic of portal city regions is the creation of order by design. Order
by design, a key part of the art of systems, facilitates the long-distance, cross-cultural reach
of portals. To do this, it reduces the grip of rules and hierarchies in social organization in
favor of aesthetic self-organization. The latter is crucial. For aesthetic self-organization
stimulates tacit and explicit innovation. Beauty and its many synonyms (e.g., mathemati-
cal elegance, social symmetry) are key drivers of social reform, systems development,
product creation, machine efficiency, and so on. (For a discussion of beauty’s role in
machine and product development, see Gelertner 1998.)The same thing that animates
social and economic creativity propels great art and science, and creates great urban cen-
ters. Here we see the underlying symmetry between designing intelligence, the historic
concentration of world-class arts and sciences in portal regions, and the economic wealth
and aesthetic order of their cities. Common to all is the power of beauty.
Portal zones include historic cases like the fifth-century b.c.e. Aegean and Black
Seas (Athens), the Renaissance Mediterranean (Venice), and the seventeenth- and
eighteenth-century North Sea (London, Amsterdam, and Edinburgh). The modern age
saw the development of powerful maritime city-regions in the New World, notably the
pseudo-sea regions (the East Coast, Great Lakes-Hudson region, and the California
coast) and littoral cities (Boston, Chicago, Detroit, Toronto, New York, and San Fran-
cisco) of North America, the urban coastal cities and “beach civilization” of Australia,
and the islands of New Zealand (on the Australian case, see Murphy, 2006). The nine-
teenth and twentieth centuries saw the rise of the China Seas region, and the emergence
there of a series of insular and peninsula societies—Japan and more recently Singapore,
South Korea, and Taiwan—that have accumulated high levels of intellectual capital and
have developed impressive technocratic cities.
Like all other species of society and economy, portal regions include interesting cases
of failure, and also of triumph over failure, such as the following:
• The dashing of Thomas Jefferson’s hopes that the Mississippi–Gulf of Mexico–New
Orleans region would become an economic powerhouse in the nineteenth century.
• The faltering attempts to reenergize the Mediterranean in the same century as the
territorial power of the Russians and Ottomans broke the tissue of connection between
the Mediterranean and Black Seas, and oceanic power finished off the Mediterranean
city-states.
• The swallowing of the riverine city-states and principalities of Europe by French and
German territorial power in the nineteenth century, and the splitting of Baltic and
maritime East Asian economies by Soviet and Chinese Communist territorial power in
the twentieth century.
• The reemergence of older portal regions—the Mediterranean (Northern Italy and
Israel) after 1945; the renaissance of Black Sea and Caspian Sea zones and the reunifica-
tion of the Baltic after the end of the Soviet Union, reorientating historically intellectual
capital–rich coastal societies (e.g., Lithuania and Estonia) to their littoral near-neigh-
bors (e.g., Finland); and the reemergence of the south coast of China as a powerhouse
with complex relations to its insular twin, Taiwan, following the partial retreat of state
socialism in China.
• The latter-day resurrection of the Gulf of Mexico as a major portal region structured
around the Houston-Miami littoral arc, its oil-sea industries, and high-tech space
industries.
The ups and downs of these long-term, large-scale processes are well-illustrated by the
case of the rise and fall of the large mainland-dominated Communist states in the Soviet
Union and China. The resulting capitalist-communist geopolitical bipolarity disrupted
historical patterns of sea ecumenes in the Black Sea, the Mediterranean, the Caspian Sea,
the Baltic Sea, and the China Seas. Since the end of the Cold War, older and arguably
more powerful patterns have come back into play. Studies measuring innovative capac-
ity (measured by expenditure on research and development and production of patents)
indicate that the emergent cohort of economic innovators (those that have appeared in
the period since the late 1980s) are all littoral entities bordering these old sea regions.
Porter and Stern (2001) point to major gains in innovative capacity made by Denmark,
Finland, Singapore, Taiwan, South Korea, and Israel. They predicted then that Ireland
was in the process of joining this littoral group. It is also notable that three of the four
countries (Japan, Sweden, Finland, and Germany) that have lifted their patentable level
of innovative capacity consistently over the past quarter of a century are littoral states on
the bounds of the Baltic or China Seas. Sharp observers have noted how with the demise
of the Soviet Union “a new Hanseatic League” began to develop. This is “an emerging
regional commercial trading zone, stretching as far as Hamburg and Copenhagen to the
west, Oslo and Stockholm to the north.” The eastern anchor of this zone is the twin cit-
ies of Helsinki and Tallinn, located a ferry ride across the Baltic Sea (McGuire, Conant,
and Theil 2002). Such twinning or mirror cities are very typical of these powerhouse sea
region groupings. As in the case of Israel, Finland, and other budding innovators, at the
end of the twentieth century information technologies and telecommunications have
played a leading role in the reemergent zones. However, one should be careful not to
overidentify formative power with any particular technology, system, or process.
In all of the cases, deeper structural forces are at play. In all portal regions character-
ized by persistent and high levels of innovation, procedural rules and social hierarchies
are (partly) displaced by aesthetic structures or tacit self-organizing forms of order. This
is conditioned by the fact that portal societies are all involved in long-haul trade. Sea or
riverine carriage, and long-distance trade, shapes the nature of portal regions by virtue of
one telling condition: The greater the distance is, the less effective are hierarchies and rules
in ordering human transactions. One of the results of this is that knowledge in the strong
sense of the aesthetic or art of systems has an incipient tendency to replace hierarchies
and rules under portal conditions. This has important spin-offs, one of the chief being that
portal city regions are excellent milieus in which the arts and sciences develop.
This helps to explain the role of the arts and sciences in the political economy of por-
tals, and the high level of creativity often characteristic of them. A classic case of this is
historic Königsburg, on the far eastern side of the Baltic. This old port and university
town not only produced Immanuel Kant but also Hermann Minkowski (the geometer
who provided the mathematical basis for Einstein’s theory of “spacetime”), Theodr
Kaluza (whose geometry laid the foundation for string theory in physics), and Hannah
Arendt (one of the two or three great political philosophers of the twentieth century).
Copernicus came from the nearby port town of Frombork. Think also of cases such as
fifth-century b.c.e. Athens or twentieth-century New York City. Why do these places
have such a high incidence of creativity? The phenomenon can be explained in part by
the dense, unsocial, and mobile nature of portal cities and their populations of strangers
who lack thick social ties. Aesthetic ordering, key to creative acts, is favored under such
conditions. Political context also has implications for the power of aesthetic ordering.
The most crucial factor is that city-regions are not nations. To do what they do, they
must operate at least to some extent outside of national-territorial procedural institu-
tions and network systems, and equally also outside of the bureaucratic hierarchies of
patrimonial states. Hong Kong’s special administrative status vis-à-vis the People’s
Republic of China is a classic example of the latter. The Pearl River delta today produces
10 percent of China’s gross domestic product and 40 percent of its goods for export.
This is directly a function of Hong Kong’s special—that is, “odd”—status. Portal city
regions flourish where the states or legal systems that they are embedded in are odd, at
least in contrast with conventional nation-states and patrimonies. Often these are states
that are federations, commonwealths, or unions of states. Examples range from the sev-
enteenth-century Dutch Republic and the United States to United Arab Emirates and
its mercurial portal of Dubai. Such states are based on devolved power, divided power,
or separated power. In other cases, the power of portal states is enigmatic. They rely on
tacit unwritten constitutions (like Great Britain) or on a pervading sense of anonymous
power (like Japan)—or else they are states that are cities (historic Venice, Singapore);
states that have been divided in half (South Korea); or states that are claimed as prov-
inces of another state (Taiwan). In some cases, portal city regions, like Japan’s Kobe-
Osaka-Yokohama-Tokyo conurbanation, dominate the surrounding nation-state.
In short, powerful portals are different. They obey the law of the state yet have a life that
is quasi-independent of it. Portals, though, do not just replace one kind of law for another.
What makes portals truly different is their capacity to replace social rules and hierarchies
with an intuitive aesthetic order. This has enormous consequences, not least because the
resulting morphology of portal city-regions typically embodies an emphatic sense of form,
and this in turn encourages visual, intuitive, and pattern-style cognition that is essential
for high-level creative action. Let us examine how such aesthetic order emerges.
EMERGENT FORMS
When a portal city begins to act as an intermediary between its manufacturers and for-
eign cities or between its countryside and foreign cities, or simply between foreign cities,
it becomes a foreign commerce city. People bring their goods to the intermediary—to
the portal—rather than trading directly because of the concentration of intelligence in
the portal city. A classic example is the cotton trade in the American South before the
Civil War. By 1830, 40 percent of the receipts of that trade flowed to New York City for
freight, insurance, commissions, and interest (Miller 1968). This is a consequence of
the fact that in any production or distribution system, organizational capacity, logistics,
and inventiveness over time acquire a progressively greater role in contrast to land,
labor, energy, and physical capital. Portals concentrate such capacities. Intelligence in
the most general sense means the capacity to make better-than-chance choices. Portal
cities are intelligence centers. Portals function as intelligence centers in a number of dif-
ferent ways, ranging from the simple to the complex. Let us consider briefly these four
levels or stages.
At the first stage, portals collect and disseminate information about prices, environ-
mental conditions, availability of transport, assessments of political risks, maps, stories
of expeditions, warnings of invasions, and so on. Such information is a response to
uncertainty. The more uncertain the world, the greater is the demand and the need for
information.
Uncertainty creates contingency—possible or alternative ways of acting are projected
in order to meet uncertain conditions. Intelligence at the second stage is the ability to
think effectively about contingencies and to evaluate possibilities (what might be done),
without fear or panic or irrational exuberance. Limited intelligence, typical of societies
with thick cultures, assumes a more or less fixed number of alternatives. Expansive intel-
ligence, typical of societies with thin cultures but high cognitive thresholds, encourages
unconventional conceptions of what might be done.
The third stage of intelligence rests on the capacity to be able to locate events,
contingencies, and choices in the context of large-scale and long-range patterns and
structures. Contextualization relies on pattern recognition. This requires theoria—the
ability to be able to step back and think theoretically about events and contingencies,
which means being able to intuit the deeper structural forces and morphologies that
shape surface events and contingent situations.
The fourth stage of intelligence is innovation/creation. This kind of intelligence is
not to be confused with reflexive projection and evaluation of contingencies. Future
thinking, involved in puzzling about contingencies, underpins adaptability to contex-
tual change. But changing actions or the rules of action to master contingencies is not
the same as fundamental creation/innovation.
Fundamental creation/innovation is a function of emergent forms. The highest stage
of intelligence is the capacity to give form. This is the most difficult and the most mys-
terious kind of intelligence. It is very powerful but rarely in evidence. It is the kind of
intelligence that is called upon when social systems are threatened with chaos. This kind
of intelligence creates new scientific, technological, economic, social, organizational,
intellectual, and cultural forms. The creation of new forms is rare but extraordinarily
important (Castoriadis 1997).
Where do such forms come from? That is a difficult question to answer. But one thing
is clear: portals have played an exceptional role in the history of creation. In antiquity,
the Mediterranean ecumene was a generator of a remarkable array of forms. The Silk
Roads–Caspian Sea ecumene was the incubator of the most vital developments in Arab
and Islamic thought. The China Seas ecumene today produces the most enterprising of
Asian social forms. The Baltic Sea was a driving force of commercial innovation dur-
ing the European Middle Ages (Parker 2004). The Mediterranean revisited its massive
formative power during the Renaissance and early modern era. The North Sea–Baltic
Sea ecumene became the crucible of European and global modernity from the sixteenth
through seventeenth, eighteenth, and nineteenth centuries.
The greatest form-generating powerhouse in the nineteenth century was the Great
Lakes–Hudson ecumene that linked Chicago and New York City. In the second half
of the twentieth century, this leading role gravitated to the coastal ecumene that linked
San Francisco’s Bay Area with Los Angeles and San Diego. Much of the enduring
strength of the United States derives from its unprecedented command of not one or
even two but of multiple portal city regions ranging from the Baltimore–Boston sea-
board through the Great Lakes–Hudson region, the Californian coast, and the cross-
border Seattle–Vancouver ecumene to the liquid arteries of the vast Mississippi–Gulf
of Mexico–Floridian Peninsula zone. Notably, whenever one of these regions declines,
another rises in its place. As the power of the post-1945 postindustrial economies of the
California Coast and Puget Sound dipped around 2000, the slack was already being taken
up by Florida and Texas, as flows of population and investment accelerated toward the
inverted Y centered on Houston and Miami. In 2000–2005, the largest seaports in the
United States were New Orleans (“South Louisiana”) and Houston. These were ranked
fourth and sixth internationally—competing with Rotterdam (first), Singapore (sec-
ond), Shanghai (third), and Hong Kong (fifth) (see Geohive n.d.). The election of Texas
Governor George W. Bush as U.S. President in 2000 was driven by population growth
in Florida and Texas. This population growth was matched by a flow of businesses from
California, the dominant economy of the 1990s. (For a discussion of the export of busi-
ness and people from California to Florida, see Kotkin 2005.) The signature of this shift
was the growth of intellectual capital concentrations in the southern U.S. littoral relative
to California or the North-East.
The dynamic of portal cities is well exemplified by Chicago, on the Great Lakes
(Miller 1996). In the nineteenth and early twentieth centuries, Chicago created a star-
tling array of new economic, social, and intellectual forms, including futures trading
in commodities, the modern office (based on a combination of telegraph, filing cabi-
net, and typewriter), the assembly line packing plant, the iron-frame skyscraper and the
modern vertical city, the balloon frame for domestic housing, the mail-order business,1
modern marketing techniques (the introduction of the sale and the bargain, and active
stimulation of customer trust and loyalty), the idea of the city as a conference center,
and the first truly great school of American sociology (the Chicago School). Chicago
also cocreated the only species of indigenous American philosophy (Pragmatism). In
the twentieth century its premier university, the University of Chicago, was domicile
to more than 70 Nobel Laureates, mainly in physics, chemistry, medicine, and the eco-
nomic sciences.
The movement from information through contingency, order, and innovation can be
thought of as the life cycle of intelligence in the portal. Two additional conditions, how-
ever, are prerequisites for the concentration of intelligence in the portal, both spatial
in nature. The first is topography. Portal cities typically arise in locations that are poor
for agriculture or do not have sufficient raw materials for self-sufficient manufactures.
These are cities built on thin strips between coast and hills, on deltas, drained marshes,
or on islands. They arise in topographically difficult places. The development of col-
lective intelligence is a compensation—and substitution—for the lack of conventional
resources or factors of production. The portal creates advantage out of disadvantage.
The second ulterior condition of the concentration of intelligence in the portal is that
such cities have a strong sense of the sculptural. The denizen of the portal city is inclined
to see the world as a plastic place. Portals are characterized by a distinctive combination
of lightweight media and of plastic media. The life cycle of information, contingency,
order, and innovation is driven by a response to the human condition of uncertainty.
Let us call this the cybernetic cycle. Much of this process unfolds through the kind of
lightweight media whose creations are portable and ephemeral—as one might expect
where the driving force of the process is uncertainty. However, toward the higher end
of the life cycle, as order and structure become more central to outcomes, plasticity and
sculptural qualities become increasingly important drivers of collective intelligence. At
this point, the civic and architectonic qualities of the portal emerge as a central feature
of the cybernetic cycle.
INFORMATION AND UNCERTAINTY

Information is a response to uncertainty. Human beings seek out information when
they are uncertain. (This is not to say that they necessarily seek out challenging infor-
mation; indeed, probably most often they look for information that is reassuring or
comforting in the light of uncertainty.) Thus, a traditional village has a relatively low
need for information. Its members typically never travel outside a radius of 15 or 20
miles, and their lives are ruled by the local forces of custom and the seasons. Of course,
from time to time such societies will be subject to unpredictable events like wars and
invasions, about which they will want to gather reports. But in the traditional agrar-
ian society of this kind, such contingent events are exceptional, whereas in the case of
a long-distance mercantile society, the need to respond to such events is an everyday
occurrence. On a spectrum of societal types—from the agrarian to the industrial to the
long-distance trading society—the last has the highest demand for information sim-
ply because it experiences higher levels of doubt on a regular basis and must master
the resulting ambiguities and contingent choices. The wider the habitual scope of the
transactions and traffic of a society, the greater is the experience of uncertainty and con-
tingency. A society that conducts a high proportion of its transactions and traffic over
long distances—either on a regional or global scale—multiplies its exposure to sources
of uncertainty. Not all or even a majority of these uncertainties will be negative. How-
ever, simply by virtue of being uncertainties, they produce information needs. If stock
markets plummet, war is declared, there is a virus outbreak, or some business teeters on
the brink of bankruptcy, such events generate uncertainty. Demand for the production
and transmission of information follows such events.
Information is an attempt to answer the question “How can I orientate myself in
this situation?” This kind of question has a high cognitive weighting. In contrast, in the
village society, uncertainty generates questions with a high affective content. Uncer-
tainty, in other words, triggers both affects (fear, alarm, and panic) and cognitive emo-
tions (curiosity, interest, and attention). In traditional settings, uncertainty is ultimately
resolved by the assertion of hierarchical order (often in the form of patrimonial struc-
tures). In modern societies, uncertainty generates demand for procedural guarantees—
rules governing how we proceed. The model of such rules or methods emerges from
the regulation of movement or procession across space. Thought anticipates (plans for)
events. It constantly seeks information so it can make plans. Plans are possible because
events can be correlated—on the X and Y axes of a Cartesian graph: “If X happens, then
we can do Y to compensate.” Uncertainty in this case is resolved by being able to think
about the paths of things through space as they cross and cause events in time. Meth-
ods, like the railway network timetable or the television network schedule, emerge to
regularize these crossings. Procedural institutions, from government departments to
commercial corporations, take shape around these methods.
In the case of portals, uncertainty tends to be resolved in part through methodi-
cal network correlations, but also sometimes by the very opposite of the methodical
approach—that is to say, uncertainty is resolved by paradox instead. Paradoxes are a
path through complex or ambiguous situations in which the ambiguity of tension-filled
contingencies is resolved into the ambidexterity of living with opposites. Paradox is a
meta-cultural way of dealing with contingency. Thinking by paradox means that empha-
sis is placed less on if-then rules and methods—and more on the conceptual union of
opposites. Immanuel Kant, in the conclusion of his Groundwork of the Metaphysics of
Morals (1964), observed that the most demanding kinds of thought end in paradox.
More specifically, he was arguing that there was no ultimate distinction between free-
dom and necessity. This is the mentality of the portal—for what it imports, it exports. Its
thought is revolutionary—circular like a paradox. We begin with freedom and end with
necessity that leads us back to freedom.
Information is raw material for such Tao-like path making. The question of where the
next concentration of intellectual capital might emerge was raised in Pauleen and Mur-
phy (2005). The legacy of Taoism, especially its feeling for paradox and its geographical
footprint, gives some hints about the cognitive mapping of the future. This theme is taken
up in Murphy (2005c) and in Murphy and Hogan (2005). The greater the scope of human
action is, the greater is the demand for information. Demand for information is a response
to the uncertainty caused by enlarging the ambit of action. Information can be produced
and transmitted in a vast array of genres—letters, documents, news reports, memoranda,
analytic reports, commentary, official reviews, legally prescribed reports, and so on. Such
information can also be produced and transmitted by electronic means. Electronic means
of transmission have existed since the invention of the telegraph in the middle of the
nineteenth century. Wireless media (broadcast radio, television, and mobile devices) and
wired media (the Internet) in the twentieth century expanded the scope of instantaneous
transmission, but not its fundamental nature. (Think of the innovative combination of
telegraph, filing cabinet, and typewriter in the emergent form of the modern office in Chi-
cago in the 1870s and 1880s: the office computer of the 1990s was only a fusing of these
three functions into one machine combining digital transmission, electronic filing, and
the keyboard.) Alternatively, information can be transmitted physically like any other
commodity. Books are shipped, hard copies of documents are couriered, letters are car-
ried by the postal system, and government reports are warehoused.
The carriage and storage of information creates an economy. The foundation of
this economy is uncertainty. Thus, much—perhaps most—of what is produced and
disseminated by this economy has little lasting value, and indeed much is redundant
before it is ever stored or transmitted. Information is created and carried in response
to an event, or a series of events. After an event is reported or analyzed, it is rare that
anyone at a later time returns to the report or the analysis. Indeed, often the real value of
information lies not with any particular item of information but rather in the way that
the process of its production and distribution satisfies the demand for information and
does so independently even of the content of the information. The board of a company
in financial crisis will commission a strategic review, or a government faced with failing
military power will commission an inquiry. But little beyond the executive summary of
these documents will ever be read, and even those abstracts will not necessarily or even
normally be acted on. In such cases, the process of creation and distribution of informa-
tion satisfies demand for information without anyone ever caring what the report or
document says.
Looked at from this perspective, information is an index or measure of uncertainty in
social situations. It is a bellwether of social anxiety and social curiosity. The demand for
information is a response to the unknown or the unpredictable. To produce a statement
that it will not rain tomorrow in the desert is a statement that has little or no informa-
tion value. We already know that there is little risk of this happening anyway. Rain is an
event that can and does occur occasionally in a desert. But such an event occurs within
a known probability distribution. It is possible, but the probability is low that it will rain
in the desert tomorrow. In contrast, if someone reports that tomorrow it is likely to rain
in the desert, then that is a statement that deals with an event. Such a statement has some
value, albeit of an ephemeral nature. The more the world is surprising or unpredictable,
and the more it is filled with irregular events, the greater the demand for information. A
world in which deserts are swamped with rain, the tropics are parched, temperate zones
are frozen, and the icecaps are melting is a world starting to border on chaos. Such a
world would be filled with the maximum amount of information, but this is not a world
we would want to live in. Yes, artists from time to time play with the idea of the chaos-
mos, but this is a thought experiment. Those facing uncertainty demand information in
the expectation of reducing uncertainty and with it the prospect of chaos.
CONTINGENCY AND ORDER

How does information, generated by uncertainty, reduce uncertainty? It does so by
helping to establish what has happened (report), and what has caused what has hap-
pened (analysis). Information conveys something not already known. Information does
not always in itself alleviate the feeling that the world is chaotic. Reports of the free-fall of
a stock market may induce a strong perception that the world is disordered. But informa-
tion does nonetheless provide the raw material for the production of orientative knowl-
edge—knowledge for devising a pathway around an unexpected event, and subsequently
for understanding the causality of events and the way in which most events (that about
which we are uncertain) are not purely random but have structural causes. To under-
stand the structural causes of events, we must understand structures. We need to be able
to show how events and actions take on recognizable patterns, shapes, and figures.
Let us consider the first aspect of orientative knowledge—that of finding strategic
pathways through and around events. It may surprise us to find out that it is raining in
the desert. Possessing this item of information does not change the surprising nature
of the event, but it does prompt us to formulate yes/no responses to the situation—to
treat the event as something that poses contingencies that we have to decide between.
Physical events, market events, and political events cause us to reorientate the course of
our actions. If we hear reports of rain, we might have to decide whether to continue our
planned journey into the desert until the event is over. Information—as the apprehen-
sion of uncertainty—presses us toward the formulation of contingencies. It does this
because information is always an answer to an implied or actual question (query). An
answer to a question carries information to the extent that it reduces the questioner’s
uncertainty. A report that it is raining carries an implied question: viz., when will the
event—the departure from regularity—be over (“When will the rain finish?”). When we
pose that question to ourselves, we also pose the question of contingency: “Either we will
stay put or we will continue with our trip.” Contingencies are alternatives, or choices,
that we must decide upon. We can plan for contingencies. (“It might rain even in the
desert—what do we do if it does rain??). But the “what if?” question—entertaining as
that question is—rarely anticipates actual events. So we are left with surprises in light of
which we must formulate new or adaptive courses of action.
Portal societies are faced with contingent choices all of the time. In a metaphori-
cal sense, any society that interacts with temperate, tropic, desert, and arctic zones at
a distance is bombarded with surprises to the point where surprises are no long sur-
prising. In such societies, orientating quickly and devising pathways that reduce both
uncertainty and the flow of incoming information that results from uncertainty is at
a premium. If uncertainty is not reduced, chaos results, both at the level of social and
economic action and at the level of information (too much information creates its own
uncertainty, viz. “Which item do I choose to read first when I have limited time?” and
“Which items shall I ignore?”).
As important as the ability to make contingent choices in response to uncertain situ-
ations is, there is still a yet more important operation that must accompany this at a
higher level: the capacity for pattern recognition. Pattern recognition allows us to deter-
mine whether events belong to an underlying pattern. In performing this operation,
we answer questions such as “Is rain in the desert an anomaly, or is it consistent with
known probabilities, or is it indicative of a long-term change in climatic patterns?”
What pattern recognition supposes is that physical, social-historical, and even divine
events have an underlying order—that is, they are organized into systems. This does
not preclude asystemic behaviors. Unpredictable physical events occur, political events
remain surprising from time to time, markets on occasions rise and fall erratically, and
fate can be arbitrary. However, the human capacity for pattern recognition is built on
the natural fact that surprise is the exception rather than the rule and that the world is
fundamentally orderly. More perplexing is the fact that the world may be orderly even
when it does not appear to be so. The sudden death by suicide of a loved one may be
a shocking event that “makes no sense,” but the joyless science of sociology nonethe-
less may well tell us that the person who has taken their life was a member of an at-risk
group characterized by high levels of suicidal behavior. (Contemporary methods of data
mining do exactly the same: They can predict that a customer who has a certain financial
and credit history, and a particular social profile, and who buys a certain garment at a
particular time in the cycle of the financial year, has a high probability of defaulting on
their credit payments.) Identifying a deceased person as belonging to a high-risk group

may be little comfort to those who have lost a loved one, but it nonetheless under-
lines the fact that even events to which the labels “surprise” and “shock” are attached
often belong to probabilistic or normative orders that are actually quite deterministic.
The world has its stochastic and existential moments, and possibly even its miraculous
moments, but we do not live in a stochastic world. Such a world would be chaotic and
ultimately entropic. We cope well with, and even do interesting things with, occasional
stochastic events. Some theories of artistic and personal freedom rate stochastic behav-
iors very high. But in reality it is the human capacity for perceiving order and producing
emergent forms that is the real foundation of human freedom and creativity.
To experience the world as chaotic is ultimately not a liberating or productive expe-
rience, except in small doses or at historically decisive junctures. Significant continuing
levels of disorder generate entropy and decreasing levels of social and physical energy.
In short, disorder is exhausting. Structures, in contrast, are energizing—though of
course many so-called structures are nothing of the kind and are in fact chaos in the
making. But where there is real order, which is characterized by beautiful, elegant, and
economic forms or systems, brilliant things can be produced. Order should not be
confused with rules or norms, protocols or procedures, customs or rituals—any more
than knowledge can be equated with information. Rituals and rules at some level are
generated or shaped by the forms that give us structure and order. They are the second-
ary or tertiary phenomenon of this order. Order can be best understood as an abstract
figure or design, as a pattern. Order is the shape around which social structure and
organization is built up.
SOCIAL GEOMETRIES
From a social-historical point of view, order allows us to act in the world, to anticipate
how we will act, and to understand retrospectively how we have acted. Referring strictly
to the social-historical domain, here I distinguish between three fundamental kinds of
order—order based on hierarchies, networks, and navigations. (See also Murphy 2003:
this schema extends the typology of hierarchical, dynamic, and civic orders developed in
Murphy 2001a.) These orders reflect different degrees of extension. Navigational orders
extend the greatest distance, networks less far, and hierarchies least far. (For a discus-
sion of the ethics of navigational orders, see Murphy 1999.)
Hierarchy is a one-dimensional order. We can sketch a hierarchy by penciling a series
of vertical dots and connecting the lines between them, and then branching further dots
and lines (nodes and paths) from the initial set. We can build up a complex social and
organizational structure around that diagram. In the social-historical domain, tradi-
tional, customary, and patrimonial orders are species of hierarchical order. We all rec-
ognize such social forms, even in their adaptive modern versions, where organizational
hierarchies have largely though not completely replaced personal and traditional kinds
of hierarchies. From the consensus-producing hierarchies of the Japanese company to
the party bureaucracies of Mainland China, from the patron–client hierarchies of most
of the world’s poorer states to the Fordist hierarchies of the modern procedurally driven
departmentalized corporation, most societies still order many, and in some cases most,
of their activities in an up and down manner.
Yet, hierarchy is not the only kind of order. In the modern age, two-dimensional
social geometrical forms have partially overtaken one-dimensional forms. Imagine that
we take lines (paths) connecting dots (nodes), and we connect together those lines.
We thereby create two-dimensional plane figures, representing things such as fields,
windows, and tables. Field, window, and tabular images are central to the modern
imaginary. (Correspondingly, many of the radical critiques of modernity end up being
restatements of the logic of plane surfaces; see, for instance, Deleuze and Guattari 1987.)
The pervasive late twentieth-century metaphor of windows, which accompanied the
spread of information technologies, is an apotheosis of this kind of order. That is to say,
not tree hierarchies but plane figures are the most common way that moderns have of
both ordering and representing figuratively the world around them. Windows, mirrors,
frames, maps, and facades dominate the modern social geometrical imagination. They
do so because they embody the equality of the plane surface. They are structured, not up
and down, like the levels of a hierarchy, but from side to side, as if on the plane surface
of a billiard table.
One of the early historical examples of the planar type of order was the ethos of the
seventeenth-century English levelers. This was followed in the eighteenth century by
the imagining of the world in two-dimensional longitudinal and latitudinal terms. The
introduction of new worldviews is always a slow process. For example, convincing Eng-
lish royal science of the day of the validity of the planar representation of space proved
quite difficult—because it conflicted with the hierarchical impulse to want to look
upward to the stars (the heavens). Navigators liked the idea of longitude, but science
preferred an implicit hierarchical order of steering by the stars. In this case, the planar
conception eventually won out over the stargazers. But hierarchy never disappeared as a
fundamental ordering principle. It merely took on new appearances.
Hierarchies imply tight connections with powerful forces. The type of connection
over plane surfaces is less intense. Plane surfaces are conducive to network connections.
As things move across a plane surface in different directions, they cross paths, eventu-
ally composing a net-like pattern across the plane. In social action, such interactions
on a field are organized by rules or plans for proceeding. This is what modern law does;
it is also what democratic and organizational procedure does. They allow for orderly
interaction on a field. They establish coordinate relations across planar surfaces. These
relations mirror the equality of the planar surface as opposed to the hierarchy of an
ascending-descending chain of being. The methods of flat organization, “one vote, one
value,” and “one law for all” are all expressions of such planar equality.
These images of order permeate the world. Take technology as an example. The desk-
top of a contemporary computer is without rank order, whereas the hard disk of a com-
puter is normally organized around arboreal tree structures and nested hierarchies, as
are the information architectures of institutional local area networks. Yet if we take a
step beyond this level, and look at the technologies of inter-networked computing, we
discover a different kind of order—the order of reconnaissance or navigation—where
one cannot move using hierarchic cues or planar directions because of the scale of inter-
networked worlds. Navigational order as a consequence dominates the world of inter-
networked technologies. The nature of this order is to encourage movement in and
around. Its key technologies are search technologies. Its organization is neither linear
nor planar. It has a kind of plastic character—or at least, in the informational realm,
the virtual equivalent of three-dimensional plasticity (Murphy 2005b). To understand

this, imagine if we take a number of plane surfaces and bolt them together. In doing so,
we create stereometrical objects (three-dimensional objects) that bodies (other three-
dimensional objects) move around. We also create three-dimensional spaces that bodies
move through. This is the essence of a navigational order.
Hierarchical orders operate most effectively at high intensity over short distances.
Network orders operate most effectively, at lesser intensity, over medium distances—
such as within the borders of a nation-state. Navigational orders operate with minimum
force over long distances. We can think of this in geopolitical terms. Hierarchies are
most effective over localities. Correspondingly, big-scale hierarchies often have diffi-
culty administering what is most distant from the root of the hierarchical structure.
(The classic examples are the collapse of premodern empires into feudal hierarchies or
else into competing warlord ruled territories.) Networks seem best disposed to national
or continental scales. If we think of modern network building—the railroad and tele-
graph, and later telephone and broadcasting networks—their natural scope seems to be
medium-scale territorial space.
Hierarchies generate strong, but limited, connections, often of a personal kind and
often regulated by ritual, custom, or loyalty, as well as by command. Network orders
generate wider but less stringent connectivity. Network orders cluster human beings
into associations rather than communities. Associations put human beings together in
a lateral rather than vertical manner. They rely less on ritual, custom, and command
than hierarchies do, and more on legal rules, procedures, and indicative guidance (i.e.,
policy). Modern organizations are frequently a hybrid of hierarchy and association.
Modern organizations appear once systems have to be managed over national scale
distances. Before that, family or patrician or party hierarchies could effectively coor-
dinate actions. As and when these failed to translate satisfactorily to national or global
scale, bureaucratic hybrids emerged. Modern bureaucratic hierarchy is a compromise
between hierarchical and network forms. (Professional worlds are a similar hybrid: They
encourage lateral transactions—for example, the national conference—but jealously
guard tacit hierarchies of authority in the guise of reputable sources, journals, speakers,
and the like.) Such hybrids allow action at a distance to be combined with smaller scaled
features such as personal affiliation to bosses. Employees remain governed by local hier-
archical structures while operating at large through contractual, contact, professional,
peer, cross-departmental, interorganizational, and strategic-coalition networks.
The network society is not a recent development. This is contrary to the view of Cas-
tells (2000) who regards the network society as a product of the explosion of informa-
tion technology in the latter part of the twentieth century. The fact, though, is that this
explosion piggybacked on existing network technologies (the U.S. and British phone
networks in the first instance) which themselves descended from nineteenth-century
American and British models of communication and municipal utility networks. Mod-
ern oceanic empires (the Dutch and the British) were effective in part because of their
ability to develop functioning networks across the face of the globe. The purest example
of the network society developed in the United States (Murphy 2004). This society has
a strong lateral, associational dimension underpinned by legal and procedural norms.
The network society is also a legalitarian society with strong planar characteristics. We
see this inscribed in Thomas Jefferson’s legal device to subdivide all U.S. territory into
a gridiron pattern. This checkerboard geometry with its network of intersecting lines
was infinitely expandable across two-dimensional space—the type of space of the U.S.
Geological Survey mapmakers for example. Underlying this was a simple equation: Law
plus grid equals a dynamic society.
As Jefferson anticipated, American power expanded from coast to coast, across the
continent, and then beyond. It did so via networks. One of the greatest of these was the
riverine network opened up by Jefferson’s purchase of the Louisiana Territory from
the French. This enabled a commercial web that extended along the Mississippi River
eventually from New Orleans to the Great Lakes, upward to the Gulf of St. Lawrence and
downward along the Hudson River to New York City. Land networks (the railroad and
the telegraph) followed. Eventually, these networks began to expand across the oceans
via civil communications (first cable, later wireless and satellite) and by the strategic
dotting of U.S. military bases across the globe.
Networks are effective for coordinating action over the medium scale. Their effec-
tiveness declines on the larger scale. A union of 50 states may constitute an effective
federal network over a continental scale—but a union of 500 states over a global scale
is inconceivable. It would simply be entropic. Even with its strategic networks and its
networked alliances, U.S. military intervention worldwide can be effective only inter-
mittently and for short- or medium-term durations. Similarly, think of the example of
the original networking of computers in the ARPANET project of the 1960s. The U.S.
Defense Department’s Advanced Research Projects Agency (ARPA) funded projects in
the 1960s to network university computer labs. The principal figures in this research
were J.C.R. Licklider and Larry Roberts. They worked out how to connect machines
over a telephone network, solving especially the routing problems involved because of
the large number of connections opened up by even a simple network. Paul Baran from
the RAND corporation and British telecom engineer Donald Davies worked out the
idea of sending messages around these networks not via continuous analog channels
but via discrete, reroutable, noncontinuous packages of digital information. That was
a very powerful extension of network geometry to computing. However, in the era of
inter-networking, when networked computing was extended (through the amalgama-
tion of networks) beyond a continental scope, a new logic overtook that of network-
ing—the logic of navigation, in which searching and reconnaissance began to supersede
the practice of strict networking. In the 1970s, Vinton Cerf and Robert Kahn devised
the Transport Control Protocols (TCP) for networking different networks. Navigational
logic is not primarily a logic of status (“here is my place”) or one of reasoning (“if X,
then Y”) but rather one of morphology. It is an aesthetic logic. Successful searching
through a google-sized quantum of data requires being able to recognize patterns. In a
parallel sense, human creation (and quite probably natural creation as well) take forms
(aesthetic patterns) and transforms them (Thompson 1961).
A word of caution: There is nothing new about navigational order. It is as old as port
cities. If we think of a society as a vertical branching line that converges on a root, or
a network as grid, or lattice, or hatching of lines spread over a plane surface, a naviga-
tional order, in contrast, has a third dimension—that of depth. Navigational space is full
of bays. It is convex/concave space. It is plastic space—space that is moved through and
around. It is space that is entered and exited. It is recursive space in the sense that it is
rotated through. It is the space of eternal return (Murphy 2001b).
Navigational orders are so called because of the load that they place on cognitive
orientational competencies and emotions. In a hierarchical or network order, it is rela-
tively easy to find one’s place. The symptom of the breakdown of an order is the systemic
inability of agents to find their place. Hierarchies have lines running through connecting
nodes from top to bottom. Webs, lattices, grids, and other network structures have high
levels (redundant levels) of connectivity. Navigational orders happily employ elements
of hierarchical and network forms. But they do not rely as heavily on connectivity as the
other two do.2 To orientate and to structure movement, they use devices that are more
abstract in a plastic sense. Navigational orders use high-level design features to structure
movement and orientation, such as scale, proportion, contrast, symmetry, rhythm, and
balance. These are pattern-forming geometric properties that the human brain readily
recognizes even when it cannot necessarily describe the geometric properties underly-
ing the forms. Knowledge of these features is usually tacit rather than explicit, but no
less powerful for that.
Scale, proportion, contrast, symmetry, rhythm, and balance apply to all aspects of the
world—linguistic, visual, auditory, tactile, olfactory; aesthetic, intellectual, social, eco-
nomic, political; organizational, associational, and customary. These pattern-forming
properties play a role in hierarchical and network orders. Hierarchies can be structured
to branch symmetrically; the grid is an example of the highly (almost inertly) symmetri-
cal organization of a web. But it is under conditions of three-dimensional order that pat-
tern-forming geometric properties take on an emphatic role. Think of the everyday act
of walking down the street. We move through (navigate) a world that is filled with solid
geometrical objects. We may know we are walking along a grid because we are used to
looking at maps of gridiron streets, but we actually orientate ourselves by observing
around us the literally thousands of patterns created out of scale, proportion, contrast,
symmetry, rhythm, and balance (and the calculated departures from these).
RECURSIVE OR CIRCULAR KNOWLEDGE

Exactly the same thing applies to knowledge. When we take the simplest of data and
start to structure it, we create objects that we must navigate. Taped voice messages, video
clips, letters, reports—indeed any information-carrying entity—must be navigable if it
is to have any force. Its force is its navigability, and its navigability is the effect of its
lucidity, the power of the patterns from which it is composed. Take the example of one
informational object—the document. The document is the basis of modern governance.
We can build tree hierarchies of documents, and we can link documents into web-like
patterns. This was the motivating schema of Tim Berners-Lee (1999) in the early 1990s,
when he devised his URL, HTTP, and HTML protocols for linking documents stored on
networked computers. However, when we move around the object itself, these types of
orderings are helpful only in a limited way. To navigate the object, we need other cues,
such as visual symmetry, scale, and proportionality. All information objects, from the
microscopic to the macroscopic level, can be organized in such patterns. The letters on
a page are made up of contrasting dots against blank space organized in regular ratios.
Text on a page is organized symmetrically, or with deliberate departures from symme-
try. The size of headings, subheadings, and text on a page is scaled—large, medium, and
small size. More complex page layouts utilize the same tacit geometries. Space is divided
into scales, ratios, and rhythms allowing the eye to easily navigate the page. All of this
is conditioned by the fact that the space between the reader’s eye and the surface of the
page is three-dimensional space.
Exactly the same applies to larger intellectual, organizational, and social systems. Sys-
tems can be formed on the basis of properties that allow movement and orientation
through space without strong connections. In hierarchies and network models, when
connections break, systems fail. To ensure connectivity, systems need sanctions or the
enforcement of some kind of law or policy or protocol or law-like agreement. Peer, coali-
tion, contractual, and other network relations are underpinned by rules and protocols.
At the same time, the transactions possible for any one node in a network depend on the
connection strengths and activity of its correspondents. When correspondents are too
close, personal qualities (trust, loyalty, and preverbal understandings) are much more
effective than networked association. However, beyond a median point, the greater the
distance a system must cover, the more connection strengths will be strained. Thus, for
action outside of the middle ground, a paradox presents itself: How can we have interac-
tion without connection?
Interaction without connection was the basis of the first markets—I am assuming here
Karl Polanyi’s (1977) distinction between local exchange and market exchange, which is
carried on over a distance and outside of a given society—when unaffiliated tribes began
to trade without actually meeting one another. Fearful of strangers, but wanting goods
available outside their kin structure, the first market traders would leave goods at their
tribes’ boundaries; these would be collected anonymously and other goods left in their
place (Brown 1990). Hermes was the god of this silent trade in archaic Greece. This kind
of trade was known in many societies. (For archaic examples of silent trade, see Grier-
son 1903.) It was probably the first actual instance of global trade in the modern era.
As the Portuguese began to pioneer oceanic trade routes, the trade carried on between
the Portuguese and populations on the African west coast was conducted initially by
silent trade techniques. According to Herodotus (Histories, Book 5), the Carthaginians
used similar techniques when they were trading with “a race of men who live in a part
of Libya beyond the Pillars of Heracles.” The asynchronous and anonymous nature of
the exchange seemed to generate very good outcomes: “There is perfect honesty on both
sides; the Carthaginians never touch the gold until it equals in value what they have
offered for sale, and the natives never touch the goods until the gold has been taken
away.” It is actually possible that some of the tensions of loyalty and network transac-
tions are simply avoided by this system. Hermes was the god of the boundary-crossers
(those engaged in various kinds of silent trade) in societies that had strong near-to-
closed boundaries. Silent trade began out of the fear of strangers. Ironically, the spaces
where it was conducted—at boundaries and crossroads—eventually became hubs filled
with strangers conducting silent trade. Eventually these strangers would create their
own society—the portal society.
Silent trade has taken on many forms through the history of mercantile and cul-
tural traffic. Consider the impact of electronic means of communication in the late
twentieth century. The electronic linking of documents stored on networked computers
enhanced the degree of lateral access to documents. This was a conventional effect of
networking. But electronic linking also expanded the potential for silent trade both in a
commercial and intellectual sense. It created asynchronous transactional structures that
enabled agents to act and react on the basis of information, while machines mediated
their transactions. This created a form where agents could act and react not just on the
basis of information that they provided each other, but also on the basis of knowledge
they acquired of the collective patterns of action and reaction of people involved in
these transactions. Data logged as a result of machine-to-machine transactions made
it possible to analyze the characteristics of anonymous agents and mine for statistical
correlations indicating behavioral patterns—for example, “people who read document
X who also read document Y” or “people who purchase commodity N also purchase
commodity P,” and so forth. What the aggregation of such data establishes is not the
boundaries of a community (of trust) or an association (of peers) but the existence of
anonymous collectives of usage, transaction and type. This offers self-reflexive and self-
monitoring understandings of silent trade based on interaction without connection.
Decision markets (Surowiecki 2004) are yet another contemporary example of silent
trade. These are markets where individuals are required to make a judgment indepen-
dently of each other. This might be to decide “How many jelly beans are in a jar?” “Who
will win the next election?” or “Which stock will perform best?” The mean of these judg-
ments is uncanny in predicting the right answer. Well-run stock markets and elections
have a similar propensity to “get it right.” One of the reasons this is so is that decision
markets mobilize knowledge without this knowledge being distorted by persuasion. The
earliest theories of knowledge, developed by the ancient Greeks, harbored the suspicion
that persuasion, far from enhancing collective decision-making, often degraded it. It
was sophistic. Arbitrary factors—such as who speaks first or who speaks loudest, as well
as the desire to be liked by others or the fear of offending others—deform discursive
reasoning. Bad judgments, as well as good ones, communicate well. There are always
good reasons for doing bad things. The best, collective decisions occur where decision
makers have the greatest independence of each other. The mean of a set of indepen-
dent judgments is more likely to “hit the mark” than the communicative consensus of
experts, pundits, or committees. Decision markets—such as betting on an election or
institutions structurally akin to them, such as voting in an election—may occur against
a discursive background, but the market itself is silent. Such decision markets in practice
are much more accurate in predicting outcomes, and probably a lot better at securing
outcomes, than any consensus of experts is. The strength of decision markets lies in the
paradox of interaction without connection.
Interaction without connection has always been of particular interest to small states,
especially city-states based on portal trade, and to economic regions that occupy extra-
territorial space (particularly sea space) between large states. Unless they acted imperi-
ally, portals and city-states traditionally lacked the ability to administer or control the
trade networks that they were dependent on. Some city-states, such as Venice, were
forced into empire building to protect and augment their networks. Antiquity was a
model for this. The Attic, Hellenistic, and Roman Empires all married hierarchic com-
mand structures with lateral networks. The Romans, for example, were brilliant road
builders; and they put in place a very effective postal system that carried mail long dis-
tance across sea and land. But to control networks, protect them from enemies, and
drive their extension, the Romans turned to imperial techniques. This did not mean
that Rome lost the capacity for lateral organization. It just combined that capacity with
hierarchical structures. But even when city-states were forced into empire-building,
they also relied on their capacity for interaction without connection. To do so, they had
to create transport, trading, and other systems that were self-steering.
Self-steering supposes that a system acts in response to information. The result of this
action generates new information that in turn generates a new response and new action.
Information comes from external and internal sources. As these kinds of self-steer-
ing loops become more sophisticated, information is archived, and that (accumulated,
objectified) information becomes part of the way of generating new or modified behav-
iors. The most effective looping of information and action occurs under conditions
in which information is treated as patterns. Stories, documents, protocols, and news
reports each have their own generic structural patterns. Beneath their literary surfaces
they all suppose some patterned relationship between events. The greatest city-states
and portals have been those that excel at theoria—at high-level pattern recognition and
production.
Self-steering is a type of autonomy. City-states and city regions are interested in
autonomy because, more often than not, if they are not able to self-steer (interact without
connection), they will be assimilated into some larger hierarchical structure or spatial
network. A condition of their existence is to be very good at self-steering. This means to
be able to act in response to external conditions and contingencies without their actions
being set in motion by either the “unmoved mover” (the root node) of a hierarchy, or by
the correlation of forces produced by distributed networks. One of the reasons why the
ancient Greek city-states resisted federalism (even though they invented the idea) was
likely that it subtly impinged on their self-steering capabilities.
Self-steering systems internalize causation. This was the basic point of Norbert Wie-
ner’s (1948) theory of cybernetics, which was a play on the Greek word for steersman.
When a steersman of a boat moved a rudder, the craft changed its course. If a steers-
man detected that the previous change of course had overshot the mark, the rudder was
moved again to correct the boat’s drift. Self-steering systems do not rely on the teleology
(the final cause) of the unmoved mover, or on the convergence of multiple efficient
causes of network agents, to drive them. Instead they loop, which is simply another
way of saying that they are autonomous or self-regulating. Causation is enacted in time.
Causation creates or regulates a succession of events or actions in time. To say that a
social action “is caused” is simply to say that social movement or action occurs in time
in a manner that belies a discernable underlying pattern. In a hierarchical order, causa-
tion functions to drive movement up and down branching lines—from the top to the
bottom, and from the bottom to the top. Everything is set in motion by the root node. In
a planar order, causation generates movement across a plane, from side to side—from
coast to coast for example. Intersection between nodes, or the convergence of efficient
causes, drives this kind of movement. In a navigational or portal order, in contrast,
causation is primarily formal: It relies heavily on pattern recognition and production.
Formal properties are the preeminent cues for steering, which is the fundamental act of
navigation. Steering drives movement in and out, around and about. The typical pattern
of motion is the circular movement of opening and closing, arriving and departing,
through and around. This type of causality is almost acausal. In a circular or rotational
pattern, the strict difference between cause and effect is blurred or obliterated. The
navigator is constantly taking on board tiny bits of pattern-information and adapting
actions accordingly.
Pattern production is the highest stage of intelligence. To create forms is the most
demanding and the most difficult of all intelligent functions. The historical incidence
of formative power is not evenly distributed. A relative handful of times and places are
responsible for the largest quantum of form-creation. As has already been noted, sea
regions and portal cities are in turn responsible for the largest portion of this quantum.
The classic cases are the ancient Greek and Roman Mediterranean–Black Sea region;
the medieval Silk Road–Caspian Sea ecumene; the Renaissance Mediterranean; the
early modern Baltic Sea–North Sea; the modern China Seas; and the nineteenth-century
Great Lakes–Hudson ecumene. Athens–Piraeus, Rome–Ostia, Alexandria, Constanti-
nople, Bukhara, Venice, Florence, Amsterdam, London, Stockholm, Shanghai, Chicago,
and New York City have all played a vastly disproportionate role in form-creation—in
artistic, scientific, economic, and social creation.
One possible reason for the coincidence of form-creation and portal activity is that
the portal city and the sea region are navigators’ domains. This is meant not just in the
obvious sense that these places are mariners’ domains, but also in the more complex
sense that these are by their nature places for the organization of long-distance traffic
and logistics, and mercantile and cultural interaction. Such things, of course, can be and
are organized by bureaucratic hierarchies and network organizations. Yet, the effective-
ness of these stands in an inverse relation to the distance over which they operate. The
further away we move, the less compelling is the power of contractual or peer networks.
Under these conditions, the silent trade of interaction without connection becomes
more important. Portals provide sophisticated versions of this because they are “cities
of turnover.” The churn of these cities is conducive to interactions without connectivity.
These are interactions that are supported not by hierarchic connections or networked
associations but by abstraction. Portals, of course, have hierarchies and networks in
abundance, but they have something additional—plastic milieus through which is it
easy for itinerants and strangers to move, and that are crucibles for the emergence of
material, technological, and intercultural forms.
Aristotle proposed that ideally a city-state should be self-sufficient. To modern ears,
that idea sounds like a proposal for a closed society. It sounds like China in the 1960s
or Burma in the 1990s. But that was not what Aristotle had in mind. Sparta was not
his idea of a normal city. Rather, self-sufficiency meant something like self-steering. In
fact, kybernetes, the steersman, was a common Greek metaphor for the state. Self-steer-
ing was paradoxical. The city of Aristotle’s acquaintance had extensive contact with the
world, but it arranged its affairs such that it was not beholden to the world. This is a
difficult balancing act. It is only possible because portal societies are intensely interested
in the world but without being suborned to hierarchic loyalties and planar networks.
Knowledge plays a special role in the portal city’s adaptation to the exigencies of the
world. The more closed a society is (the Spartan model), the more tight-knit it is, the
more it relies on local affinities of loyalty and trust, and the more suspicious it can be,
as well as the more hostile to aliens and strangers. The Chicago School sociologist W.
I. Thomas made the observation about how the ties and feelings of locality, or what he
called the “primary group,” are projected onto larger-scale organizations and spaces:
The Polish peasant uses a word, okolica, ‘the neighborhood round about,’ ‘as far as the
report of a man reaches,’ and this may be taken as the natural external limit of the size
of the primary group—as far as the report of a member reaches—so long as men have
only primary means of communication. But with militancy, conquest and the formation
of a great state we have a systematic attempt to preserve in the whole population the soli-
darity of feeling characterizing the primary population. The great state cannot preserve
this solidarity in all respects—there is the formation of a series of primary groups within
the state—but it develops authoritative definitions of ‘patriotism,’ ‘treason,’ etc., and the
appropriate emotional attitudes in this respect, so that in time of crisis, of war, where there
is a fight of the whole nation against death, we witness, as at this moment, the temporary
reconstitution of the attitude of the primary group.” (Thomas 1966, 169–70)
An open society (a liberal network society like the United States), in contrast, does
not function at all like a primary group, except in moments of crisis. Network relations
are thin, not thick. Contract trumps community, and institutional procedure is more
powerful than moral solidarity. The cost of entry to a network is low. An open soci-
ety depreciates local affinities for networks that are infinitely extensible. These, though,
have diminishing power or efficacy beyond the medium scale.
The portal, by contrast with this, is paradoxical. It has a strong capacity to create
boundaries—to demarcate itself from its environment—and yet it is porous: Goods,
people, or information freely flow in and out of it. Great portal cities, for instance,
engender strong civic identification and patriotism (“a strong sense of place”) but, at
the same time, attract large numbers of outsiders to settle there and still larger numbers
to pass through. To be both open and bounded is a powerful condition. Its power arises
from its paradox. Cities of turnover that encourage and attract those who act and see
the world not in terms of personal affiliation or networked association but as structure,
form, and pattern have a subtle advantage. Such persons can engage in the quid pro
quo of trade and traffic without the transactions being dependent on mutual consent
or on face-to-face attachment. A place where large numbers of such people congregate
is likely to be capable of producing emergent forms. That people do congregate in such
places is a function of the need of portals to organize action at a distance. Such organiza-
tion is optimally achievable when systems are self-organized through forms rather than
via networks of coefficient causality or by the directing action of the unmoved mover
of a hierarchy.
MANAGEMENT OF KNOWLEDGE
The largest companies in the world, almost without exception, are headquartered in
portal cities. As the maps in Slater (2004) indicate, most of the headquarters of Fortune
500 companies are located (in Asia) in the Japan archipelago and the South Korean
peninsula; (in the United States) in the East Coast, Great Lakes, Mississippi, Califor-
nia coast, and Gulf of Mexico zones; and (in Europe) in southeast England, the Île de
France, and the Rhine–Danube zone. To indicate just how difficult it is to escape this
logic, two or three Fortune 500 companies are headquartered in territorial Beijing, but
Taipei, the capital of the island of Taiwan, has the same number.
The dominance of portals is because these cities (1) maximize access to information
(and most especially information summarized in prices); (2) constitute nodes in the
most important distributive networks in the world; and (3) excel at generating forms
and accumulating knowledge of forms. Of all of the many functions of the firm, the
generation of productive forms, in the long run, is the most important. Firms compete
on price. They also accumulate market power (market share) through supply chains and
distributive networks. But the most successful firms are art firms or science firms; they
compete on the design of products and systems. They compete on quality.
All firms and institutions have scarce resources. The better the use of these resources
is, the more viable the company or organization will be. It is here that aesthetic knowl-
edge comes into play. For, ultimately, efficiency and economy are a species of beauty. If
a technologist figures out how to reduce the power consumption of a refrigerator by a
factor of ten (which is what technologists achieved during the 1990s), this will be a more
marketable fridge than one that is simply cheap. From the science angle, the technolo-
gist who does this is always finding more elegant solutions to technical problems, just
as the commercial designer who finds the most elegant touch pad arrangement to work
the device does so from the art angle. The same applies to economies. When looked at
closely, the economy of Mainland China in the 2000s appears much less like the nir-
vana of growth that journalists routinely tout and much more like a nightmare of gross
inefficiency. When we observe China use seven times the energy of Japan, six times the
energy of the United States, and three times the energy of India to produce the same unit
of output, the overriding importance of technical design becomes clear.
Design plays an ever-growing role in consumption as well as production. Indeed,
the most sophisticated consumers make purchasing decisions based on aesthetics not
price. These may be the aesthetics of the product or of the shopping center where it
is purchased. But aesthetics is not just wrapping. It is implicated in the very heart of
creative production, and this has enormous implications for wealth generation. Simply
put, a company that develops a new pharmaceutical is better placed than one that pro-
duces existing drugs more cheaply. This is essentially what a knowledge economy is. It
is an aesthetic economy. It is propelled by firms that compete through design—be it the
design of a tin can, a drug, a piece of software, a highway, or a book. The implicit idea
behind a design always belongs to the human commons. But the work of teasing out
what is implicit, and making it explicit, can be turned into property. Increasingly much
of what makes the most valuable firms valuable is such intellectual property.
Portal city regions have long been social laboratories of design. Venice built its
economy on the design of better boats. Portals like Venice also invest heavily in the
design of the built environment. This is not a matter of luxurious ornamentation or
conspicuous consumption. Rather, beautiful cities provide the most intensive exposure
of their denizens to form. They thereby inspire and encourage designing intelligence of
all kinds. There is strong evidence that human neurology is open-ended. Neurological
structures are not a genetic inheritance but are formed through the interaction of the
human mind with its environment by creating its own artificial environment. The built
environment of the city has long been a key to nurturing the architectonic structures of
human intelligence (Allen 2004). Unsurprisingly then, high-quality arts and sciences
have had an historic propensity to concentrate in portal cities that have invested mas-
sive wealth in the building of city squares, churches, museums, and campuses. From
London and Edinburgh to New York and Hong Kong, from Athens to San Francisco,
Rome to Chicago, this has been true. All of this has implications for the management
of knowledge.
First, the management of knowledge occurs on macro, meso, and micro levels. Great
firms take an interest in their city regions—they invest in them through their building
and sponsorship programs, just as the Renaissance guilds did in Venice and Florence.
The macro and meso levels of city region and firm cannot be entirely separated. The
commons of the city is the necessary complement of the private domain of the firm.
One produces ideas, the other produces intellectual property. There is not a firewall
between. Common wealth and private wealth are mutually implicated. One advances or
retreats with the other. Striking the balance between them is difficult, but achieving it is
enormously productive.
Second, knowledge that has it roots in the commons should not be confused either
with information about contingency or with the protocols of connectivity that typify
distributed networks. Rather, the core of knowledge management is concerned with
enhancing the art and science of an organization. For sure, such management is invari-
ably conditioned by the imperatives of contingency and connection. When the old
Soviet Union triggered an explosion of American space science—with the news of
its Sputnik flight—this set off the accelerated development of the high-tech Gulf of
Mexico–Floridian Coast space economy. But a certain sign that knowledge is more than
a response to contingency, and more than a function of the proliferation of connections,
is illustrated by the first great organization of the space economy, the National Aeronau-
tics and Space Administration (NASA). NASA developed as a typical Fordist organiza-
tion. It combined bureaucratic hierarchy with a national network artfully distributed
across politically powerful states (with headquarters in Washington, DC, and Centers in
California, Ohio, Maryland, Texas, Florida, Virginia, Alabama, and Mississippi State).
It had great successes and great failures. Its greatest failure, the Space Shuttle Columbia
disaster, encapsulates the limits of knowledge management in such organizations. The
day before the shuttle’s breakup, NASA’s engineers were to be found busy debating
hypothetical contingency scenarios of “what would happen if’ the Shuttle’s heat-shield
tiles failed.”3 Such prescience was spooky. Good engineering can be tested by if-then
reasoning. But, in the end, such testing cannot overcome bad design, and this was the
shuttle’s problem. Fundamentally from the beginning, it was a poor design.
Information cannot substitute for good design. Another way of putting this is that
the logic of knowledge is different from the logic of contingency, or for that matter from
the logic of networks. Contingency generates lots of reporting—on risks and possible
responses. Networks require a large amount of time to maintain linkages—relations
between different offices and campuses. Most of this activity, though, is secondary to the
art or science of design. If-then reasoning, and its endless demand for information, has
decidedly fewer beneficial effects in the world than might be supposed. This is not just
because, as economists have long known, information in the real world is imperfect but
simply because good design (read beautiful form) in the first place is often a better way
of obviating risk than incessant planning for it. Intelligence failure is inherent in pro-
jecting scenarios of highly uncertain environments (e.g., warfare, space voyage). What
is important is not so much that bad things occur, but that good system design allows
recovery when the unpredictable but inevitable dire event happens.
When we understand the limits of contingency management, we also understand why
it is that so many firms and organizations rely so much on branding. A brand is a simple
visual abstraction (an iconic design) that binds individuals and agencies across distance
irrespective of location. A brand is a visual form that communicates silently. This is also
what knowledge, albeit in a much more complex sense, does. Knowledge, understood as
the art of systems, creates effects without relying on bureaucratic hierarchy or procedural
negotiation. Knowledge spreads without time-consuming transactions between agents.

This is because it is shape-like. In our imagination, the virtual realm par excellence, we
can “see,” “hear,” and “touch” the shapes of knowledge. Think for example of DNA—it
is a double helix. Grasping the shape was the key to unlocking the knowledge of the
genome. Knowledge acquisition in organizations is similar. Its most powerful media are
morphological. This is true, ironically enough, of the knowledge of hierarchy and net-
works as much as anything else. Before we describe them or enact them, we “see” them.
But hierarchies and networks are not necessarily the most interesting or even the most
robust of cognitive-aesthetic structures. Structures like symmetry, balance, rhythm,
and proportionality—and shapes like those of skeletons, sponges, interfaces, tiles, and
cells—abound in art and science. The challenge of knowledge management is to help
create contexts in which reasoning and imagining about these are not overwhelmed or
overdetermined by the imaginary of hierarchies and networks.
A related challenge, then, is to turn the management of knowledge into the knowledge
of management. In the simple sense, this means to find ways of using the art of systems
to redefine management away from the overworked imaginary of hierarchy and
network to one that begins to explore a larger morphological universe filled with other
reliable structures like skeletons, sponges, and interfaces. Endless instructions down
the hierarchy, and repeated negotiations across networks, are not the sign of successful
firms or organizations. Knowledge in the strong sense, in contrast, is a deep repository
of cognitive-aesthetic forms.
CONCLUSION
Cognitive-aesthetic knowledge is found everywhere. But, in its most developed forms,
it clusters. Notably, as has been observed, it clusters in portals. Most people are shocked
when they first meet New Yorkers on the street. They are rude—their address is bluff,
gruff, and short. The stories told about Venetians in the old days, or about denizens of
Shanghai today, are pretty much the same. This is not surprising. Portals, by their nature,
are ecumenical. They harbor a multitude of languages, nationalities, faiths, and customs,
and they put them together in one, usually tiny, place. In such places, communication
works best when it is aesthetic. Irrespective of language, nationality, and faith, people
understand beauty. Beauty is silent. Beauty is the essence of a good system. Beauty is
the paradigm of economy and efficiency. From Venice to New York, Shanghai to San
Francisco, portals have developed aesthetic form as the complement of, and sometimes
substitute for, rules and hierarchies. In this world, the art of systems flourishes as the
medium of silent trade and of interaction without connection over distance.
Thus we end where we began, with a singular proposition: The most interesting and
most efficacious kind of culture from the perspective of fundamental innovation is the
meta-culture of the city. Cities, in this department at least, trump nations. The art-
knowledge of the city is the acme of human knowledge. No matter how much human
beings mobilize religious or national norms in economic life or organizational behaviors, it
is art-knowledge, or pattern knowledge, that shapes the most important breakthroughs
in production and distribution, organization and governance. Irrespective of whether
it is the engineers in Houston’s space administration or the designers of assembly-line
robots for a Japanese car manufacturer based in Tokyo, the same basic fund of pattern
knowledge is drawn on. It is to this kind of knowledge, and its concentration in great
cities, that we owe the most far-reaching experiments in economy making and organi-
zational development. For this reason, the capacity to manage pattern knowledge, to
understand its dynamics and its mimetic distribution, is essential.
NOTES
1. This invention possessed virtually all of the structural features of electronic commerce that
appeared a little more than a century later. These features included purchase at a distance based
on selections from distributed catalogs, the central warehousing of commodities, placement of
orders via a communications network (the post office in the nineteenth-century case), distribu-
tion of goods via post offices, reliance on customer trust to purchase goods “sight unseen,” and
asynchronicity between payment and delivery of goods.
2. A parallel can be drawn here with debates about the functioning of the human brain. Con-
nectionist models of the brain explain cognitive functioning in terms of neural networks. Hebb’s
1949 rule states that learning is dependent on changes in the brain caused by correlated activity
between neurons. When two neurons are active together, their connection is strengthened; when
not, the connection is weakened. Intelligence is located in the connections between neurons. In
response, Fodor and Pylyshyn (1988) identify a feature of human intelligence that they call syste-
maticity. Systematicity is something that connectionists cannot account for. The systematicity of
language refers to the pattern nature of language behavior. It accounts for the fact that the ability
to produce or understand some sentences is tied to the ability to produce or understand others of
related structure.
3. E-mails show that National Aeronautics and Space Administration (NASA) engineers
predicted the Columbia disaster. The Associated Press (2/27/03 Washington) indicated that
newly disclosed e-mails inside NASA showed senior engineers worried a day before the Co-
lumbia disaster that the shuttle’s left wing might burn off and cause the deaths of the crew, a
scenario remarkably similar to the one investigators believe actually occurred. The dozens of
pages of e-mails describe a broader, internal debate than previously acknowledged about the
seriousness of potential damage to Columbia from a liftoff collision with foam debris from its
central fuel tank. Engineers never sent their warnings to NASA’s leadership. Engineers in Texas
and Virginia fretted about the shuttle’s safety during its final three days in orbit. One specu-
lated whether officials were “just relegated to crossing their fingers,” and another questioned
why such dire issues had been raised so late. “Why are we talking about this on the day before
landing and not the day after launch?” wrote William C. Anderson, an employee for the United
Space Alliance LLC, a NASA contractor, less than 24 hours before the shuttle broke apart
February 1 while returning to Earth. NASA said those messages—including the few that were
hauntingly prescient—were part of a what-if exercise by engineers convinced the shuttle would
land safely despite possible damage from foam that struck insulating tiles on the spacecraft’s
left wing at liftoff. “It was a surprise to us when the ‘what-if’ scenario played out,” said Robert
Doremus, head of the mechanical systems group in Mission Control. “We were not expecting
that.”
REFERENCES
Allen, B. 2004. Knowledge and civilization. Boulder, CO: Westview Press.
Associated Press 2003. E-mails show NASA engineers predicted Columbia disaster. http://
abclocal.go.com/ktrk/news/22703_nat_shuttleemail.html
Berners-Lee, T. 1999. Weaving the Web. London: Orion.
Brown, N. 1990/1947. Hermes the thief: The evolution of a myth. Great Barrington, MA: Lindisfarne
Press.
Castells, M. 2000. The rise of the network society. Volume 1, 2nd ed. Oxford: Blackwell.
Castoriadis, C. 1997. World in fragments: Writings on politics, society, psychoanalysis, and the
imagination. Stanford, CA: Stanford University Press.
Deleuze, G., and F. Guattari 1987. A thousand plateaus: Capitalism and schizophrenia. Minneapolis:
University of Minnesota Press.
Fodor, J., and Z. Pylyshyn 1988. Connectionism and cognitive architecture: A critical analysis.
Cognition 28:3–71.
Gelertner, D. 1998. Machine beauty: Elegance and the heart of technology. New York: Basic
Books.
Geohive n.d. Largest seaports in the world. http://www.geohive.com/charts/charts.php?xml=ec_
seaport&xsl=ec_seaport
Greene, B. 2004. The fabric of the cosmos: Space, time and the texture of reality. London: Penguin.
Grierson, P. J. H. 1903. The silent trade: A contribution to the early history of human intercourse.
Edinburgh: W. Green.
Heller, A. 1985. The power of shame: A rational perspective. London: Routledge and Kegan Paul.
Howkins, J. 2001. The creative economy. London: Penguin.
Kant, I. 1964. Groundwork of the metaphysics of morals. New York: Harper and Row.
Kotkin, J. 2005. American cities of aspiration. Weekly Standard 10:21.
McGuire, S., E. Conant, and S. Theil 2002. A new Hanseatic league. Newsweek International, 11
March: 14.
Miller, D. 1996. City of the century: The epic of Chicago and the making of America. New York:
Simon and Schuster.
Miller, W. 1968. A new history of the United States. London: Granada.
Murphy, P. 1999. The existential stoic. Thesis Eleven: Critical Theory and Historical Sociology 60:
87–94.
———. 2001a. Civic justice: From Greek antiquity to the modern world. Amherst, NY: Humanity
Books.
———. 2001b. Marine reason. Thesis Eleven: Critical Theory and Historical Sociology, 67:11–38.
———. 2003. Trust, rationality and virtual teams. In Virtual Teams: Projects, Protocols and
Processes, ed. D. Pauleen, 316–42. Hershey, PA: Idea Group.
———. 2004. Portal empire: Plastic power and thalassic imagination. New Zealand Sociology 19
(1): 4–27.
———. 2005a. Knowledge capitalism. Thesis Eleven: Critical Theory and Historical Sociology
81:36–62.
———. 2005b. The n-dimensional geometry and kinesthetic space of the Internet. In Encyclopedia
of Multimedia Technology and Networking Volume 2, ed. M. Pagani, 742–47. Hershey, PA:
Idea Group.
———. 2005c. Unsocial sociability: The paradoxes of intellectual capital formation and social capital
networks. In The Third International Conference on Politics and Information Systems Tech-
nologies and Applications Proceedings, eds. J. Carrasquero, F. Welsch, A. Oropeza, T. Flueler,
and N. Callaos, 405–10. Orlando, FL: PISTA.
———. 2006. Sealanes. In Sociology—Place, time and division, eds. P. Beilharz and T. Hogan, 38–
44. Melbourne: Oxford University Press.
Murphy, P. and T. Hogan. 2005. Creative cities and intellectual capital: Megapolis, technopolis
and the China Seas region: The economics of paradox. Paper presented at the Eighth Asian
Urbanization Conference, The University of Marketing and Distribution Sciences, Kobe,
Japan.
Murphy, P. and D. Roberts. 2004. Dialectic of romanticism. London: Continuum.

Murray, C. 2003. Human accomplishment: The pursuit of excellence in the arts and sciences 800 B.C
to 1950. New York: HarperCollins.
Parker, G. 2004. Sovereign city: The city-state through history. London: Reaktion.
Pauleen, D. and P. Murphy 2005. In praise of cultural bias. MIT Sloan Management Review 46(2):
21–22.
Polanyi, K. 1977. The livelyhood of man. New York: Academic Press.
Porter, M. E. and S. Stern 2001. Innovation: Location matters. MIT Sloan Management Review
42(4): 28–36.
Slater, E. 2004. The flickering global city. Journal of World-Systems Research 10(3): 591–608.
Surowiecki, J. 2004. The wisdom of crowds. New York: Doubleday.
Thomas, W. I. 1966. Analytical types: Philistine, bohemian and creative man. In On social
organization and social personality: Selected papers, ed. M. Janowitz, 169–70. Chicago:
University of Chicago Press.
Thompson, D. 1961/1917. On growth and forms. Cambridge: Cambridge University Press.
Wiener, N. 1948. Cybernetics, or control and communication in the animal and the machine. New
York: Wiley.
SECTION 2
Effects of Culture on Key Aspects of
4
Cultural Stretch: Knowledge Transfer and
Disconcerting Resistance to Absorption
and Application
Gerhard Fink and Nigel Holden
ABSTRACT
International knowledge transfer does not follow a straightforward scheme. There is

ample evidence that, even if senders and receivers of management knowledge are
initially cooperative, expectations of both sides cannot be met, and within a relatively
short period of time, conflicts unavoidably emerge caused by communication prob-
lems due to cultural differences. It can take 18 months or two years to overcome that
period of disappointment and resistance. These effects can only be overcome if send-
ers and receivers of knowledge socialize, develop, and maintain contacts both in the
business and also in the private sphere. Furthermore, even if the transfer of explicit
knowledge (written, codified) is complemented by transfer of tacit knowledge, it may
take seven years or longer to achieve a smooth transfer and acceptance of knowledge.
It is also crucially important to deploy the right people—that is, individuals who are
locally sourced and with appropriate personality characteristics. Finally, successful
knowledge transfer must operate in a society that is open to the application of the
management knowledge being made available.
When a best practice migrates, its quality and perceived usefulness and
applicability change. It becomes something different.…
INTRODUCTION
The importance of knowledge management (KM) as a core aspect of the international
activities of corporations is beyond dispute. This conviction is unambiguously articu-
lated by Heinrich von Pierer, the chief executive officer of Siemens, whose company
is featured in the one of the contributions to the Academy of Management Executive
Special Issue on global transfer of management knowledge (Fink and Holden 2005a).
He is quoted as saying, “Between 60 and 80% of the value added we generate is linked
directly to knowledge—and that proportion is growing.” But exactly how this global,
multiplex transfer of management knowledge is most effectively accomplished is a mat-
ter of contention. This chapter aims to throw useful light on that key issue by means of
(1) presenting an up-to-date overview of state-of-the-art academic knowledge about the
global transfer of management knowledge and (2) underpinning this overview with a
perceptive commentary.
During 2004 and 2005 Fink and Holden (2005a, 2005b) prepared special issues of
two academic journals—the Academy of Management Executive (AME) and the Jour-
nal of Managerial Psychology (JMP)—about the challenge of transferring management
knowledge in the context of the modern global economy. The theme of the AME special
issue, which appeared in May 2005, addressed the general question of the global trans-
fer of management knowledge from a management perspective. For the time being at
least this special issue is without question a leading guide to the state of the art in what
is emerging as a critical management function. The special issue of JMP, published in
late 2005, goes beyond the managerial issues and focuses consciously more on what one
might call the human side of cross-cultural knowledge transfer interactions.
But why are the editors confident of having access to state-of-the-art knowledge? For
both special issues some 40 contributions were received from the United States, Europe,
and Asia, which were anonymously reviewed by more than 80 scholars around the world.
No other academic journals have ever devoted themselves to the issue of global transfer
of management knowledge. Hence, one of the aims was to gather potentially important
contributions and let them stand together in order to reveal the breadth and complexity
of the subject matter. This subject matter was extremely diverse, ranging from cross-
cultural training interventions to knowledge orientation in Russian enterprises, from
theoretical models of knowledge transfer to management education in Australia.
What was evident from all these contributions is that there is a general recognition
of the importance of effective knowledge transfer, its highly problematical nature in
practice, and the lack of unifying concepts to guide methodologically based investiga-
tion. The AME and JMP special issues comprise 13 cases, which combine conceptual
insight lodged in practical experience in locales as diverse as China, Russia, Poland,
Vietnam, and Africa. The selected cases represent the most valuable source of up-to-
date academic endeavor in the field of the global transfer of knowledge with a strong
focus on the nature of interorganizational and interpersonal interactions and their
consequences. The editors attempted in their respective introductions to synthesize the
insights as practical challenges to management and as pointers to rich research topics.
This chapter reflects those motivations.
ANTICIPATION IN SUCCESSFUL KNOWLEDGE TRANSFER

Of 13 cases published in the two special issues, 6 have been selected for this chapter
in order to illustrate both a major insight as well as a major management challenge.
The main criteria for selection of the six cases were as follows: (1) There should have
been obvious interest on the supplying and receiving ends to have up-to-date manage-
ment knowledge transferred; (2) Taken together the cases should overlap as to the time
range of efforts and together provide a “full cycle picture”; (3) The cases should cover
Cultural Stretch 69
experiences from different regions of the world; and (4) The cases should reflect failure
and success.
This refers to the fact that, when headquarters attempt to impose their knowledge
on other cultures in an overtly tutorial manner, there is a very strong probability of
encountering resistance at the receiving end, also due to a conflict of interest. The six
cases reveal that resistance is often unanticipated by the providers of knowledge. Suc-
cess is achieved only if providers of knowledge are willing to modify their attitude and
approaches and engage constructively with local counterparts. The passage of 18–24
months seems to be significant.
If there is one clear message that emerges from the cases discussed (albeit briefly) in
this chapter it is that the successful transfer of knowledge as an international activity
requires of managers a competence that is rarely mentioned, certainly not a topic in
management education, yet crucial when knowledge moves into new cultural contexts.
This precious competence is anticipation, and the cases show that a failure to anticipate
often catches management off its guard and can knock strategies off course for years.
Of particular concern then to the KM community and the wider community of
management scholarship is to account for the impact of cultural factors on knowledge
transfer activities. The fact that the JMP authors were required to discuss knowledge
transfer from the point of view of both application and absorption meant that they were
able to highlight subtleties and nuances that appear to be disconcerting in practice, yet
were considered to be of minor significance to KM researchers. One such issue con-
cerns the language barrier, a habitually undervalued and misunderstood influence on
cross-cultural knowledge transfer in specialist literature shaped by authors whose native
language is, unhelpfully, English.
To place the core message of the contents of these journals in context, this chapter
will begin with some general considerations about approaches to cross-cultural KM.
CROSS-CULTURAL KNOWLEDGE MANAGEMENT MODELS

AND SCHEMES
At risk of oversimplification it can be said that the KM literature is dominated by
two approaches, which treat the topic in theory and practice from strongly contrasting
positions. For Japanese scholars Nonaka and Takeuchi (1995), the key issue is knowl-
edge creation, whereby firms convert tacit knowledge into explicit knowledge and vice
versa through interaction processes, which are briefly discussed subsequently. Despite
the considerable influence of the work of Nonaka and Takeuchi, which embodies a spe-
cifically Japanese but more generally an oriental approach to KM, the Western (i.e.,
North American and European) contributions emphasize knowledge transfer as a more
consciously explicit process. Nonaka and Takeuchi state the distinction as follows:
The realization that knowledge is the new competitive resource has hit the West like
lightning. But all this talk about the importance of knowledge—for both companies and
countries—does little to help us understand how knowledge gets created. Despite all the
attention by leading observers of business and society, none of them has really examined
the mechanisms and processes by which knowledge is created. This distinction is what
separates the Japanese approach from theirs. More important, it is for this reason that the
Japanese experience is especially interesting and useful.
There is a reason why Western observers tend not to address the issue of organizational
knowledge creation. They take for granted a view of the organization as a machine for
‘information processing’. This view is deeply ingrained in the traditions of Western man-
agement, from Frederick Taylor to Herbert Simon. And is it a view of knowledge as neces-
sarily “explicit”—something formal and systematic. Explicit knowledge can be expressed
in words and numbers, and easily communicated and shared in the form of hard data,
scientific formulae, codified procedures, or universal principles. Thus knowledge is viewed
synonymously with a computer code, a chemical formula, or a set of general rules. (Nonaka
and Takeuchi (1997, 7–8)
Nonaka and Takeuchi (1995) based their theory of knowledge creation on the general
distinction between tacit knowledge (hidden, implicit, embedded, and not codified) and
explicit knowledge (codified, explicitly expressed, outspoken, written text). They assumed
that the most important knowledge in a firm is tacit knowledge, because tacit knowledge
is unique to the firm and difficult to transfer—hence in the sense of the resource-based
view also difficult to copy (Barney 1991, 1997). To create new knowledge tacit knowl-
edge has to be made explicit, transferred, combined with other available knowledge, and
reconverted (internalized) into new tacit knowledge. They suggested in their famous
model four stages in a sort of circular (or spiral) process of knowledge creation:
• Tacit—tacit transfer (Socialization)
• Tacit—explicit conversion and transfer (Externalization)
• Explicit—explicit transfer (Combination), and
• Explicit—tacit transfer and conversion (Internalization).
At the end of these four stages, the process begins again at the socialization stage.
However, as Glisby and Holden (2002) have argued, all four modes are culture-
dependent, each reflecting well-documented aspects of Japanese organizational behav-
ior. Their critique reflects a conviction that the cultural context variously influences
what is understood by tacit or explicit knowledge, and how either mode of knowledge
can be communicated, perceived, and absorbed. What for Americans or West Europe-
ans may be clear and explicit is not necessarily so for East Europeans or Asian people,
who need (1) additional tacit information in order to accept or understand the explicit
component, or (2) explicit explanations to understand the tacit. By stressing the Japane-
seness of the Nonaka/Takeuchi model, Glisby and Holden (2002) remind us that their
conception cannot be used indiscriminately to throw light on cross-cultural knowledge
creation behavior involving non-Japanese protagonists.
The typology of Gupta and Govindarajan (2000) helps us to combat this limitation. It
shows us that the effectiveness of knowledge transfer within each of Nonaka and Takeu-
chi’s four modes is conditioned to a greater or lesser extent by five factors:
• The perceived value of knowledge
• The motivation to share knowledge
• The richness of communication channels
• The motivation to learn and adopt new knowledge
• The ability to recognize the value of new knowledge.
These five factors are regarded as representing essential preconditions for the suc-
cessful transfer of management knowledge and especially in cross-cultural contexts. It
is, however, important to grasp that the quality of each of the five factors is in practice
Cultural Stretch 71
determined by the context of the interaction. As is made evident in the following text,
the selected cases make it abundantly clear that perceptions of knowledge and the moti-
vations to share or adopt it were powerfully influenced by contextual factors such as
resistance to accepting knowledge from outside one’s own ambience and lack of appre-
ciation of the role of tacit knowledge as a catalyst for facilitating the transfer of explicit
knowledge.
It is important not to see the Gupta/Govindarajan typology as an alternative to the
Nonaka/Takeuchi model. Rather, the two schemes are complementary. The Nonaka/
Takeuchi model emphasizes the need of conversion of tacit knowledge into explicit and
after transformation back into tacit knowledge. In that sense tacit and explicit knowledge
are complementary. The model also stresses the importance of human relationships in
organizational settings and, through amply referring to practices in Japan, selective ele-
ments of the model became rather culture dependent. The Gupta/Govindarajan typol-
ogy is concerned with knowledge transfer at the strategic level. It is culture-neutral and
strongly emphasizes motivational aspects, but it lacks recognition of the importance
of tacit knowledge to complement explicit knowledge. All six cases selected embrace
aspects of the Gupta/Govindarajan model and highlight the importance of tacit knowl-
edge; however, they also indicate the importance of an atmosphere conducive to estab-
lish rich communication channels (Holden 2002).
All this reinforces the conviction that the mere possession of knowledge and the
capacity, thanks to modern communication technologies, to transmit it to multiple users
does not by itself ensure genuine transfer. For his part, Holden (2002) has demonstrated
that a psychological and emotional component, which he calls atmosphere, is a vital
factor in energizing the flow of knowledge across individuals. He defines atmosphere
as “a pervasive feeling, which is derived from experience and serves as a determinant
of expectations concerning future cooperation, about a business relationship or group
activity such as collaborative learning or knowledge sharing” (Holden 2002, 315).
KNOWLEDGE TRANSFER IS NEVER LINEAR

The six cases selected reveal the value of the Gupta/Govindarajan model as well as the
concept of atmosphere, whose significance for the study of knowledge transfer in cross-
cultural situations is not yet fully appreciated. The cases make it plain that knowledge
transfer activities—no matter how systematically planned—do not follow a linear logic.
This is an extremely troublesome issue, as it highlights a major challenge in the global
transfer of management knowledge: namely, the very precariousness of the activity
as a management practice, involving weaknesses in (1) planning and co-coordinating
cross-cultural knowledge exchanges, and (2) anticipating the manifold causes of forms
of knowledge distortion and the nature of their impact on operations. The latter point
is extremely important. In complex ways cultural differences can impede the straight-
forward cross-cultural transfer of management knowledge, but it is folly to attribute to
culture, as popularly understood, some inherently pernicious features that willy-nilly
undermine corporate endeavor.
The argument being advanced here is that the management failure to anticipate in what
ways cross-cultural business interactions may evolve contrary to plans and assumptions
is a prime cause of stress and strain in the global transfer of management knowledge.
Although top managers of large corporations often claim that they are reducing com-
plexity within their firm, it would be naïve to assume that managers can make cultural
difference disappear. We conclude that complexity cannot be eliminated; it only can
be shifted. Thus managers who find it burdensome or tiresome dealing with cultural
diversity often transfer this task to local managers in firms’ networks. This practice can
be called cultural stretch, referring to the challenge whereby individuals or groups of
people adjust their behavior to suit the demands of working simultaneously with vari-
ous sets of cultural values and norms in order to meet organizational goals. This calls for
alignment with the headquarters’ requirements alongside the norms and values embed-
ded in manifold stakeholder cultures.
KNOWLEDGE TRANSFER AND RESISTANCE TO ABSORPTION

For this chapter, six cases have been selected to provide other key learning points,
which were derived from the specific context of investigation yet which may have appli-
cability in completely different knowledge sharing scenarios. These cases also suggest
that the available theories briefly sketched above could have served as guideposts for
effective knowledge transfer and that setbacks could have been avoided with appropriate
preparation. As a communality, the cases make clear that knowledge transfer processes
will take years rather than weeks or months, encountering many forms of unanticipated
resistance, and that the transfer process cannot be hurried. The antidote appears to be
trust, but in cross-cultural environments, that too takes time. Trust seems to be estab-
lished only when people at the receiving end are given voice as equal partners.
May, Puffer, and McCarthy (2005) were engaged in establishing Western-style man-
agement training in Russia, a country that is still in awkward transition to market
economy. Initially equipped with enthusiasm and the best intentions the U.S. trainers
soon had to face the fact that what they considered to be important knowledge was not
wanted by the Russian managers, who initially were eager to gain superior U.S. manage-
ment knowledge but could not cope with what was offered to them. Not long after the
collapse of the initial training program, another attempt was started, in which strong
emphasis was put on identifying the “right people”: those young, ambitious, but mostly
inexperienced managers who were able and willing to learn from scratch and were not
burdened with previously important knowledge.
Here the Gupta/Govindarajan (2000) typology can be usefully invoked. It helps to
explain why American trainers found themselves confronted with an unexpected demo-
tivation on the part of the Russians about the way in which the knowledge was being
imparted, and about its value and relevance for Russia. The clash was so sharp that the
U.S. attempts to train Russian managers came to an abrupt halt.
CONTEXTUAL KNOWLEDGE IS NOT GAINED OVERNIGHT

The authors who report their own experience had to learn that for the delivery of
management know-how to non-Western countries, it is of paramount importance to
(1) adapt a given set of tools to fit for a specific subset of people of the other national cul-
ture and (2) be able to transfer these tools to preidentified people who are equipped with
the required personality traits and consequently could be successfully selected as course
Cultural Stretch 73
participants. Their case emphasizes the importance of designing appropriate strategies

for selecting people from transitional economies as potential receivers of the knowledge
that the Americans could offer. A further prominent factor is that the educators should
be not only context-sensitive but also fully conversant with the cultural and institutional
background, and that is a type of knowledge not gained overnight.
The truth of that observation is amply supported in the contribution of Javidan and
his coauthors (2005), who describe rapidly deteriorating interactions involving a North
European business school and a large South Asian corporation. The Asian Bank com-
missioned the business school to design and run a major executive program, but scarcely
had this started when bitter recriminations blocked the knowledge transfer. After a short
while, Asian participants and their supervisors found out that that the knowledge about
leadership management provided by the Nordic scholars would not fit into the local
corporate culture settings. Thus, their motivation to learn subsided. Instead of seek-
ing clarification in communication about the emerging issues, the Nordic scholars also
quickly lost their motivation to share their knowledge with the Asian bank staff.
Guided by the Gupta/Govindarajan (2000) model, one may say that both sides—the
Nordic Europeans and the top management of the Asian Bank—did not even think
about establishing rich communication channels between them. This paper also alerts
us to the importance of Holden’s (2002) approach, which recommends creating at the
outset an atmosphere conducive to cross-cultural knowledge sharing and of the need
to see the associated transfer processes as learning opportunities for suppliers and
prospective recipients of knowledge.
TRANSFERRING MEANINGLESS MANAGEMENT KNOW-HOW

Kuznetsov and Yakavenka (2005) report about large-scale attempts to make avail-
able British and other modern Western management textbooks to university teachers in
Belarus. They expose a rarely considered aspect of the transfer of Western management
know-how to former socialist countries. What emerges is a picture in which Western
management texts are perfectly translated into Russian and transferred to the Belarusian
context without much adaptation of content to local conditions prevailing in the Belarus
economy. As Kuznetsov and Yakavenka report, 40 percent of their sample of Belarus pro-
fessors are unhappy with the overall style of the texts or question the validity of the transla-
tions. Even if they understand every word, they cannot give a meaning to the texts.
The authors make it clear that this attempt to transfer management knowledge to
Belarus was based on a Western assumption that sufficient absorptive capacity was avail-
able to make the process efficient. The reality is rather different, as the case study shows
that even after 15 years, the massive sums of money from European and other interna-
tional sources to support the transition from communism to the market economy in
the more easterly lying socialist countries of Europe have only partially succeeded as an
exercise in international knowledge transfer. The professors had not the slightest idea
about the functioning of Western market economies. Thus, they could not attribute any
meaning to texts that reflect a different economic and political reality than that prevail-
ing in Belarus. The conclusion to be drawn is that there would need to be some transfer
of tacit knowledge going along with the explicit knowledge provided in the textbooks
(cf. Holden and Kortzfleisch 2004).
In practical terms, this means that the contents of textbooks must be adapted. It can-
not be taken for granted that professors and students are familiar with Western busi-
ness practices, the related concepts, and the societal values that underpin them. It may
not be feasible to modify textbooks to fully reflect the reality of one particular former
Soviet republic, but authors and their local collaborators ought to be able to find ways
to make the contents suit a country experiencing the transition to the market-economy
system by referring to other countries in analogous situations. The issue at stake is that
explicit knowledge provided with books and author’s guides cannot be grasped without
also being complemented by tacit knowledge. This means that publishers can produce
textbooks that, through achieving a certain common cognitive ground with readers in
countries like Belarus, have a greater chance of being useful. That would fit in with the
Gupta/Govindarajan (2000) scheme and the Nonaka/Takeuchi (1995) model. Without
socializing among professors from the West and Belarus, there is hardly a chance to get
the management knowledge across.
UNDERSTANDING FOREIGN EMPLOYEES

AS CULTURAL RESOURCES
The issue concerning the gap between expatriates and the local business community
is taken a stage further by Vance and Paik (2005, 590), who shift the focus from expa-
triate managers to “foreign employees being managed at host country operations.” In
their case study of “forms of host country national learning for enhanced [multinational
corporation (MNC)] absorptive capacity,” they build on the well-established finding
that “past research … [generally has failed] … to identify important contributions that
can be made by host country nationals to promote the effective transfer of knowledge
throughout the multinational organization.”
On the basis of an empirical investigation involving 51 managers as informants in 49
different MNC foreign subsidiaries with home bases in France, Japan, Germany, Korea,
the United States and the United Kingdom, the authors identify 12 categories of learn-
ing needs among host country nationals. The investigation suggests a picture of top
management detachment and aloofness vis-à-vis their host country employees and a
reluctance to consult and trust these colleagues. Vance and Paik argue that, unless these
employees are empowered to receive expatriate knowledge and know-how, their absorp-
tive capacity remains underused and that MNCs need to consider forms of in-house
training to align the strategy of the company with the potential of those employees.
Companies should not only train their potential expatriates to cope with assignments
abroad, but also their local counterparts to be prepared for the cultural gaps with the
incoming expatriates.
Glisby and Holden (2005) show how a Danish giftware firm achieved a remarkable
breakthrough by dispensing with market intermediaries and directly exchanging tacit
knowledge between corporate headquarters in Copenhagen and business partners in
Japan’s retail sector. The Danish firm seems to have implemented exactly what Vance
and Paik (2005) recommend: to have Japanese nationals trained and employed at the
corporate headquarters and to serve as intermediaries between the Danish corporate
culture and the Japanese local culture. They did this by going to Japan not on a perma-
nent basis, but rather on a temporary basis to contact local firms, to socialize with local
Cultural Stretch 75
counterparts, and to help them understand the tacit and explicit knowledge on which
the particular sales strategy of the Danish firm is based. This case is an extremely inter-
esting example of the applicability of the Nonaka-Takeuchi (1005) model to interac-
tions also involving non-Japanese protagonists.
The existence of a gulf between detached and aloof headquarters’ managers and expa-
triates, on the one hand, and their respective host country counterparts, on the other,
stresses the need for a conversationalist disposition amongst managers and the need to
articulate “rational” and “non-rational” elements in their active discourse. This expe-
rience is to be seen in contrast to a traditional sender-receiver model, such as that of
Gupta and Govindarajan (2000), which considers KM as a set of objective messages. The
intrinsic merits of these messages and the characteristics of the potential adopters are
considered to be the sole contributors to the success of knowledge transfer. Such a per-
ception would support the view that strategic implementation of management concepts
through power relations is dependent on the capability of key managers to persuade
their subordinates to accept a management tool without a mutual understanding of its
merits.
CREATING THE ATMOSPHERE FOR TRUST

That trust and a positive atmosphere be achieved neither straightforwardly nor within
a short period of time is impressively demonstrated by Nancy Napier (2005) on the basis
of her 10-year experience with management knowledge transfer to Vietnam. At first she
and other Western scholars enjoyed a very brief period of smooth and unchallenged
flow of explicit and simple textbook knowledge from foreign experts to Vietnamese
professors. Then the process came to an abrupt halt, as the Vietnamese started to claim
that “Vietnam was a special case,” resisting the foreigners’ lofty view of their own man-
agement knowledge. For the foreigners this shift of behavior was tough to accept. Note
that this is the third occasion cited in which there has been an abrupt halt in an attempt
to transfer Western management knowledge.
Time passed, and committed foreigners became familiar with the internal constraints
of the Vietnamese system. Only then could they build trust and began to learn from the
Vietnamese. As a result both sides could open up to each other again. The foreigners
were no longer just mentors, but actually became colleagues. Intriguingly, the actual
turning point was marked by an open confrontation between the Vietnamese and their
foreign colleagues. This confrontation became possible only after the foreigners had
become perceived as partners who were prepared to operate within the constraints of
Vietnamese culture.
Extending on her earlier writings and that of Holden (2002), Gupta and Govindarajan
(2000) and others, Napier identifies four core elements as a framework of analysis: (1) the
stages of the relationship; (2) participative competence—to be applied to senders and receiv-
ers alike about their ability, motivation, and understanding of knowledge; (3) organizational
atmosphere—between and within organizations on both sides; and (4) conduit conditions
that facilitate the ease or difficulty of knowledge flows.
It is worth highlighting a notable feature of Napier’s paper: its description of how
radical system change in Vietnam induced a collective culture shock (Fink and Feich-
tinger 1998; Fink and Holden 2002), which expressed itself in learned helplessness
(Garber and Seligman 1980) and skepticism about rewards to be given for personal
efforts and achievements. It was frequently observed that it took 18–24 months before
the Vietnamese were willing and able to make their own decisions.
REDUCING AND INCREASING ABSORPTIVE CAPACITY

The six cases highlighted in this chapter cover experiences across three continents.
It is striking how the six sets of authors point to a failure on the part of “knowledge
deliverers”—whether the West as a source of management know-how or a corporation
handling relationships with its subsidiaries—to take account of attitudes, feelings, and
specific features at the receiving end. In the context of the selected cases such features
range from the intelligibility and perceived value of Western management texts to a
sense of affront in host country subsidiaries at not being trusted by top management in a
remote head office. Either way, the transfer of knowledge is rendered difficult. Self-esteem
is damaged; absorptive capacity lies dormant.
As it happens, all authors of the six cases contend that patience, training, and human
resource development methods are called for. This is, of course, easier said than done.
The scope and specialization of such interventions go far beyond what is customarily
available in cross-cultural management education. While that particular challenge goes
unmet and possibly unrecognized, it must be expected given that we live in a world in
which knowledge sharing remains a great buzzword but is habitually compromised by a
heavy-handed and frequently power-based approach.
As already noted, the transfer of management knowledge takes time—often years.
The more detailed and thorough the preparation was, the less likely the emergence of
intractable problems. Part of the preparation involves the nature of the knowledge and
recognition that the transfer process itself is part of the knowledge received. Thus, the
design of the transfer process to suit recipients and potential beneficiaries is of vital
importance. Here, it is important to recognize that every explicit knowledge transfer
needs to be complemented by a tacit component, and vice versa. Otherwise, even if
texts are perfectly translated and retranslated, prospective recipients of the explicit mes-
sages may understand every word in either language but still have problems making
sense of the communicated management knowledge, because the context from which
the knowledge is derived remains unknown.
The transfer of management know-how is heavily dependent on how the values, atti-
tudes, competences, and personality traits enmesh with each other. Finding or develop-
ing the appropriate people can be very difficult—sometimes an impossibility. If people
are involved who are inappropriately qualified to handle the related cross-cultural issues,
any attempt to transfer management know-how is counterproductive. If the transfer of
management know-how involves uniform procedures, local or regional management is
likely to establish its own informal subsystems and routines. This occurs not as an act of
defiance, but as an attempt to modify those procedures so that they are better received at
the local end. If headquarters cannot supply solutions that serve the needs of subsidiar-
ies, the management role of headquarters has to be questioned.
The absorptive capacity of local managers can be greatly enhanced if they—as pro-
spective recipients of new management knowledge provided by headquarters—are
given a chance to gain insights into and understanding of the cultures from which that
Cultural Stretch 77
knowledge emerges. Expatriates sent to distant subsidiaries can successfully serve as

knowledge mediators if they do not separate themselves from the local business com-
munity and socialize with local people—in other words, showing interest in and respect
for the local culture, and investing in building relationships and trust with local manag-
ers. Cultural stretch—the reaching out across boundaries of language and culture—can
be left to the local managers, but can also be the responsibility of headquarters. Cultural
stretch is a key component of the accommodating approach mentioned previously. The
following is a synopsis of the key learning points to emerge from the cases under con-
sideration:
• Major knowledge transfer processes across different nations or cultures may take seven
years to come to fruition.
• Initial optimism may be high, but there is a strong probability of confrontation and
resistance if senders and prospective receivers of knowledge do not conscientiously
strive to establish rich communication channels between each other.
• Resistance may be the result of cross-cultural miscommunication or clashes of interest.
Either way, it may take 18 months or longer to overcome standoffs. In such cases social-
ization of senders and receivers of knowledge seems to be indispensable, because tacit
and explicit knowledge are complementary and tacit knowledge can only be transferred
by socialization.
• Socialization, as stressed in the Nonaka/Takeuchi model (1995), and motivation, as
specified in the Gupta/Govindarajan typology (2000), play a key role. Both are signifi-
cant factors in the creation of an atmosphere conducive to interchange between senders
and receivers (Holden 2002).
• Transfer of purely explicit knowledge across cultures is bound to fail if the prospective
receivers are not able or willing to fully understand the context whence this knowl-
edge is derived—that is, they already have tacit knowledge about the sender’s context
and culture. The sending culture may have to be prepared to learn from the receiving
culture (Napier 2005).
DISCUSSION
The cases described here have given some insights into some important questions for
cross-cultural KM practice. These include the following:
• Why context/culture specific management knowledge is changing its meaning when
traveling
• Why teachers of management knowledge, which come from another culture, need to
find the “right people” for what they teach
• Why corporations, which want to harmonize their management practices and reduce
complexity, need to find the right people for redesigned tasks, and
• Why transfer of a successful management practice embedded in production technology
is bound to fail if the right people cannot be found within the required time span or
simply do not exist in a given society.
It is clear that neither the models of Nonaka and Takeuchi, on the one hand, nor of
Gupta and Govindarajan, on the other, can embrace these factors, much less suggest
practical solutions to problems which these very models anticipate. No model is capable
of subsuming all key factors in a simplified format. All this presents KM theorists with a
very tricky challenge because, according to the nature of the context, some factors may
acquire a disproportionate significance and sometimes a disproportionate insignificance.

To take a simple yet very familiar example: the capability to operate in languages other
than other English is largely insignificant to the businesspeople of English-speaking
countries, but to businesspeople whose native language is not English, foreign language
knowledge is not only significant, it is a sine qua non of their operational effectiveness.
The unilateral transfer of management knowledge (i.e., the imposition of new man-
agement knowledge on staff and local managers in another culture) has the effect of seri-
ously depleting valuable knowledge—much of it of the valuable tacit kind—acquired by
managers and staff at the local level. These personnel become recipients of knowledge,
which is judged by headquarters to be highly context-relevant, but the acts of absorbing
it may mean abandoning previously held ways of perceiving, thinking, judging, and act-
ing that were considered normal and self-evident, even obligatory. This proves to be a
painful and demotivating experience, presenting individuals with various challenges:
• To learn the new management rules and to comply with those rules
• To behave differently as the still valid values of their society would imply
• To adjust their personality profiles to fit with the prevailing values of the society and the
new value profiles of the firm
• To cope with the changes within the organization, and what they imply for the social
groups they belong to and for their private life
• To redefine their own personality and their notion of privacy
It would be utterly naïve to expect that these changes can take place within a short
period. Imposing completely new management practices on people may largely destroy
what so far has given orientation to people and what used to be the foundation of their
personal identity inside and outside the organization.
It has been emphasized several times in this chapter the importance of establishing
a conducive atmosphere for creating trust as a prerequisite of cooperative knowledge
sharing. Insofar as this observation enshrines a truth, it was noticeable how Western
knowledge deliverers tended to ignore it. Indeed, they ignored it so comprehensively in
some cases that cross-cultural interactions came to a complete halt. Such eventualities
were not anticipated, just as it was seldom anticipated how less blatant forms of resis-
tance could undermine business strategies. It is worth noting that strategies, in the way
in which they are formulated and discussed, have a strongly explicit character. What
unsettles them in the domain of knowledge transfer is the impact of the tacit in the form
of contextually influenced indifference, resistance, and occasionally even outrage. These
by no means uncommon reactions take management—especially management at head-
quarters—by surprise. There is no known antidote to this condition as long as corporate
management surveys the world from headquarters and not from multiplicities of local
standpoints.
CONCLUDING REMARKS
There is no straightforward transfer of management knowledge. On the one hand,
successful transfer is subject to numerous preconditions as to the perceived value of
the knowledge, the motivation of the knowledge providers, the esteem that the pro-
vided knowledge enjoys, and the capabilities of recipients to understand and absorb the
offered knowledge. On the other hand, the transfer of management knowledge may cut
Cultural Stretch 79
deeply into the existing structures of values and norms of behavior, which are valid in
the recipient societies. The adoption of the new management practices has severe con-
sequences for the identity of the affected people. New definitions are required of social
values, of norms of behavior, and of what privacy means to people. Major changes in
management practice may therefore bring into the public domain what hitherto had
been held to belong to the private sphere.
Out of this springs a further observation, which may have positive implications for
our understanding of good practice. The way in which good practice is mediated by
communication between headquarters and local management and staff and training of
local people across languages and cultures is an intrinsic part of the practice as far as
recipients are concerned. The case discussed by May, Puffer, and McCarthy (2005) sug-
gests that learning depends on prior unlearning on the side of the trainers and the train-
ees. Trainers must adapt their training techniques and know-how by considering the
local absorptive capacities and by finding ways and means to identify those local people
who fit the qualifications and personality profiles required by the new management
know-how.
One of the great challenges imposed on staff and managers by cross border manage-
ment knowledge transfer is the necessity of “unfreezing elements in their backgrounds
inhibiting their receptivity to learning market-oriented practices” (May, Puffer, and
McCarthy 2005, 25). This is by no means the first reference in the KM literature to the
importance of unlearning practices and skills for which there is no longer any call. But it
is always the others—our colleagues in Moscow or Beijing or Lusaka—who are expected
to unfreeze elements in their background. Yet we must learn to unfreeze the equivalent
elements in ourselves too (Glisby and Holden 2005; Napier 2005). Otherwise, those all
too misplaced ethnocentric assumptions about the superiority of Western methods are
merely replicated to our own detriment.
In other words, to impose exclusively the good practices of other cultures’ headquarters
is tantamount to renouncing local or regional knowledge. Thus, knowledge is reduced to
what can be applied across many nations. Although this may reduce complexity within a
large firm and will enhance headquarters’ control, it has the effect of increasing the psychic
distance between the whole organization and its markets located in culturally diverse socio-
economic environments. In the long run, this constraint on knowledge leveraging will give
room to newly emerging competitors that can better deal with local requirements.
Cross-culturally, then, from the cases here it seems likely that there is no such thing
as a universal best practice; it is relative to those involved in transferring, receiving, and
implementing. As has been shown, when a best practice migrates, its quality and per-
ceived usefulness and applicability change. It becomes something different from what
was originally conceived. In utterly contrasting ways, this reality was recognized by all
the authors mentioned.
There is no firm that stands as an unequivocal benchmark for other corporations; as
with all other forms of communication there are countervailing influences, whose prov-
enance, Promethean forms, and effects including economic consequences continually
take managers by surprise. In fact, if there is one factor that links most of the contribu-
tions principally discussed in this chapter, it is that the cultural impacts on cross-cultural
knowledge sharing activities repeatedly also catch managers—often at senior levels—off
guard and, in some cases, throw corporate strategies off course for years.
REFERENCES
Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of Management
17(1): 99–120.
. 1997. Gaining and sustaining competitive advantages. Reading, MA: Addison-Wesley.
Fink, G., and C. Feichtinger 1998. Towards a theory of collective culture shock. Journal of Con-
temporary Management Issues 3 (2): 1–134.
Fink, G., and N. Holden 2002. Collective culture shock: contrastive reactions to radical systemic
change. IEF Working Paper 45(October).
Fink, G., and N. Holden, eds. 2005a. Special Issue: Global transfer of management knowledge. The
Academy of Management Executive 19 (2).
. 2005b. Special Issue: Absorption and application of management knowledge. Journal of
Managerial Psychology (November).
Garber, J., and M. E. P. Seligman, eds. 1980. Human helplessness theory and applications. New
York: Academic Press.
cultural embeddedness of Nonaka’s knowledge-creating company. Knowledge and Process
. 2005. Applying knowledge management concepts to the supply chain: How a Danish firm
achieved a remarkable breakthrough in Japan. The Academy of Management Executive 19
(2): 85–89.
Gupta, A. K., and V. Govindarajan 2000. Knowledge flows within multinational companies. Stra-
tegic Management Journal 21 (4): 473–96.
Holden, N. J. 2002. Cross-cultural management: A knowledge management perspective. Upper
Saddle River, NJ: Financial Times/Prentice Hall.
Holden, N. J., and H.F.O. Von Kortzfleisch 2004. Why cross-cultural knowledge transfer is a form
of translation in more ways than you think. Knowledge and Process Management 11. www.
interscience.wiley.com
Javidan, M., G. K. Stahl, F. Brodbeck, and C. P.M. Wilderom 2005. Cross-border transfer of
knowledge: cultural lessons from Project GLOBE. The Academy of Management Executive
19 (2): 59–76.
Kuznetsov, A., and H. Yakavenka 2005. Barriers to the absorption of management knowledge in
Belarus. Journal of Managerial Psychology, 20 (7): 566–77.
May, R. C., S. M. Puffer, and D. J. McCarthy 2005. Transferring management knowledge to Russia:
A culturally based approach. The Academy of Management Executive 19 (2): 24–35.
Napier, N. 2005. Knowledge transfer in Vietnam: Starts, stops, and loops. Journal of Managerial
Psychology 20 (7): 621–36.
Nonaka, I., and H. Takeuchi 1995. The knowledge-creating company. New York: Oxford University
Press.
Vance, C. M., and Y. Paik 2005. Forms of host country national learning for enhanced MNC
absorptive capacity. Journal of Managerial Psychology, 20 (7): 590–606.
5
From Concept to Context: Toward Social-
Cultural Awareness and Responsibility
in the Organization of Knowledge
Chern Li Liew
ABSTRACT
Human language, and by extension, information and knowledge is subjective and

contextually biased—created within certain ideological, organizational and socio-
cultural contexts. Forcing diverse contexts to accept a single representational vo-
cabulary or universal classificatory structure as the medium for discourse across
boundaries would be detrimental to the process of supporting cross-domain
and cross-cultural information retrieval (IR) in the networked environment as
it is inevitable that certain views and perspectives would be misrepresented or
underrepresented. A more productive approach would seek to support free and
open dialog across competing heterogeneous contexts in the knowledge discov-
ery (KD) environment. In this chapter, the author maintains that a hermeneutic
approach provides a promising avenue for addressing some major limitations of
existing means of organizing knowledge for cross-domain and cross-cultural IR
and KD.
INTRODUCTION: KNOWLEDGE SHARING ACROSS CULTURES

The need to share information and knowledge across organizational and national
boundaries has prompted the emergence of highly distributed knowledge systems.
These systems are increasingly shared by different communities including most, if not
all, nations, languages, and cultures in the world. Part of the widespread appeal of the
Web, for instance, lies in its potential as a platform that allows the integration of infor-
mation from diverse sources and as a system that supports cross-domain, cross-lingual
and cross-cultural information retrieval (IR) and knowledge discovery (KD). Ideally, the
linguistic component devised to facilitate retrieval of resources from highly distributed
knowledge systems ought to be logically and practically multinational, multilingual, and

multicultural in scope and nature in order to support successful knowledge manage-
ment (KM) across different cultures.
Creating and maintaining knowledge and its social and cultural context is vital. One
of the most important aspects of a KM system is that it becomes what Thomas, Kellogg,
and Erickson (2001) termed a ‘knowledge community’. Such a system will become a
place within which users from different backgrounds will use, discover, and manipulate
the KM environment. Thomas, Kellogg, and Erickson (2001) discuss two approaches for
supporting such knowledge communities—namely, social computing and knowledge
socialization. KM is a complex undertaking that involves human as well as social and
cultural issues. Particularly in a networked environment, KM is no longer restricted
to mere technology-related decisions. The process of supporting knowledge sharing
requires a holistic perspective that encompasses human goals, processes, technologies,
and the associated contexts. A greater understanding of how to design socially and cul-
turally transparent systems is needed.
This chapter reflects on two major questions related to subject access systems in the
era of networked information. In a context of global exchanges, are resources in knowl-
edge systems organized in such a way as to maximize efficiency of retrieval and to facili-
tate context-sensitive KD? Do knowledge organization (KO) systems such as thesauri,
classification schemes, subject heading lists, and ontology reflect the views and interests
of the different user communities in the global information society?
This chapter examines problems specifically related to cross-domain and cross-cultural
IR and KD. The focus is on putting forward an argument that a hermeneutic approach pro-
vides a promising avenue for addressing some major limitations of existing KO systems in
dealing with cross-domain and cross-cultural IR and KD. To make the most effective con-
tribution in dealing with the richness of the networked information society, KM systems
must move beyond using a single representational language (or on occasions, using more
than one representation system) to a solution that combines the different worldviews and
interests of different user communities that make up the global information society.
KNOWLEDGE ORGANIZATION
Taylor (1999, 280) states, “We organize because we need to retrieve,” whereas
Svenonius (2000, 255) proposes that “the essential and defining objective of a system
for organizing information … is to bring essentially like information together and to
differentiate what is not exactly alike.”
The profound changes introduced by the Internet have increased the concerns around KO
and KD. Quite suddenly, we find KO systems at the multiple crossroads of the overcrowded
and distributed information landscape brought about by the Web. To provide a better sense
of the digital information spaces on the Internet, various KO tools have been considered—
ranging from traditional library classification tools to the more advanced forms of semantic
tools. The distributed computing environment has evidently brought forth the trend toward
higher levels of abstraction and more formalized ontological support.
The concept of ontology is very close to the library concept of KO—the space where
subject headings, thesauri, classification schemes, and other controlled vocabularies for
IR have been developed (Soergel 1999). In recent years, ontology developments have
From Concept to Context 83
emerged from academic obscurity into mainstream business and practice on the Web
(McGuiness 2001). Interoperability has become an increasingly crucial aspect (Arms et
al. 2002). The evolution from simple syntax and structure to semantics is well illustrated
by the semantic Web movement (Berners-Lee, Hendler, and Lassila 2001) and all the
developments around it. All of these trends convey changes in systems paradigms, rais-
ing new base concepts such as composability, in which components tend to be system
independent, adaptable, extendable, and reusable.
KO tools are one among the many types of information components envisaged by
distributed, interoperable systems. The use of common, shared controlled vocabularies
is of utmost importance to convey explicit and shareable knowledge representations
in a distributed environment. Most of these formal languages, however, have not been
developed as practical solutions for adaptability, extensibility, interoperability, and
reusability across different cultures.
Previous research has investigated the tensions between standardization and flexibility
as key design factors of information infrastructure. Some argue that standardized classi-
fication is the key to successful networked computing environments (Degen et al. 2001;
Guarino 1998; Jackson, Reichgelt, and van Harmelen 1989; Smith 2003), whereas others
point out that the search and retrieval model based on such infrastructure is too simplistic,
illogical, and mechanical to describe and accommodate the dynamics taking place when
people, communities or groups, and infrastructure come together as resources (Benoit
2002; Capurro 2000: Chalmers 1999; Ghidini and Giunchiglia 2001). One of the main
weaknesses of such systems is that communication is inherently one-way, from the sys-
tems to the user.
SUBJECT ACCESS IN TURMOIL: KNOWLEDGE ORGANIZATION

The goal of supporting cross-domain and cross-cultural IR and KD in the networked
global information society has led to various attempts at developing universal classifica-
tion and KO schemes that would allow for the integration of information from diverse
sources, covering different but related conceptual domains.
The ideal universal KO scheme that can be used to organize the whole universe of
knowledge would be one that is universal, official, and systematic. It is a scheme that would
serve to legitimize a single paradigm of worldview that presumes to reflect ontological
consensus. The scheme would be carried out within the framework of an established set of
principles that governs the concepts and classes as well as relationships of classes, and that
it would authorize definition and arrangement of the scheme’s constituent classes through
consistent application of these governing principles. Unfortunately, there is not yet such
a universal scheme that can classify the chaos of the information resources now available
and make information available to everyone in a context-sensitive manner. The following
section includes a brief review of the major challenges faced in current efforts to organize
information resources for efficient access across different cultural contexts.
A Universal Ordering of Knowledge

The ideal of organizing the world’s knowledge in a single consistent scheme is an old
one. It dates back to the seventeenth century with Descartes’s concept of a “philosophical
language” (1972), which aims to reflect the order of all human thoughts. From the late
1960s, many researchers (Brown 1989; Cowan 1997; Ranganathan 1967; Wilkins 1968)
started to devise languages that formed the foundation of many of the KO schemes of
today. These earlier systems seemed rational; a closer look, however, revealed that cat-
egories in their semantic trees were obviously biased by the ideological, political, and
sociocultural environment of the time.
The same kind of bias afflicts modern day systems. Borges’s (1999) claim that “it
is clear that there is no classification of the Universe not being arbitrary and full of
conjectures…. If there is a universe, its aim is not conjectured yet; we have not yet
conjectured the words, the definitions, the etymologies, the synonyms, from the
secret dictionary of God” has since been echoed by many contemporary researchers
concerned with the lack of epistemological and sociocultural context in which KO
systems have been developed.
Current systems have failed to be truly useful to global users because they are based
on a faulty epistemological assumption—an objectivistic epistemology that disregards
the contextual, subjective, and social aspects of knowledge (Black 1968; Eco 1995),
almost enforcing a “Newspeak” (Orwell 1992) solution. To meet the demands of the
society envisaged by George Orwell, there was an effort to create a reformed lan-
guage (i.e., Newspeak), which was simpler but less capable of expressing the ambigu-
ity inherent in different points of view than traditional English. The consequence was
that the language became less expressive. KO systems designed along these lines are
flawed because, amongst other things, they fail to explicitly recognize a user’s situa-
tion and interests (Bowker and Star 1999; Hjǿrland 2002; Lakoff 1987). In most cases
only majority views are represented. Minority views are not, underrepresented and/or
wrongly reflected and represented in the systems, and users are not made aware of
alternative views and meanings.
Knowledge and Context: Unified Classification Systems

and Ontology
Human language, and by extension information and knowledge, is not static. It nei-
ther exists in a vacuum nor substantiates a unitary form determined by a set of norma-
tive principles. The human language is inherently social. The complexity of language
issues, and hence of controlled vocabularies, has increased with the multi-domain, mul-
tilingual, and multicultural requirements of the networked environment.
Current KO systems fail to support cross-domain and cross-cultural IR because
relevance is connected to meaning, which is contextual. In existing systems, compet-
ing contexts are forced to accept a single vocabulary or classification structure as the
representational medium for discourse across various boundaries of language, culture,
and paradigms. People are not given the opportunity to consider the competing (and
at times, conflicting) views and interests to make a context-sensitive judgment. Even
systems that have been widely adopted worldwide to organize library resources such as
the Library of Congress Subject Headings (LCSH) and classification systems such as the
Dewey Decimal Classification (DDC) scheme have failed to be truly universal. These
subject heading lists and classification schemes carry with them systematic exclusions
or misrepresentation of points of view of ethnic minorities, using language that shows a
prejudice in favor of particular points of view and against others (Olson 2000; Tamara
1987). They have an emphasis on Western religions (Oh and Yeo 2001) and do not well
represent names of other languages and cultures (Sudweek and Ess 2000). The leading
critic of the LCSH, Sanford Berman, who wrote Prejudices and antipathies: A tract on
the LC subject heads concerning people in 1971 found that 30 years later, no more than
half of his suggestions for changes have been adopted and that areas of bias are still
prevalent in LCSH (Knowlton 2005).
The development of a truly responsive and effective KD system or environment must
ensure that diverse, and sometimes competing, contexts are not coerced to accept a single
representational vocabulary of universal classificatory structure as the medium for dis-
course across boundaries. Classification and KO tools (especially those that aim to serve an
international community of users) must acquire a new crucial role. Instead of functioning
based on objective epistemology and imposing “shared conceptualizations,” these knowl-
edge representation and organization systems ought to support the navigation of not only
knowledge topics, but also context-sensitive views and perspectives. To support context-
sensitive KD, the KD environment should be a place where users may come to learn in a
much more interactive way than merely using information within an enforced paradigm.
TOWARD A HERMENEUTIC APPROACH

TO CONTEXT EXPLICATION
Knowledge and Context
It is beyond the scope of this chapter to carry out a detailed exploration of the range of
contexts that might be necessary in a KD environment. Further exploration of this line
of thought is nevertheless both necessary and worthwhile. The question of what kind of
contextual information should be included in knowledge repositories can be itself an
area of further research.
In this section, the relation between knowledge and context is briefly discussed in the
light of findings from previous researchers.
Within the literature, many definitions of knowledge have context as an important
aspect. A selection of these is presented in Table 5.1.
Klemke (2000), meanwhile, recommends a holistic understanding of context by means
of several dimensions (see Figure 5.1). Context includes the social, cultural, historical,
and personal perspectives affecting how a person evaluates and uses information. Con-
text can also be defined as the situational factors surrounding knowledge works.
When documents move beyond the boundaries of the local domain in which they
have been created, the contextual information that comes with them (such as those
listed in Figure 5.1) is not always clear to the users. Hence, contextual information needs
to be made explicit so that users in the broader domains can uniquely identify, retrieve,
and understand meanings of the information carried by the documents. It is impor-
tant therefore for context to be considered at the level of knowledge representation and
made transparent in the KD environment.
In a cross-domain and cross-cultural KD environment, knowledge should at least
be considered to comprise both information and user-specific aspects, such as domain
knowledge, as well as social and cultural values. The explication of an information
Table 5.1
Selected definitions of knowledge
Literature Definition
Davenport and Prusak (1998) “Knowledge is a fluid mix of framed experience, values,
contextual information, and expert insight that provides a
framework for evaluating and incorporating new experi-
ences and information. It originates and is applied in the
minds of knowers.”
Sveiby (1997) Knowledge is the capacity to act within context.
Murray (1996) “Making the tacit explicit often includes the following activi-
ties: … identifying terminology that is clearly understood
and using language that is appropriate for the culture and
context.”
Nonaka and Takeuchi (1995) “First, knowledge, unlike information, is about beliefs and
commitment…. We consider knowledge as a dynamic
human process of justifying personal belief toward the
‘truth.’” (i.e., contextual)
Polanyi (1966) Tacit knowledge is personal, context-specific, difficult to ex-
press in verbal, symbolic, and written form, and therefore
hard to formalize and communicate.
Figure 5.1
Klemke’s context typology.
object’s implicit context, thereby making explicit those meanings, supports a context-
sensitive KD. This is essential in KD in a global environment.
The appropriate contexts must be made explicit in both representation and organiza-
tion. An ongoing process of contextualizing and recontextualizing is also required so
as to provide a viable infrastructure to support effective KD and knowledge acquisition
in a context-sensitive way, both internally within a knowledge domain and externally
across the boundaries of conflicting competing domains with different meanings, views,
and interests. The exclusion or invisibility of certain communities of users or social
worlds in the representational system—that is, a kind of institutional opacity rather than
transparency, must be avoided. In the following section, we argue that a hermeneutical
approach is a promising avenue for context explication.
Why Hermeneutics?
The “real world” is in fact ambiguous to quite a significant degree. People with
different theoretical dispositions and agendas have different worldviews. The his-
torian of science T. S. Kuhn (1996) insists that the notion of a deeper, and hence
neutral, classificatory scheme is an illusive one. In his view, all classifications are
relevant to some theoretical framework and therefore, a so-called deeper (universal)
classificatory scheme would not be neutral, but relative only to its own theoretical
perspective.
In Kuhn’s terms, the absence of a common neutral set of categories to which different
categorical schemas could be reduced means that the different schemas are incommen-
surable with respect to the criteria in relation to which they are evaluated. It should also
be noted that, to some extent, even the same terms can sometimes bear different empiri-
cal and theoretical meaning in different paradigmatic contexts. This is also the opinion
of Bernstein (1983) and Feyerabend (1993). Criteria for data recognition vary with the
context of application, even within paradigms. Smith (2003) has also pointed out that
even a limited and domain-specific approach to ontology has its problems. He gives the
example that even in a domain as limited as finance, any ontology designed to facilitate
communication will have to be adjusted to the fact that “objects in the realm of finance,
credit, securities, collateral and so on are structured and partitioned in different ways in
different cultures” (Smith 2003, 48).
Whenever one is forced to apply an ontology to a domain structured by the subtle-
ties of human judgment and local contexts, the requirement that the application of the
ontology be adjusted to those subtleties and contexts seems to block the aims of the sort
of automatic information processing ontology designers have hoped for.
Scientific knowledge and understanding are clearly not strictly rule-governed activities
grounded in a set of neutral facts. They depend on crucial junctures of human judg-
ment and interpretations. The aspects of the conventions structuring human knowl-
edge, analysis, synthesis, and application are precisely the dimensions that are central
to the Heidegger-Gadamer analysis of the so-called hermeneutic circle (Gadamer 1975;
Heidegger 1962). Heidegger distinguishes three modes of people’s involvement with their
surroundings: (1) an everyday mode of practical activity, (2) a reflective problem-solving
mode, and (3) a theoretical mode. In his now classic example—in picking up a hammer
to nail something—Heidegger states that a hermeneutic understanding is already at work.
Pre-understanding can be constructed into words, but hereby, Heidegger proposes, is the
original hermeneutical relation between person and world reified. Knowledge is always
situated. The emphasis of the hermeneutical approach is that there is no escape to an abso-
lute view without presuppositions. Human knowledge is always an interpretation of the
world—not a pure, perspective-free theory. The literature of philosophical hermeneutics,
dealing as it does with communication among people holding different perspectives, has
central relevance to the construction and use of ontology and other KO schemes.
According to Suchman (1987, 76), “the communicative significance of a linguistic
expression is always dependent upon the circumstances of its use. A formal statement
not of what the language means in relation to any context, but of what the language-user
means in relation to some particular context, requires a description of the context or
situation of the utterance itself. And every utterance’s situation comprises an indefinite
range of possible relevant features.”
Hermeneutic theory is based on accepting the effect of this indefinite, inevitable, and
infinitely detailed situational background. Any use of a symbol in a human activity car-
ries with it a set of assumptions, applicability, the people involved, the other information
and prior knowledge that they have acquired, their organizational structures, policies
and practices, and so on. Each language-user’s interpretation therefore involves their
understanding of the original utterance’s content and context, as well as an understand-
ing of other contexts of use of the utterance.
Butler (1998) has attempted to categorize hermeneutics and discussed their potential
applications to information systems research as follows:
• Hermeneutical Theory/Conservative: Uncover original meanings as intended by the
author
• Constructivist or Pragmatic: Enter into the interpretative norms of the community, as
well as consider the historical contexts of the interpreter and interpreted
• Radical or Deconstructionist: Text and social action are treated as an endless play of
signs that reveal and conceal knowledge through the play of difference and contra-
diction
Others have also discussed the relevance of hermeneutics for information science.
Winograd and Flores (1986) have proposed that in light of the importance of a herme-
neutic analysis of computation and cognition, the communicative function of comput-
ers should be given serious recognition. Snodgrass and Coyne (1997) argue that design
is not in the domain of natural sciences but belongs to the human and hermeneutical
sciences. Rafael Capurro (2000) considers that trying to fit the event of information
into a fixed structure is a hopeless enterprise, and argues that an ethically responsible
approach to information technology is one that takes into consideration the process of
interpretation that is required for the constitution of meaning. Accordingly, Capurro
points to the centrality of hermeneutics for the study of information and information
science. Chalmers (1999), meanwhile, discusses the importance of interpretation and
a hermeneutic approach particularly for IR and in library science literature, and Ben-
oit (2002) devotes a sophisticated review to the analysis of information systems from
the point of view of twentieth-century philosophy, including an excellent study of
hermeneutics.
Taking a wider view, this chapter follows in the footsteps of those within herme-
neutics that seek a view of knowledge and inquiry that unifies the perspectives of
the social, cultural, and natural sciences. More specifically, it is proposed that a her-
meneutic approach to KO tool construction and use will facilitate the generation of
knowledge through an ongoing process of interpretation (contextualization) and
integration (recontextualization)—creating a place where users may come to learn in
a much more fundamental way than merely using information within one enforced
paradigm.
UNITY IN DIVERSITY: CROSS-CONTEXTUAL

KNOWLEDGE DISCOVERY
If hermeneutic analysis makes possible a valid characterization of scientific activity,
this entails that KO schemas should be designed in the light of the fundamentally herme-
neutic character of scientific enterprise. A KO schema should not be considered static;
instead it should be flexible and open to development, adjusting to different contexts of
application and capable of incorporating new contexts.
In an earlier study by Kublik and others (2003), it was pointed out that in the DDC,
nursing personnel were not categorized as a subdivision of 610.695, “Specific kinds of
medical personnel,” but were instead assigned under the topic of education and research.
The authors argued that this classification had resulted in nurses being effectively ghet-
toized. Users browsing books about the medical professions might not find books about
nursing.
To accommodate different perspectives, the KO system envisioned would enable
the appropriate reorganization and recontextualization, as well as making available
comparison of the different perspectives. By designing a hermeneutic context in knowl-
edge representation and KO, we therefore make room for an interactive space—for
communication among users who hold different ontologies. Representation of diverse
ontology can be a setting within which users with different conceptual schemas can
learn to understand one another.
A systematic method for automatically detecting and assisting in resolving various
semantic conflicts is needed. The proposed framework is different from other ontol-
ogy frameworks that have been designed to capture domain specific (MacGregor 1991;
Mahalingam and Huhns 1997) or commonsense knowledge (Lenat et al. 1990; Storey et
al. 1997). The aim of the framework is to support the encoding of extensible knowledge
on commonly found semantic conflicts that have been identified. A knowledge organi-
zation KO system designed based on this framework, be it an ontology or a classifica-
tion system for instance, will provide an automatic way of comparing and manipulating
contextual knowledge of each information source. The structure of such a system can be
as shown in Figure 5.2.
A concept is related to instances in that a concept is a generalized abstract term
that may have several concrete instances. A concept may have zero or more children,
and each concept may be an instance or another concept. The “disjoint” relationship
Figure 5.2
Structure of a cross-contextual knowledge organization system.
between two concepts indicates that they are not semantically equivalent. The “part-of”
relationship is similar to an aggregation in object-oriented data models and semantic
such models. The “is-a” relationship, in contrast, is similar to generalization/specializa-
tion in such models. The “peer” relationship is used when two concepts are semantically
equivalent. It is possible for the two concepts to define one-to-one mapping between all
the instances of these two concepts. The disjoint and peer relationships will be useful for
mediators to determine if semantic conflicts (especially data-level conflicts) exist, and
if they exist, whether these conflicts are resolvable. The purpose of the is-a and part-of
relationships is to allow mediators to detect schema-level conflicts (e.g., those that exist
between different KO systems).
As Elaine Svenonius writes in The Intellectual Foundation of Information Orga-
nization (2000), the framework proposed in this chapter “seeks unity in diversity.”
Information and concepts are not viewed as static entities but as emergent properties
resulting from a subjective, dialogic process of reorganization and recontextualization.
KO systems, particularly those purporting to be universal and international, need to
be capable of bringing together data and/or documents from different countries and
communities, and integrating them within a common scheme that permits the colloca-
tion of information and navigation of information spaces in ways that meet the cultural
expectations of particular communities, while having an infrastructure that contains
the different ontologies.
A number of characteristics of the KO and KD environment envisioned are as

follows:
1. The KO and KD environment envisioned is a space where users assuming different con-
ceptual schemas may come to learn from one another through interaction with each
other and with the KO tool. The interaction would involve a back-and-forth process that
includes dimensions of interpretation, understanding, and application.
2. The KO system should be based on effective infrastructures that will support productive
activity and encourage dialog both internally within a knowledge domain, and exter-
nally across the boundaries of competing or conflicting domains.
3. The KO scheme must strive not only to encourage external dialog across the boundar-
ies of overlapping knowledge communities, but also to facilitate the generation of new
knowledge internally through interpretation (contextualization) and integration ( recon-
textualization) within the existing infrastructure of new facts and new observations.
4. The KO system should also have an infrastructure that supports the discovery, explica-
tion, visualization, navigation, and use of contexts to stimulate context-sensitive KD, as
well as supporting the growth of contextual perspectives within the KO system.
5. Information visualization tools as well as topic maps (http://www.topicmaps.org/) for
conceptual and contextual mapping could play a prominent role.
6. Convergence of the different representations and contextualization is not interoperability,
but rather a layering of solutions, conventions, and standards.
This framework encourages us to construe KO schemas as representations of the

world as present-at-hand where different perspectives meet. Instead of functioning
as objective shared conceptualizations, knowledge classifications could be a powerful
tool for supporting the growth of each knowledge community’s contextual perspective,
and for allowing interoperation between autonomous perspectives shared by the global
information society.
APPLICATION OF THE FRAMEWORK

TO KNOWLEDGE MANAGEMENT
The application of the proposed framework to knowledge organization and knowl-
edge management systems offers the benefit that cultural and administrative barriers
to individual and organizational learning are systematically broken down by focusing
on related contexts. The tendency of individuals and groups in communities or orga-
nizations to self-organize around their interests is supported by and strengthened by
embracing knowledge-related contexts that encourage related behaviors. The frame-
work proposed in this chapter explicitly rejects the claim that individuals operating in
social environments can produce and integrate knowledge via prescriptive edicts on a
sustainable basis.
Knowledge is dependent upon, and tied to the context within which its “epistemic
culture and machinery” is produced, in the terms formulated by Knorr-Certina (1999).
Technology, including knowledge management systems, is not just an exterior force
that encroaches upon local, “technologically unspoiled” contexts, although it might be
utilized that way. Most of the time, technology participates in the constitution of local
contexts. Hasselbladh and Kallinikos (2000) have argued that interpretation constitutes
an intrinsic part of the social life process by means of which humans seek to actively
enact the possibilities inherent in technologies and cross-contextual systems in order to

construct particular forms of “actor-hood” in the local settings. It is therefore important
to address the issue of who interprets and locally negotiates the meaning and functional-
ity of the technology concerned.
It is time to move away from the Newspeak solution and culturally biased knowledge
systems to an ethically responsible approach. We must take into account the process of
interpretation that is needed for the constitution of meaning. The framework proposed
aims to be a starting point for the move toward instilling sociocultural awareness and
responsibility in our efforts to organize knowledge for sharing among societies of dif-
ferent cultures.
ACKNOWLEDGMENT
Part of this work was presented at the Fourth IADIS International Conference on
WWW/Internet 2005, 19–22 October 2005, Lisbon, Portugal.
REFERENCES
Arms, W. Y., D. Hillmann, C. Lagoze, D. Krafft, M. Richard, J. Saylor, C. Terrizzi. and H. van de
Sompel. 2002. A spectrum of interoperability: The site for science prototype for the NSDL.
D-Lib Magazine 8 (1): 9.
Benoit, G. 2002. Towards a critical theoretic perspective in information systems. Library Quarterly
72 (4): 444–74.
Berman, S. 1971. Prejudices and antipathies: A tract on the LC subject heads concerning people.
Metuchen, NJ: Scarecrow Press.
Berners-Lee, T., J. Hendler, and O. Lassila. 2001. The semantic Web, http://www.sciam.com/
2001/0501issue/0501berners-lee.html.
Bernstein, R. J. 1983. Beyond objectivism and relativism: Science, hermeneutics, and praxis.
Philadelphia: University of Pennsylvania Press.
Black, M. 1968. Can language reflect reality? The labyrinth of language. http://www.rick.harrison.
net/langlab/reality.html.
Borges, J. L. 1999. The analytical language of John Wilkin. Trans. L. G. Vazquez, http://www.
alamut.com/subj/artiface/language/johnWilkins.html.
Bowker, G. C., and S. L. Star. 1999. Sorting things out: Classification and its consequences.
Cambridge, MA: MIT Press.
Brown, J. 1989. Loglan 1: A logical language, 4th ed. Gainesville, FL: Loglan Institute.
Butler, T. 1998. Toward a hermeneutic method for interpretative research in information systems.
Journal of Information Technology 13:285–300.
Capurro, R. 2000. Hermeneutics and the phenomenon of information. In Metaphysics, epistemol-
ogy, and technology, ed. C. Mitcham, 79–85. New York: JAI.
Chalmers, M. 1999. Comparing information access approaches. Journal of the American Society
for Information Science and Technology 50 (12): 1108–18.
Cowan, J. W. 1997. The complete Lojban language. Fairfax, VA: Logical Language Group.
Davenport, T. H., and L. Prusak. 1998. Working knowledge: How organizations manage what they
Degen, W., B. Heller, H. Herre, and B. Smith. 2001. GOL: A general ontological language.
Proceedings of 2001 Conference on Formal Ontologies in Information Systems, 34–46. New
York: ACM Press.
Descartes, R. 1972. Traité de l’homme (Treaties of man), trans. T. S. Hall. Cambridge, MA: Harvard
University Press.
Eco, U. 1995. The search for the perfect language. Oxford: Blackwell.
Feyerabend, P. K. Against method, 3rd ed. London: Verso.
Gadamer, H.G. 1975. Truth and method. New York: Seabury Press.
Ghidini, C. and F. Giunchiglia. 2001. Local models semantics, or contextual reasoning = Locality
+ Compatibility. Artificial Intelligence 127 (2): 221–59.
Guarino, N. 1998. Formal ontology and information systems. In Formal ontology in information
systems, ed. N. Guarino, 3–15. Amsterdam: IOS Press.
Jackson. P., H. Reichgelt, and F. van Harmelen. 1989. Logic-based knowledge representation.
Cambridge, MA: MIT Press.
Hasselbladh, H., and J. Kallinikos. 2000. The process of rationalization: A critique and re-appraisal
of neo-institutionalism in organizational studies. Organization Studies 21 (4): 697–720.
Heidegger, M. 1962. Being and time. New York: Harper.
Hjǿrland, B. 2002. Epistemology and the socio-cognitive perspective in information science.
Journal of the American Society for Information Science and Technology 53 (4): 257–70.
Klemke, R. 2000. Context framework—an open approach to enhance organizational memory
systems with context modeling techniques. Proceedings of the Practical Applications of
KM (PAKM2000), http://www.fit.fraunhofer.de/gebiete/wissensmanagement/papers/
pakm2000_klemke_ContextFramework.pdf.
Knorr-Certina, K. 1999. Epistemic cultures. How the sciences make knowledge. Cambridge, MA:
Harvard University Press.
Knowlton, S. A. 2005. Three decades since Prejudices and Antipathies: A study of changes in
the Library of Congress Subject Headings. Cataloging & Classification Quarterly 40 (2):
123–45.
Kublik, A., V. Clevette, D. Ward, and H. A. Olson. 2003. Adapting dominant classifications to
particular contexts. Cataloging & Classification Quarterly 37 (1/2): 13–31.
Kuhn, T. 1996. The structure of scientific revolutions, 3rd ed. Chicago: University of Chicago
Press.
Lakoff, G. 1987. Women, fire and dangerous things—What categories reveal about the mind.
Chicago: University of Chicago Press.
Lenat, D.B., R. V. Guha, K. Pittman, D. Pratt, and M. Shepherd. 1990. CYC: Toward programs
with common sense. Communication of ACM 33 (8): 30–49.
MacGregor, R. 1991. The evolving technology of classification-based knowledge representation
systems. In Principles of semantic networks: Explorations in the representations of knowl-
edge, ed. J. F. Sowa, 385–400. San Mateo, CA: Morgan Kaufmann.
Mahalingam, K. and M. N. Huhns. 1997. An ontology tool for query formulation in an agent-
based context. Proceedings of Second IFCIS International Conference on Cooperative
Information Systems: 170. Washington: IEEE Computer Society.
McGuiness, D.L. 2001. Ontologies come of age. http://www.ksl.stanford.edu/people/dlm/papers/
ontologies-come-of-age-mit-press-(with-citation).htm.
Murray, P. C. 1996. Information, knowledge, and document management technology. Knowledge
Management Briefs 1(2), http://www.ktic.com/topic6/12_INFKM.HTM.
Nonaka, I., and H. Takeuchi. 1995. The knowledge-creating company: How Japanese companies
create the dynamics of innovation. New York: Oxford University Press.
Oh, D-G., and J-S. Yeo. 2001. Suggesting an option for DDC Class Religion (2001) for nations in
which religious diversity predominates. Knowledge Organization 28 (2): 75–84.
Olson, H, A. 2000. Difference, culture and change: The untapped potential of LCSH. Cataloging &
Classification Quarterly 29 (1/2): 53–71.
Orwell, G. 1992. Nineteen eighty-four. Norwalk, CT: Easton Press.

Polanyi, M. 1966. The tacit dimension. Gloucester: Routledge & Kegan Paul.
Ranganathan, S. R. 1967. Prolegomena to library classification, 3rd ed. Bombay: Asia Publishing
House.
Smith, B. 2003. Ontology and information systems. In The Stanford Encyclopedia of Philosophy,
ed. E. N. Zalta, 46–52. Stanford, CA: Center for the Study of Language and Information,
Stanford University.
Snodgrass, A., and R. Coyne. 1997. Is designing hermeneutical? Architectural Review Theory 1
(1): 65–97.
Soergel, D. 1999. The rise of ontologies or the reinvention of classification. Journal of the American
Society of Information Science 50 (12): 1119–20.
Storey, V. C., R.H.L. Chang, D. Dey, R. C. Goldstein, and S. Sundaresan. 1997. Database design
with common sense business reasoning and learning. ACM Transaction of Database
Systems 22 (4): 471–512.
Suchman, L. 1987. Plans and situated actions: The problem of human machine communication.
Cambridge: Cambridge University Press.
Sudweek, F., and C. Ess, eds. 2000. Cultural attitudes towards technology and communication.
Proceedings of Second International Conference on Cultural Attitudes Towards Technology
and Communication. Perth, Australia: Murdoch University.
Svenonius, E. 2000. The intellectual foundation of information organization. Cambridge, MA: MIT
Press.
Tamara, L. 1987. Ethno-linguistic misrepresentations of the Alaskan native languages as mirrored
in the Library of Congress of cataloging and classification. Cataloging & Classification
Quarterly 7 (3): 69–90.
Taylor, A. G. 1999. Organization of information. Englewood, CO: Libraries Unlimited.
Thomas, J., W. Kellogg, and T. Erickson. 2001. The knowledge management puzzle: Human and
social factors in knowledge management. IBM Systems Journal 40 (4): 863–84.
Wilkins, J. 1968. An essay towards a real character and a philosophical language. Menston, UK:
Scholar Press.
Winograd, T., and F. Flores. 1986. Understanding computers and cognition: A new foundation for
design. Norwood, NJ: Ablex.
6
Managing Innovative Knowledge:
Cultural Perspectives on Patenting
Chad Saunders and Mike Chiasson
ABSTRACT
This chapter employs a cross-cultural perspective on patenting to explore differences

and similarities in the management of innovative knowledge over time. Patents op-
erate at the nexus of individual, legal, political, organizational, and societal inter-
ests thus providing a useful vantage point to explore cultural perspectives in the
management of knowledge. The discussion includes how culture is implicated in the
emerging notions of intellectual property and innovative knowledge, the motivations
for managing it, its ownership and the allocation and enforcement of rights to this
knowledge. The ongoing debate over the patentability of new innovations (e.g., soft-
ware, genes) serves to illustrate how cultural differences continue to influence fun-
damental decisions regarding the management of innovative knowledge. Over time,
the management of innovative knowledge has shifted from the communal concerns
of localized groups within particular locales, to the individual rights of inventors,
and to the global rights of organizations. Although a global patent system facilitates
knowledge exchange across cultures by providing common practices upon which
knowledge can more freely flow, the universal approach to knowledge management
implied in this global system is seen to impede innovation in unintended ways when
considered in the context of the diversity of the constituent cultures that inform and
are affected by this system.
INTRODUCTION
In this chapter, a cross-cultural perspective on patenting is employed to explore
differences and similarities in the management of innovative knowledge over time.
Patents operate at the nexus of individual, legal, political, organizational, and societal
interests thus providing a useful vantage point to explore cultural perspectives in the
management of knowledge. The discussion includes how culture is implicated in the
notion of intellectual property and innovative knowledge, the motivations for managing
it, its ownership, and the allocation and enforcement of rights to this knowledge. Over
time, the management of innovative knowledge has shifted from the communal con-
cerns of localized groups within particular locales, to the individual rights of inventors,
and to the global rights of organizations. Each shift illustrates a complicated and socially
constructed balancing of societal, individual, and organizational rights that now favor
the international rights of corporations.
Patenting institutionalizes the management of specific approaches to innovative
knowledge within and across societies. These systems have interacted over time to pro-
duce a global system dominated by Western practice. The debate over the patentability
of computer-implemented inventions, and in particular software, serves to illustrate
how cultural differences continue to influence fundamental decisions regarding the
management of innovative knowledge. The motivation for the patenting system has
shifted over time, and recent research raises concerns over the universal applicability
of patenting across cultures suggesting that cultures with strong support for patenting
do not produce more innovations than those without such systems but instead tend to
develop innovations of a certain type.
The remainder of this chapter explores the ongoing cross-cultural negotiations
that occur in the context of patenting with respect to the acceptable types of innova-
tive knowledge, why this knowledge is managed, who owns the knowledge and how is
it managed. The implications of these shifts in the patenting systems identified in the
first half of the chapter are discussed in the context of a global patent system and the
influence of dominant patent jurisdictions on emerging ones. In particular, it is pointed
out that countries ill equipped to adopt or adapt this system, through financing and
intellectual infrastructure, have numerous barriers to accessing and building on global
innovations, which further curtails their ability to participate and contribute. Although
a global patent system facilitates knowledge exchange across cultures by providing com-
mon practices upon which knowledge can more freely flow, the universal approach to
knowledge management implied in this global system is seen to impede innovation in
unintended ways when considered in the context of the diversity of the constituent cul-
tures that inform and are affected by this system.
PROPERTY RIGHTS AND PATENTING

To understand the acceptable types of innovative knowledge that fall under the pur-
view of patenting, it is useful to consider the historical roots of patenting across several
influential cultures through the emergence of the concept of intellectual property as an
intangible asset with financial value. The concept of intellectual property, as an intan-
gible property with commercial value, is a relatively recent development accompanying
new attitudes toward authorship, craft knowledge, and invention (Long 1991).
The origin of property rights lies with ownership and control over physical things like
land and cattle; however, over time these rights have extended to include intangibles—
assets not directly attributable to physical resources (Carruthers and Ariovich 2004).
Managing Innovative Knowledge 97
Our earliest evidence of a shifting value toward more intangibles lies in the ancient
Greek views of authorship. Within these ancient societies, the practice of giving credit
for authorship provides insight into the value placed upon this knowledge. The ancients
wished to bestow honor on their writers through an explicit recognition of their works.
This ancient practice of honoring authors and discouraging theft of writings was to
increase the reputation of the author, and not for preventing the larceny of intangible
property (Long 1991). Value was placed upon recognizing the contribution of authors,
thus the protection offered was for the author’s reputation and stature as an author
within society and not direct protection of the work.
The rise of craft knowledge within medieval cultures was characterized by the rise of
guilds in which the commercial value of intangible practical knowledge was recognized.
Medieval societies transmitted craft knowledge through oral tradition and apprentice-
ship, with many crafts originating from the skills learned out of necessity in the house-
hold. With the rise of urbanism, artisan production shifted outside the household to
guilds, thus opening craft knowledge beyond the confines of family ties (Long 1991).
This close-knit corporation of the guild provided a mechanism for passing the craft
knowledge on, while controlling—at least to a certain extent—those with access to
the craft knowledge and how it was exploited. When craft knowledge was useful only
among those practicing in a household, no explicit attempts were made to maintain
the craft knowledge in secrecy since it was only conveyed among the family, and much
of the craft knowledge could only be attained through the practice of the craft. Thus
secrecy was most likely unintentional, relying on the tacit knowledge exchange gained
through practice (Long 1991). From this family focus on the protection of craft knowl-
edge emerged the development of guilds as organizations of artisans based upon partic-
ular crafts and technologies. The guilds originally organized to attend to the cult deity,
to meet for social events, or to provide burial for poor members of the guild, and did
not address economic concerns or intentionally manage craft knowledge (Long 1991).
That is, the guild emerged to meet obligations normally handled by the family, but as
the guild membership moved beyond family ties toward more commercial interests, the
focus of the guild activities moved to concerns over protecting the craft. Craft knowl-
edge as intellectual property emerged as an intangible product with economic value
with the rise of medieval cities and the market economies that developed within them
(Long 1991). Medieval cultures began to value not only property in the form of physical
assets like land but also intangible assets like craft knowledge. The connection between
individual authorship and intellectual property was not made until the fifteenth century,
first with regard to material inventions and later (in the sixteenth century) with regard
to writings (Long 1991).
The patent emerged from this conceptualization of intellectual property as having
intangible dimensions with economic value. Patents served to convert craft knowledge
into property that could be owned and managed. During its inception the patent existed
as a limited monopoly awarded locally for novel craft knowledge or for the invention
of new devices (Long 1991). European and English patents during the fifteenth and six-
teenth centuries consisted of limited monopolies for novel machines and processes on
the basis of authorship or possession of knowledge about a particular process. Govern-
ments issued patents for these innovations as well as other resources (e.g., land, minerals)
with the purpose of promoting economic development and attaining political ends (Long
1991). Inventors petitioned for intellectual property rights using the same mechanism
used for requesting rights to land or minerals. The inventors argued for the granting of
patents based upon claims of tangible benefits of the invention for the economy (i.e., the
usefulness of the invention) and not necessarily its newness, which is the focus of today’s
patents.
Current conceptualizations of what constitutes patentable innovative knowledge are
evaluated in terms of the invention’s newness, nonobviousness, and usefulness. This
list of criteria has emerged over time, and it is culturally negotiated and disputed both
within and across jurisdictions. What constitutes innovative knowledge with respect to
newness has shifted over time with the criteria being of little import or based upon a
geographic location. The first patents issued in Italy used an urban criterion of newness:
Was the invention new to the city? There was little concern whether the person apply-
ing for the patent was the inventor or the importer of the technology. Societal norms
focused more on the impact of the inventor for the greater good of the city and not
necessarily protecting intellectual property rights of the inventor, because the focus was
more on the usefulness of the invention. The issue of nonobviousness emerged much
later—only after the rights of individual inventors came to the forefront and it became
increasingly important to determine ownership of the invention.
The culture and laws in which the concepts of ownership are embedded influence
what can and cannot be owned. For example, the adoption and enforcement of intel-
lectual property rights in contemporary China has been undercut by the lack of a notion
of “property” under Imperial Chinese law and culture (Alford 1995). The contrast with
Western cultures that have well-established legal systems to deal with property, both
tangible and intangible, based upon an economic system where individual ownership
is paramount, serves to highlight the considerable challenge for implementing a West-
ern-style patent system in such a context. Remarkably, that is essentially what exists in
China today—however, not without considerable debate over the applicability of such a
patent system. Interestingly, many of the concerns raised by the Chinese are similar to
those historically raised by other nations as they implemented their own patent systems.
High-context cultures like China emphasize relationships, whereas lower-context cul-
tures in the West rely more on contracts. The patent system is now strongly influenced
by lower-context cultures, and thus the rules and norms surrounding what is deemed
innovative knowledge are driven by these cultural expectations.
Debates over the patentability of new types of innovations often challenge cultural
norms and prohibitions. Recent debates over the patentability of life forms, genes,
and software serve to highlight the differing cultural values that the patenting system
crosses. The debate over software patents in the United States illustrates the ongoing
dialogue within one jurisdiction. The U.S. Patent and Trademark Office (USPTO) has
historically been reluctant to grant patents on computer implemented inventions such
as software, and during the 1970s, it avoided granting patents on inventions that uti-
lized calculations made by a computer. Patents could only be granted for processes,
machines, articles of manufacture, and compositions of matter and could not be granted
to scientific truths, whether expressed mathematically or not. Software was considered to
be public mathematical algorithms—not processes or machinery—and thus not patent-
able. During the 1980s the USPTO shifted its position and began accepting inventions
that utilized a generic computing device to implement a new process. That is, software
was patentable if the new business methods defined by the software were implemented
using a general-purpose computer. Thus, the patentability of software during this time
depended heavily on how the claims outlining what was innovative were drafted by the
patent attorney. By the 1990s, following a landmark case involving the patentability of
business methods, software was placed within the purview of patentable subject matter
within the United States. As a result, the dialog surrounding whether software was pat-
entable changed over time from rejection to acceptance. However, other cultures and
nations continue to debate the acceptance of software patents, such as the European
Union, where a combination of rhetoric (e.g., “we are not the United States”) and social
concerns (i.e., software and business patents offer too much protection) are raised. This
issue is revisited later in the chapter in the context of cross-cultural influences and the
emergence of a global patenting system. Ironically, jurisdictions like China do not allow
patents on software, but if the combination of software and hardware as a whole is an
improvement that offers a complete technical solution, then an invention containing a
computer program might be patentable.
Cultural expectations have influenced the value placed upon certain types of knowl-
edge. Cultures adopting patent protection place increased emphasis on the promotion
of the creation of new knowledge. This tends to have the cultural influence on placing
primacy on newness and innovation, potentially at the expense of historical practice.
In entrepreneurial cultures like the United States, the desire to promote innovation
with minimal interference from government institutions like the patent office leaves the
inventor—and more recently corporations—to choose which innovative knowledge to
develop, protect, and exploit, leaving the open market to decide the usefulness of such
efforts. This strong entrepreneurial spirit has over time influenced the United States to
relax restrictions on patenting of software, whereas other jurisdictions like Canada, the
European Union, and China take a decidedly more cautious approach. The next section
explores the cultural influences increasing the reliance on intangible property, and the
motivations for patenting.
MOTIVATIONS FOR PATENTING

The motivation for managing innovative knowledge is culturally influenced through
underlying assumptions that inventors should be rewarded for their creative and tech-
nical activity. However, cultural differences in the role of governments in the affairs of
their citizens and a growing discomfort with powerful monopolies serve to temper the
patent systems within individual countries.
The act of invention is considered to require significant effort on the part of the inven-
tor, whereas the duplication of the invention by others is assumed to have minimal
effort and risk. Inventors are understandably reluctant to publicly release the details
of their inventions because they potentially risk forfeiting significant financial rewards
from exploiting their ideas. Governments and the public also feel that in the absence of
incentives, inventors might choose to not invent or keep their ideas secret in order to
protect their efforts. However, there are practical problems in maintaining trade secrets,
which are prone to unintentional public disclosure, thus destroying the inventor’s pri-
ority claims to the invention. Once an invention has been released, reverse engineer-
ing can be employed to reveal the invention’s process and inner workings. Thus, once
released as a product or service, the opportunity to maintain secrecy is lost for many
inventions. In these instances, the patent system provides a mechanism for protecting
the inventor’s interests while purportedly addressing broader societal needs for promot-
ing innovation. Today, a patent represents a contract between the inventor and society
whereby the inventor is granted a limited monopoly for their invention for a period of
time and in return agrees to publicly disclose the details of the invention so that others
might improve upon it and use this knowledge to create new inventions. In this way,
the patent record provides a repository of innovative knowledge from which society can
draw to address current challenges and to evaluate and generate new inventions.
Western societies rely heavily on continued innovation to fuel commercial ventures
and to promote economic growth. Westerners view invention not as a gift from the
gods, as did the ancient Greeks, but as a human activity that is amenable to individual,
organizational, and societal management (Cooper 1991). Individual inventors play a
critical role in meeting societal level demands for new products and services, and gov-
ernments of Western nations believe continued growth and prosperity depends upon
the regular supply of innovation from their citizens. Supporting and promoting inven-
tive activity is seen as crucial to the continued success of the nation and thus within the
purview of government management.
The motivation for patenting is culturally embedded in Western attitudes toward cre-
ative activity in general, and technical activity in particular (Cooper 1991). The patent-
ing system provides an institutional inducement for invention by attempting to align
the individual needs of the inventor with the broader needs of society. Patenting is not
the only approach taken by nations to meet this alignment. For example, before 1791,
France did not have a patent system, relying instead on a set of institutions for state
identification, reward, and utilization of inventions through privileges (MacLeod 1991).
Although the purpose of these privileges paralleled the Anglo-American patent sys-
tems, the French system employed the economic resources of the government and not
of private individuals through limited monopolies. The French government dealt with
invention as an integral part of its economic policy and extended this to encourage man-
ufacturing (MacLeod 1991). This was in sharp contrast to other jurisdictions like the
United States and England, which took a decidedly hands-off approach, leaving these
decisions to the open market to decide. Having extensive government involvement in
the affairs of inventors is culturally untenable in societies that value entrepreneurship
and an open market.
As the use of patents grew in prominence, the power of the monopolies they created
came under increasing scrutiny. Governments came under pressure to limit the excesses
of monopoly while encouraging the introduction of new manufacturers and promot-
ing invention (MacLeod 1991). Part of the motivation for encouraging manufacturing
was so that others, including the patentee’s employees, could learn the methods. This
was often incorporated directly into the conditions of the patent grant. For example,
English and some American patents regularly in the sixteenth century—and occasion-
ally in the seventeenth century—included a requirement to instruct a certain number
of apprentices; however, by the eighteenth century, this practice disappeared (MacLeod
1991). MacLeod (1991) points out that the role of patents in economic development is
to stimulate invention by ironically inhibiting its free diffusion by imitators. Inherent in
patenting practice is a paradox that in order to stimulate invention governments must
inhibit diffusion. Since the seventeenth century, the usual English and American way of
rewarding invention has been indirectly through the provision of monopolistic power
over the idea (Cooper 1991). In this way, the patentee defines and publicizes the original
idea about the invention, and turns this into private property over which the owner has
legal rights to use or license for a limited duration (Cooper 1991).
It is not always clear whether granting patent protection serves broader societal
assumptions of promoting innovation and encouraging new products and services
without providing excessive monopolistic benefits for the inventors and impeding fur-
ther innovative activity within an industry. The issue of software patents introduced in
the previous section was exacerbated in the context of Internet patents during the dot-
com boom era. Companies eager to claim control over key business processes relating
to trade and commerce on the Internet have filed numerous patent applications for soft-
ware and business method patents that apply to online networks. Many claim that these
patents deal with innovations that are obvious techniques or processes that have simply
been computerized. These challenges have been exacerbated by the lack of trained pat-
ent examiners, resulting in the issuance of poor-quality patents and further fueling the
debate. Those patents that were issued sometimes had the unintended consequence of
providing protection for large tracts of e-commerce related activity, making it difficult
to navigate the intellectual property rights owned, or more likely pending, related to
Internet-based inventions. This produced considerable uncertainty in the market and
likely impeded innovation for many companies wishing to pursue e-commerce related
activity or seek patent protection. Internet patents, as a form of software and business
process patent, are not recognized in all jurisdictions. The United States led the push
for patent protection of these types of innovations while other countries were slower
to recognize the claims. Today most countries, fueled by international treaty and trade
agreements, recognize software-related patents to some degree. The United States and
Japan tend to embrace these patents and are key influencers of international trade agree-
ments, whereas countries like Canada, China, and the European Union nations tend to
take a more moderate approach to granting software patents.
The motivation for patenting is built upon a foundation of promoting innovation and
inventiveness within particular jurisdictions, but in order to do this, the diffusion of the
innovation must be controlled. Culture influences the degree to which a country is willing
to impede the diffusion of particular innovations. Countries like the United States with
strong individualistic and entrepreneurial cultures are willing to extend the rights to those
inventors at the frontier of computer-implemented inventions while other countries are
more cautious in their approach. Interestingly, if countries like the United States and Japan
are successful in securing patent protection for key aspects of e-commerce then countries
taking a more moderate approach to software patents might inadvertently place their
inventors at a disadvantage if these patents are eventually granted domestically—which is
likely, given current trends toward treaty and trade agreements. In the next section, cul-
tural impacts on the shift in the ownership of innovative knowledge are explored.
INTELLECTUAL PROPERTY OWNERS

Cultural norms concerning the rightful owners of intellectual property influence the
practice of patenting. Communal perspectives emphasize group ownership, whereas
other worldviews place primacy on individual genius and the importance of individual
entrepreneurship. As a result, the dominant intellectual property owners have shifted
over time with origins in communal guilds, to the rise of an individual focus, to a partial
return to communal ownership in the modern corporation.
As mentioned previously, the concept of ownership of innovative knowledge origi-
nated within the medieval guilds. The guild commune essentially owned the intan-
gible craft knowledge. Membership in the guild and adherence to its regulations was
rewarded through access to the guild knowledge for the economic benefit of its mem-
bers. By participating in the management of the guild, individuals were able to effect the
management of the intellectual property and the practice of the craft through various
rules and sanctions imposed upon its members. The case of the Venetian glassmaker
guild illustrates the nature of the guild corporation: Only a few regulations governing
the guild dealt with the technical processes of glassmaking (e.g., the type of wood to be
used in the furnaces and the number of holes allowed in the main furnace). Instead,
the focus was on policies related to the number of working days, election processes,
apprenticeship practices, the handling of stolen goods, and the selling of defective glass
(Long 1991). The corporation restricted the export of the craft by forbidding its practice
outside of Venice while facilitating the export and sale of glass products across Europe.
This effectively restricted the practice of glassmaking to the city, thus allowing the guild
to control the quality of the product and ensure that Venetian glass was only available
from Venice. However, maintaining that level of control over craft practitioners proved
difficult, as many wished to produce Venetian glass outside of Venice because there was
considerable economic benefit in doing so.
During the late fifteenth century and the sixteenth century the role of individual inge-
nuity and authorship emerged to supplant the importance of communal ownership.
This revised view of the individual in invention contributed to a heightened concern for
the “priority dispute” policy, especially in instances where several individuals claimed to
have invented a particular innovation. In 1790–91, as a result of various political revo-
lutions, both France and the United States established patent systems that embodied
the concepts of an inventor’s natural right to their intellectual property. French patents
were placed under considerable scrutiny, but there was commensurable reward avail-
able from the state if the invention was deemed to merit support. In contrast, the Eng-
lish patentee paid for the right to exercise a 14-year monopoly over production and sale
of their invention, and by the eighteenth century, after many years of abuse, the English
government’s main concern was to avoid embarrassment arising from the suggestion of
monopolies (MacLeod 1991).
During the medieval era, local invention and the importation of new techniques from
other locations was rewarded. No distinction was made between local or foreign inno-
vations and there was no assessment or consideration for claims of ownership of the
innovation. The focus was on promoting innovation within a particular city, and nov-
elty was assessed in terms of its newness to the city and not to the world. However, this
focus of ownership gradually shifted away from cities to nation-states. Patenting rights
were no longer conferred to individuals residing within a particular city but instead
were granted to individuals within a particular nation, although considerable differ-
ences in practice existed between jurisdictions. For example, early U.S. patents were
restricted to citizens and aliens resident for at least two years, whereas English patent
holders were not required to reside in England or commercialize their invention in the
country (MacLeod 1991). While the jurisdiction expanded from guild, to city, to nation,
ownership still resided almost exclusively with individuals, whether they were citizens
or not.
As late as 1921, 72 percent of patents in the United States were awarded to individuals
while by 1938, the majority went to corporations because of the growing importance of
industrial research and the advantage corporations had in navigating the patenting pro-
cess (Owens 1991). Since the late nineteenth century, incorporation laws have allowed
corporations to become increasingly important owners of innovative knowledge (Car-
ruthers and Ariovich 2004). In China, where there is little corporate privatization,
changes in property rights have contributed to the creation of new ownership forms,
including reformed state firms, government–management partnerships, leased public
assets, and private companies (Oi and Walder 1999).
The ownership of innovative knowledge originally concentrated within the commu-
nal structures of the guilds and gradually shifted to individuals in recognition of the role
of individual authorship and creativity. Increasingly, this individual creativity is being
leveraged through research groups within corporations resulting in a shift in owner-
ship to corporations. These companies are now the owners of a large majority of the
innovative knowledge, often controlling entire domains of knowledge through the use
of interrelated patents. It is perhaps ironic that the entrepreneurial and individualistic
cultures that promoted patenting produced a system dominated by collective cultures
at the organizational level. This shifting profile of the owners of innovative knowledge
to large multinational corporations provides interesting challenges for managing and
enforcing patent rights across cultures.
ENFORCEMENT OF RIGHTS
How patents are managed and rights are enforced are also influenced by cultural
views on the role of entrepreneurial activity and the implicit contract between the
inventor and society. For an invention to be patented and enforceable it must be new,
nonobvious, useful, and directed toward patentable subject matter. To evaluate new-
ness, previous patents and other documents in the public domain (i.e., the prior art) are
used to evaluate the novel contribution of the invention. If several pieces of prior art can
be used to create the proposed invention, then the invention is considered to be “antici-
pated” and not patentable. The nonobviousness of the invention is from the perspective
of someone experienced in the art. Today, if the other criteria for patentability are met,
then the issue of usefulness is left to the open market to decide. Given the effort and
expense of patenting, it is assumed to be unlikely that an inventor would file a patent
application for an invention that they could not envision a reasonable use from which to
extract economic value. However this value is not always apparent at the inventive stage,
and many of the rules surrounding patenting are designed to provide adequate time for
the inventor to assess such potential. In Canada, for example, examination of the inven-
tion is not automatic, and the inventor is allowed a period of time after filing before
requesting a full examination of the application. This facilitates time to raise investment,
complete further research and development, or pursue other activities related to assess-
ing the market potential of the invention. Many of the regulations guiding patenting are
aimed at benefiting individual inventors with limited resources; however, as explored

in the previous section, ownership of much of the patent knowledgebase is with corpo-
rations that have significant resources to direct toward patenting activity. Despite the
growing importance of corporations for patent ownership and enforcement of rights,
within entrepreneurial cultures there is a tendency to romanticize about the individual
inventor and their plight alone on some new frontier, when it is more likely that entre-
preneurial activity will occur within a corporate setting as part of a well-funded research
and development team.
The patent offices in each country are charged with the task of processing patent
applications. The patent office decides whether an innovation becomes property or not.
If a patent is issued, then the idea becomes property, at least until such time as the pat-
ent is challenged and deemed invalid. The involvement of the patent office in this pro-
cess has changed over time. As noted earlier, at one point the British state did not use
the resources of the government to promote inventions and instead registered the pat-
ents and then withdrew (MacLeod 1991). In sharp contrast, French patent applications
received considerable scrutiny, owing to the considerable value placed upon inventions
and their inventors and the rewards available from government. By the early nineteenth
century, both British and North American practitioners and researchers regarded pat-
ents as a contract between the public and the inventor, who was awarded a temporary
monopoly in return for disclosure of the invention (MacLeod 1991).
The specification of the patent describes the invention, its usefulness, and the bound-
aries of the patent protection claimed. It was critical, therefore, to have specifications
that were clear, complete, accurate, and with sufficient detail to allow someone skilled in
the relevant trade to imitate the methods. The importance of the specification emerged
over time. Under the early English system, the specification was not scrutinized unless
and until the patent came before the courts. In this form, it was originally not intended
as a means of informing the public but instead as a measure to assist the courts in decid-
ing the merits of a disputed patent (MacLeod 1991). It was only in the final quarter of
the eighteenth century that the specification under the English system became the focal
point of the patent along with an expectation that the specification should inform the
public, albeit a domestic public (MacLeod 1991).
The English system until 1905 and the American system from 1793 to 1836 did not
require prior examination of an inventor’s claims to originality, as this was left for pat-
ent litigation to decide should such a challenge arise (Cooper 1991). This consumed
considerable time in the courts, and there was an eventual shift toward patent inspec-
tion for originality. This eased the burden on the courts but increased the demands of
those evaluating patent applications at the patent offices.
As noted in the previous section, a key issue in establishing a patent is assigning rights
to the owner. However, who owns a particular invention is not always clear and var-
ies by the approach taken in assessing ownership. Two main strategies are currently
discernable. Under the first-to-invent principle used in the United States, the patent
is granted to the inventor with the earliest date of invention. In contrast, under the
first-to-file principle recently adopted by Canada and in use in most countries, a patent
is granted to the inventor with the earliest filing date. The adoption of the first-to-file
principle moved Canadian patent practice away from the United States and more in line
with European approaches. The first-to-invent principle is deeply rooted in American
individualism and an antagonism toward powerful central government. It reflects the

notion that it is private enterprise and not the state that provides inventive ideas for the
economy (Owens 1991). First-to-invent places emphasis on the primacy of individual
creative acts, whereas the first-to-file focuses more on meeting the demands of a col-
lective bureaucracy to determine ownership. This emphasis on the role of individual
inventors was guaranteed within the United States with a constitutional grant of power
to Congress “to promote the progress of science and useful arts by securing for limited
times to authors and inventors the exclusive right to their respective writings and dis-
coveries” (Coe 1969, 863).
Software patents provide particularly fertile ground for challenges to patent rights.
As noted previously, each country tends to adopt particular nuances and degrees of
enforcement with respect to software patents, even when such innovations are covered
under various treaties and trade agreements. Of particular importance is the man-
ner in which software is claimed as part of a patent application. For example, in the
United States, a claim can be made for a computer program stored on computer read-
able media; thus, a patent holder can enforce the patent against publishers placing
the software on the media without having to go after individual end users. This type
of program product claim (aka a Beauregard claim) is not recognized in all jurisdic-
tions, although it is increasingly being adopted. To compound the problem of enforc-
ing patent rights, patent litigation is expensive. This is clearly prohibitive for individual
inventors with limited financial resources but is also of concern to large corporations
that potentially face extremely large patent settlements if they are found to be infring-
ing. An interesting development in this regard is the establishment of cross-licensing
agreements among large software companies in which each agrees not to sue the other
over patent infringements. In fact much of the activity related to filing of patents is to
maintain a pool of patents to be “traded” within these reciprocal agreements. However,
even companies without large patent portfolios have been able to secure reciprocal
rights with large software companies in the face of expensive and uncertain litigation.
The same cultural assumptions that motivated a reliance on agreements over relation-
ships is now being used to voluntarily limit the rights of patentees for the greater good
of specific industries.
The differences and similarities outlined thus far illustrate various cultural approaches
to patenting that are presented as being somewhat isolated but in practice are increas-
ingly interrelated with the actions of one jurisdiction influencing the others. Over time,
these ongoing negotiations fueled by treaties and trade agreements that tend to stan-
dardize practice give rise to a global patent system. The impacts such a system has on the
constituent cultures that inform it are discussed in the next section.
GLOBAL PATENT SYSTEM

Although intellectual property values emerged from the confines of the guild context,
the ideals of patenting spread from individuals breaking away from the guilds (Long
1991). This led, for example, to Italian inventors promoting the concept of patents in
other cities beyond Venice and in other countries beyond Italy (Long 1991). From Italy,
concepts of patenting quickly spread to France, England, and beyond. The practices
of the established patent strongholds have continued to influence other countries in
their patenting practice. The Canadian patent practice is predominantly influenced by

developments in Britain and the United States. The Canadian Patent Act was modeled
on the U.S. legislation, whereas key areas were derived from British practice (Duy 2001).
More recently, changes to the patent act in Canada have been influenced by European
practice, including early publication, deferred examination of patent applications, and
the introduction of maintenance fees; in contrast, Japan looked to German and French
intellectual property law at the end of the nineteenth century to inspire their systems
(Carruthers and Ariovich 2004).
However, as each country adapted the patenting system to promote their local inter-
ests, it became increasingly onerous for inventors to navigate between systems. As the
inventors and inventions were decoupled from their jurisdictional constraints, the seek-
ing of patent protection in multiple jurisdictions became attractive. Various treaties and
trade agreements facilitated the cross-cultural management and enforcement of patent
rights.
The 1883, the Paris Convention for the Protection of Industrial Property provisioned
the recognition of foreign patent filing dates and an obligation for member states to
provide the same protection for foreigners as for their residents. A Secretariat originally
formed to administer the Paris Convention was absorbed with the creation in 1970 of
the World Intellectual Property Organization (WIPO). The internationalization of the
patenting process was continued by the Patent Cooperation Treaty (PCT), which facili-
tates obtaining patent protection in more than 100 member countries. Various trade
agreements are also implicated in this process. For example, the North American Free
Trade Agreement (NAFTA) and the World Trade Organization (WTO) Agreement
on Trade-Related Aspects Intellectual Property Rights (TRIPS) obligated members to
make available patents for all fields of technology and to refrain from restricting patent
rights based upon place of invention or whether a patented invention was imported or
manufactured locally.
Today most of the world’s intellectual property is owned by Europe, the United States,
and Japan, leaving many other countries as net consumers of intellectual property (Car-
ruthers and Ariovich 2004). For example, Canada is a net importer of innovations, with
foreigners owning 90 percent of Canadian patents, with roughly half of those owned by
United States patentees (Duy 2001). This patent profile is in sharp contrast to countries
like the United States, where the majority of the patents are owned domestically.
The growing international nature of the patent system, fueled by treaties and inter-
national trade agreements, has necessitated the standardization of policies related to
patents. However, there is still variation in practice as to how those policies are imple-
mented. The approaches to software patents serve to illustrate the point. The United
States and Canada have very similar policies with respect to the wording of claims
related to software patents. Software for an algorithm or mathematical formula is not
patentable; however, if an invention embeds the software in hardware or the software
is described in terms of an apparatus or system, then it is patentable because a pro-
grammed computer is considered a machine. However, in the United States, software
is patentable as long as it produces a useful, concrete, or tangible result and does not
merely monopolize the underlying algorithm. In Europe, although software is explic-
itly excluded from patentability, a product or method that is of a technical character
may be patentable, even if the claimed subject matter defines or at least involves a
business method, a computer program, or the like (Van Barr 2001). Two instances in
which software can have a technical character are when it manages, via a computer, an
industrial process or the working of a machine and if it produces further effects in the
hardware (Van Barr 2001). Although there has been ongoing and often heated debate
over the patentability of software in various jurisdictions, as one jurisdiction opens a
new area of patentable subject matter, it is nearly impossible to retract those rights and
extremely difficult for other jurisdictions to refuse to accept those innovations as patent-
able subject matter. To do so is likely to be against the terms of the various treaties and
trade agreements that most countries now belong to and potentially disadvantages local
inventors, who must now compete with competitors afforded protection to which they
do not have access locally.
In this way, the globalizing of national rules and standards allows interest groups
to use local political power to influence global rules (Carruther and Ariovich 2004).
Patents and patenting systems do not exist in isolation, and pressure is already coming
from industries and governments to limit licensing fees and to pressure the owners of
new technologies: If they wish their technologies to become industry standards, then
they must reduce the restrictions on use that would otherwise be available under pat-
ent protection. The software industry has long favored open standards as contributing
more to innovation than patenting. The software industry players point to the growth
and success of the Internet without patents, and contrast that with the litigation and
challenges faced by today’s firms through the enforcement of patents.
China, African countries, and those in South America take an objectivist-utilitar-
ian approach, claiming that intellectual property is inherently social in nature and the
state has the right to limit the individual claims of its citizens in the name of the pub-
lic good. Interestingly this is the same argument used by nineteenth-century United
States to refuse patent claims by non-nationals (Hesse 2002). The United States and
other Western countries with a vested interest in protecting the domestically pro-
duced intellectual property and ensuring continued access to foreign innovations have
shifted toward a doctrine of universal rights of authors and inventors for the exclusive
commercial exploitation of their creations and inventions (Hesse 2002). Interestingly,
recent research points out that strong patent-law systems do not necessarily increase the
number of innovations, but they do affect the kinds of innovations a country produces
(Moser 2005). Not surprisingly, inventors tend to create the types of inventions they
can protect. If patent protection is not available, then they create inventions that can be
protected by trade secret. For software patents, a similar strategy has been implemented
at the industry level with inventors—in the form of large software companies—recog-
nizing that the patent system is not meeting their needs due to the uncertain and high
cost of litigation. Thus they have essentially returned to the guild culture from which
patents originated relying instead on agreements based upon communal rights to col-
lective repositories of intellectual property.
CONCLUSION
In the course of managing patents, people and ideas interact in defining the benefits
and costs of intellectual property, in defining invention, and in determining the original-
ity and newness of human-made objects, whether tangible or intangible (Cooper 1991).
Patenting exists at the intersection of cultural systems such as legal, economic, political,
and academic systems, and is increasingly affected by globalization and changes in infor-
mation technology. The cultural systems of patenting have continuously created and
shaped the inventor’s rights and rewards for creating intellectual property. Our distinc-
tion among invented objects reflects what a culture values, highlighting the importance
of private property rights and technological innovation. Our relation to technology, its
history, and how people have made technological distinctions is reflected within the
patenting systems of various societies that inform it. The reciprocal connection between
organizational culture and the society in which individuals and businesses are embed-
ded is evidence that the patenting system reflects societal norms while both informing
and being informed by the stakeholders of these and other systems. The global nature
of patenting has contributed to both the blocking and the free flow of knowledge across
cultural boundaries. Given its origins, approaches to patenting have moved well beyond
the original localized vision of the patent system, though some have returned to those
beginnings for the management and protection of particular innovations. To consider
patenting as monolithic and unchanging is to ignore the rich history of the ongoing
negotiations and cultural expectations acted on through social, political, and economic
systems.
As nation-states become more dependent on international trade and commerce, local
concerns give way to more global perspectives on knowledge sharing and the protec-
tion of intellectual property. The very technologies that the patent system is designed
to encourage also facilitate changing the nature of the system and challenging the cul-
tural assumptions upon which it is based. Although the patent system remains glob-
ally focused, its constituent cultures inform and adapt how the system is employed in
practice. These diverse cultures produce different societal and organizational practices
in managing innovative knowledge, and therefore, a one-size-fits-all approach to the
management of innovative knowledge is inappropriate.
Still, the patenting system appears dominated by Western views, and the price of
admission to this system is to adopt these or similar practices despite different assump-
tions about the purpose of the patenting, how knowledge should be shared and pro-
tected, and the ability to pay for what has become a very expensive and exclusive system
to join and maintain. For countries that are ill equipped financially to adopt or adapt
this system, the costs of accessing and building on global innovations further curtails
their ability to participate and contribute. The dual role of patents in both enabling and
constraining innovation must be balanced. On the one hand, we risk unjustifiable and
potentially worldwide monopolies over aspects of entire industries; on the other hand,
demanding excessive disclosure potentially inadequately rewards those individuals and
groups responsible for the creative leap.
REFERENCES
Alford, W. P. 1995. To steal a book is an elegant offence: Intellectual property law in Chinese
civilization. Stanford, CA: Stanford University Press.
Carruthers, B. G., and L. Ariovich 2004. The sociology of property rights. Annual Review of
Sociology 30:23–46.
Coe, C. 1969. Hearings before the Temporary National Economic Committee. New York: Arno
Press.
Cooper, C. C. 1991. Making inventions patent. Technology and Culture 32 (4): 837–45.
Duy, V. 2001. Brief history of the Canadian patent system: The Canadian Biotechnology Advisory
Committee Project Steering Committee on Intellectual Property and the Patenting of
Higher Life Forms. Strategis Canada, http://strategis.ic.gc.ca/epic/internet/incbac-cccb.
nsf/en/ah00405e.html.
Hesse, C. 2002. The rise of intellectual property, 700 bc–ad 2000: An idea in the balance. Daedalus
131:26–45.
Long, P. O. 1991. Invention, authorship, ‘intellectual property,’ and the origin of patents: Notes
toward a conceptual history. Technology and Culture 32 (4): 846–84.
MacLeod, C. 1991. The paradoxes of patenting: Invention and its diffusion in 18th and 19th cen-
tury Britain, France, and North America. Technology and Culture 32 (4): 885–910.
Moser, P. 2005. How do patent laws influence innovation? Evidence from 19th century World’s
Fairs. American Economic Review 95 (4): 1215–36.
Oi, J. C. and A. G. Walder. 1999. Property rights and economic reform in China. Stanford, CA:
Stanford University Press.
Owens, L. 1991. Patents, the “frontiers” of American invention, and the Monopoly Committee of
1939: Anatomy of a discourse. Technology and Culture 32 (4): 1076–93.
Van Barr, C. C. 2001. Patentability of software and business methods. Gowling Lafleur Henderson,
LLP. http://www.gowlings.com/resources/publications.asp?showWhat = 697.
7
The Influence of National Culture
on Knowledge Management
in Virtual Teams
Doug Vogel, Anne-Francoise Rutkowski,
and Michiel van Genuchten
ABSTRACT
Knowledge management (KM) has emerged as a critical factor in both organizational

and academic settings in distributed contexts that increasingly engage multiple na-
tional cultures. This chapter explores aspects of national culture with respect to char-
acteristics of KM in virtual teams supported with both synchronous and asynchronous
technologies. The HKNET project, involving participants from three continents and
extending over seven years, is used as a foundation and point of departure. Findings
are presented to provide credibility and ease understanding of relevant issues with
special attention given to cultural convergence. Discussion extends to application of
findings in virtual teams within commercial organizations as an illustration of gen-
eralizability and corporate impact. Implications for practice are drawn. The chapter
concludes with a model of the interaction dynamics associated with national culture,
technology choice, and knowledge management process and outcomes.
INTRODUCTION
Knowledge management (KM) has emerged as a critical factor in both organizational
and academic settings in distributed contexts. KM in virtual teams (VTs) presents a
number of challenges, among which are aspects of national culture (Qureshi and Vogel
2001). National culture, as well as organizational and professional culture, is an impor-
tant characteristic of VTs that interact with group dynamics in a number of ways with
a plethora of implications (Griffith, Sawyer, and Neale 2003; Vogel et al. 2001b). How-
ever, issues need not be addressed simultaneously and, in fact, some appear only after
others have been recognized and managed (Rutkowski et al. 2002b).
The HKNET project has provided a fertile ground within which to explore aspects of
KM in VTs supported with both synchronous and asynchronous technologies with an
emphasis on national culture implications (Vogel, Davison, and Shroff 2001a). In par-
ticular, participants organized into teams of six to eight people from five distinct national
cultures (Hong Kong, the Netherlands, France, the United States, and Mainland China)
have collaborated in virtual teams resulting in deliverables such as electronic books. KM
issues influenced by national culture arise throughout the projects that typically extend
over a six-week period as teams identify research issues around a broad topic (e.g., tele-
medicine), develop consensus, coordinate activities, and integrate research results. KM
phases include creation, storage/retrieval, transfer, and application (Alavi and Leidner
2001). The HKNET project has now run for seven years and much has been learned.
The purpose of this chapter is to explore aspects of national culture with respect to
characteristics of KM in VTs. The seven-year HKNET project is used as a foundation and
point of departure. Findings are presented to provide credibility and ease understanding
of relevant issues. Discussion extends to application of findings in virtual teams within
Philips Software as an illustration of generalizability and corporate impact. The chapter
concludes with a model of the interaction dynamics associated with national culture,
technology choice, and knowledge management process and outcomes.
BACKGROUND
This section provides a foundation based on national culture and characteristics of
the HKNET project to establish a basis for findings and subsequent discussion. KM is
used as a theme to focus and organize issues.
National Culture
Culture plays an especially salient role in virtual teams. A culture is a system of
knowledge, a set of learned behaviors and beliefs, and a way of categorizing experience
shared by a particular society, population, or group (Triandis 1994). A popular way
to look at culture involves the examination of national traits. From this perspective,
culture is seen as a relatively stable and long-lasting attribute of our behavior. Numer-
ous cross-cultural researchers (Gudykunst and Kim 1988) have used cultural dimensions
developed by Hofstede (1980) to distinguish members of one cultural group from
another. Although Hofstede’s cultural model has often been criticized for containing
sampling flaws, the general cultural constructs have been shown to be useful for explaining
potential differences in culture with regard to the use of information technology (IT)
(e.g., Mejias et al. 1997).
The Chinese concepts of Guanxi and interpersonal interdependence are representa-
tive of norms of hierarchy. Guanxi is defined as a network of personal relationships or
of interpersonal connections based on the principles of reciprocity and regulating social
interactions (Bond and Hwang 1986). A person’s Guanxi drives their personal attitude
and behavior. The collectivist aspects of Confucian societies promote efficiency and
harmony as synonyms of one’s Guanxi or interpersonal connections (Hwang 1987).
In Confucian societies, “harmony within hierarchy” characterizes many social
interactions, whereas Western theories perceive hierarchy as a level of interpersonal
The Influence of National Culture on Knowledge Management in Virtual Teams 113
interdependence between members of a social network (Rijsman 1997). The perceived

value of interdependence in Western culture depends, on the one hand, on positive
interpersonal interactions among team members and a sense of compatibility (McGrath
1984); on the other hand, it depends on the structural feature of the relationships
between team members (e.g., leader versus follower) (van der Vegt, Ermans, and van de
Vliert 1999), and stems from the task within the team (e.g., task interdependence).
The normative and cultural need for hierarchy in Confucian and Western thinking is
observable through differing conceptualizations of the notion of leadership. In Western
culture, a democratic style of leadership is generally advocated, converting the ability to
balance freedom and authority into the concept of charisma or as a personal ability. In
Western culture, one’s personal ability is an explicative factor to the style of leadership.
Research on leadership demonstrates that balance between task-centered activities and
consideration for others is important for effective leadership (Fiedler 1965). The Con-
fucian culture focuses on the guardian role of the leader, with the expectation to take
control and to be in possession of the solutions to maintain harmonious dynamics in the
group and tends to be authoritarian and paternalistic (Bond and Hwang 1986).
We also recognize a dynamic view of culture. In this sense, the person that belongs
to a particular national group is seen as the guardian of culturally based assets as mutu-
ally defined in a context (Gergen et al. 1996). This emerging perspective views culture
as being more dynamic, process-based and constructivist by nature as a function of
the context. In other words, culture can be seen as contested, temporal, and emergent
(Myers and Tan 2002, 29). For example, Hong and colleagues (2000) note that under
conditions of heavy time pressure, experimental subjects tended to behave in a manner
consistent with trait-based cultural norms (cf. Hofstede 1983). However, if time pres-
sure was absent, experimental subjects exhibited greater cultural variance and willing-
ness to change normalized behaviors. Similar effects occur when cognitive load is heavy
or light (cf. Briley, Morris, and Simonson 2000).
These surface differentiations between national cultural perspectives do not necessar-
ily contradict each other if we consider the situation at another level. National culture
can be influenced by conditions (e.g., time pressure) and mixed with elements of other
cultural conditioning (e.g., professional and organizational). This does not diminish the
importance of national culture but only serves to recognize the inherent complexity in
seeking to draw robust conclusions. The reality is that national culture is a founda-
tion upon which many of the other dynamics exist. At the end of the day, the foundation
remains as has been witnessed in the seven years of HKNET.
HKNET Project
Over the period of seven years, more than 800 students have participated in the
HKNET project as an example of KM in action. The number of students has grown
from 65 in the first year to 163 in the seventh year. About half of the students in this
project are studying part-time while also working, and the other half are full-time uni-
versity students. The project started with universities in Eindhoven (The Netherlands)
and Hong Kong. The number of universities involved over the years has expanded to
include universities in Tilburg (The Netherlands), Grenoble (France), and Orlando
(United States). This past year students from Beijing participated for the first time.
Typically, HKNET teams consist of 8–10 students from two to four cultures. The
team assignment encompasses an IT–related topic (e.g., offshore outsourcing, extreme
programming, or mobile devices) from different cultural and geographical perspectives
in a structured process consisting of multiple divergent and convergent activities over a
six-week time frame. The teams define a number of research questions to focus their
study of the subject. Three research questions are selected to reflect important and/or
emerging information science trends and collection of material follows. Vogel and col-
leagues (2001b), Rutkowski and colleagues (2002a, 2002b), as well as Genuchten and
colleagues (2005) provide additional process detail and explore a range of issues with
special focus on multicultural virtual team dynamics. The following list illustrates the
sequence of six activities undertaken by the teams.
1. Introduction: The project started with the formation of the local national teams. The
local teams selected a subject from a given list and formed a team with their global
counterparts that selected the same subject. A videoconference was held in order to
“meet” the global members of the team. The videoconference lasted 10 minutes per
team, after which the teams used the learning management system to continue the dis-
cussion.
2. Deciding upon research questions: The team members were asked to identify possi-
ble research questions for their project and converge on the research questions to be
selected for their project. Some groups arrived at a consensus during the introductory
videoconference. Others used chat, virtual whiteboard, and discussion forums to gen-
erate and prioritize research questions.
3. Division of responsibilities: After the framework was established, each team member
selected a portion of the Web site for which to provide content.
4. Plain text and comment on contributions: This activity enabled the team to simultane-
ously create different sections of the Web site. This activity was typically performed
using a text processor and the results were submitted to the person(s) in the team
assigned as Web master(s) for the team.
5. Webmaster prepares Web site: The editor transformed the text file into a draft version
of the Web site and typically completed it within a week.
6. Reviewing of the Web site by members of the team: The draft Web site was evaluated
and the team arrived at a final Web site after one or two iterations.
The synchronous and asynchronous technologies used have included videoconfer-

encing, e-mail, group support systems (GSS), and an off-the-shelf learning manage-
ment system (Blackboard) that support both chat and forums under the control of the
students within structure provided by the instructors. Videoconferencing is used at
the start of the project, halfway through the six weeks to track the progress, and once
again toward the end to celebrate the completion. Table 7.1 illustrates the nature of the
activities as a function of synchronous and asynchronous technologies use. Aspects of
both technology and process are considered as has been deemed important in other KM
related studies (e.g., Kwok, Ma, and Vogel 2002).
Initially, the team effort resulted in ten-page reports in 1998, 1999, and 2000 and in
recent years Web sites have been developed. From 2002 to 2004 (and since) the results
have been formed into electronic books on the software industry, available at www.
bohknet.com. These constituted a variety of KM efforts and activities covering phases of
creation, storage/retrieval, transfer, and application (Alavi and Leidner 2001).
Table 7.1
Synchronous versus asynchronous communication activities
Synchronous Asynchronous
Introductory videoconference: Discussion Forum: (Social Oriented)
A 10-minute per group videoconference en- A forum was used during the team member
abled group members to form some initial introduction for members to tell something
perceptions of their team members.Teams ad- about themselves and learn more about the
ditionally began to discuss the domain of their team members.
topic. A separate forum was also used for planning,
among others to let team members know when
members planned to work on the project.
Chat Sessions:Six synchronous chat sessions Discussion Forum: (Task Oriented)
were planned in order to provide the oppor- A forum was also used to discuss issues regard-
tunity to the participants to exchange infor- ing the management of the project. Issues like
mation synchronously. The participants were the progress, planning, approach, and division
free to organize more chat sessions during the of work were discussed.
project. In another forum, the potential research ques-
tions were generated and discussed.
Discussion Forum: (Convergent)
A forum was used to converge upon the re-
search questions that the team would work
on for the next six weeks.
Report Outline: This forum was used to begin
to formulate the report.
Midterm videoconference: A 20-minute vid- E-mail: The participants could use this facility
eoconference was used by each of the teams to send e-mails to their whole team, to some
during Week 3 to coordinate activities and/ selected participants, or to the instructors.
or solve potential conflicts. File exchange: Students typically posted draft
versions of the content of the Web page and
thus could review and improve each other’s
work.
Final videoconference: The projects concluded
with a final videoconference in which the
results and implications of the project were
presented and awards presented to high-
performing teams.
HKNET EVOLUTION
Much has occurred over the past seven years with respect to KM aspects of national
culture in VTs as the HKNET project has evolved. Each year has led to changes that have
enhanced KM effectiveness and efficiency.
HKNET1
The first trial commenced in October 1998 linking teams consisting of part time MBA
accountancy students from the City University of Hong Kong and full time business
engineering students from Eindhoven University of Technology in the Netherlands

in a structured seven-week project. In total, 72 students participated, dividing into
10 teams with varying degrees of experience in working in distributed cross-cultural
contexts. Dutch experiences ranged from international traineeships and exchange pro-
grams to having a foreign friend (“my girlfriend is from Bulgaria, does this count too?”).
The Hong Kong experiences typically included working as middle-level managers in
multinational companies.
Before the start of the project, the students attended lectures covering several subjects
related to the team assignments. Because of the different backgrounds of the students,
the lectures in both locations were not identical: Whereas the Dutch lectures were given
from a software-engineering point of view, the Hong Kong lectures focused on aspects of
the impact and implications of information systems from a management perspective.
HKNET2
A second trial between the same institutions was launched in November 1999 that
built upon knowledge gained from the first year. The second trial consisted of 57 stu-
dents divided into nine teams with balanced Hong Kong–Netherlands membership. In
the second trial, part-time MBA management students from Hong Kong and full-time
business engineering students from Eindhoven and full-time MIS students from Tilburg
University (a university located 30 kilometers from Eindhoven) engaged in a structured
six-week project. As such, elements of professional as well as national culture were pres-
ent. In this case the Hong Kong students were especially experienced in working in
multicultural teams and the majority had significant remote collaboration experience.
Feedback from HKNET1 was used to further modify technology, processes and
materials. In particular, the need to better orient the students and familiarize them more
with the material and each other had became especially apparent in the first trial. Simi-
larly to HKNET1, students attended lectures covering several subjects related to the team
assignments prior to the project. However, efforts were extended in HKNET2 to make the
material more available immediately preceding project commencement (e.g., a Hong Kong
session focused specifically on software engineering). Class Web sites gave students at both
sites access to materials. These cross-cultural teams also had the opportunity to introduce
themselves at the start of the project, for which a high bandwidth videoconference link
between the two universities was established. After the introduction, all participants gained
access to GroupSystems via the Internet, the main collaborative tool for students to work
on their project in a structured way. They could also use e-mail and desktop videoconfer-
encing via NetMeeting to communicate with their teammates as the project progressed.
HKNET3
HKNET3 commenced in October 2000 with 61 students divided into 10 teams, with
balanced Hong Kong–Netherlands membership. In HKNET3, part-time Masters of
Science in Electronic Commerce (MScEC) students from Hong Kong and full-time
business engineering students from Eindhoven and full-time MIS students from Tilburg
University engaged in a structured six-week project. The MScEC students, unlike those
in previous years, had a predominantly computer science background and thus were
in some ways more homogeneous with their Dutch colleagues. However, they did have
a high degree of international working experience in alignment with the Hong Kong
students in HKNET1 and HKNET2. We therefore expected less disciplinary culture dif-
ference but a continued significance in national and organizational culture differences.
Feedback from HKNET2 was used to further modify technology, processes, and
materials. In addition to preserving HKNET1 learning, more time was dedicated to topic
preplanning to better fit student interests. Furthermore, in HKNET3 added attention was
given to cultural orientation for the students as well as better familiarizing them with the
material. As such, a session conducted by a cross-cultural facilitator (Gert-Jan Hofstede)
via videoconference exposed the students to issues in cross-cultural collaboration (Dustdar
and Hofstede 1999). In HKNET3, attention was shifted toward cross-cultural dynamics and
better understanding of determinants of successful interaction. Toward that end, special
attention was given to antecedents that might enable prediction of successful interaction
and/or particular areas to focus attention upon in facilitating cross-cultural interaction.
HKNET4
HKNET4 introduced additional national cultural elements. The 104 participants
were graduate students from four universities. They were part-time MScEC students
from Hong Kong, full-time industrial engineering students from Eindhoven (The
Netherlands), full-time MIS students from Tilburg University (The Netherlands), and
full-time MBA students from l’École Supérieure d’Administration de Grenoble (France).
The 104 participants were spread across 13 teams, eight of them tricultural (n = 66) and
the remaining five bicultural (n = 38). Local team members in each country were self-
selected and chose a topic from a prescribed list. The multicultural virtual teams were
formed based on the chosen topic before the cultural counterparts had met.
The average age of the participants was 25 years. Most were male; only 12.5 percent
were female. All Hong Kong participants had at least one year of full-time work experience
compared with only 25 percent of the French and 15 percent of the Dutch participants.
The large majority of the participants had personal experience or social links with foreign-
ers (81.5 percent). The Hong Kong participants happened to be more experienced (88.2
percent) than the Dutch (78.4 percent) or the French (76.2 percent). They all felt the same
wish to collaborate with participants from different national cultures (m = 7.23,SD = 1.57).
Only 17.6 percent had previous experience working in a multicultural team. The more
experienced were the Dutch (24.3 percent), then the Hong Kong participants (15.15 per-
cent), and lastly the French (9.5 percent). As such, the impact of national culture was miti-
gated by a variety of factors that varied significantly across the composition of the teams.
HKNET5
HKNET5 introduced yet another national culture—the United States. In this case a small
number of students (10) from the University of Central Florida were involved as “consul-
tants” to each of the teams composed of participants similar to those of HKNET4. There
were 45 part-time MScEC students from Hong Kong, 65 full-time Netherlands students
(Industrial Engineering from Eindhoven and MIS from Tilburg University), as well as 21
full-time MBA students from l’École Supérieure d’Administration de Grenoble (France).
The degree of involvement of the U.S. participants varied widely as did their impact
on the teams. In some cases, the U.S. participants were actively involved and were
received positively for their contribution by their Euro-Asian teammates. In other cases,
the U.S. participants were marginalized. In some cases there was virtually no impact as a
result of negligible involvement of the U.S. participants. The U.S. participants were par-
ticularly disadvantaged by time differences. Hong Kong and European team members
could comfortably interact synchronously, because evening in Hong Kong is midday
in Europe. Such, however, was not the case with the U.S. students, who had to arrive at
the break of dawn to participate synchronously. This, needless to say, created a difficulty
that influenced the degree of U.S. participation.
HKNET6
HKNET6 formalized the inclusion of U.S. participants from the University of Central
Florida as full team members and was dubbed OHKNET to recognize the home base of
the U.S. participants—Orlando, Florida. However, HKNET6 also saw the withdrawal of
French participation, which had created intrateam conflict from a European perspective
in previous years. The end result was more balanced and harmonious team participa-
tion. A much more globally robust national cultural presence was exhibited, given the
presence of three continents spread around the world. Added attention was given to
integration of the team electronic chapter deliverables into an electronic book, which
further enhanced the unity of the end product and raised the influence of national cul-
tural issues across teams as well as within teams.
From a KM perspective, HKNET6 was especially illustrative in terms of creation,
storage/retrieval, and transfer of information. A number of special roles and behaviors
of team members were noted to directly influence team success. For example, some
team members tended to adopt “shepherd” roles in keeping other members engaged
in knowledge creation and transfer. Other team members might perform more of a
“librarian” role in organizing and storing information for easy retrieval by others. Those
teams that exhibited a full set of specialized roles tended to outperform their counter-
parts and were much more adept at managing conflict.
HKNET7
HKNET7 (dubbed BOHKNET) introduced yet another national culture: Mainland
Chinese from the Beijing University of Technology’s School of Software Engineering.
The ‘B’ was added to OHKNET to recognize Beijing as the home base of the Chinese
participants. However, HKNET7 also saw the withdrawal of U.S. student participa-
tion, although the U.S. instructor acted as a consultant to the project while on sab-
batical. HKNET7 was especially interesting in bringing together two Asian cultures.
It became quickly apparent that Hong Kong and Mainland Chinese were very distinct
from a national culture perspective. In particular, power distance and accommodation
of uncertainty were notably differentiated. Mainland Chinese were particularly accus-
tomed to assigned team leadership and a preference for reduction of uncertainty that
was not commonly found among Hong Kong or Dutch participants. The end result was
tension and difficulty as teams struggled to complete the task.
The additional of Mainland Chinese in HKNET7 had special KM implications with

respect to aspects of information creation, sharing, and dissemination compatible with
project objectives. As noted, the Mainland Chinese were not as personally experienced
in working collaboratively in a self-guided manner, so they were often looking for direc-
tion and generally uncomfortable with knowledge creation and sharing in the absence
of leadership. The traditional hierarchical orientation and tendency to uncertainty
avoidance further inhibited dissemination through fears of being incomplete and not
wanting to take initiative. A sense of not wanting to lose face only exacerbated prob-
lems in knowledge sharing as the Mainland Chinese were less confident in their ability
to express themselves effectively and overly worried about the reaction of other team
members.
FINDINGS
This section summarizes the findings with special emphasis on the implications of
national culture and dynamics of cultural adaptation in the context of KM as expe-
rienced over seven years of the HKNET project. Data was collected throughout each
project with a pre- and post-test questionnaire complemented by team interactions cap-
tured through forum contributions as well as assessment of deliverables. Analysis was
both quantitative and qualitative in this regard, as reported in the following sections.
Differences in Experience and Expectations

The technological familiarity of the Hong Kong students was considerably less than
that of the Dutch students during the first few years of the project. Substantial differ-
ences existed between the groups during the first two years in terms of previous multi-
cultural team experience and working experience in general (as illustrated in Table 7.2)
that began to dissipate in year three and was no longer an issue in following years. It is
important to remember that the Hong Kong participants were part-time students. In
general, however, neither Hong Kong nor Dutch had experience in multicultural teams
supported by groupware other than e-mail. Consistently, fewer than 20 percent of the
respondents mentioned having used other remote IT tools such as Lotus Notes, Group-
Systems, and videoconferencing.
The differences between HK and Dutch participants were borne out in terms of
expected problems as measured in a pre-test and actual problems experienced based on
a post-test, as illustrated in Table 7.3.
Table 7.2
Experience of HK and Dutch respondents
Experience HKNET1 HKNET2 HKNET3
HK Dutch HK Dutch HK Dutch

Multicultural team 26% 40% 70% 19% 32% 42%
Remote collaboration 27% 13% 56% 42% 31% 37%
Working > 1 year 100% 7% 100% 8% 89% 17%
Table 7.3
Expected and encountered problems
HKNET1 Hong Kong Dutch
Pre-test 1. Technical problems 1. Time pressure
2. Time pressure 2. Technical problems
3. Different study back- 3. Different study background
ground
Post-test 1. Technical problems 1. Lack of face-to-face contact
2. Different study back- 2. Poor interaction
ground 3. Technical problems
3. Time pressure
Pre-test 1. Time pressure 1. Different way of working
2. Lack of interaction 2. Cultural difference
3. Technical problems 3. Lack of face-to-face contact
Post-test 1. Time pressure 1. Lack of interaction
2. Lack of interaction 2. Time pressure
3. Technical problems 3. Lack of face-to-face contact
Pre-test 1. Lack of interaction 1. Cultural difference
2. Language difficulties 2. Lack of face-to-face contact
3. Cultural difference 3. Different way of working
Post-test 1. Lack of interaction 1. Lack of interaction
2. Lack of face-to-face contact 2. Lack of face-to-face contact
3. Time pressure 3. Different way of working
HKNET1 Hong Kong participants were particularly concerned about technical prob-
lems, as might be expected given their general lack of technical experience. By HKNET2,
the technical environment had improved, as had the experience of Hong Kong students.
By HKNET3, technical problems were no longer noted as a concern either before or
after the project, and few differences existed between Hong Kong and Dutch experience
of technology. HKNET2 Hong Kong participants were especially noteworthy in terms
of their high levels of remote collaboration and multicultural team experience relative
to their Dutch counterparts (Table 7.2). As such, the Hong Kong students had a much
better idea of problems to expect, which is indicated in their pre- and post-test consis-
tency in Table 7.3.
Although many differences (e.g., technology familiarity) effectively disappeared after
the first three years, a number of other differences remained. For example, lack of inter-
action was noted consistently by Hong Kong and Dutch participants. However, lack
of face-to-face contact was consistently rated more highly by the Dutch in terms of
problems anticipated and encountered. The Hong Kong students continued to have sig-
nificantly more work experience than the Dutch, which gave them more confidence in
working in teams. However, the Hong Kong participants were more concerned with
time pressure, since they were also working full-time.
The addition of the French, U.S., and Mainland Chinese students amplified differ-
ences in experiences and expectations. The French were not especially experienced but
had rather high expectations that went unrealized, in part due to their own failure to
attain the confidence of the other team members. The U.S. students were severely ham-
pered by time differences and also lacked international experience. They were, however,
respected by the other team members and particularly relied upon for their English
skills. The Mainland Chinese students were least experienced but also had lower expec-
tations. They had not historically been involved in projects in which they had positions
of authority and generally felt uncomfortable in times of high uncertainty.
Hierarchy and Leadership

The item “Any kind of relationship had to be structured hierarchically to obtain
harmony” adapted from the previous measure of Guanxi (Bond and Hwang 1986) was
assessed on a 5-point Likert scale (-2 = Strongly Disagree, +2 = Strongly Agree). The
results of the ANOVA on the pre-test indicated a significant cultural main effect (p =
.0058). As depicted in the left part of Figure 7.1, the Hong Kong participants have dif-
ferent conceptions of the link between “hierarchy and harmony” (m = 0.15, SD = 0.92:
Neutral/Agree) than do the French (m = –0.38, SD = 0.92: Neutral/Disagree) and the
Dutch (m = –0.58, SD = 0.86: Disagree). The ANOVA conducted on the same ques-
tion in the post-test revealed no significant Culture main effect. The results (presented
in the right part of Figure 7.1) show that most of the participants reached a consensus
and formed a multicultural virtual team norm (mHK = 0.67, SD = 0.66: Agree; mFR =
0.31, SD = 0.88: Agree; mNL = 0.04, SD = 0.94: Agree). The standard student-t paired-
test comparison confirmed the results of the ANOVA in terms of a significant attitude
change between the pre-test and the post-test (t(81) = –4.75, p<.0001).
We also asked, “How much is the presence of a leader in the group required?” (on a
10-point scale, from 1 = not at all, to 10 = very much). The ANOVA conducted on that
item in the pre-test revealed a significant Culture main effect (see Figure 7.2). Indeed,
Figure 7.1
Significant attitude change between the pre-test and post-test on the item “Any kind
of relationship had to be structured hierarchically to obtain harmony” on a 5-point
scale (From –2 = Strongly Disagree to +2 = Strongly Agree).
Figure 7.2
Convergence between the pre-test and post-test on the item “How much is the pres-
ence of a leader in the group required?” on a 10-point scale, from 1 = not at all, to 10 =
very much.
the French (m = 6.421, SD = 2.143), the Dutch (m = 7.135, SD = 1.766) and the Hong
Kong participants (m = 8.577, SD = 1.332) answered this item differe ntly. The results of
the ANOVA conducted on the same item in the post-test revealed no significant Cul-
ture main effect (see Figure 7.2.). As represented in Figure 7.2, after participating in the
project the participants converged on that item (mFR = 6.63, SD = 2.306; mNL = 6.027,
SD = 3.096; mHK = 7.19, SD = 2.89). The Dutch participants (t(36) = 2.003, p = .05) and
the Hong Kong participants (t(25) = 2.156, p = .04) changed their opinions between the
pre-test and the post-test.
The results of the ANOVA conducted on the post-test indicated no Culture/Cultural
Diversity interaction effect and a single Cultural Diversity main effect (F(1,75) = 6.263, p =
.0145) on the dependent variable “leadership requirement.” This effect indicated that
the participants did not answer differently to the pre-test and post-test questionnaires
with respect to the cultural diversity of the multicultural virtual team they belonged
to, except for the item that characterized leadership. Indeed, the unpaired comparison
test indicated clearly that the participants that belonged to the bicultural multicultural
virtual team (m = 5.563, SD = 2.994) considered the presence of a leader to be signifi-
cantly (t(93) = –2.073, p = .0409) less required than the participants that belonged to the
tricultural virtual teams (m = 6.857, SD = 2.816).
From a descriptive perspective, the answers of the participants to the items relative to the
“emergent style of leadership” indicated that the low social diversity multicultural virtual
teams (bicultural) related indifferently to a leadership oriented task (51 percent), rotating
leadership (43 percent), or declared that no particular participants/teams took the lead
(30 percent). In the tricultural condition, 68 percent of the participants indicated that the
leadership was oriented toward the task and the time schedule, 39 percent that each team
had its own national team leader, and 30 percent that no particular participants/teams
took the lead. The answer to the item relative to the “type of emergent conflict” congruently
indicated that bicultural virtual teams encountered mainly organizational conflicts relative
to time issues (47 percent), whereas the tricultural virtual teams encountered cognitive
conflicts related to theoretical issues such as problem definition (39 percent).
Aspects of hierarchy and leadership were especially moderated by the national culture
composition of tricultural teams. Those teams that had U.S. membership in addition to
Dutch and Hong Kong Chinese tended to be more relaxed because the dominant orienta-
tion within the groups favored a more egalitarian and shared style of working with hier-
archy, and leadership became more emergent as situations warranted. In contrast, when
Mainland Chinese were mixed with Dutch and Hong Kong Chinese in tricultural teams,
hierarchy and leadership became more pronounced and perceived as more important,
especially in encouraging contribution by the Mainland Chinese. As such, different cul-
tural dominance within the tricultural teams tended to influence the perceived importance
and impact of hierarchy and leadership which, in turn, influenced aspects of KM (e.g.,
knowledge creation, sharing, and dissemination) compatible with project objectives.
Cultural Learning
Cultural learning was a primary focus throughout the seven years of the HKNET
program. Issues of culture arose in a number of ways.
• For example, some Dutch students claimed that their Hong Kong colleagues were
doing everything strictly by the rules. This could work out both negatively (“They don’t
show much initiative. Tell them what to do and they will. They won’t do ‘anything’ if
they were not told what to do”) and positively (“They feel very responsible about their
tasks. You can really count on them that they will do their job”).
• The following quote of a Hong Kong student reflects the general opinion of the Hong
Kong students about their Dutch teammates: “They are open-minded, outspoken and
really concerned about their individual performance.” Some Hong Kong students were
annoyed with the Dutch individualistic behavior: “They stick to their own interest, do not
try to reach consensus with their counterparts.” And others noticed that “they did not
follow the rules of the game.” One student described the difference between both cultures
as “Netherlands: more creative and innovative; Hong Kong: prudent but effective.”
All students were also asked to indicate what they have learned about their own cul-
ture during the project. Many of the Dutch students felt that they did not learn much
new about themselves. Some observed a direct and open-minded approach to commu-
nication which seemed to be typically Dutch (“Dutch people have an attitude character-
ized by ‘well, let me tell you how to do it’ and are pretty persistent and active.”) On the
Hong Kong side, several students observed themselves to be more passive than their
Dutch counterparts. They found themselves more inclined to work collectively and to
avoid issues of conflict. These findings were illustrated by the following quotes from
three different study participants from Hong Kong:
“We are relatively less active and would tend to compromise when dispute arises.”
“More group sense, not to stand out too much from the team. Help other members who are
considered less capable. Able to fulfill the deadlines.”
“The Hong Kong team members are relatively passive, but they are also very cooperative
and easy going.”
Additional attention was placed on the question of cultural difference within team
dynamics. In particular, the researchers were interested in seeing the degree of consensus
Table 7.4
Pre- and post-test characterization rankings
HK self HK => NL NL self NL => HK
Cultural traits Pre Post Pre Post Pre Post Pre Post
Tolerant 1 10 6 8 1 3 8 10
Modest 8 7 3 4 7 9 1 8
Practical 2 1 7 5 2 1 5 4
Ambitious 9 6 10 10 3 5 3 1
Honest 7 8 2 2 6 4 6 6
Courteous 10 5 4 7 10 8 4 5
Conventional 6 9 8 3 11 10 7 9
Arrogant 11 11 11 9 8 11 11 11
Friendly 4 4 1 1 5 2 2 3
Industrious 3 3 9 11 9 7 9 2
Progressive 5 2 5 6 4 6 10 7
among students with respect to attributes of their own culture. On the questionnaire
answered by the students prior to project initiation, they were asked to identify their
own culture characteristics from a list of 39 attributes. At the conclusion of the project,
the same list was presented to the students, but this time they were asked to identify the
cultural attributes of their counterparts.
• In the pre-test, Hong Kong students felt that they were culturally collectivist, friendly,
practical, sincere, reliable, honest, courteous, tolerant, efficient, and warm. At the con-
clusion of the project, Netherlands students felt the Hong Kong students were friendly,
sincere, tolerant, reserved, reliable, honest, quiet, modest, collectivist, and conventional.
Overall there was agreement among the Hong Kong and Netherlands students on six of
the ten attributes.
• In the pre-test, Netherlands students felt that they were tolerant, straightforward, ambi-
tious, practical, reliable, friendly, efficient, sincere, honest, and progressive. At the con-
clusion of the project, Hong Kong students felt the Netherlands students were friendly,
sincere, practical, straightforward, efficient, reliable, courteous, individualistic, warm,
and tolerant. Overall there was agreement among the Hong Kong and Netherlands
students on seven of the ten attributes.
In summary, common to both Dutch and Hong Kong students were attributes of
friendliness, tolerance, sincerity, and reliability. There was additional consensus that
Hong Kong participants were collectivist and honest and that the Dutch were practical,
straightforward, and efficient.
In HKNET3, students were asked to rank themselves and their counterparts both
before and after the project on 11 cultural traits chosen from those used in classical eth-
nic stereotype studies (Grant and Holmes 1981; Katz and Braly 1933, 1935; Kirby and
Gardner 1972; Lippman 1922; Stangor 2001). The results are illustrated in Table 7.4.
The cultures definitely perceived themselves as different. It would appear that the
teams learned about each other’s culture as well as that of their counterparts over the
course of the project. For example, the HK students concluded they were much less
tolerant after the project than their initial self-perception. Similarly, the HK students
had initially expected the Dutch to be less conventional and changed their opinion con-
siderably. On their part, Dutch students concluded they were not nearly as modest after
the project as their initial self-perception. They also noted that the HK students were
much more industrious than initially expected.
Some HK self ratings stayed consistent (e.g., friendliness and industriousness) as did
HK perceptions of NL (e.g., friendliness, honesty, and lack of ambition). Some Dutch
self ratings also stayed relatively consistent (e.g., conventional) for themselves as well
as for their perception of the HK students (e.g., friendly but not quite as honest). Simi-
larly, some ratings stayed consistent across time for both cultures (e.g., arrogance was
consistently rated low).
Cultural Convergence
Can we say anything about convergence between HK and NL perceptions pre- to
post-test? In general, the participants reorganized the prototypical set of stereotypes for
both cultures. The ethnic cognitive beliefs of the participants changed after they inter-
acted as a group. In effect, the new cognitive beliefs became a point of reference for
future interactions. More than one interaction with a different culture is necessary to
be objective and to obtain less stereotypical judgments for the interaction, at least in
Chinese contexts (Bond 1986).
The Spearman rank correlation (–1 < rs < 1) produces some interesting results:
• HK->HK: rs = .38, t(9) = 1.239. The HK students’ cognitive beliefs on the definition
of the self are not correlated pre-test/post-test; this is particularly linked to the items
“tolerant” and “courteous.” They learned that they were less tolerant and more courte-
ous than they initially expected. However, the NL participants both pre- and post- were
consistent with the HK concluding self perception on these characteristics.
• HK->NL: rs = .77 t(9) = 3.541. The HK students’ cognitive beliefs concerning the NL
are highly correlated pre-test/post-test. They did not change their minds after the inter-
action and found the NL friendly and honest, albeit lacking in ambition and industri-
ousness.
Interestingly, the rs between NL->NL post and HK->NL post-test (matching self-
definition of the NL with HK cognitive beliefs concerning NL after the interaction)
is low: rs = .25, t(9) = 0.7745. The HK definition (e.g., perception) of the NL did not
converge with the NL self-definition although they agreed on the items “friendly” and
“progressive.”
• NL->NL: rs = .78, t(9) = 1.12. The NL students’ cognitive beliefs are highly correlated
pre-test/post-test, unlike the HK participants. The NL participants were consistent con-
cerning their self-definition.
• NL->HK: rs = .45, t(9) = 1.51. The NL students’ cognitive beliefs concerning the HK are
not correlated in the pre-test/post-test. The NL did change their mind after the inter-
action and found the HK participants not to be as “modest” and “friendly” as initially
anticipated, for example.
The rs between HK->HK post and NL->HK post-test (matching self-definition of

the HK with NL cognitive beliefs concerning HK after the interaction) is unexpectedly
high: rs = .70, t(9) = 2.04. The NL perceptions of the HK converge with the HK self-
definition (they agree on many items such as ”tolerant” (not), honest, courteous, arro-
gant (not), friendly, and industrious. Additional areas of cultural convergence became
apparent with regards to a perceived need for leadership and the hierarchical nature
of relationships. Statistical tests (MANOVA and ANOVA) revealed no significant dif-
ferences between the answers collected in the second and third years of the project.
Thus the results are presented for the data sum through the two years (HKNET2 and
HKNET3).
Analysis of variance (ANOVA) was conducted on the item “Is the presence of a leader
in the group required?” and revealed a significant “Nationality” main effect (F = (1, 94)
= 11.548, p = . 001) in the pre-test on a 10-point scale (from 1 = not at all, to 10 = very
much). The Dutch HKNET participants predictably thought that a leader is less necessary
(mNet = 6.5) than the Chinese HKNET participants (mHK = 7.8) did. It is interesting to
note that the ANOVA conducted on the same item revealed no significant main effect in
the post-test. Hence, the two groups reached a virtual consensus (mNet = 5.6; mHK = 6).
Leadership was less important in the virtual framework than both groups expected. The
student-t ‘within comparisons’ for each group shows that the Hong Kong participants
significantly changed (t(44) = 5.675, p<.0001) their opinion between the pre-test (mHK
= 7.8) and the post-test (mHK = 6). The same effect is observed for the Dutch who also
changed their opinion significantly (t(50) = 3.294, p = .018) between the two tests. The
results are summarized in Table 7.5.
The ANOVA conducted on the item “Any kind of relationship had to be structured
hierarchically to be harmonious” on a 5-point scale (from –2 = strongly disagree,
to +2 = strongly agree) revealed a significant Nationality main effect (F = (1,104) =
43.246, p<.0001) in the pre-test. The Chinese HKNET participants (n = 52) rated that
item significantly more positively (mHK = 0.4, StD = 0.72) than the Dutch HKNET
participants (n = 54) did (mNet = -0.741, StD = 1). Again, it is noteworthy that the
ANOVA conducted on the same item revealed no significant main effect in the post-
test. The two groups reached a virtual consensus (mNet = 0.8, StD = 0.71; mHK = 0.67,
StD = 0.7).
The findings across the seven years of the HKNet project paint a rich picture of the
knowledge management dynamics that go on in the context of virtual teams. In the
next section we will discuss the implications of these findings and integrate them to
provide support for a range of propositions. We additionally seek to explain some of
Table 7.5
Between and within nationality comparisons on the item “leadership”
Hong Kong** The Netherlands***
nHK = 45 nNet = 51
M StD M StD
Pre-test * 7.8 1.4 6.5 1.8
Post-test ns 6 1.7 5.6 2

* p = .001; ** p < .0001; *** p = .018; ns: nonsignificant difference between groups in the post-test.
the anomalies and nuances of the findings through our observations and cumulative
experience.
DISCUSSION
In this section, we begin by examining results that provide support for cultural con-
vergence in teams under varying conditions. We then examine compatibility followed
by aspects of satisfaction with special attention to social and professional learning. We
build on these topics with considerations of technology configuration and robustness
including global availability. We conclude the section with extrapolations to commer-
cial organizations including Philips Software and implications for practice.
The results relative to normative and cultural need for structure and convergence
toward a norm lead us to generally support our cultural convergence proposition. Salient
in this conclusion are changing perceptions of the need for hierarchy and importance
of leadership. Widely variant senses of need for hierarchy converged as team members
from different cultures found a way of working that, in this case, mutually saw hierarchy
as important, especially on the part of French and Dutch participants. Similarly, percep-
tions of the importance of leadership converged with all cultures seeing leadership as
less important albeit to a lesser extent than initially envisioned by the French partici-
pants. The Hong Kong participants were noteworthy in their lowered perceptions of the
importance of leadership. Overall, the interactive national teams changed significantly
in their normative cultural need for structure and converged toward a multicultural vir-
tual team norm. However, it is overly simplistic to assume that this convergence would
always occur in a similar way, especially in the context of more complex cultural cir-
cumstances.
In a condition of high cultural diversity, the participants need to understand and inte-
grate diverse norms and subjective meanings; we therefore assumed that the normative
cultural need for hierarchical structure would emerge differently in a bicultural condi-
tion (Low social diversity) than in a tricultural condition (High social diversity). We
assumed that the normative cultural need for structure would be different as a function
of cultural diversity. However, the results led us to partially reject these assumptions.
Indeed, the inferential analysis reveals only a single significant effect on the item “lead-
ership requirement”: The presence of a leader appeared less necessary to the bicultural
MVT than to the tricultural ones. However the descriptive results indicate that in the
bicultural MVT, the response to the type of leadership was indifferent while in the tri-
cultural MVT it was more specific and oriented toward the task and the time schedule.
We conclude therefore that less cultural and social diversity requires less hierarchy and
leadership.
The set of results relative to pattern of feeling of compatibility led us to cautiously
consider generalization. The interactive national teams did not significantly change
their preexisting pattern of interpersonal compatibility toward a multicultural virtual
team identity. However, the discrepancy in the feeling of compatibility between national
teams was generally reduced after the virtual collaboration, followed by a general dimi-
nution of in-group favoritism (Tajfel 1981). We could argue that the Dutch reached a
shared group identity and that the reciprocal prejudice of Confucian versus Western
diminished during the six weeks of virtual collaboration. Under these circumstances, we
conclude that careful consideration needs to be given before generalizing about changes
in compatibility.
The set of results relative to satisfaction revealed that participants enjoyed the project
to varying degrees. The lowered sense of social and professional learning reported in
the post-test is troubling. The French had quite a negative attitude toward the project or
perhaps had too high initial expectations possibly linked to the lack of previous experi-
ence they had of working in multicultural teams (9.5 percent). This can first be related
to the dimension of Uncertainty/Avoidance, linked to the ability to apprehend stress-
ful situations (Hofstede 1980). Indeed, the members of the French culture had more
difficulties in dealing with uncertain situations including a low level of control on the
outcome (the participation in the first section in the project), difficulty in mastering the
English language, high group cohesion, lack of professional experience in multicultural
teams, and forced compliance (Festinger 1957).
The lowered sense of social and professional learning reported in the post-test for the
Dutch is less striking, and the Hong Kong participants reported virtually no change.
This is more encouraging but still warrants consideration. In no case did post-test results
exceed pre-test expectations. Initial expectations were quite high, however, and would
perhaps be tempered in future interactions. It must be considered that this was typically
the first virtual team experience for the participants. The results concerning conflict
were encouraging. Generally, participants usually expect the cultural differences to be a
great source of problems. However, they did not experience a high level of such conflict
within the multicultural virtual teams.
From a technological perspective, we see lots of equifinality (i.e., the same technol-
ogy configuration can be used in different ways leading toward a common result). For
example, some groups arrived at a consensus during the introductory videoconference
whereas others used the discussion groups to generate and prioritize research questions.
One group used an electronic whiteboard to cluster and prioritize ideas as one might
do in a face-to-face session. The portfolio of technology provided and associated sup-
port was recognized as important as teams worked literally 24 hours a day given time
zone differences as well as their individual preferences and other demands on time (e.g.,
employment).
Technology robustness and global availability are key in a project of this size. We
have learned that this is more important than trying to match specific technology func-
tionalities to specific virtual team processes. The processes followed in the structure pro-
vided for this project were the result of four years of evolution with the objective to be
supported by a wide range of technologies. A general learning management system such
as Blackboard meets the basic requirements, although it is clear that synchronous com-
munication and convergence could use improved technological support. In this study,
videoconferencing was seen as less important than Blackboard, due in part to lack of
availability. The teams had limited access to videoconferencing whereas they had Web-
based access to Blackboard 24 hours a day.
IMPLICATIONS FOR PRACTICE

Implications of aspects of national culture with respect to KM in VTs extend beyond
findings in academic contexts to experiences in multinational organizations (e.g.,
Davison, Vogel, and Harris 2005; Saunders, Van Slyke, and Vogel 2004). For example,
Philips Software (PSW) is a new Business Unit in Philips that operates as an independent
software vendor in the mobile and consumer electronics market. The unit was formed
in 2003. The units of PSW are located in seven locations in six countries on three conti-
nents. PSW can be characterized as a virtual organization from conception. The size of
the units varies from 3 people to 30 people. National culture issues experienced by PSW
are similar to those associated with the HKNET project. We have also gone forth to have
experiences and examine implications with other large multinational organizations.
The data presented demonstrate that different national cultures may have differ-
ent preferences and different usage of knowledge management technologies. This has
consequences for the usage of technologies in virtual teams in practice. For example,
synchronous technology use has been shown to be effective in virtual teams. However,
one must be aware that synchronous decision-making may be against the preference of
some of the group members. This does not mean that synchronous time cannot be use-
ful; rather it means that more time will have to be dedicated to guiding team members
through the synchronous decision-making process as a function, in part, of group cul-
tural composition. People from Asian cultures may require time for local convergence
before they are willing to enter into global interaction. Two examples of how this can
materialize in (virtual) teams are presented.
The first example was observed within the HKNET project and relates to the impor-
tance of consensus and collectivism in the Confucian culture. The team members were
expected to vote to arrive at a selection of the research questions. The Europeans voted
and nothing seemed to happen on the Hong Kong side. A phone call between professors
found that the Hong Kong students had momentarily left their computers to discuss and
arrive at a local group consensus. After that they voted on screen, only submitting their
vote after they had double-checked with local teammates that the vote was unanimous.
The second example relates to one of the authors’ experience in an initial meeting
between the 150 senior managers of a multi-billion-dollar company, formed after the
merger of an Asian and a European company. This example addresses the importance
of hierarchy in the Confucian culture. Group Support System technology was used to
support this meeting. The managers from the Asian company did not provide any input
until their most senior manager answered a question using the computer. It was inter-
esting that the company culture determined the behavior. The European company had
many Asian managers but their behavior in the meeting reflected their company culture
more than their national culture.
Both examples involve the use of knowledge management technology to provide
input or vote on a particular problem to reach a decision. Congruently, in big virtual
meetings in industry we have also experienced that hierarchy and norm of collectivism
influence the behavior of the participants engaged in large-scale audio and video confer-
ences. Lively interaction and quick responses to unexpected questions are more likely to
be received from individualistic Westerners than from Asian participants who will more
often feel the need to seek local consensus and receive approval from their superiors in
the organizational hierarchy.
These examples demonstrate that difference in sense of hierarchy and collectivism
especially influences the behavior of the Confucian culture participants when using syn-
chronous technology. We also experienced that, in case of conflict, some participants
prefer to use a synchronous mode of communication. The escalation of media in times

of conflict may be counterproductive if the chosen media are against the preference
of part of the group. For example, Westerners typically increase the richness of media
in case of conflict, often going from asynchronous data exchange to synchronous data
exchange or from data exchange to audio to video. In business, the ultimate step is
usually to get on an airplane and meet face-to-face. The use of synchronous technolo-
gies in times of conflict may be threatening to persons from a Confucian culture. The
conflict may become more pronounced because, in addition to the existing conflict,
Western team members are trying to impose processes and technologies that go against
the cultural protocol of the Confucian members of the team, as noted by Lee (2000). The
Asians may have the need to buy more time to arrive at a local consensus, whereas the
Westerners seek to impose technology that provides them with less and less time.
In business, difference between cultures is also observed between Westerners using
synchronous communication to solve problems. The French and the Dutch have very
different ways of tackling conflict and problem solving. The Dutch, more task-oriented,
will adapt a straightforward style of negotiation that will typically be supported by a set
of points in an agenda to be discussed. These points will be systematically addressed
and result in a consensual potential decision. Video and audio conferencing are thus
efficient for the Dutch culture. The French, though, consider face-to-face as necessary to
have a real discussion and reach a stable consensus.
A major threat that was observed and common with the Confucian culture is that
French and Hong Kong participants will agree via synchronous mode and then later
rethink the decision. This is particularly frustrating to the Dutch. For the French, real
discussion typically involved some social activities that are important to mediate con-
flicts and influence the decision to be taken. They tend to have more problems with
structured agendas required for video/audio conferences that lack social interaction. The
French recognize that a lot of value can emerge from mixing different cultures. At the
same time, they fear that misunderstanding and conflict will emerge based on cultural
differences. This reinforces their conviction that face-to-face interaction is important.
In business, we have observed congruent behavior, and noted that the French typically
ask to be provided with training on cultural issues and multicultural behavior to ensure
fluency of communication. They also emphasize the importance of social events and
activities and the importance of meeting face-to-face to have a better grasp on the other
partners of the interaction. They are clearly concerned about their lack of abilities in
English and want to balance this shortcoming through meeting socially where they feel
more comfortable and could potentially better influence decisions.
The research data also demonstrated that asynchronous technology use is important
to elaborate on research questions. The main advantage of asynchronous time in virtual
teams is to allow the participants to work out the problem in more detail. This turns
out to be particularly useful for participants with lower social communication skills or
language deficiencies. Indeed, experience has shown that French participants needed
more time to elaborate on their text and felt less secure about their knowledge of Eng-
lish. Asynchronous time also provides the space desired by the Confucian participants
to review the work at the local level to be more cohesive. We also observed in industry
that the main problem of asynchronous communication is the overload of information
that needs to be read and the frustrations of delayed feedback. Interestingly, one of the
teams in the HKNET project worked out a plan to tackle the information overload.
They appointed a local reader and rotated that role every week: one person per local
team was reading all the asynchronous messages and summarized them for the rest of
the local team members. The use of technology required the development of additional
technology such as developing an efficient system to monitor asynchronous messaging
over different time zones.
The HKNET research also holds some lessons for providers of technologies. It is
emphasized again that, because each technology has pros and cons that vary as a func-
tion of culture and team desires, a single technology will not be sufficient and a portfolio
will be required. Both synchronous and asynchronous technologies should be available
and mixing of the two should be supported. However, no single mixing recipe can be
provided. As such, integration and ease of movement from one technology to the next
is paramount and needs to be fluid and flexible to meet the varying needs of teams
as circumstances dictate in the tasks at hand and as the team’s characteristics evolve.
Familiarity also plays a role here. People have a tendency to focus their attention on
one form of electronic input. For many people, this is the inbox of their e-mail system.
We have experienced that it is difficult to expand perspectives and include synchronous
technologies. We have also experienced in practice that even if people are convinced of
the merits of synchronous technologies, it requires process or organizational pressure
to move them.
Our research has special implications for virtual team facilitators and managers. Ear-
lier research indicated that different virtual teams experience different problems, even
when the circumstances are similar. We have described this using an onion-skin model
that suggests that virtual teams have to work through layers of problems to be able to
operate effectively (Rutkowski et al. 2002b). Examples of layers are technology, motiva-
tion, and professional as well as national culture. Our current research indicates that the
relation between culture, information technologies, and process/outcome are dynamic.
This means that teams adapt their culture in terms of norms and pre-existing patterns of
cultural compatibility. Teams do not only experience different layers of problems while
working in virtual teams but the layers are also dynamic. A problem that one team has
solved may reappear for this team or another team in a different form or shape. Ulti-
mately, at the cultural layer level, participants expect differences from the start and the
effect is that (1) some will pass over it to keep the process working smoothly in the VTs
or (2) others will typically attribute failure to culture rather than to recognize that the
problems concern the VT process and other issues such as motivation.
Perceived impact and experiences vary significantly within and between teams. Vir-
tual teams in practice will experience a greater variety of tasks, which will make it even
more difficult to agree upon the lessons learned and the next steps for the virtual orga-
nization. A specific issue for virtual teams at the organization level is progress tracking.
It is difficult to track the progress of larger numbers of individuals and virtual teams.
Our research indicates that different cultures use different technologies. This makes it
more difficult to set up a tracking system. Our research further indicates that one should
not enforce a specific technology upon different cultures, which makes it more difficult
to track progress in quantitative terms. For example, the fact that teams do not use
a synchronous technology (e.g., chat) for convergence could be an early warning for
lack of progress in a Western team. It should not be perceived as an indication of lack
of progress in a team with Chinese members, given their preference for asynchronous
technology. It is not yet clear how it should be interpreted in a team with a mixture of
Eastern and Western members, like the ones studied here. It is even more complicated
in that it could be a warning sign for a team in its initial project, but in later projects,
they may have adapted their culture and their use of technology may well be justifiably
different.
CONCLUSION
Virtual teams are here to stay, and knowledge management is a perennial issue with
many challenges, not the least of which includes the impact and implications of national
culture. The conclusions that we draw here are based on seven years of findings associ-
ated with the HKNET project plus experience with virtual teams in a variety of orga-
nizations. In general, it would appear that national culture drives, to some extent, the
choice of technology (e.g., through desire for synchronous or asynchronous driven by
uncertainty reduction preference). This, in turn, influences the processes and outcomes
of team interactions due, in part, to technology characteristics. These differences in pro-
cess and outcome can then feed back to influence national culture, at least temporarily,
in the context of the team interactions. Thus, the circle is complete and can continue,
iteratively, to influence and affect team members, resulting in cultural convergence
to accomplish agreed upon tasks in a knowledge management context. The degree to
which this has a lasting effect as team members move from one project to the next is an
important topic for future research.
REFERENCES
Alavi, M. A., and D. E. Leidner 2001. Review: Knowledge management and knowledge manage-
ment systems: conceptual foundations and research issues. MIS Quarterly 25(1): 107–36.
Bond, M. H. 1986. The handbook of Chinese psychology. New York: Oxford University Press.
Bond, M. H., and K. K. Hwang 1986. The social psychology of Chinese people. In The psychology
of Chinese People, ed. M. H. Bond, 213–66. Hong Kong: Oxford University Press.
Briley, D. A., M. W. Morris, and I. Simonson 2000. Reasons as carriers of culture: Dynamic vs.
dispositional models of cultural influence on decision making. Journal of Consumer Re-
search 27:157–78.
Davison, R., D. Vogel, and R. Harris 2005. The e-transformation of western China. Communica-
tions of the ACM 48(4): 62–66.
Dustdar, S., and G. J. Hofstede 1999. Videoconferencing across cultures: A conceptual framework
for floor control issues. Journal of Information Technology (14): 161–69.
Festinger, L. 1957. A theory of cognitive dissonance. Stanford, CA: Stanford University Press.
Fiedler, F. E. 1965. A contingency model of leadership effectiveness. In Group Processes, ed. L.
Berkowitz, 85–107. New York: Academic Press.
Genuchten, M., D. Vogel, A. Rutkowski, and C. Saunders 2005. HKNET: Instilling realism into
the study of emerging trends. Communications of AIS 15:357–70. http://cais.isworld.org/
contents.asp.
Grant, P. R. and J. G. Holmes, J. G. 1981. The integration of implicit personality theory schemas
and stereotype images. Social Psychology Quarterly 44(2): 107–15.
Gergen, K. J., A. L. Massey, A. Gulerce, and M. Misra 1996. Psychological science in cultural con-
text. American Psychologist 51:496–503.
Griffith, T. L., J. E. Sawyer, and M. A. Neale 2003. Virtualness and knowledge in teams: Managing
the love triangle of organizations, individuals, and information technology. MIS Quarterly
27(2): 265–87.
Gudykunst, W., and Y. Kim 1988. Theories in intercultural communication. Newbury Park, CA:
Sage.
Hong, Y. Y., M. W. Morris, C. Chiu, and V. Benet-Martinez 2000. Multi-cultural minds: A dy-
namic constructivist approach to culture and cognition. American Psychologist 55(7):
709–20.
Hofstede, G. 1980. Culture’s consequences: International differences in work related values. Lon-
don: Sage Publications.
Hofstede, G. H. 1983. National cultures revisited. Behavior Science Research 18(4): 285–305.
Hwang, K. K. 1987. Face and favor: the Chinese power game. American Journal of Sociology. 92:
944–74.
Katz, D., and K. Braly 1933. Racial stereotypes of one hundred undergraduates. Journal of Abnor-
mal and Social Psychology 28: 280–90.
———. 1935. Racial prejudice and racial stereotypes. Journal of Abnormal and Social Psychology
30:175–93.
Kirby, D. M., and R. C. Gardner 1972. Ethnic stereotypes: Norms on 208 words typically used in
their assessment. Canadian Journal of Psychology 26: 140–54.
Kwok, R., J. Ma and D. Vogel 2002. Assessing GSS and facilitation effect on knowledge acquisi-
tion. Journal of MIS 19(3): 185–229.
Lee, O. 2000. The role of cultural protocol in media choice in a Confucian virtual workplace. IEEE
Transactions on Professional Communication 43(2): 196–210.
Lippman, W. 1922. Public opinion. New York: Harcourt Brace.
McGrath, J. E. 1984. Group: interaction and performance. New York: Prentice Hall.
Mejias, R., M. Sheppard, D. Vogel, and L. Lazaneo 1997. Consensus and perceived satisfaction
levels: A cross-cultural comparison of GSS and non-GSS outcomes within and between
the U.S. and Mexico. Journal of Management Information Systems 13(3): 137–61.
Myers, M. D., and F. B. Tan 2002. Beyond model of national culture in information systems re-
search. Journal of Global Information Management 10(1): 24–32.
Qureshi, S., and D. Vogel 2001. Adaptiveness in virtual teams: Organizational challenges and
research directions. Group Decision and Negotiation 10(1): 27–46.
Rijsman, J. B. 1997. Social diversity: A social psychological analysis and some implications for groups
and organizations. European Journal of Work and Organizational Psychology 6(2): 139–52.
Rutkowski, A., D. Vogel, T. Bemelmans, and M. Genuchten 2002a. Group support systems and
virtual collaboration: The HKNET project. Group Decision and Negotiation 11(2): 101–25.
Rutkowski, A., D. Vogel, M. Genuchten, T. Bemelmans, and M. Favier 2002b. E-collaboration: The
reality of virtuality. IEEE Transactions on Professional Communication 45(4): 219–30.
Saunders, C., C. Van Slyke, and D. Vogel 2004. My time or yours? Managing time visions in global
virtual teams. Academy of Management Executive, 18(1): 19–31.
Stangor, C. 2001. Stereotypes and prejudice: Essential readings. Philadelphia: Psychology Press.
Tajfel, H. 1981. Human groups and social categories. Cambridge: Cambridge University Press.
Triandis, H. C. 1994. Culture and social behavior. New York: McGraw-Hill.
Van der Vegt, G., B. Ermans, and E. van de Vliert (1999). Effects of interdependencies in project
teams. Journal of Social Psychology 139(2): 202–14.
Vogel, D., R. Davison, and R. Shroff 2001a. Sociocultural learning: A perspective on GSS enabled
global education. Communications of AIS 7(9): 1–41. http://cais.isworld.org/contents.asp.
Vogel, D., M. Genuchten, D. Lou, S. Verveen, M. van Eekhout, and T. Adams 2001b. Exploratory
research on the role of national and professional cultures in a distributed learning project.
IEEE Transactions on Professional Communication 44(2): 114–25.
8
People’s Twist: The Cultural Standard
of Loyalty and Performance in Former
Socialist Economies1
Gerhard Fink and Maren Lehmann
ABSTRACT
Culture is a complex frame of perceiving, observing, understanding, judging, and act-

ing. Normal behavior within these frames (e.g., the ways people normally do these
things) can be called cultural standards (Thomas 1993). This chapter analyzes the
emergence of cultural standards that are specific to the former socialist economies.
Knowledge management provokes views outside and inside such cultural frames,
and it couples these views. This coupling twists the different cultures across their
borders: It links up internal and external knowledge within the coupled cultural
frames. Aspects of knowledge management are analyzed in light of recent literature,
research, and experience and show how a specific culture of loyalty and performance
emerged. The conclusion is that these more or less closed states tried to translate
the inside-out and outside-in view into top-down and bottom-up control, and then
tried to ignore the outside-in view as well as the bottom-up-control; the effects were
totalitarianism and isolation. The term “people’s twist” is the retranslation of this
hierarchical control into heterarchical observing, thus the reinvention of the outside-
in view as well as the bottom-up control. This special kind of knowledge manage-
ment functions by concealing effective knowledge from state control and shifting it
to private networking. Our argument is that this concealing and shifting of effective
knowledge from political control saves and reestablishes market rationality inside
planning rationality. Thus, the people’s twist makes possible what we call a socialist
economy: It establishes cultural standards specific to the socialist economy, which
help to secure survival in a culture of fear.
INTRODUCTION
Since managers of large corporations are more and more becoming cost savers and
know less and less about the tacit and explicit knowledge required to perform actual
work, knowledge management is becoming an increasingly important issue in man-
agement. The main argument for almost any merger or acquisition is the cost-saving
aspect. Heralded synergies will allow managers to reduce staff, in large mergers often by
the thousands. Usually the most qualified staff leave first as is reflected by the proverb
“Leave the best and merge the rest.” Even in fast-food chains, high personnel turnover is
a good predictor of decreased efficiency, because tacit knowledge gets lost (Kacmar et al.
2006). Mergers and acquisitions are often based on the assumption that the knowledge
in the acquiring firm is superior to any other knowledge and, thus, staff in the acquired
firms should be grateful to receive that superior knowledge. Surprisingly for those man-
agers the staff of acquired firms often remains passive if not in outright opposition to
accepting the “new and superior” management knowledge. Reportedly passivity and
resistance by the local staff are also at the core of many privatizations in former socialist
countries. Usually this is ascribed to the “communist heritage.” Rightly so, albeit that the
presumptions that the observed behavior had become a sort of national cultural value
under socialism are utterly wrong. Passivity is not a value, as can be easily clarified if ref-
erence is made to the literature on values (Hofstede 2001; House et al. 2004; Kluckhohn
and Strodtbeck 1961).2
It was a specific cultural standard to be applied in public life, since in socialist economies
passivity was advised where political risk was to be avoided. Otherwise, in private circles,
which were actually established at the workplace, people were very active about securing
survival and had developed a particular and very self-conscious form of individualism
to get the best out of the system. In a way, nobody was unemployed, but nobody worked
hard. Hence, there were not enough supplies in the shop, but everyone had sufficient sup-
plies at home. There was no political freedom, but there was freedom at the workplace.
This chapter shows that in the socialist economies in Europe, workers had learned to
protect their productive knowledge from being exploited by the rulers. They had learned
to transfer their knowledge from the workplace to the private sphere, where inequal-
ity in performance and knowledge is more rewarding than equality. People exported
their productive knowledge from the firm and reimported it only when needed. They
established a kind of subversive privacy at the workplace. This transfer and reimport of
productive knowledge is identified as a specific form of knowledge management pre-
vailing in socialist systems, which produces a radical, very self-conscious individuality
underneath the surface of a collective. In this aspect, former socialist economies com-
bine two forms of rigid social control: official integration at the organizational level
(the collective) and private integration (in the niche) at the society level. Despite the
permanent threat at the society level (or because of the threat), the primary small work
collectives became the nucleus of privacy and lasting friendship. Despite the rhetoric of
“tight plans” and “plan targets of unprecedented difficulty” there was a lot of freedom at
the workplace, as plans were quite often changed so that targets were met ex post facto.
That freedom was such that after 1989 people felt that “first the Berlin Wall fell; next we
lost our freedom at the workplace!” Sociologically speaking, socialist economies consid-
ered economy and politics as identical and called the functioning of this identity work or
People’s Twist 137
labor. Formal organization (bureaucracy) was employed as the appropriate social field of
action. It was exactly this work/organization entanglement that allowed the transfer of
knowledge to the private sphere and differentiation of private performance mentioned
previously. There were attractive places outside of the organization, but within society.
People not only entered them, but used their positions within organizations as places of
social interaction (i.e. socialization in the sense of Nonaka and Takeuchi 1995).
This chapter is organized as follows. After this introduction there is a brief description
of the core elements of state-of-the-art literature on knowledge management, followed
by an account of the functioning of the socialist system: first, a theoretical part describ-
ing the historic development of relations between individuals, classes, and masses, which
are related to the notions of work; Lenin’s invention of cadres; and the unavoidable con-
flict between expectations of performance and loyalty. Next there is an account of the
functioning of the socialist planned economy by considering the four core elements of
work life: the impact of recurring purges, humiliations, and other forms of degradation,
the small work collective as the nucleus of lasting friendship and social relations, the
actual functioning of the planning system, and the quest for efficiency with measures of
socialist competition. Finally, there is a short reflection on the reduction of knowledge
to labor that was reflected by this order: “Send the intellectuals back to production!”
Performance and creativity were forgotten by the rulers when it came to securing loyalty
and power. Consequently, people integrated their tacit and explicit knowledge into their
individual private life wherever they were—at work or at home. This practice of privacy
can be called “subversive surviving.”
THEORETICAL PERSPECTIVES
In this section there is brief reference made to two streams of theoretical literature:
cultural standards and knowledge management.
“By cultural standards we understand all kinds of perceiving, thinking, judging, and
acting, which in a given culture are considered by the vast majority of the individu-
als for themselves and others as normal, self-evident, typical, and obligatory” (Thomas
1993, 381, translation by Fink, Neyer, and Kölling 2007). Cultural standards are inter-
related with cultural values (society level) and personality traits (individual level), but
are distinct constructs. Values can be understood to function as a general guidance to
select appropriate modes of behavior from a given repertoire to solve common human
problems within a society (Kluckhohn and Strodbeck 1961) and personality traits char-
acterize the disposition of individuals to behave in certain ways. Individuals select their
actual mode of behavior from the available repertoire of cultural standards depending
on the problem to be solved, the values in a society, and their personal disposition and
interest (Fink, Neyer, and Kölling 2007).
When considering the functioning of the former socialist system from a knowledge
management perspective it is necessary to raise the issue of whether the motivational
foundations of knowledge management were given, as in the models of Nonaka and
Takeuchi (1995), Gupta and Govindarajan (2000), and Glisby and Holden (2002). Can
tacit knowledge be mobilized by socialization at the workplace (i.e., transferred as tacit
knowledge) and at the next stage converted into explicit knowledge as described by
Nonaka and Takeuchi (1995)?
Knowledge management is, of course, also to a large extent culture dependent (for
details see also Chapter 4, “Cultural Stretch: Knowledge Transfer and Disconcert-
ing Resistance to Absorption and Application”). Nonaka and Takeuchi (1995) based
their theory of knowledge creation on the general distinction between tacit knowledge
(implicit and not codified) and explicit knowledge (explicitly expressed and codified,
written text). This distinction is at the core of behavioral rules in socialist economies.
However, in an atmosphere of high political pressure and fear, transfer of explicit knowl-
edge was highly risky and, thus, impeded. Specific forms of communication and tacit
knowledge transfer were developed. This observation reinforces the findings of Glisby
and Holden (2002), who have shown that all four modes of the Nonaka/Takeuchi (1995)
model are culture dependent.
The model of Gupta and Govindarajan (2000) distinguishes issues that are related
to the sender of knowledge (perceived value and motivation to share knowledge), the
prospective receiver (motivation to learn and the ability to recognize the value of new
knowledge), and to the richness of transmission channels. The logic of the socialist
economic and political system had a direct bearing on the components of the Gupta/
Govindarajan (2000) concept. Thus, it also proved to be culture dependent.
Culture variously influences what is understood by tacit or explicit knowledge and
how it can be communicated, perceived, and absorbed. What for West Europeans could
be clear and explicit is not necessarily so for East Europeans, who might need additional
tacit information in order to understand the explicit messages and to be able to absorb
that knowledge. The same applies in the reverse direction. “If the context changes (e.g.,
culture), knowledge also changes.” (Venzin 1998 as quoted by Holden and von Kortz-
fleisch 2004, 2). However, when asking whether differences in management techniques
do exist, one simultaneously has to ask what kind of decisions and actions should be
taken to integrate what used to be separate, and as a consequence of that integration,
what will be separated which used to be integrated.
THE FUNCTIONING OF THE SOCIALIST SYSTEM

Here the socialist economy will be considered an economy managed by an authori-
tarian, bureaucratic organization (a party). This management is based on a conventional
understanding of economy as a kind of a nation-state’s household and, therefore, as a
single corporation of more or less totally included people. Thus, this economy refers
to the classical concept of an oikos (a closed economical and political unit; a complete
household under a patron; in the strict sense of Greek tradition and Roman law it is the
elementary unit of a state cf. Brunner 1980). The political task of management is to take
individuals and place them inside this economy, without respecting people’s everyday
life, values, commitments, and other personal relationships. In earlier times of commu-
nist power such measures were deliberately taken to degrade intellectuals and humiliate
the bourgeois, in order to “isolate enemies of the working population from the public
sphere” (Paríková 2004, 51). This kind of management views people as empty, abstract
individuals, loosely coupled with a substratum: the masses, which are to be organized
rigidly to secure loyalty. Thus it produces cadres, not managers.
By contrast, it is quite clear that individuals are thinking and feeling observers—not
empty containers—that they are somehow integrated in families, groups, or teams,
whose internal traditions and rules undermine this kind of management as does the
thinking of individuals. In effect, socialist management couples its ignorance of people’s
thoughts and commitments with a suspicion concerning those thoughts and commit-
ments. Sociologically speaking, communication is under permanent suspicion of under-
mining organizational control, because it does not respect the boundary of the oikos. It
brings the outer side back into the closed inner side; it brings society back into the orga-
nization. Thus, the take-and-place strategy has to realize that the workplace is the most
important locus of communication and as such the most important place where orga-
nizational control is required. In other words, individuals undermine or bridge every
wall by communication. The supposed elements of the working class use work as their
favorite joker in the socialist manager’s game—they play a game with this game, work-
ing with communication, which can be neither completely appropriated nor perfectly
controlled by the totalitarian party—this is the people’s twist.
Individuals, Classes, Masses

In the eighteenth century, the term individual was used in a pejorative sense only (cf.
also genius, idiot, and proletarian). It indicated a disintegrated man without any respect-
able social status: in other words a man under suspicion. In the nineteenth century,
which framed and provided the background of social movements like socialism and
communism, this pejorative term is abstracted and generalized to create a recognizable
unit: an element of masses that enters a social status by industrial work only to become
an element of class instead of mass. The supposition is that work is the only way for an
individual to gain personality. The advantage of this supposition is an almost undeter-
mined notion of personality—a notion which focuses on action, supervision, and pro-
cess instead of status. Positions can be achieved, but not taken for granted. Everybody
can hope to change their inherited ascribed status. The medium of hope and change is
work, or better: working. Because an oikos always describes social positions in terms of
property rights and duties, it is no surprise that work as a means to gain and keep status
is considered as a means only for those who have no such stable positions—that is, for
individuals, who are people without property rights and therefore without any commit-
ment and loyalty to the good of society. The notion of working poor for homeless people
shows this excellently. Thus, the suspicion of a lack of integrity is an index of individual-
ity (Stanitzek 1989). This can be called the “suspicion index.”
The concept of obligation to work and the necessity of political control of labor by the
society can already be found in the writings of Thomas More and the Utopians of the
sixteenth and seventeenth centuries (Roth 2004, 10). In the eighteenth century, there
were many attempts to use work (i.e., physical labor) as an integrative instrument (Fou-
cault 1976) in orphanages, jails, labor camps, and so on. Later, under socialism, physical
labor was attributed to be of higher moral and symbolic value than the activities of intel-
lectuals, and industrial work to be of higher value than agricultural work. Being without
employment (i.e., having “no work”) was consequently considered to be a criminal state
of life, which was to be prosecuted by the police (Niedermüller 2004, 30).
These attempts lead to the invention of “organization.” It is the basis of Lenin’s eco-
nomic program, which was founded on his high esteem of German bureaucracy and
American management methods, including cadre politics (Best 2005; Hughes 1991;
Taylor 1911). Until today and even outside socialism and communism, organization
can be seen as a kind of entanglement of work and membership (thus, people nor-
mally speak about “employment”). It has remained the horizon of almost all career
planning and personnel development. Labor has become generalized to work to indi-
cate that intellectuals and engineers are also employees. Otherwise, work can never be
claimed completely and exclusively by an organization; nobody is completely occupied
by employment. “To work” is what both included and excluded people can always
do to continue their social life or to reproduce their social identity (their personal-
ity). Describing ourselves as working indicates our attractiveness as employees, but
also indicates our external life, our personal individuality. Thus, the entanglement of
organization and work reproduces the suspicion index mentioned previously, because
work (not employment) is the joker of the individual within the organization. Work
itself bears the suspicion index of individuality. Work itself allows us to evade rigid
organizational controls. This is the game that people learned to play so well under
socialism.
The twentieth century brought an invention with serious consequences: the invention
of communication (Shannon 1948). It gave the opportunity for individuals to introduce
individuality as a joker in the management and organization game. It enters the social
stage as a kind of redescription (Hesse 1966) of the well-established work/organization
entanglement: communication occupies work. The problem of individuality, namely
the social reckoning with inclusions and exclusions or with integration and disinte-
gration, now lies in the entanglement of decision and communication or, as Luhmann
(2000) clearly put it, in the entanglement of organization and society.
Communication works as a bridge and as an undermining tunnel as well in formal
organizational decisions. It has become a kind of disintegrating joker in integration pro-
cesses. Problems of integrity have seemingly become problems of flexibility. Problems
of planning and leadership became problems of management. Communication is not
simply the medium of individuality, but the way in which decision and communication
are to be entangled. If management is a sort of leadership, then knowledge management
becomes of importance as a communication process, because managers have to reckon
with the social, organizational, and individual rationalities. That is why in organizations,
everyday communication is presented as work. In socialism small groups established
themselves as “informal collectives” at the workplace. They used communication to
develop identity and lasting collective friendship, and to distinguish themselves from
the “other world” by communicating about interesting topics, which often were not
discussed in the public sphere (Jõesalu 2004).
Former socialist economies, focusing only on the work/organization entanglement
and ignoring the communication/organization difference, had to mobilize all their con-
trolling efforts to make communication become work and to strengthen the decisional
aspects to become a kind of confession. But these economies were not isolated from the
rest of the world. They were not the whole society and not the only world (even if some
of their leaders may have hoped so). Everybody inside the system knew that. Conse-
quently, the more the borderline was shaped as an unbreakable wall, the more traffic
went underneath and above. Thus, the rules of masses undermined the rules of classes.
The rules of communication undermined the rules of work. The rules of everyday life
in the society undermined the rules of organizational control. These undermining
channels, usually described as “private niches,” were the playground for the individuals
who loosely coupled, but did not break, the sides of the walls.
Lenin’s Invention of Cadres

Vladimir Ilyich Lenin (1870–1924) was a son of the nineteenth century. His model
of society was that of a corporation; his model of organization was bureaucracy; his
model of order was correctness; and his model of economy was industry. He twisted
and entangled all these models to create his own special model of politics: the model of
revolution. The management playground for him was in effect a confluence of politics
and economy: His notion of revolution is a technical, mechanistic one, which ascribes
the obvious difference between politics and economy to bureaucratic organization only
and supposedly replaced this difference itself by organization (Selznick 1952). In other
words, he found politics and economy to be identical and thus confused them. To man-
age this, he also identified society and organization as being identical and, thus, con-
fused them too. The result was the new-type party—Lenin’s Communist Party of the
Soviet Union—the invention of what sociology calls a “total institution.” Otherwise,
Lenin himself certainly knew that a difference remains a difference. A working organi-
zation, he thought, would and should reckon with this difference. And certainly he was
right; however, a few things were overlooked. On the one hand, there is not only one
kind of organizational reasoning and, on the other hand, not only the organization, but
also the organized people have their own practices of reasoning. Baecker (2002) dem-
onstrates very lucidly that, because of the forgotten difference, communist parties were
forced to turn to conspiracy. In his later years Lenin was also forced to reinvent the state
(Lenin 1923).
Nevertheless, the main handicap was his understanding of organization as a selecting
and separating, distributing, planning, and controlling process (Lenin 1917). However,
he overestimated the possible performance of organization. Speed and control were his
most sought-after goals (Lenin 1923: 884f.). In this respect, Lenin’s New Economic Pol-
icy, starting in 1921, can be seen as an adaptation of Frederick Winslow Taylor’s ideas,
because it turned cadre politics into a kind of mechanization of individuals. Taylor
replaced the question of organization with the question of efficiency, but he omitted the
problem of class struggle—just as Lenin did, when he proposed the transformation of all
classes into one mass of individuals, which was considered the substratum for bureau-
cratic management. Taylor replaced the question of individuality with the question of
performance, thus replacing loyalty with payment and bonus and stressing the problem
of control—just as Lenin did, although his bonus was social access only (thus, he tried
to improve performance by threat). For Taylor a perennial question was whether and
how executives and workers can be conciliated—just as it was for Lenin’s cadre politics.
Both were inclined to select “first class laborers” as executives (Taylor 1911). Both Tay-
lor and Lenin cultivated connotations of economics, and both interpreted performance
to be “a matter of attitude.” Both cultivated a vast range of suspicions concerning pos-
sible concurrences between different integrative structures (groups) and both tried to
fight against all of these groups. The suspicion was that each kind of integration inside
or outside of the organization would negatively influence the individuals’ attitudes to
work and, thus produce a “loss of ambition and initiative,” if workmen were “herded
into gangs” instead of being treated as separate individuals (Taylor 1911, 36). Lenin
expressed the same suspicion as emergent lack of loyalty (something he called “cor-
rect consciousness”). Both Lenin and Taylor had in common a general suspicion of the
proletariat (Conze 1966). Lenin intended to organize the whole country (not a selected
firm, like Taylor) in his preferred bureaucratic sense. If something did not work, he
reacted with terror (Service 2000), whilst Taylor could simply reduce wages.
Lenin coupled an inclusive program with an exclusive strategy. His program was:
supervision by the organization (‘the party’ replaced economy and politics), and trans-
formation of people into individuals by decoupling kinship and friendship connections
and commitments. This was also the reason for his eagerness to destroy religious struc-
tures. Thus, Lenin’s management concept considered people to be unreliable elements:
it uses and confirms the pejorative meaning of ‘individual’ as mentioned in the intro-
duction. Additionally, just as Foucault (1976) described it, Lenin expected individuals to
be more or less completely controllable, which provided the frame for totally inclusive
cadre politics.
According to the personal experiences of one of the authors (M.L.), people in socialist
economies knew how to ignore these expectations and how to undermine bureaucratic
control. The primary principle—a cultural standard—was: ‘Never stick out!’ Yet, on the
other hand, their kind of ‘best practice’ confirmed Lenin’s invention of cadres, because
their horizon was the same socialist identification of economy and politics. Even in the
late 1980s there was no idea of how to live in a society that would not continue this way
of organizing, which would not consider economy and politics as being identical and,
thus, not conflate them. There was no knowledge about cultural standards in market
economy countries. After the collapse of communist power the people’s twist, invented
and tested in undermining total institutions under socialism, became meaningless. Their
social behavior lost its reference; best practice became worst. Important parts of previ-
ous knowledge and related cultural standards became depleted, useless, and out of place.
To quote from a personal encounter: M.L.’s teacher at the Burg Giebichenstein School
of Arts once told her: “I’ve been a successful professional, now I am more foolish than
a dilettante.” The role of people networking was replaced by professional management;
but this replacement was not experienced as subversive, but as a very rigid undermin-
ing of what was before established as economic rationality itself—the culture of people
networking. Thus, the political and economic transformation after 1989 seemed to be
destruction and not a reconstruction of economic rationality. The level of people—the
‘flatland’ of culture (Abbott 1992)—seemed to be canceled. Culturally speaking, people
lost the ground under their feet. Despite numerous attempts at economic reform of the
socialist system it was just this flat level of subversive economic culture, which had been
established since Lenin’s invention of planning and cadre politics, which remained until
the late 1980s (Luhmann 1995).
The term cadre originally indicated a reliable core of armed forces officers, which is
necessary for a successful army and thus had to be arranged and developed. It was “a
corps of professional soldiers preserved in peacetime as a basis for the wartime army”
(Selznick 1952, 18). The notion of a cadre can principally be used to indicate each solid,
reliable core of staff or each group of executives or each group of potential leaders. The
cadre may refer to a group but may also be used to indicate an individual member of a
group. Today in the German language, the term is instead used in sports (e.g., to denote
members of a football team) or a kind of pool from which the members of an occasional
team, like a national team, are to be selected. (To our knowledge cadre is not used in this
sporting sense in English.) It is certainly no coincidence that socialist states had a special
preference for sports and also for the military. Lenin and Stalin understood that these
provide a very practical way to individualize people and to form individuals into cadres.
To this day this is most successful in very bureaucratic, hierarchical organizations (e.g.,
French elite schools as resources for public services and economic leaders; see Bourdieu
2004). The concept of forming cadres was extraordinarily successful in the twentieth
century, especially in Germany and Russia. It is important to note that cadre describes
a precarious status, because it relies on an individualization strategy, which considers
people to be unreliable elements.
Yet another issue is important in this context: after 1945 the notion of cadre was
reintroduced in other languages of socialist countries as if it was of Russian descent (i.e.,
in the plural form of the word only). The plural form indicates a renunciation of indi-
vidual-personal attributions, but not of individuality in the abstract sense of a kind of
mere element of the mass. Since everyone had been considered to be a member of some
cadre as a mere individual, but never as a personality, there are good reasons to assume
that the attribution processes referred to hidden groups, networks, or hierarchies and
not to individuals. The generalization of the organizational view trivialized and, at the
same time, exaggerated the disturbances possibly caused by individuals. Thus, the incli-
nation to hide one’s personality became typical for socialization under communism.
One of the most surprising results of this socialization process was an official pride in
reliability and a hidden pride in unreliability.
Cadres and Project Makers (Loyalty and Performance)

Socialism (Lenin’s notion of “the revolution”) claimed that economy and politics as
well as organization and society are identical, and by that confused them in the state-
monopolist attempt to control the whole society. This provoked the rule “Do not stick
out!” Lü (2000, 100) reports one possible strategy for survival under such circumstances
and gives an example: “A prevalent mode of operation among cadres were the ‘three
looks and three don’t-speaks’: look for the direction of the wind … , when it is not clear
from where the wind is blowing, don’t speak; look at the color of the eyes of supervisors
… , when the color is not right (that is, not in the right mood), don’t speak; look for their
intentions … , when the intentions of superiors are not clear, don’t speak.”
Thus, socialism always tends to present a clean and untroubled surface. But, as much
as has been learned from second order cybernetics (Spencer-Brown 1969; von Foerster
1993), underneath there live troublemakers, and they live very well. They are profit-
ing observers (i.e., “parasites of silence”; Serres 1985). In biological organisms, there is
normally a symbiosis: Parasites profit from their host, but the host also profits from its
parasites. Societies can be described in the same way, and for socialism it would be very
lucid. The confusion of economy and politics and the replacement of its differences by
bureaucratic organization produce social structures, which focus problems of power
and welfare, not of money and credit. Thus it tends to produce political, not economic,
information. The effect is a lack of everything and a desire for everything. An economy
of more or less trivial exchange is working behind or underneath the official distribution
channels—and the official side depends on it. Because of that dependence, those who
accept the official (surface) rules can be included under a cadre.
The invention of a cadre assumes that a life under control is not only possible, but
attractive. A good way for an individual to live under these circumstances is to do what
is ordered—to do everything correctly, to meet the plan, and so on. The assumption is
that, whereas organization produces reliability, individuality produces unreliability. (As
noted previously, the same supposition appears in Taylor’s concept of “scientific man-
agement.”) This “correct life” can be termed first-order performance according to Heinz
von Foerster’s (1993) description of behavior: to present oneself as a “trivial machine,”
which transforms every request into an expected output, without any feelings. People
who present themselves as reliable workers who do precisely what they have to do, with-
out any doubt or question, make no difference to a planning organization: They seem
to be perfect tools, just like organization itself. But they only seem to be so; what indi-
viduals really do is to present a suitable identity that hides them from interventions and
sanctions.
Thus, first-order performance is only the surface of another, more profitable and
much more attractive behavior—“second-order performance”—which emerges on
the other side of correct life. In Heinz von Foerster’s (1993) description: “a non-trivial
machine,” which transforms every input into a possibly unexpected output: a feeling
individual, an observing observer, a self-conscious, socialized person, embedded into a
complex structure of commitments. Second-order performance depends on network-
ing, and is networking in the exact sense of the word. Georg Stanitzek (1987) described
this type of performance outside the sphere of fixed status as “project making,” referring
to an essay by Daniel Defoe (published in the late seventeenth century). Whereas first-
order performance profits from a confusion of performance and loyalty, second-order
performance profits from a distinction between performance and loyalty. It is a case of
decision making, of testing a variable range of opportunities (projects) and of choos-
ing an appropriate project at the actual moment. It is the case of connecting actualities
within a network of opportunities. This is the people’s twist, connecting and entangling
performance and loyalty. Applying Harrison C. White’s concept of “vacancy chains,”
which was originally designed in career research (1970), it can be said then that second-
order performance does not simply fill obvious gaps and empty positions (as first-order
performance does) but looks for these gaps and positions and links the identified gaps
and positions. It is a managerial game by nonmanagers to undermine cadre politics.
It is understood that a network of project-making observers lived underneath the
planning and totally controlling socialist surface. These observers were those perform-
ers that Lenin’s (and Mao’s, and Ulbricht’s, and Jaruzelki’s …) “new-type party” tried
to adopt into their cadres or preferably to transform them into their cadres. The total
organization aimed to destroy the economic networks within friendship and kinship
structures and the related commitments to get the chance to claim second-order per-
formers by individualization. If it was successful, it could transform them into first order
performers, considering performance and loyalty as identical and creating cadres—but
cadres under suspicion, because of individuality. Recognizing their suspicious status,
these individuals aimed at maintaining their social commitments underneath their
organizational loyalty, tried to hide them from observation, and continued to use their
networks and commitments to undermine organizational control. Thus, the people’s
twist is switching status between first- and second-order performances (cf. Luhmann
1995 with subtle references to East Germany in the late 1980s).
BEHAVIORAL ATTITUDES IN THE SOCIALIST WORKPLACE

This chapter is based on a variety of sources: personal experience, activities, and
observation; hundreds of conversations and our own research over more than 25 years;
and studying recent research on work in socialism (Roth 2004).
Maren Lehmann was an observing participant. She lived in the German Demo-
cratic Republic and had to find a way to survive in those times. Gerhard Fink was a
participating observer. His research on economics of socialist countries in Europe is
well documented in more than 100 publications. Numerous visits to socialist countries,
joint conferences, and meeting with many scholars from socialist countries at home and
abroad gave ample opportunities to collect detailed insights into the functioning of the
system and into the personal histories of hundreds of individuals.
To understand the behavioral attitudes in the workplace, it is necessary to consider
four aspects of work life: the impact of recurring purges, humiliation, and other forms
of degradation; the small work collective as the nucleus of lasting friendships and social
relationships; the actual functioning of the planning system; and the quest for efficiency
with measures of socialist competition.
In socialist political practice, work was recurrently used to degrade or humiliate peo-
ple who held positions, mostly by initial individualization and sometimes later to inte-
grate them again into a cadre, after they had proven to be reliable. The recurring purges
of Stalin, Mao Ze-dong, and others could be considered as necessary consequences of
the necessity of a permanent revolution, as Leo Trotsky (1981 [1929], 151) had put it:
“The dictatorship of the proletariat, which came to power as leader of the democratic
revolution, will unavoidably and necessarily be confronted with tasks, which will be
connected with far reaching interferences into the property rights of the bourgeois….
The acquisition of power by the proletariat will not conclude the revolution, but only
start it” [Translation by the authors].
In fact, during the great purges or political affairs, people (i.e., holders of positions)
must have been profoundly happy not to have been killed or imprisoned in labor camps,
but only humiliated. (For selected examples see, e.g., the reports by Paríková 2004.) It is
easy to recognize that these personal careers were in line with Lenin’s program: obser-
vation by the cadre (the party) transforms all individuals (1) into unreliable elements,
and (2) controllable cadres. Thus, while for systems theory the order “Don’t forget to
observe!” reminds us of the contingency of any social form, for the Bolshevik party (the
communist parties) the same order indicated a battle cry and a threat, as it refers to arbi-
trariness, not to contingency. ”Don’t forget to observe!” is the task of the cadre in two
directions: to check whence the wind is actually blowing and to control the individuals’
loyalty (Lehmann 2003a).
Of course, all purges, humiliation, or degradation, which primarily were undertaken
to secure the loyalty of individuals to the party line, namely the party leaders, necessarily
meant that vast knowledge and capabilities were destroyed. For example, some observ-
ers relate the initial successes of the German Army in Russia during World War II to the
great purges in the Soviet Army and Navy during 1937–38 (Brockhaus Enzyklopädie 1993;
Columbia 2005). Given the permanent political threat exercised by the totalitarian state,
which could hit anybody in the society, the small work collectives functioned as the nucleus
of lasting friendship and social relations, as a sort of retreat (Benovska-Sãbkova 2004). It is
necessary to understand that any individual performing a management task had to be loyal
against superiors (politicians, top managers) and in order to survive in his position and not
to be threatened from below to secure the loyalty of subordinates too. Loyalty cannot be
achieved by punishment! The gigantic need for control leads to increasing bureaucratiza-
tion (personnel administration), with the effect that relief is sought by self-recruitment (i.e.,
to build up a cadre). This tends to result in a confusion of loyalty and competence, and,
consequently, performance emerges as a troublemaker (Lehmann 2003b).
The outcome of these processes was that the line between private life and business
life (i.e., life at the workplace) was completely blurred. For the bosses, the best way to
secure loyalty was to develop friendships with their subordinates. For the subordinates,
the best way to avoid risk was to avoid challenging the authority of their superiors (i.e.,
to demonstrate loyalty and not to criticize), and, thus, to develop friendships with their
superiors to permanently implicitly express the required loyalty. In that sense it is no
surprise that Aroio (1989, 89), for example, spoke about collectives and addressed the
then reform attempts with the words “the labor collectives have become the sovereign
managers of the means of production.” The term collective usually referred to small
groups and not to the whole factory. These collectives had a common space, a room
where they worked together; were jointly responsible for meeting the plan targets; and
jointly organized parties or excursions where their families or spouses also participated
(Benovska-Sãbkova 2004; Jõesalu 2004).
This leads us to follow another line of reasoning, which has to do with the planning
system—that is, the actual way in which planning was put into effect (in contrast to what
was often believed about planning). The notion of “command economy” is utterly wrong
in understanding the functioning of the economic system. In the West this notion pri-
marily served political purposes to illustrate the contrast between ideologies.
Although planning ended up in mandatory plan figures (plan targets), it could not be
undertaken without loyalty, support, and information provided by subordinates. The
Soviet planning system consisted of two huge organizations: GOSPLAN SSSR and GOS-
SNAB SSSR (Fink 1971). GOSPLAN was in charge of the plan targets as far as outputs
were concerned, and GOSSNAB (the material supply organization) was in charge of
determining and providing the supplies needed to achieve that planned output. At all
organizational levels, there were attempts undertaken to balance the expected planned
output and the expected required inputs (Fink and Levcik 1984). This system of bal-
ances, the incentives given for plan fulfillment, and the disincentives for not meeting the
plan generated the opportunities and the incentives for all participants at the workplace
and within firms to behave exactly the same way as the political system had implied:
to build up cadres (i.e., circles of loyalty) that did not aim at maximizing output but
to secure plan fulfillment by achieving plan targets that were easy to meet. If meeting
the plan could not be achieved (e.g., because of insufficient supplies below the planned
target) then changes in the plan figures regularly happened. Plan figures were changed
quite often, as with a huge number of plan targets there is always inconsistency in the
plan (Fink 1971, 85–91, 93), and planners always got what they had planned, but also
undesired side effects (Fink 1987).
No single person ever did receive a plan target. It was always the collective, a group
of people, a department that was responsible as a whole for meeting the plan targets,
which were usually easy to meet. Only those who accepted this ascription and visibly
demonstrated that it was accepted could join the cadre or became a cadre themselves.
Because this was usually the case, there was a lot of freedom at the workplace. The most
important task of those who wanted to keep their freedom was not necessarily to avoid
any situation in which they could get the order to accept the ascription of performance
to the collective (which constituted a special form of expropriation), but to avoid any
situation in which one’s own capabilities were claimed by the collective. The aim was
to protect these capabilities for private use in order to accomplish the complex tasks in
social life outside the organization. At the workplace individuals were weaving networks
with other individuals with special capabilities.
The result was a specific form of escapism: the establishment of one’s own niche, relatively
(and often delusively) isolated from society and its problems. The primary work team func-
tioned both as a formal group and an informal friendly coalition…. Instrumental friendships,
successful transactions, and manipulative actions could be transformed into social capital or
into economic resources. Clientelism in the workplace is thus a powerful instrument for refor-
mulating social relations and for changing one’s social status. (Benovska-Sãbkova 2004, 125)
Voluntary confinement within small workgroups offered the following advantages

for their members: “saving” on social investment; creating interdependence with others,
which was vital for trust building and for achieving additional incomes; and by forming
coalitions it also helped the supervisors to exercise control (Benovska-Sãbkova 2004).
Of course, this brought to the surface a permanent problem of economic efficiency and
performance. There was always the rhetoric of “ambitious plans,” “very tight plans,” “a
plan of unprecedented difficulty,” and so on, while plans were met “34 days in advance”
and the results may not have been as great as on paper (Golonka-Czajkowska 2004).
Because of that, there were more or less permanent attempts to stimulate extra perfor-
mance, be it with “voluntary” collective work (called “subbotniks” as this work was per-
formed on a normally free day) or with socialist competition, which could also embrace
moral targets (e.g., to stop drinking at the workplace) but also to exceed plan targets (e.g.
by 1 percent for the whole group) (Popkov 2004).
During 1948–53, in particular, various work initiatives attempted to individualize
workers and promised premium payments for those who achieved superior performance
(e.g., during a work shift in order to unveil productivity reserves). Such initiatives were
usually linked to the names of people who were selected to be the model workers in dif-
ferent socialist countries and who at well-rehearsed single work shifts produced many
times more then a regular worker in a regular shift: Stakhanov, Korabelnikova, Bykov,
Erich Seifert, and others. Toward the end of the 1960s most of these attempts were
stopped. Workers had learned that even those who successfully exceeded the work shift
targets could not gain much in the long run, since work norms were increased in the
medium term. In addition, social pressure was increasing to share the monetary rewards
with the collective, which enabled those individuals to exceed the work shift targets
(Heumos 2004). The obvious effect was that workers learned to keep their knowledge
about plan reserves among themselves, not to talk about their knowledge to their super-
visors, and not to tell anybody outside the small collective.
SUBVERSIVE SURVIVING: KNOWLEDGE MANAGEMENT

AT WORK
It has been shown that in socialist economies the distinction has been crucial between
public and private, as well as in other notions—between position and person, or between
firm and family. Management of this difference works with the abstract difference
between organization and society. Living in such circumstances, people are always con-
cerned about how to bridge or undermine this particular difference (i.e., how to twist
the crucial distinction to establish a niche), which provides the playground for indi-
viduality, for creativity, and also for personal honor (Lüdtke 1994, 2002). This twist is at
the core issue of subversive survival. The term work was used to refer metaphorically to
this playground (or niche) as an indicator, which proved especially fruitful in a society
based on an ideological meaning of work. The socialist program assigns political power
only to those who work, namely the members of the “working class.” To be acceptable,
every internal differentiation must be reinterpreted in terms of work, e.g., the party cad-
res must be called workers. From “work as everybody’s property” (Engler 1999, quoted
by Lüdtke 2002, 39) follows a kind of total inclusion and an increasing inflation of the
notion work. However, people used their opportunity to attempt a sort of deflation:
they used the term work, too, in order to undermine the socialist version of manage-
ment. By that new forms of tacit knowledge were created: the knowledge of how to com-
municate in official party language to transmit private information and how to screen,
filter, and employ publicly available explicit knowledge for private use. In that sense,
there was tacit-tacit transfer at the workplace among friends, and there was also explicit-
tacit transfer of knowledge made publicly available, but at the workplace there was no
tacit-explicit conversion from workers to supervisors, and there was no explicit-explicit
transfer from workers to supervisors. The Nonaka/Takeuchi (1995) model did apply,
but only very selectively. Knowledge creation for the organization, or the party, did not
take place. Very specific cultural standards of communication styles emerged, which are
in stark contrast to communication styles in Anglo-Saxon or German-speaking cultures
(Fink, Neyer, and Kölling 2007).
Subversive surviving by work is based on yet another distinction. When the focus
is to be put on the physical, arduous side of work, it can be called labor to emphasize
physical production or one could emphasize the creative meaning of intellectual activi-
ties and use the term work. The latter was normatively preferred in socialist economies,
but by that intelligence and engineering, science and leadership were confused. Thus,
the party claimed the intellectual side for their cadre and assigned the arduous side to
the people (Zimmermann 1994). The primary effect was a total confusion of labor and
work at the ideological level and complete separation at the political level. The second-
ary effect was that a model like that of Gupta and Govindarajan (2000) could not work
within the organization. Those who were politically assigned the right to have the useful
knowledge did not have it, and those who did have the knowledge were better advised
not to stick out and let the others know that they knew. Communication channels were
reduced to tacit knowledge transfer embedded in the official political language, which
had a double meaning: a meaning as a vehicle for knowledge transfer only to those who
knew the context. Those who knew the context could internalize new tacit knowledge;
those who did not know were excluded from the communication channels. A condition
of atmosphere as suggested by Holden (2002) was restricted to the small collective at the
workplace, where lasting friendships could be developed. Communication was context
dependent and more implicit—between the lines—than explicit. Thus, the Gupta/Gov-
indarajan (2000) model may also be considered to be culture dependent.
Both confusion and separation of work and labor were obvious at the workplace
where in the primary team everybody could monitor all information in the room. But
neither the confusion nor the separation could ever be discussed, because that would
have challenged the political ideology. But exactly because of this blind spot of social-
ism, people outside the cadre could use this as their playground. Thus, the workplace
was the place of subversive surviving. Consequently, people who lost their jobs after the
end of communist power interpreted this unprecedented experience as the loss of their
existence.
The first condition of this subversion was that each action and each creation, each
production and each invention, and definitively each performance were to be described
in terms of labor: It must have been done with someone’s own hands; it must have been
arduous and cumbersome. It must have been “objective production.” Consequently,
engineers and scientists—who produce under more or less intellectual circumstances—
but also those who had leading positions or professions as teachers, physicians, or law-
yers found their personal self-consciousness in the private sphere where they “really
worked manually.” By that they framed themselves as honorable persons at their
workplace (Lüdtke 2002). The second condition of the subversion is that the creative,
intellectual aspects of work are to be understood solely as limited professional aspects
and—in this shape—must be played down in the light of the ideological understanding
of work as everybody’s practice and leadership as the cadre’s practice. In that sense, it
was forbidden rather than encouraged to explicitly address the value of knowledge. To
follow insights as provided by the Gupta/Govindarajan model (2000) would have been
in direct conflict with the ruling ideology.
To conclude, the socialist economy itself established a double-sided subversion: labor
undermined work, and work undermined labor—both people and professionals under-
mined the cadre—at the workplace!
DISCUSSION
This chapter uses a sociological theoretical approach to highlight a cultural organi-
zational concept of behavioral attitudes at the workplace in socialist economies. This
concept is in line with earlier findings about the functioning of the socialist planning
system and with more recent research on work in socialism (Roth 2004). Attempts to
give those observations a meaning in economics, as Janos Kornai (1975) had put it with
his “economics of shortage” are not referred to here. Nor is the financial mirror image
of our findings, although the late reform attempts, which were aborted by the collapse
of communist power, aimed at putting stronger emphasis and great hopes on applying
financial tools in economic planning (Fink and Vacic 1989). Our approach is also in
stark contrast to the core issues discussed in the literature on economic transition and
on German unification, in particular.
Our approach is a badly needed complement to the financial and cost-cutting views
predominant since the fall of the Berlin Wall in 1989. However, more efforts are still
required to reconcile our approach with the financial and cost-cutting view, at least to
link the two approaches and to identify commonalities and crucial differences. More
research is required to understanding the processes of transition at workplaces, in pri-
vate life, and in households. Nevertheless, our findings will also hold if the financial side
was to be fused with our cultural organizational approach.
SUMMARY
In socialist economies, the motivational foundations of knowledge management were
not given as stated in the models of Nonaka and Takeuchi (1995), Gupta and Gov-
indarajan (2000), and Glisby and Holden (2002). In an atmosphere of high political
pressure, transfer of explicit knowledge was highly risky and, thus, impeded. From the
perspective of rulers (political leaders) communication was under permanent suspicion
of undermining organizational control.
Based on the insights of F. W. Taylor, with whom he shared the suspicion of indi-
viduals and the perception that performance was a “matter of attitude,” V. I. Lenin had
derived his concept of the totalitarian communist party. By that, Lenin had overesti-
mated the possible performance of organization. He was much concerned about speed,
control, and issues of securing loyalty. Because work and communication were entan-
gled, and can never be claimed completely and exclusively by an organization, build-
ing cadres (i.e. organizing fully reliable well-performing individuals) was at the core of
Lenin’s organizational concept. The implied assumption was that a life under control is
not only possible, but also attractive. The best way for an individual to live under these
circumstances was to do what is ordered and to hide one’s personality, knowledge, and
capabilities.
Under such circumstances, passivity of individuals was advised where political risk
was to be avoided. Embedded into the collective at the workplace, people were very active
about securing survival and developed a self-conscious form of individualism to get the
best out of the system: Workers had learned to protect their productive knowledge from
being exploited by the rulers. “Never stick out” had become a central behavioral rule, a
cultural standard. Individuals aimed at maintaining their social commitments under-
neath their shown organizational loyalty.
Those individuals who were performing a management task had to be loyal against
their superiors and had to secure loyalty of subordinates, too, in order to survive in a
position and not to be threatened from below. To achieve that, superiors had to recruit
their own cadres and to protect their cadres by aiming at easily met plan targets, which
were never given to any individual but to the collective. This created interdependence
between subordinates and supervisors and helped supervisors to exercise control.
Because of that, the line between private life and life at the workplace was completely
blurred. For the subordinates, the best way to avoid risk was not to criticize, to develop
friendship with their superiors, and to demonstrate loyalty permanently.
In the former socialist economies an important rule of the game was this: Loyalty is
more important than efficiency. Subordinates were well advised not to challenge the
authority of their supervisors. The imperative was to be friends with immediate col-
leagues and superiors. An atmosphere of trust and lasting instrumental friendship was
to be generated among the primary work team. Therefore, superiors should not demand
impossible tasks from their subordinates and take care of the well-being of their subor-
dinates. Implicit advice for everyone included the following: Do not provide informa-
tion; do not provide knowledge to those who fix the plan targets; enjoy your freedom at
the workplace; and integrate your family into your life at the workplace.
Under such circumstances, new forms of tacit knowledge transfer emerged: the
knowledge of how to communicate in official party language to transmit private infor-
mation and how to screen, filter, and employ publicly available explicit knowledge for
private use. Knowledge creation for the organization or the party did not take place.
Loyalty was of importance in the Soviet Union and other socialist economies. Gifts
were regularly given to make sure that the supplies, which the plan had assigned to
a firm, were forthcoming. This very particular in-group behavior emerged within the
imposed culture of fear: Outsiders may have challenged the peace at the workplace,
intervened in the group, or endangered private life. This fear was enhanced by the politi-
cal system that required full loyalty and subordination to the leaders by everybody.
We may also understand why Western-style notions of individualization and man-
agement by objectives are clearly perceived as command economy by those people who
used to work under socialism (i.e., in a socialist planned economy). These are the main
reasons why knowledge management “Western style” needs a considerable amount
of preparation and learning also by Westerners who want to transfer their “superior”
management knowledge. In socialist economies, applying wisdom as provided by extant
Western literature on knowledge management would have been fatal for workers and
cadres alike.
NOTES
1. The title of our chapter refers to Dirk Baecker’s (2002) notion of “Lenin’s Twist.” We
particularly wish to thank Nigel Holden, Nottingham, and David Pauleen for stimulating com-
ments and very helpful advice and support. The usual disclaimer applies.
2. For a more detailed review of the literature on cultural values, cultural standards, and
personality traits see Fink, Neyer, and Kölling (2007).
REFERENCES
Abbott, E. A. 1884/1992. Flatland: A romance of many dimensions. New York: Dover Publica-
tions.
Aroio, Z. 1989. The enterprise in the People’s Republic of Bulgaria. In Economic reforms in the Eu-
ropean centrally planned economies, eds. G. Fink and A. Vacic, 85–92. New York: United
Nations, Economic Commission for Europe, Economic Studies No. 1.
Baecker, D. 2002. Lenin’s twist, or the R-Factor of communication / Lenin’s void: Toward a keno-
grammar of management. Soziale Systeme 8 (1): 88–100 / (2): 294–306.
Benovska-Sãbkova, M. 2004. Social Networks, Coalitions, and Clientelism at the Workplace
in Bulgaria. In Arbeit im Sozialismus –Arbeit im Postsozialismus, ed. K. Roth, 109–28.
Münster: LIT Verlag.
Best, H. 2005. Cadres into managers: Structural changes of East German economic elites be-
fore and after reunification. Historical Social Research/Historische Sozialforschung 30 (2):
6–24.
Bourdieu, P. 2004. Der Staatsadel [La Noblesse d’état, 1989]. Konstanz: UVK-Verlagsgemeinschaft.
Brockhaus Enzyklopädie 1993. Sowjetunion. Geschichte. Die innere Entwicklung 1929–39. Brock-
haus Enzyklopädie, 19th ed.
Brunner, O. 1980. Das ‘ganze Haus’ und die alteuropäische ‘Ökonomik.’ In Neue Wege der
Verfassungs- und Sozialgeschichte 3rd ed, ed. O. Brunner, 103–27. Göttingen: Vandenhoeck
& Ruprecht.
Columbia 2005. The Columbia Electronic Encyclopedia, 6th ed. New York: Columbia University
Press. http://www.infoplease.com/ce6/people/A0861298.html
Conze, W. 1966. Vom ‘Pöbel’ zum ‘Proletariat.’ In Moderne deutsche Sozialgeschichte, ed. H-U.
Wehler, 111–36. Köln: Kiepenheuer & Witsch.
Fink, G. 1971. GOSSNAB SSSR, Planung und Planungsprobleme der Produktionsmittelverteilung
in der UdSSR. Berlin: Duncker & Humblot.
. 1987. Background and prospects on economic reforms in Eastern Europe and the USSR.
In Economic Theory, Political Power and Social Justice, eds. G. Fink, G. Pöll and M. Riese,
393–405. Wien: Springer-Verlag.
Fink, G. and F. Levcik 1984. Wachstumsverlangsamung im RGW-Raum –Konjunkturzyklus und
Strukturkrise. In Wachstumsverlangsamung und Konjunkturzyklen in unterschiedlichen
Wirtschaftssystemen, ed. A. Schüller, 47–79. Berlin: Duncker & Hublot.
Fink, G., A-K. Neyer, and M. Kölling 2007. Understanding cross-cultural management in-
teraction: Research into cultural standards to complement cultural value dimentions
and personality traits. International Studies of Management & Organization 36 (4):
39–61.
Fink, G., and A.M. Vacic, eds. 1989. Economic reforms in the European centrally planned econ-
omies. Economic Studies No. 1. New York: United Nations Economic Commission for
Europe.
Foucault, M. 1976. Überwachen und Strafen. Die Geburt des Gefängnisses.Frankfurt am Main:
Suhrkamp.
Golonka-Czajkowska, M. 2004. The socialist role model as seen by individuals. In Arbeit im
Sozialismus –Arbeit im Postsozialismus, ed. K. Roth, 239–58. Münster: LIT Verlag.
Gupta, A. K., and V. Govindarajan 2000. Knowledge flows within multinational companies.
Strategic Management Journal 21 (4): 473–96.
Hesse, M. 1966. The explanatory function of the metaphor. Models and analogies in science. Paris:
Notre Dame University Press, 157–77.
Heumos, P. 2004. Grenzen des sozialistischen Produktivismus. In Arbeit im Sozialismus –Arbeit
im Postsozialismus, ed. K. Roth, 199–218. Münster: LIT Verlag.
Hofstede, G. 1993. Cultural dimensions in people management: The socialization perspective. In
Globalizing management: Creating and leading the competitive organization, eds. V. Pucik,
N. Tichy and C. Barnett, 139–58. New York: John Wiley.
. 2001. Culture’s consequences: International differences in work-related values, 2nd ed.
Beverley Hills, CA: Sage
Saddle River, NJ: Financial Times/Prentice Hall.
Holden, N. J., and Von Kortzfleisch, H. F. O. 2004. Why cross-cultural knowledge transfer is a
form of translation in more ways than you think. Knowledge and Process Management 11.
www.interscience.wiley.com.
House, R., P. Hanges, M. Javidan, P. Dorfman, and V. Gupta, eds. 2004. Culture, leadership and
organizations: The GLOBE study of 62 countries. Thousand Oaks, CA: Sage.
Hughes, T. P. 1991. Die Erfindung Amerikas: der technologische Aufstieg in den USA seit 1870.
München: Beck.
Jõesalu, K. 2004. Das informelle Kollektiv in Behörden der Estnischen SSR. Praktiken und Strat-
egien im sozialen Netz. In Arbeit im Sozialismus –Arbeit im Postsozialismus, ed. K. Roth,
129–46. Münster: LIT Verlag.
Kacmar, K. M., M. C. Andrews, D. L. van Rooy, R. C. Steilberg, and S. Cerrone. 2006. Sure
everyone can be replaced … but at what cost? Turnover as a predictor of unit-level
performance. The Academy of Management Journal 49 (1): 133–44.
Kluckhohn, F. R., and F. L. Strodtbeck. 1961. Variations in value orientations. New York:
Elmsford.
Kornai, J. 1975. Anti-Äquilibrium. Akadémiai Kiadó Budapest. Berlin: Springer Verlag.
Lehmann, M. 2003a. Don’t forget to observe the organization and the cadre. Paper presented at
The Opening of Systems Theory conference, Copenhagen, May 23–25.
. 2003b. Cadres and high potentials. Paper presented at the Sixth Chemnitz East Forum,
Chemnitz, March.
Lenin, V. I. 1917. Entwurf von Bestimmungen über die Arbeiterkontrolle. In Ausgewählte Werke
in drei Bänden (II) ed. V. I. Lenin, 543 ff. Institut für Marxismus-Leninismus beim ZK der
KPdSU. Berlin: Dietz.
. 1923/1979. Lieber weniger, aber besser. In Ausgewählte Werke in drei Bänden (III) ed. V.
I. Lenin, 876–90. Institut für Marxismus-Leninismus beim ZK der KPdSU. Berlin: Dietz.
Lü, X. [Lu, H.] 2000. Cadres and corruption: The organizational involution of the Chinese
Communist Party. Stanford, CA: Stanford University Press.
Lüdtke, A. 1994. “Helden der Arbeit”—Mühen beim Arbeiten. Zur missmutigen Loyalität von
Industriearbeitern in der DDR. In Sozialgeschichte der DDR, eds. H. Kaelble, J. Kocka, and
H. Zwahr, 188–213. Stuttgart: Klett-Cotta.
. 2002. Männerarbeit. In Archäologie der Arbeit, ed. D. Baecker, 35–47. Berlin: Kadmos.
Luhmann, N. 1995. Kausalität im Süden. Soziale Systeme 1(1): 7–28.
. 2000. Organisation und Entscheidung. Wiesbaden/Opladen.
Niedermüller, P. 2004. Arbeit, Identität, Klasse. Der Sozialismus als Lebensentwurf. In Arbeit im
Nonaka, I., and H. Takeuchi 1995. The knowledge-creating company. New York: Oxford
University Press.
Paríková, M. 2004. ‘Ehre der Arbeit!’—Disziplinierung durch Arbeit. Marxistische Konzepte und
Realität in der Slowakei. In Arbeit im Sozialismus –Arbeit im Postsozialismus, ed. K. Roth,
49–58. Münster: LIT Verlag.
Popkov, V. 2004. Arbeitsbeziehungen in der Sowjetunion. In Arbeit im Sozialismus –Arbeit im
Postsozialismus, ed. K. Roth, 167–77. LIT Verlag Münster.
Roth, K. 2004. Arbeit im Sozialismus –Arbeit im Postsozialismus. Zur Einführung, In Arbeit im
Selznick, P. 1952. The organizational weapon: A study of Bolshevik strategy and tactics. Santa
Monica, Calif.: The Rand Corporation.
Serres, M. 1985. Le parasite. [Der Parasit]. Frankfurt am Main: Suhrkamp.
Service, R. 2000. Lenin: Eine Biographie. München: dtv.
Shannon, C. E. 1948. Eine mathematische Theorie der Kommunikation. [A mathematical theory
of communication] In Ein/Aus. Ausgewählte Schriften zur Kommunikations- und Nach-
richtentheorie, ed. C. E. Shannon, 7–100. Berlin: Brinkman + Bose.
Spencer Brown, G. 1969. Laws of form. London: Allen & Unwin.

Stanitzek, G. 1987. Der Projektmacher: Projektionen auf eine ‘unmögliche’ moderne Kategorie.
Ästhetik und Kommunikation 65/66: 135–46.
Stanitzek, G. 1989. Blödigkeit. Beschreibungen des Individuums im 18. Jahrhundert. Tübingen:
Niemeyer.
Taylor, F. W. 1911. The principles of scientific management. New York: Dover.
Thomas, A., ed. 1993. Kulturvergleichende psychologie, Eine einführung. Göttingen: Hogrefe Ver-
lag für Psychologie.
Trotzky, L. 1981[1929]. Die permanente revolution. Frankfurt am Main: Fischer Taschenbuch
Verlag, Tausend.
Venzin, M. 1998. Knowledge management. CEMS Business Review 2(3): 205–10.
von Foerster, H. 1993. Wissen und Gewissen: Versuch einer Brücke. Frankfurt am Main:
Suhrkamp.
White, H. C. 1970. Chains of opportunity: System models of mobility in organizations. Cambridge,
MA: Harvard University Press.
Zimmermann, H. 1994. Überlegungen zur Geschichte der Kader und der Kaderpolitik in der
SBZ/DDR. In Sozialgeschichte der DDR, eds. H. Kaelble, J. Kocka, and H. Zwahr, 322–56.
Stuttgart.
SECTION 3
Research and Cases on Culture
and Knowledge Management
9
Institutional and Cultural Influences on
Knowledge Sharing in Russia and China1
Kate Hutchings and Snejina Michailova
ABSTRACT
Knowledge sharing within organizations can contribute to competitive advantage;

as such understanding what contributes to, and works against, knowledge sharing
within subsidiary operations is of vital importance to internationalizing organizations.
Where there is great cultural distance between the home nation and the subsidiary
operation, as there is between Western industrialized economies and the transition
economies of (former) communist nations like Russia and China, there is even more
necessity to create a climate conducive to effective knowledge sharing if its potential
value for gaining competitive advantage is to be harnessed. The purpose of this chap-
ter is to explore the cultural and institutional factors that impede and facilitate knowl-
edge sharing in Russia and China. The research involved semistructured interviews
conducted with Western and local managers in Russia and China over an eight-year
period between 1996 and 2003. The chapter adds value to the existing literature in
finding that knowledge sharing can occur in Russia and China but within a context of
recognizing preexisting in-groups and implicit communications styles and the legacy
of communist work practices and a culture of fear.
INTRODUCTION
During the past two decades, there has been an unprecedented increase in the
number of organizations that have decided to internationalize their operations.
The international movement of labor that has been concomitant to such expan-
sion of international business has meant that knowledge management within wholly
owned foreign subsidiaries and international joint ventures has become an issue
of increasing importance to international managers and management researchers
alike. Foreign direct investment (FDI) brings with it advanced technologies, mar-
keting skills and easier access to export markets (Soubbotina and Sheram 2000),
but it also provides challenges and opportunities in knowledge sharing, a bilateral
process in which knowledge is transmitted and received by international managers
and local subsidiary employees alike. Where there is a great cultural gulf between
the headquarters nation and the subsidiary operation, as there is between West-
ern industrialized economies and the transition economies of (former) communist
nations like Russia and China, there is even more necessity to create a climate con-
ducive to effective knowledge sharing if its potential value for gaining competitive
advantage is to be harnessed.
Knowledge sharing, as opposed to one-way knowledge transfer, has the potential
to not only ensure the development of the nation in which FDI occurs but also to
facilitate cross-cultural communication that contributes to cross-cultural understand-
ing between the parent and the subsidiary, and ultimately intercultural effectiveness.
Where the cultural distance between the multinational corporation’s (MNC’s) nation
of origin and the host nation subsidiary is great, there is even greater saliency for there
to be efficient knowledge sharing if intercultural effectiveness is to be achieved and
the potential value of such knowledge sharing for gaining organizational competitive
advantage is to be harnessed. Two such nations where there is a great cultural gap from
the Western2 MNCs that have moved into them as foreign direct investors are the tran-
sition economies of Russia and China, both of which have taken advantage of the rapid
demand for entry by international corporations since the crumbling of communism
in the late 1980s, and both of which are of considerable international economic and
strategic importance.
This chapter explores the cultural and institutional factors that impede and facili-
tate knowledge sharing in Russia and China. The chapter extends existing literature
in finding that, despite prior belief to the contrary, knowledge sharing can occur in
Russia and China but outside the context of a Western model of knowledge sharing
and teamwork, allowing for the recognition of preexisting in-groups and implicit
communications styles and the legacy of communist work practices and a culture of
fear. The rationale for examining both Russia and China is to highlight the signifi-
cance of differing cultural and institutional impacts on knowledge sharing in these
transformational societies. Although there is a growing body of literature explor-
ing knowledge management in the developed world, generally, and the transforming
economies, specifically, to date there has been little comparison between countries
of the impacts of both culture and institutions on knowledge sharing behavior and
attitudes.
We begin by exploring the literature on the importance of knowledge sharing and
current thinking on knowledge sharing in Russia and China. This is followed by a brief
description of methodology and examination of why Western approaches to knowledge
sharing and teamwork meet with little success in Russia and China. We then explore the
specific cultural and institutional impediments to knowledge sharing while providing
suggestions as to how Western managers can work with these constraints to facilitate
knowledge sharing within their Russian and Chinese subsidiaries. The chapter con-
cludes by suggesting that successful knowledge sharing will be contingent upon adopt-
ing a blend of Western and Russian and Chinese practices.
Institutional and Cultural Influences on Knowledge Sharing in Russia and China 159
LITERATURE REVIEW
Research has suggested that international businesses need to transfer distinctive
knowledge to foreign subsidiaries and international joint ventures (IJVs) to build com-
petitive advantage and offset some of the disadvantages of operating in alien environ-
ments (Kogut and Zander 1992) and to expand the knowledge base of the subsidiary or
joint venture operation. Defined as entailing the deliberate intent to increase, renew,
share, or improve the use of knowledge represented in structural, human, and social
elements of intellectual capital (Seeman et al. 1999, cited in Haggie and Kingston 2003),
knowledge management has been asserted as being essential to organizational competi-
tiveness (Drucker et al. 1997; Kogut and Zander 1992). Yet, though intra-organizational
knowledge management has become increasingly regarded as imperative to achieving
international productivity, an important limitation on the capacity of international
organizations to achieve international competitiveness has been problems with cross-
cultural communication and management and a subsequent failure of many interna-
tional businesses to harness cross-cultural knowledge sharing and management learning
(Hutchings, 2005).
Initial research and practice in the field of knowledge management focused on
knowledge transfer which entailed international businesses transferring distinctive
knowledge to their subsidiaries to build their own competitive advantage as well as
to minimize some of the disadvantages of operating in foreign environments (Argote
and Ingram 2000). In this one-way process the international partner brings technol-
ogy and management know-how (Lu and Bjorkman 1997) with the implication that
international managers are “senders” and “teachers” of knowledge, whereas locals
are “recipients” and “learners” of knowledge (Clark and Geppert 2002). Much less
research has been undertaken into the more complex two-way process of knowledge
sharing which involves active participation from both international managers and
locals (Husted and Michailova 2002b) in providing one’s knowledge to others as
well as receiving knowledge from others (Davenport and Prusak 1998). Knowledge
transfer generally involves downloading of technical information to local partners in
IJVs and has the potential to result in loss of intellectual property from the foreign
partner through ‘knowledge leakage’. Importantly, although knowledge sharing has
the potential to benefit both partners in an IJV and can contribute to new ways of
thinking and understanding, the research that has been undertaken highlights that
knowledge sharing does not always result in competitive advantage for an organiza-
tion. Rather, it has been suggested that, like knowledge transfer, knowledge shar-
ing can be detrimental to an organization in that once knowledge is codified and
articulated the organization risks losing information to competitors (Hutchings
and Michailova 2004). Moreover, Husted and Michailova (2002a) argue that knowl-
edge is asymmetrically distributed in any organization and that knowledge sharing
depends on the willingness of individuals to signal possession of knowledge and
share it when requested. Nonaka and Takeuchi (1995) suggest that human knowl-
edge is created and expanded through the social interaction between tacit knowledge
and explicit knowledge and advocate that the organization cannot create knowledge
on its own; knowledge creation is dependent upon the initiative of individuals and
the interaction that takes place within the group.
Cross-Cultural Knowledge Sharing

Within much of the knowledge management literature there has been an assump-
tion that when individuals are forced into groups, cooperation, and teamwork, knowl-
edge sharing would naturally emerge. A more recent body of work has questioned
this view in suggesting that knowledge sharing may not occur at all in cross-cultural
settings but its effectiveness, where it does occur, depends upon the foreign partner
having understanding of a complex range of factors. Glisby and Holden (2003) argue
that a universally applicable understanding of knowledge management is not possible
and Holden (2002) suggests that commentators create the impression that knowledge
management operates in a kind of a vacuum in which diversity is compressed into one
giant independent variable. Hutchings and Michailova (2004), Lam (2000), and Sbarcea
(2001) concur in emphasizing that knowledge sharing is not as natural as is often pre-
sented in the literature and that attitudes to knowledge sharing and knowledge sharing
behavior depend on conditions that vary across institutional and cultural environ-
ments. May, Puffer, and McCarthy (2005) further argue that international managers
should not only be context-sensitive, but also be fully conversant with the cultural and
institutional backgrounds of the countries in which they operate as this type of knowl-
edge is not gained overnight.
In attempting to address a lack of knowledge of knowledge sharing within cross-
cultural settings, initial forays have been made into examining cross-cultural knowl-
edge sharing from both cultural and institutional perspectives and there has been strong
agreement that knowledge sharing differs markedly across cultures. Weir and Hutch-
ings (2005) point to the need for trust development as a precursor to the sharing of
tacit knowledge in the Arab world, and Child and Rodrigues (1996) argue that cultural
differences create divisions between international managers and locals in China. Hutch-
ings and Michailova (2004) found that in former communist countries suspicion of
outsiders and in-group alliances work against knowledge sharing and Hutchings (2005)
proffers that lack of institutional maturity in China also works against knowledge shar-
ing. Clark and Geppert (2002) suggest that management learning in the former commu-
nist nations differs significantly from capitalist societies because of different processes
and the nature of post-socialist societies in which organizations and managers operate
in a state of ambiguity due to political and socio-economic flux.
Knowledge Sharing in Russia and China

In Russia, the potential value of knowledge sharing is often defeated by “knowl-
edge sharing hostility” (Michailova and Husted 2003), which may result from (1) the
behavior of knowledge transmitters; (2) the behavior of knowledge receivers; or (3) the
transmitter’s and receiver’s shared understanding of the content of the knowledge. Spe-
cific characteristics of Russians as knowledge transmitters are: lack of incentives for
sharing knowledge; a departmental way of thinking and acting; and a fear of admit-
ting mistakes. Furthermore, Russian managers and employees are eager to accumulate
knowledge but strongly resist sharing it, and the strong focus on hierarchical status and
physical distance are an impediment to knowledge sharing both top-down and bottom-
up (Michailova and Husted 2003).
This resistance to knowledge sharing is well illustrated by recent research in which the
second author began collecting questionnaire-based survey data on knowledge sharing in a
number of Russian organizations. The respondents were required to answer whether, and to
what extent, they would agree with, among others, the following two statements: (1) Knowl-
edge is power, and (2) knowledge sharing is power. The majority of Russian respondents
believed that (2) was a typo. Many others could not understand at all the very statement
“Knowledge sharing is power” because they strongly believed that “knowledge is power.”
In China, the nature of the knowledge available for sharing, along with the knowledge
owner’s relationship to the potential recipient may interact with the national culture in
affecting people’s openness in sharing knowledge (Chow, Deng, and Ho 2000). Indeed,
in China, if private knowledge has no potential to damage the sharer’s self-interests,
there is no significant difference between U.S. and PRC nationals’ willingness to share.
However, when examining knowledge that could potentially damage the sharer’s self-
interests while benefiting the company, Chinese respondents had a significantly higher
propensity to share, putting the interests of the collective ahead of their own. Chinese
are also significantly less inclined to share information files with other employees who
are not considered to be part of their ‘in-group’ (Chow, Deng, and Ho 2000).
In most joint ventures in China the foreign partner is motivated by cheap manufactur-
ing costs, a lucrative Chinese domestic market, reduced investment risk, and expertise
regarding market conditions. For their part, the joint venture offers the Chinese partner an
opportunity to acquire and develop the foreign company’s technology, receipt of foreign
capital, and management know-how (Wong et al. 2003). However, for the foreign partner
there is the potential for the Chinese partner to expropriate the foreign company’s techni-
cal knowledge and to act opportunistically in a competitive fashion (Chalos and O’Connor
2004). While the foreign company begins as the stronger partner because of its technologi-
cal know-how, this advantage is gradually diminished by the ability of the Chinese partner
to learn foreign technology quickly. As Wong and colleagues (2003) argue, when the Chi-
nese partner has exhausted technology transfer possibilities, its unique knowledge of its
own culture enables it to move out of the partnership quickly and operate independently,
using the proprietary knowledge it has acquired from its former foreign partner. Such
potential for knowledge leakage creates real reluctance to engage in knowledge sharing.
It has been further proposed that Russians and Chinese actually have a propensity
not to share knowledge at all (Elenkov 1998; McCarthy and Puffer 2003; Michailova and
Husted 2003; Smith, Peterson, and Wang 1996; Tsang 2002). Our analysis suggests, how-
ever, that understanding knowledge sharing in Russia and China is more complicated
than has been previously assumed and that knowledge sharing may actually be greater
in these locations than in Western cultures if an in-group relationship exists between
transmitter and receiver. For Western managers to unlock the key to how to achieve such
knowledge sharing in their subsidiaries is central to achieving competitive advantage in
nations that are of increasing strategic importance to international business.
METHODS
The research referred to in this paper is based on interviews that we have under-
taken in Russia and China over the past eight years. The Russian data is based primarily
on interviews and informal conversations conducted with 48 Russians and Westerners
between 1996 and 2002. Some of the organizations were followed closely over a three
year period of time and, in those cases, written and video material was used and obser-
vations conducted along with the interviews. The Chinese research involved analysis
of company reports, informal conversations and semi-structured interviews conducted
with almost 100 interviewees including Australian, North American, and European
expatriate managers and local Chinese managers between 1999 and 2003. Organiza-
tions employing these managers were selected from databases maintained by Western
trade and business associations in Russia and China. In both countries, the researchers
acquired insider status in a number of companies by virtue of return visits to conduct
follow-up research. Such insider status was an advantage in gaining access to organi-
zations as well as in soliciting information from interviewees. The disadvantages were
offset, in part, by the inclusion of colleagues who were outsiders to the Russian and Chi-
nese contexts and who, accordingly, lent academic distance to the research projects.
The companies in both Russia and China represented a variety of industries and ranged
in size from small, owner-operated businesses to large MNCs. The companies included
those that have had significant strategic success in their operations in Russia and China as
well as those who have committed strategic errors and have lessons to teach other poten-
tial investors into Russia and China about the problems and pitfalls inherent in doing
business without adequate understanding of, and sensitivity to, local business practice.
Multinational companies drawn on for interviews include, but are not limited to, ABB,
Accenture, ANZ, BASF, Bechtel, BHP-Billiton, Dow Corning, Great Northern, Hilton,
Maersk, Nike, Philips, Radisson, Rockwool, Smith Kline Beecham, and Unilever.3
INSTITUTIONAL AND CULTURAL INFLUENCES

ON KNOWLEDGE SHARING
As many Western organizations have shifted to flatter organizational structures,
they have also altered their management and human resource management practices
to fit with a culture of decreased hierarchy, greater participation, devolved decision-
making, teamwork and multi-tasking. In many cases, such organizations have assumed
that when they establish subsidiary operations in transition countries they may also uti-
lize the organizational structures and practices that have proved optimal in their home
operations. Concomitant to such assumptions has been the belief that employees in
subsidiary operations will also develop an organizational culture in which departments
will work well together and will share information and knowledge for the benefit of the
organization as a whole. The reality that Western managers have encountered is orga-
nizational practices that have erstwhile proved an impediment to knowledge sharing.
Transition economies like Russia and China provide Western businesses with employ-
ees that have been historically accustomed to very vertical organizations that utilize Tay-
lorist work styles, punishment as deterrence for poor performance rather than rewards
and incentives for good performance, and communication and decision-making that is
very top-down and follows a strict hierarchical chain of command.
A Western expatriate in a Russian construction company pointed out the following:
It is amazing how well-defined, strict, and rigid the structures of the traditional Russian
companies are. There are so many hierarchical layers. And there is so little transparency. At
the same time, when it comes to who is allowed to make a decision, suddenly the structure
becomes entirely flat—there is only one person in the entire company who is authorized
to make decisions, the top boss. Everybody is happy with this situation. Why? Because it is
the best way in which the employees can avoid responsibility and the top boss is satisfied in
his desire to exercise as much formal power as possible.
A similar view is shared by Russian managers and employees themselves. According

to a Russian middle manager in a pharmaceutical company,
The CEO is the top figure in each enterprise. This is how it is and nobody can question this
fact. We all expect the CEO to have the precise answers to all important questions. He is
paid for this and this is his primary responsibility. All the others have to make sure that the
decisions are executed. It will be anarchy otherwise.
Certainly Western managers face obstacles in creating an organizational culture in

subsidiary operations in which knowledge is shared, but they are not insurmountable
obstacles. In essence, to improve intra-organizational knowledge sharing, international
managers need to work with preexisting Russian and Chinese cultures and institutions.
What Western managers most need to avoid is just attempting to unilaterally force
groups to work together. In the West, assigning people to work together often yields
naturally emerging cooperation, and self-managing work teams are increasingly uti-
lized. However, such a strategy does not seem to work in the Russian and Chinese con-
texts. Indeed, forcing out-groups to work with each other can not only lead to conflict
between out-groups and in-groups but also to conflict within existing in-groups. West-
ern managers and expatriates can easily be misled by believing that because Russia and
China are collectivist countries, teamwork would be self-evident and unproblematic.
However, Russian managers and employees do not distinguish the notions of team and
collective. They have been working in groups and collectives for decades, but never really
in teams and the word team does not have a specific meaning for them. In a number
of interviews conducted in Russian companies, our Russian respondents used the term
collective in their answers to questions regarding teams and teamwork.
Modus Operandi of Personal Networks and In-Groups

Core to the conduct of business in Russia and China is interpersonal relationships
that are to a great extent determined by the distinction between in-groups and out-
groups. For the Chinese, “having found the basis for friendship one has acquired a good
friend whom one believes one can trust and can do business with. However, at this
stage the friendship is one on which business deals can be struck. A major development
however is that one has moved to bring the former ‘outsider’ into one’s close network of
‘“insider’ friends” (Buttery and Wong 1999, 152). For Russians, a struggle for domina-
tion within a group is the most natural thing in the world, and the essence of human
relations. Therefore, “building a circle of intimate friends is extremely important in
securing one’s dominant position within a group … for the group to act together coher-
ently … there needs to be an equal distribution of both hardship and pleasure so condi-
tions can improve for the whole group” (Mikheyev 1987, 504). Although recent findings
suggest that as transitional economies become more competitive, the networks and con-
nections will no longer seem as important as before (Guthrie 1998; Wright, Szeto, and
Cheng 2002), we would argue that personal connections remain essential to creating a
climate of knowledge sharing.
Key to Western managers achieving knowledge sharing in Russia and China is accept-
ing the existence of a culture of insider status and recognizing that networks, (see Lede-
neva 1998; Michailova and Worm 2003; Puffer and McCarthy 1995 and Guthrie 1998;
Luo 1997; Wright, Szeto, and Cheng 2002) being based largely on collectivist relation-
ships, involve very frequent exchanges, and operate at both workplace and private lev-
els. Our interview data confirms that Chinese and Russians prefer working and perform
best in in-groups. Therefore relationship building must occur before business is trans-
acted and before knowledge sharing can occur. Relationship building takes a long-term
orientation because it is integrally tied to the development of trust and shared context.
As a European expatriate explained,
Once you are family/friends, they (the Chinese) want to do deals to help you out. The
Chinese culture is one of giving the world to family/friends—but if they do not know you,
you are worthless. Perhaps there is less balance in the Chinese culture from a Westerner’s
perspective (European manager, construction company).
Similarly, a Russian top manager in a Russian-Danish joint venture in the telecom-

munications industry commented,
Westerners come and go. They usually stay for two, three years. Exactly after we have had
some time to test them and made up our minds whether they are trustworthy or not, they
leave. This is a pity. Two to three years are not a sufficient period to establish a good per-
sonal relationship. When the next Westerner comes, I simply decide that it is not worth
investing the energy and the effort in a new friendship.
An important distinction between Western and Russian/Chinese practice is that for

the Westerners the ends can often justify the means but for the Russians/Chinese the
means is more important than the ends. Indeed, the inclination not to share knowledge
with outsiders means that the only way in which one is able to access information from
an outsider is to work toward the ascription of insider status or work through interme-
diaries who already possess insider status. As an Australian expatriate explained it,
You need to employ people with connections to be your advisors—they can mediate for
you. They can tell you what to do. But be selective. These people can turn out to be charla-
tans. This can be a massive liability if these people get out of favor—you need to check their
political background (Australian manager, trading company).
The importance of in-groups in Russia and China also means that employees tend to
focus on departments rather than an organization as a whole. Historically in both Russia
and China, various corporate departments within state-owned enterprises (SOEs) have
been linked to a large number of government constituencies which implies that com-
panies have depended heavily on higher authorities for their operations. As most of the
SOEs performed poorly financially they had to secure bank loans through government
intervention. Moreover, within organizations there has been a high level of dependency
on superiors, who are responsible for defining the tasks and assessing the performance
of their subordinates. These factors have meant that subunits in Russian and Chinese
organizations have depended on relevant government agencies more than on their own
organization, and employees have directed their loyalty to their immediate superior
rather than to the organization as a whole.
Russians and Chinese know a lot about their in-groups but are reluctant to provide
information to somebody that they consider to belong to an out-group. Traditions of
secrecy were perpetuated during the communist regime. In Russia, larger groups were
imposed as merely structural configurations for executing work. It was within the
immediate in-groups where people knew each other, could trust each other, and conse-
quently, shared information and knowledge with each other. This sense of identification
and belonging to the in-group, combined with hostility to out-group members, even
from the same organization, created a feeling of security that was, and still is, highly
valued in Russia.
The following suggestions explain how Western managers can work with in-groups:
• As a Westerner, be prepared to be perceived as an outsider to the already established in-
groups in the Russian and Chinese organizations. Accept that relationship building in
Russia and China is a lengthy process and utilize intermediaries (local Russian/Chinese
or established Westerners) in the short to medium term while working at building your
own relationships in the long term.
• Build networks with departmental managers to increase interaction across
departments.
• Do not destroy existing relationships among people in the organization.
• When implementing “Western” management practices in JVs, ascertain the existing
in-group relationships and work with these existing groups rather than attempting to
impose new teams. Also, remember that teamwork is only considered in “emergency
situations”, not as a way of organizing work in general.
• Recognize that creating new teams can be done but it takes time to build an organiza-
tional culture that broadens its perception of who is included in an in-group—patience
and flexibility are key.
• Develop a strategy in which in-group team members’ shared characteristics (such as a
group goal) become more salient than the characteristics that differentiate them from
out-groups.
Emotional Trust and Implicit Communication

Intrinsically tied to the existence of in-groups in Russia and China is the notion of
trust. The decision to trust a person and share knowledge with them depends upon hav-
ing knowledge of that individual. Hence, for Western managers to facilitate knowledge
sharing amongst their employees and across departments in Russia and China neces-
sitates establishing a relationship that is built on strong trust. In both Russia and China
emotional trust is a prerequisite for establishing cognitive trust (Michailova and Worm
2003). As already mentioned, Russian and Chinese people feel frustrated that foreign
managers may only stay in their companies for a short period of time, which prevents
them from engaging in multiple and long-term projects which would offer the oppor-
tunity of establishing good personal relationships. The subsequent effect is that these
Western managers are not able to build trust and hence have greater difficulty in creat-
ing a culture of knowledge sharing within their subsidiary operations. An Australian
expatriate characterized the situation thus:
The Chinese talk about this trust thing and I think it is one of those things that I have found
very hard. It is different according to who you speak to. Basically when we start we have
no trust and we have just met and let’s do this deal first and then we can start talking about
trust because then we will understand each other. Hence, the Chinese joint ventures having
this opening paragraph abut mutual understanding … It is just really important to them
(Australian manager, finance company).
Furthermore, in cultures such as Russia’s and China’s, implicit communication styles

are used—meanings are either conveyed by physical context or internalized in person
and little information is provided in the coded, explicit, transmitted part of the message
(Hall 1977; Hall and Hall 1990). As individuals already know much about each other by
the time a relationship is formed and insider status ascribed, they do not need to dis-
close so much information in normal transactions—much knowledge is tacit. Indeed,
the existence of tacit knowledge makes it very difficult for Westerners to move from
outsider status. Consequently, it takes a long time to move into a situation of knowledge
sharing because it depends upon tacit knowledge already existing. Although the richer
the communication experience, the more effective the knowledge sharing, it will only
occur where trust and in-group status is already established. One U.S. expatriate noted
that communication is the greatest difficulty of all. As he said,
You need to take Chinese and turn it into Chinese English. The words that come out of
my mouth—they hear it differently and the words that come out of their mouths I hear
them differently … They already have an understanding of what they are saying amongst
themselves, and we (Westerners) are not really tuned into this (U.S. manager, hospitality
company).
Commenting on the communication style of Western owners, a Russian middle

manager in a construction company pointed out:
Our Western manager believes he is very efficient by inviting us to a meeting through a mes-
sage sent by e-mail. This is very impersonal. If he respects us, he should simply tell us per-
sonally about the meeting—the administration is on two floors, it will take him ten minutes
to walk through the offices. Then he is wondering why only half of us went to the meeting.
The following suggestions explain how Western managers can create a climate of
trust using implicit messages:
• Accept that trust needs to be developed and tacit knowledge held before the occurrence
of knowledge sharing.
• Utilize intermediaries to interpret implicit communications and reduce the risk of con-
frontation by minimizing the directness of conveying your messages.
• Invest in understanding the context of the setting you work in—knowing the con-
text will reduce the ambiguity of interpreting the less explicit style of communicating
adopted by Russians and Chinese.
• Work toward showing respect to Chinese and Russian counterparts through more per-
sonalized communication styles.
Group-Based Incentives and Rewards

The Chinese culture is one that values thrift and both the Chinese and Russian cul-
tures value perseverance. Yet, the Communist era created societies in which there
was no real incentive for sharing knowledge across the organization. The group focus
meant that individuals have been conditioned to evade responsibility (Worm 1997).
Indeed, organizational cultures developed (and continue to exist) in which individuals

view themselves as part of a department rather than an organization. Their department
became their work in-group and there has been indifference or even hostility toward
the out-group (other departments). This division between groups and departments can
also translate into problems in creating a sense of loyalty across an organization. As an
Australian expatriate noted,
Chinese are not loyal to the organization. It is hard to get them to feel that sense of
organizational commitment. They will leave you for 1 RMB [approximately U.S. 10 cents]
(Australian manager, trading company).
A Russian head of department in a telephone card company explained that,
My task is to make sure that my department is better than the others. We are fighting for
resources and recognition internally in the organization. It is very competitive, you see … I
don’t really care about the company as such—this is not my responsibility. My responsibil-
ity is my department.
Where rewards and incentives are introduced by Western organizations, there are
difficulties faced in their implementation. Chinese will be inclined to give greater reward
allocation to, and be “softer” in assessments of, in-group members than out-group
members (Hui, Triandis, and Yee 1991; Leung and Bond 1984), and as such it will prove
difficult for Western organizations to utilize peer assessment of performance in their
subsidiary operations. Moreover, in a collectivist culture it will be harder for in-group
members to give and receive negative feedback from each other, a situation that works
against sharing knowledge across groups. Feedback in Russian organizations is mainly
given in negative terms (e.g., when the boss realizes there has been a deviation from the
defined standards and procedures, no matter how outdated and rigid these standards).
In such a context, hiding mistakes is a well-justified and rational behavior although
it may cause chronic problems and financial losses from an organizational viewpoint
(Michailova and Husted 2003). During the communist era both Russians and Chinese
were trained not to admit mistakes. This reflects not having a Western orientation which
views mistakes as learning opportunities. The corresponding absence of feedback and
opportunity to reflect has contributed to an unwillingness to share learning experiences
and knowledge of how to avoid repeating mistakes.
Russian and Chinese executives are generally reluctant to believe that knowledge can
be acquired bottom-up in organizations and have difficulties accepting that they can
learn from employees from lower levels (Michailova and Husted 2003). Subordinates
often intentionally hoard their knowledge, anticipating that their superiors would not
promote them if they demonstrate in public that they are more knowledgeable than their
superiors. Although the lack of rewards and incentives for sharing knowledge tends to
work against employees showing initiative, the cultural traditions also reinforce the lack
of institutional incentives for this. That is, the strong hierarchical and authoritarian tra-
ditions within organizations mean that managers are threatened by participatory styles
of management and employees do not want to involve themselves in decision-making
for fear of having their views rejected (Chen, Peng, and Saparito 2002). Also, in the case
of China, for an employee to provide a suggestion to their senior manager would cause
considerable loss of face for both parties.
The manager looks inadequate and is disgraced for not having first thought of the pro-
posal and the employee is humiliated for shaming their superior. The large power distance
between managers and employees is further exacerbated when the people involved are
Western managers and Russian/Chinese employees as in these instances an even bigger gap
exists based upon an historical lack of networks and trust. Such distance enhances the in-
group/out-group divisions which affect knowledge sharing and organizational learning.
Although Western reward systems are quickly being adopted in Russia and China as the
number of alliances with Western partners increases, traditions of formality, hierarchy,
and command are much slower to change. Moreover, it has been suggested that unethical
behavior continues to be tolerated in organizations in China because employees will not
share information of superiors’ indiscretions (Jackson and Bak 1998). Such systemic con-
ditions suggest disincentives to share knowledge. Indeed, in withholding knowledge from
members of the out-group, the in-group helps preserve its own stability. Maintaining sta-
bility and security is highly valued in the Russian and Chinese societal and organizational
context (Ralston et al. 1997) and uncertainty can be a major de-motivator.
The following suggestions show how Western managers can create rewards and
incentives that work with national cultural conventions:
• Performance appraisals and compensation should be given to a group as a whole. How-
ever, disciplinary action should be done in private so as not to cause loss of face to an
individual and to their in-group. Appreciating the value of consensus and giving face to
in-groups will create a culture of knowledge sharing built on a foundation of trust.
• Recognize preexisting groups by using in-group team rewards that preserve anonymity
but have disciplinary action carried out by out-group members.
• Offer incentives to all groups rather than providing incentives that only reward indi-
viduals. This will recognize the fact that individuals will not share knowledge unless the
whole group benefits from doing so.
• Recognize that motivational techniques used at home might not transfer to Russia and
China. Use collective norms to encourage knowledge sharing and teach the importance
of a specific organizational, rather than departmental, mission.
• Bear in mind that Russians and Chinese value stability, security, and harmony.
• Recognize that Russians and Chinese will be reluctant to admit mistakes. In order not
to expose themselves to being forced to admit mistakes made, they will be very selec-
tive in terms of what they share with their superiors. Be prepared for situations where
you will hear only what your Russian and Chinese subordinates believe you should
hear, not what the reality is. Work slowly toward creating an environment that views
mistakes as opportunities to learn and advance.
• Be aware that the notion of feedback has negative connotations for Russian and Chi-
nese employees. Therefore, they will try to avoid situations of receiving feedback.
• Incorporate Russian and Chinese organizational norms about work behavior into
socialization processes in order to decrease turnover and increase worker satisfaction
and performance, and by consequence, increase the propensity of employees to share
knowledge organization-wide.
The Culture of Fear

In addition to the cultural factors that may inhibit Russians’ and Chinese’s propensity
to share knowledge is the culture of fear that continues as a legacy of the communist era
in which Russians and Chinese were not only given no incentives to share knowledge
but were actually encouraged to report to authorities the misdemeanors of others. As
one expatriate noted,
One of the greatest difficulties is in getting the Chinese to open up to you. They fear govern-
ment, they fear authority, they fear Westerners. And this makes our communication very
difficult (Australian manager, law company).
A Western expatriate in Russia pointed out,

We assume they (the Russians) will share information. However, until not long ago, they
were punished for sharing information. Why should they suddenly change behavior? It is
deeply ingrained in them that it is much more safe to be silent and only share very carefully
and very selectively.
China’s and Russia’s shift from centrally planned to market economies and their subse-
quent adoption of a number of Western accounting practices standards and legal regula-
tions, has led many Chinese and Russian managers to argue for reliance on the rule of law
(Wright, Szeto, and Cheng 2002). Yet, in both China and Russia even those who want to
stay within the law may find it difficult to do so since by observing one law they may be
breaking another one. In Russia, the loopholes in existing legislation ill define the boundar-
ies of legality, encouraging citizens and enterprises to find ways around problems (Bruno
1997). These legal loopholes mean that interpersonal connections are still the way through
which many Chinese and Russians achieve their business ends, and many others are dis-
couraged from sharing knowledge in case it should find them in trouble with authorities
even though they may not be breaking an official law or regulation. The culture of fear has
existed not only in relation to what has been loosely termed by successive Russian and
Chinese governments as political “secrets,” but also within organizations in that employees
who made mistakes were punished (Scarborough 1998). There have been suggestions that
this culture of fear may begin to alter in China with the changes flowing through since its
ascension to the WTO. However, an Australian expatriate interviewee notes that
the WTO deals mainly with country to country relations and access to markets. It (the
WTO) was never an overnight panacea. It was just another signboard on the way to China
getting from time zero to 21st century, whenever they got there. It is just another stepping
stone … another piece of administration to keep those steps moving forward. But the cul-
ture of fear will also move slowly. (Australian manager, finance company)
Western managers need to understand that Russians’ and Chinese fear of sharing
information is well-grounded:
• Recognize that many Russian and Chinese are simply too fearful to share knowledge
because of the belief (real or otherwise) that they will be punished by doing so.
• Overcome this inbuilt tendency (and create an organizational culture that values
knowledge sharing) by working toward establishing a high level of trust so individuals
and groups will feel ‘safe’ in their discussions with others.
Institutionalized Bribery and Corruption

The widespread corruption and thriving black economies in Russia and China also
have implications for knowledge sharing in that any knowledge can be acquired for a
price so long as one has the necessary resources and insider contacts. Such a situation
can cause difficulties for Western organizations in trying to reconcile the pressure to
engage in such practices whilst also attempting to stay within the confines of West-
ern organizational ethics. The use of bribery is universally condemned, particularly
now that there has been the introduction of laws specifically dealing with corrup-
tion, and the government has made a point of executing thousands to make the point
that it is serious about cracking down on corruption. Yet, although giving cash is
usually viewed as buying someone’s services and hence is condemned, gift giving is
universal (Yang 2002). The difference between what is an acceptable gift and what is
an improper bribe depends on arbitrary, delicately poised cultural conventions that
vary according to the situation (Luo 1997), and are often difficult to distinguish. Yet,
whereas some practices are increasingly viewed as backdoor (Guthrie 1998), many
other historical conventions remain de rigueur. Indeed, as one Australian expatriate
notes of operating within China,
I do not condone this system, but what can be done about it? The corruption is the result of
the political system and institutionalized practices. In terms of regular favors there is noth-
ing different from Australia or the United States. Reasonable expense accounts are reason-
able. As an MNC we are rigid, though—we will not engage in corruption—it is against our
ethics and it would be foolish anyway given the ability to be prosecuted under the Bribery
of Foreign Officials Act (Australia). We have lost large amounts because of this position we
take. (Australian manager, manufacturing company)
In Russia, gaining introduction to useful people remains extremely important. In cases

when people have no resources to blat, people will resort to bribes. Bribery, corruption,
and the criminal ‘second’ society are all part of the criminal legacy of the “economy of
favors” in Russia (Ledeneva 1998). This has important implications for knowledge shar-
ing in general (and for the knowledge sharing between organizational sub-groups of
Western managers and locals) in that it remains very difficult to develop and maintain
good business relationships without engaging in some degree of favors, and knowledge
sharing depends upon maintaining relationships through favors. Beyond that, though,
despite anti-bribery laws, paying bribes is still an effective way of ensuring access to
knowledge as well as preventing knowledge from being shared.
Western managers should understand that favors are institutionally entrenched, and
should do the following:
• Convince headquarters that larger than usual expense accounts are required to build
relationships and trust that contribute to knowledge sharing.
• Create an organizational culture that rewards knowledge sharing.
CONCLUSIONS
As indicated throughout there are key cultural and institutional influences on atti-
tudes to, and behavior toward, knowledge sharing in Russia and China and these
influences have implications for international businesses that have, or are considering
establishing, operations in these transition economies. Most notably international busi-
ness managers need to recognize the importance of devoting time to building networks
and trust and developing implicit communication prior to an expectation of knowledge
sharing occurring. International business managers will also need to be cognizant of the
fact that Russian and Chinese workers have been institutionally and culturally trained
not to deviate from the norm and to acquiesce to authority and accordingly manage-
ment functions should be performed within the context of existing networks. Moreover,
international business managers should realize that it is important to build organiza-
tional cultures that build trust slowly in recognition of Russia’s and China’s lawlessness
and culture of fear.
Furthermore, it is important to recognize differences in terms of how managers and
employees behave in different countries. Understanding these differences is especially
important in the MNC context since they are more pronounced among foreign employ-
ees within the same MNC than employees working for organizations in their home
countries. May, Puffer, and McCarthy (2005) argue that for the delivery of management
know-how (and we would argue, knowledge sharing also) to non-Western countries it
is of paramount importance to (1) develop a given set of tools for a specific subset of
people of the national culture, and (2) to be able to transfer these tools to preidentified
people who are equipped with the requisite personality traits.
Western managers also need to be aware that despite rapid developments in Russia
and China, disparate educational levels as well as vast regional differences remain and
have implications for the propensity of Russians and Chinese to share knowledge. Peo-
ple that live in the large, industrialized cities may well be familiar with Western manage-
ment concepts and organizational practices and will adapt quite readily to a culture of
knowledge sharing across individual departments and organizations. However, those
that live in more remote areas will be inexperienced or even ignorant of international
concepts of accounting, taxation, and law (Cui and Liu 2000; Speece and Kawahara
1995; Zapalaska and Edwards 2001) and management and will be much more reluctant
to share knowledge. Indeed, in China a large portion of the population in smaller cit-
ies may never have seen a living non-Chinese person (Littrell 2002). Indeed, one of the
key factors inhibiting China’s economic development has been the primary focus on
industrialization rather than education and the subsequent neglect of professional and
managerial skills.
We argue that rather than attempting to completely alter Russian and Chinese
organizational structures and culture within a very short timeframe, Western manag-
ers need to accept a marrying of Western and Eastern concepts in which knowledge
might be shared. The fundamental attribution error (Ross 1977) (i.e., the tendency to
attribute one’s own behavior to the situation but others’ behavior to their “charac-
ter”) needs to be avoided by both Westerners and Russians/Chinese. People tend to
attribute negative behavior of foreign colleagues to their nationality or culture rather
than to situational or contextual factors that operate behind the scenes (Jones and
Nisbett 1977) and this is often the case in cross-cultural organizational settings where
the national cultures have a large distance between them. Western managers can-
not expect knowledge sharing to occur in the same manner in which it occurs in
Western organizations, and therefore, the only way in which a culture of knowledge
sharing may be engendered is through working within Russian and Chinese cultural
and institutional norms. To this end we maintain that knowledge cannot just flow
from sender to receiver but must be reconstituted and recreated (Berell, Wrathall,
and Wright 2001; Newell 1999) through the development of a third culture (Hui and
Graen 1997) or an organizational culture that is a blend of Western corporate practice

and host nation cultural and institutional conventions.
NOTES
1. Aspects of the research have appeared in the Journal of Knowledge Management and are
included in a submission to the International Journal of Emerging Markets.
2. It should be noted that the term Western is used herein to refer to advanced, industrial-
ized nations. To refer to Western or Eastern entails some degree of oversimplification. The term
East has been used to refer to the great diversity of nations throughout Asia and the Indian sub-
continent as well as to former Communist nations in central and eastern Europe. The West also
constitutes a mosaic of cultural and economic diversity, ranging from the European Social Market
model to those that may be classified under the liberal, capitalist market banner favored in West-
ern Europe, Britain, Australia, New Zealand, and North America.
3. For a fuller description of the methodology used in this study, see Hutchings, K., and Mi-
chailova, S. 2006. Impacts of culture and institutions on knowledge sharing in Russia and China.
International Journal of Emerging Markets, 1(1): 21–34.
REFERENCES
Argote, L., and P. Ingram 2000. Knowledge transfer: A basis for competitive advantage in firms.
Organizational Behavior and Human Decision Processes 82:150–69.
Berell, M., J. Wrathall, and P. Wright 2001. A model for Chinese management education: Adopt-
ing the case study method to transfer management knowledge. Cross Cultural Manage-
ment 13 (1): 28–44.
Bruno, M. 1997. The business culture in Russia. In Business Cultures in Central and Eastern Eu-
rope, ed. M. Bateman, 128–68. Oxford: Butterworth Publishing.
Buttery, E. A., and Y. H. Wong, 1999. The development of a guanxi framework. Marketing Intel-
ligence and Planning 17 (3): 147–54.
Chalos, P., and N. G. O’Connor 2004. Determinants of the use of various control mechanisms in
US-Chinese joint ventures, Accounting Organizations and Society 29: 591–608.
Chen, C., M. Peng, and P. Saparito 2002. Individualism, collectivism, and opportunism: a cultural
perspective on transaction cost economics. Journal of Management 28 (4): 567–83.
Child, J., and S. Rodrigues 1996. The role of social identity in the international transfer of knowl-
edge through joint ventures. In The Politics of Management Knowledge, eds. S.R. Clegg and
G. Palmer, 46–68. London: Sage.
Chow, C. W., F. J. Deng, and J. L. Ho 2000. The openness of knowledge sharing within organiza-
tions: A comparative study of the United States and the People’s Republic of China. Jour-
nal of Management Accounting Research 12: 65–95.
Clark, E., and M. Geppert 2002. Management learning and knowledge transfer in transforming
societies: approaches, issues and future directions. Human Resource Development Inter-
national 5 (3): 263–77.
Cui, G., and Q. Liu 2000. Regional market segments of China: Opportunities and barriers in a big
emerging market. Journal of Consumer Marketing 17 (1): 55–72.
Drucker, P. F., E. Dyson, C. Handy, P. Saffo, and P.M. Senge 1997. Looking ahead: Implications
of the present. Harvard Business Review 75 (5): 18–19.
Elenkov, D. S. 1998. Can American management concepts work in Russia? A cross-cultural com-
parative study. California Management Review 40 (4): 133–56.
Guthrie, D. 1998. The declining significance of Guanxi in China’s economic transition. The China
Quarterly 3: 254–82.
Haggie, K, and J. Kingston 2003. Choosing your knowledge management strategy. Journal of
Knowledge Management Practice 4: 1–23.
Hall, E. T. 1977. Beyond culture. New York: Anchor.
Hall, E. T., and M. R. Hall 1990. Understanding cultural differences. Yarmouth, ME: Intercultural
Press.
Saddle River, NJ: Prentice Hall.
Hui, C., and G. Graen 1997. Guanxi and professional leadership in contemporary Sino-American
joint ventures in mainland China. Leadership Quarterly 8 (4): 451–66.
Hui, C., H. C. Triandis, and C. Yee 1991. Cultural differences in reward allocation: Is collectivism
the explanation? British Journal of Social Psychology 30: 145–57.
Husted, K., and S. Michailova 2002a. Diagnosing and fighting knowledge-sharing hostility.
Organizational Dynamics 31 (1): 60–73.
Husted, K., and S. Michailova 2002b. Knowledge sharing in Russian companies with Western
participation. Management International 6 (2): 19–28.
Hutchings, K. 2005. Examining the impacts of institutional change on knowledge sharing and
management learning in China: Some challenges for international managers. Thunderbird
International Business Review, 47 (4): 447–68.
Hutchings, K., and S. Michailova 2004. Facilitating knowledge sharing in Russian and Chinese
subsidiaries: The role of personal networks. Journal of Knowledge Management 8 (2):
84–94.
Jackson, T., and M. Bak 1998. Foreign companies and Chinese workers: Employee motivation in
the PRC. Journal of Organizational Change Management 11 (4): 282–95.
Jones, E. E., and R. E. Nisbett 1977. The actor and the observer: Divergent perceptions of the
causes of behavior. In Perceiving the causes of behavior, eds. E. E. Jones, D. E. Kanouse, H.
H. Kelley, R. E. Nisbett, S. Valins, and B. Weiner, 79–94. Morristown: General Learning
Press.
Kogut, B., and U. Zander 1992. Knowledge of the firm, combinative capabilities and the replica-
tion of technology. Organization Science 3 (3): 383–97.
Lam, A. 2000. Tacit knowledge, organizational learning and societal institutions: An integrated
framework. Organization Studies 21 (3): 487–513.
Ledeneva, A. V. 1998. Russia’s economy of favors: Blat, networking and informal exchange. Cam-
bridge: Cambridge University Press.
Leung, K., and M. H. Bond 1984. The impact of cultural collectivism on reward allocation. Journal
of Personality and Social Psychology 47:793–804.
Littrell, R. F. 2002. Desirable leadership behaviors of multi-cultural managers in China. Journal of
Management Development 21 (1): 5–74.
Lu, Y., and I. Bjorkman 1997. HRM practices in China-Western joint ventures: MNC standard-
ization versus localization. International Journal of Human Resource Management 8:
615–28.
Luo, Y. 1997. Guanxi and performance of foreign-invested enterprises in China: An empirical
enquiry. Management International Review 37 (1): 51–70.
May, R. C., S. M. Puffer, and D. J. McCarthy 2005. Transferring management knowledge to
Russia: A culturally-based approach. The Academy of Management Executive 19(2):
24–35.
McCarthy, D. J. and S. M. Puffer 2003. Corporate governance in Russia: A framework for analysis.
Journal of World Business 38 (4): 284–98.
Michailova, S. and K. Husted 2003. Knowledge-sharing hostility in Russian firms. California
Management Review 45 (3): 59–77.
Michailova, S. and V. Worm 2003. Personal networking in Russia and China: Blat and guanxi.
European Management Journal 21 (4): 509–19.
Mikheyev, D. 1987. The Soviet mentality. Political Psychology 8 (4): 491–523.
Newell, S. 1999. The transfer of management knowledge to China: Building learning communities
rather than translating western textbook? Education and Training 41 (6/7): 286–94.
Nonaka, I., and H. Takeuchi 1995. The knowledge creating company. Oxford: Oxford University
Press.
Puffer, S. M., and D. McCarthy 1995. Finding the common ground in Russian and American busi-
ness ethics. California Management Review 37 (2): 29–46.
Ralston, D. A., D. H. Holt, R. H. Terpstra, and K. C. Yu 1997. The impact of national culture and
economic ideology on managerial work values: A study of the United States, Russia, Japan,
and China. Journal of International Business Studies 1: 177–207.
Ross, L. 1977. The intuitive psychologist and his shortcomings: Distortions in the attribution pro-
cess. In Advances in experimental social psychology, Vol. 10, ed. L. Berkowits, 173–220.
New York: Academic Press.
Sbarcea, K. 2001. The mystery of knowledge management. New Zealand Management 48 (10):
33–39.
Scarborough, J. 1998. The origins of cultural differences and their impact on management. West-
port, CT: Quorum Books.
Seemann, P., De Long, D., Stucky, S., and Guthrie E. 1999. Building intangible assets: A strategic
framework for investing in intellectual capital. Second International Conference on the
Practical Applications of Knowledge Management (PAKeM99).
Smith, P. B., M. F. Peterson, and P. Wang 1996. The manager as mediator of alternative meanings:
A pilot study from China, the USA and UK. Journal of International Business Studies 27
(1): 115–29.
Soubbotina, T. P., and K. A. Sheram 2000. Beyond economic growth: meeting the challenges of
global development. Washington, DC: The World Bank.
Speece, M. W., and Y. Kawahara 1995. Transportation in China in the 1990s. International Jour-
nal of Physical Distribution and Logistics Management 25 (8): 53–71.
Tsang, E. W. K. 2002. Acquiring knowledge by foreign partners from international joint ventures
in a transition economy: Learning-by-doing and learning myopia. Strategic Management
Journal 23: 835–54.
Weir, D., and K. Hutchings (2005). Cultural embeddedness and textual constraints: Knowledge
sharing in Chinese and Arab cultures. Knowledge and Process Management 12 (2): 89–98.
Wong, Y-Y., T. E. Maher, J. D. Nicholson, and A. F. Bai 2003. Organizational learning and the risk
of technology transfers in China. Management Research News 26 (12): 1–11.
Worm, V. 1997. Vikings and Mandarins. Copenhagen: Handelshøyskolens Forlag.
Wright, P. C., W. F. Szeto, and L. T. W. Cheng 2002. Guanxi and professional conduct in China:
a management development perspective. International Journal of Human Resource Man-
agement 13 (1): 156–82.
Yang, M. M. 2002. Rebuttal: The resilience of Guanxi and its new deployments: A critique of some
new Guanxi scholarship. The China Quarterly 170: 459–76.
Zapalaska, A.M. and W. Edwards 2001. Chinese entrepreneurship in a cultural and economic
perspective. Journal of Small Business Management 39 (3): 286–92.
10
Asian Organizations Meet North
American Management Theory:
The Case of Singapore and Senge
Kala S. Retna and Jane E. Bryson
ABSTRACT
This chapter reviews the connection between knowledge management and the learn-
ing organization, argues that both concepts rely on culturally embedded theories
and practices, and presents a case study of the use of Senge’s learning organization
concepts in one large Singaporean organization. The analysis of this case reveals the
cultural challenges that emerged in the process of applying essentially Euro-Ameri-
can management theories within an Asian culture. We find, for example, that Singa-
porean respect for power, status, and order may affect Western-based organizational
knowledge management implementation strategies. In conclusion we discuss the
practical implications of these cross-cultural challenges for Singaporean organiza-
tions, multinational organizations, and for transnational consulting, including the
choice knowledge management practitioners have between “best practice” versus
“best fit” approaches to implementation.
KNOWLEDGE MANAGEMENT AND THE LEARNING

ORGANIZATION
From Knowledge to Knowledge Management
For centuries successive minds have pondered over the nature of knowledge and know-
ing. In the past 50 years of Western thought, management and organization studies have
grown as academic disciplines, as has the body of professional managers working within
an economic framework that favors competition. Hence as soon as something is recog-
nized as having some potential value or contribution to competitive advantage, it then
becomes seen as a resource of the organization to be exploited—suddenly it becomes
something that needs to be managed and owned. For example, staff became regarded
as human resources to be managed through human resource management policies and
practices; the performance of staff and the organization is also something to be managed
through performance management systems; even the image, reputation, or brand of the
organization has become something, which is managed through brand management
strategies. By appending the word management to a concept we are changing that con-
cept—focusing it, more often than not, in an organizational context, to serve the ends of
the manager. In the case of knowledge, knowledge management is the means, whereas
competitive advantage and achievement of business goals are the ends.
There has been an explosion of literature on knowledge management over the past decade,
remarkable for its blend of practitioner and academic input and appeal. The literature now
reports two distinct generations of approach to knowledge management, and purports to be
entering a third generation (Firestone and McElroy 2003; Gorelick and Tantawy-Monsou
2005; Metaxiotis, Ergazakis, and Psarras 2005; Scholl et al. 2004). Initial explorations of the
knowledge management concept (the first generation) took a technological focus. In these
works knowledge management is defined as a technical issue to be managed by developing
intranets and other information technology (IT) facilities through which organizational
members can capture, share, store, and retrieve data and information.
More recent discussions recognized the increasing importance of knowledge to com-
petitive advantage in organizations, and that knowledge management has at its core a
social dimension. Decades after sociologists and psychologists have revealed a social
construction perspective (Berger and Luckmann 1967; Piaget 1972), the knowledge
management literature concludes that knowledge is socially constructed among com-
munities of workers (Alavi and Leidner 2001; Lang 2001). Thus the second generation of
discourse has centered on the social and behavioral dimensions of knowledge manage-
ment. This has drawn attention to individual and group behavior in knowledge sharing
and creation. It broadened the focus from the information technology and informa-
tion management architecture needed to manage knowledge, to the organizational and
behavioral change required to achieve knowledge management. This placed human
resource management and organization development as a central part of the solu-
tion alongside IT. In particular it picked up on organizational learning and the learn-
ing organization concept, as a tool for knowledge management systems. As Carter and
Scarbrough (2001, 220) point out “for many writers the intersection between knowledge
management and human resource management rests largely in the creation or manage-
ment of learning processes. Human resource management is especially concerned with
learning at the level of both the organization and the community”.
The ‘generational’ development of approaches to knowledge management in the lit-
erature reflects (a) the gradual integration of different disciplinary perspectives (from IT
to behavioral science), and associated with that (b) changing perspectives on the nature
of knowledge and thus its management in an organizational setting (Alavi and Leidner
2001). Recently, it is claimed that third generation approaches to knowledge manage-
ment are emerging (for example, Metaxiotis, Ergazakis, and Psarras2005; Scholl et al.
2004). These approaches expand on both the first and second generation by attending
to issues of IT and the social/behavioral dimension, through integration with business
strategies and goals. As a consequence more serious attention has fallen on the impact
and contribution of organization culture to knowledge management.
Asian Organizations Meet North American Management Theory 177
From Learning to Learning Organization

Traditionally the concept of learning has been applied to individuals—learners—in
different settings (for example, school or work). In recent decades, much like knowledge
has become managed, learning has become organizational. This has changed the focus
of learning from a mechanism for achieving individual aspirations and well being, to
a mechanism for contributing to competitive advantage and organizational goals. But
more than this, the organization not only facilitates learning, it is also a learner.
The concept of organizational learning focuses on the ability of individuals and orga-
nizations to learn continuously. Its intellectual roots lie in the organizational develop-
ment literature (e.g., Argyris 1990; Argyris and Schon 1978; French and Bell 1973). But,
arguably, its most publicized exponent is Senge. He took the concept, blended it with
other concepts (such as systems dynamics) and created a management tool. This tool,
the learning organization, is a set of principles and associated techniques to be applied
in the management of organizations. He defined a learning organization as an “orga-
nization where people continually expand their capacity to create the results they truly
desire, where new expansive patterns of thinking are nurtured, where collective aspira-
tion is set free, and where people are continually learning how to learn together” (Senge
1990, 14). This organizational utopia is achieved through practicing the “five disciplines”
of personal mastery, mental models, shared vision, team learning, and systems thinking.
According to Senge the practice of these will enable organizations to truly learn because
they are the necessary elements of innovation in human behavior.
However the learning organization, and in particular Senge’s recipe for it, is not with-
out critics. For instance, the assumed mutuality of purpose and outcome of learning
activity for individual and organization has been questioned (Fenwick 1998; Thomson
et al. 2001) as has the absence of the emotional dimension of learning (Ikehara 1999).
The usefulness of the concept has also been criticized for lack of clarity on how orga-
nizations can achieve it (Kilman 1996), and for ignoring issues of power and politics
(Coopey 1995).
The Cultural Gap

The learning organization offers a tempting formula for those in pursuit of better
knowledge management in their organization. Both are concerned with the collective
entity that is the organization, and with the attainment of knowledge at an individual,
group and organizational level to contribute to the goals of the organization (Vera and
Crossan 2003). The learning organization is an instrument for connecting learning and
knowledge, and for understanding how knowledge is regarded, used, and shared in
organizations (Scarbrough and Swan 2003). And, importantly, it aims to change the
organization culture in support of learning and knowledge (De Long and Fahey 2000;
Holden 2002).
However, for knowledge management and the learning organization, their combined
strength of focus on the organization, its culture, and practices, may also be their com-
bined weakness in some contexts. If, as we accept, knowledge is socially constructed,
then it is embedded not only in organizational culture but also in national culture. That
is, the culture in which individuals grow up or live their adult lives and in which they
forge their personal values, beliefs and aspirations. It is also the larger culture in which
the organization culture is hosted. Delving into other social science disciplines we find
that cultural theorists have examined the numerous mechanisms within societies that
convey and reinforce a nation’s culture. Not least of these mechanisms are institutions
such as education systems, political systems, religion, literature, television, newspapers
and other mass communication media, family and community discourse, and work (for
example, Hall 1978; Thompson 1963; Williams 1961, 1980). Not surprisingly, when we
enter the workplace we carry our national culture with us. Even the most distinctive
organizational culture is not a closed system, it is populated with people who bring
a lifetime of cultural experience with them. To date, knowledge management and the
learning organization have not fully incorporated this perspective into theorizing. As
Holden (2002, 81) suggests “one of the problems in the knowledge management lit-
erature is that authors give the impression that knowledge management operates in a
kind of unitary vacuum, in which diversity in terms of language, cultural and ethnic
background, gender and professional affiliation are compressed into one giant inde-
pendent variable, which is in any case pushed to the side”. Hence he approaches from a
different angle by attempting to make sense of culture from a knowledge management
perspective. Holden regards cross-cultural knowledge, learning and networking as a key
resource for international business and proposes redesigning cross-cultural manage-
ment as a knowledge domain.
There is a growing body of research on cross-cultural issues in management and in
organizational psychology. Much of this work rests on the recognition that concepts,
theories and techniques from a predominantly Euro-American tradition are not “uni-
versalities and, therefore, may not be directly applicable in other cultures (Pauleen and
Murphy 2005; Smith, Fischer, and Sales 2001). This issue first gained prominence in the
management literature with the work of Hofstede (1980). Although some may debate
aspects of his research, there is no denying that it highlighted differences between West-
ern cultures and Eastern or collectivist cultures. Hofstede’s work is the most widely cited
in cultural studies (Bing 2004; Hoppe 2004; Triandis 2004) and his constructs provide
insights when conceptualizing the dynamics of national culture. Similarly, Hampden-
Turner and Trompenaars (1993) distinguished between more self-seeking American
styles of learning and knowledge sharing, and the more group based practices of Asian
cultures.
Serendipitously, cultural differences are displayed in an international study of
academic and practitioner knowledge management experts (Scholl et al. 2004). The
study sought opinions on theoretical and practical issues for knowledge management
in the future. The findings focus on these issues, but they also analyzed comparisons
of responses according to the geographical region of the respondents. Interestingly
they found significant differences in the opinions of German respondents compared
with all non-German respondents. Although not intended as such, this is some evi-
dence of the influence of national culture on priorities and emphasis in knowledge
management. In the rest of this chapter we report on a study that looked specifi-
cally at the issue of the impact of national culture on the implementation of Senge’s
learning organization concepts. This is instructive for both knowledge management
and the learning organization, whose literatures are increasingly entwined (Vera and
Crossan 2003).
THE CASE OF SINGAPORE AND SENGE

The Case Study Organization
This case study explores the influence of national culture on the practice of Senge’s
learning organization concepts in a Singaporean government organization. In Singa-
pore, the government relies on the public bureaucracy as the major vehicle for formulat-
ing and effecting social and developmental changes. Thus the public sector presents an
ideal venue for studying the implementation of new policies or management concepts.
In order to maintain confidentiality we have used the organizational pseudonym of Sin-
gapore Century (SC) throughout this case study report.
One of the largest government organizations, SC is a key provider of public services
in Singapore. Just like other public sector organizations in Singapore, SC consists of civil
servants and bureaucrats who are vested with public authority. Typically public sector
organizations in Singapore are bureaucratic in nature and employees are traditionally
oriented. These characteristics produce inflexible, self-preserving organizations, which
makes it difficult for public officials to deal with rapid changes and challenges as the
country embraces the knowledge economy. Thus the Singapore Public Service for the
Twenty-First Century (PS21) initiative was launched with an aim to increase efficiency,
provide better service, and promote learning in public sector agencies. In response to this
SC introduced the learning organization concept in 1997. Besides supporting the call by
PS21 to promote learning in the public service, there were two other important reasons
for implementing learning organization concepts in SC. First, the chief executive officer
(CEO) was a strong advocate of the learning organization concept after attending a con-
ference on systems thinking where he met consultants from Massachusetts Institute of
Technology (United States) who provide training on the concepts. Second, he took over
SC in 1997 and made a break from the bureaucratic, authoritarian culture by promoting
organizational learning using Senge’s concepts of the learning organization. Since then,
SC has introduced various changes and has put in place structures to facilitate learning
in the organization. Today, SC is highly regarded and consulted by other organizations
on the practice of learning organization concepts.
Investigating Learning Organization Concepts

To explore the influence of national culture on the practice of learning organiza-
tion concepts this case study research was conducted using ethnographic methods.
The ethnographic research process involves participating in the group or society to be
studied ranging from everyday conversations to more formal, semistructured, in-depth
interviews, in order to understand observed phenomena. A distinctive feature of eth-
nographic inquiry is its explicit focus on the features of a given culture with the aim of
exploring the relationship between culture and behavior.
In this case ethnographic fieldwork was carried out for a period of six months in
the SC organization. Face-to-face interviews lasting about 60–90 minutes were carried
out with 20 SC staff members. An interview guide was derived from both the litera-
ture, and a preceding pilot study to gather information on three key issues: the partici-
pants’ understanding of learning organization principles, the participants’ perceptions
of the importance of learning, and their perceptions of how the traditional Singaporean
culture shapes or hinders the application of the learning organization principles. The
in-depth interviews were supplemented with observations of staff meetings, informal
conversations with SC clients, analysis of company documents such as newsletters,
printed internal and external publications, CD-ROMs and brochures that were made
available to the public.1
How the Cultural Dimension Was Explored

The fundamental argument in the organizational literature on national culture is
that each nation has developed some unique understanding of organization and man-
agement through its history (e.g., Hofstede 1980). The influence of national culture on
organizations comes through societal structures (for example, education systems and
political systems) and through values and behaviors of organizational participants
(Adler and Doktor 1986). The pervasive influence of national culture on human behav-
ior in organizations has prompted several researchers to develop studies that approach
and classify national culture in different ways (e.g. Hall 1960; Hofstede 1980; Hofstede
and Bond 1988; Kluckhohn and Strodtbeck 1961; Laurent 1983; Hampden-Turner and
Trompenaars 1993; Trompenaars 1984).
In this case study we used Hofstede’s cultural dimensions to assist analysis. Hofstede’s
pioneering work was an attempt to compare national cultures in terms of broad value
differences (Hofstede 1980, 1983). In his extensive study of more than 116,000 employ-
ees of IBM in 50 countries, Hofstede identified four cultural dimensions of work-related
value differences. These four dimensions are power distance, individualism/collectivism,
uncertainty avoidance and masculinity/femininity. A fifth dimension, labeled “Confu-
cian dynamism,” was subsequently added to the cultural framework (Hofstede and Bond
1988). Confucian dynamism epitomizes “Asian values” and also shows the importance of
Confucianism to all East Asian societies (Ralston et al. 1991). This case study used three
of Hofstede’s national culture dimensions and they are briefly explained below:
Power Distance refers to the extent to which people of a particular country are said
to accept inequality in power as an irreducible fact in organization. This influences the
amount of formal hierarchy where subordinates accept that the superiors have more
power and decisions made by them are unquestioned. In this dimension, Singapore was
classified as high on power distance (Hofstede 1980). Individualism/Collectivism means
the concern for oneself as an individual as opposed to concern for the priorities and
rules of the group to which one belongs. People in individualistic cultures tend to think
of themselves as “I,” distinct from other people. Collectivism refers to cultures where
the interests of the group take precedence over the interests of the individual. Singapore
scored low on individualism in Hofstede’s study. Confucian Dynamism refers to val-
ues such as respect for tradition, ordering relationships by status, protecting one’s face
(social reputation) and having a sense of personal steadiness and stability. Singapore
scored highly on this dimension.
Hofstede (1983) notes that the most relevant dimensions for understanding leadership
and management were power distance and individualism/collectivism. The values under
these dimensions are helpful for analyzing and understanding leadership style, dialog
and experimentation, which are key elements of the learning organization principles. The
Confucianism dimension was selected because it has a strong influence on the leadership
style and work behaviors of east and south-east Asian societies. Singapore is a multicul-
tural country with a population of 4.2 million, comprising 76.8 percent Chinese, 13.9 per-
cent Malay, 7.9 percent Indian and 1.4 percent other (2000 census). As the majority of
the country’s population is ethnic Chinese, it is not surprising that many organizations in
Singapore consist of managers and employees who may share cultural values influenced
by Confucianism (Taormina 1998). Also, Singaporean political leaders have frequently
stressed the significance and relevance of Confucian ethics (Tan 1989; Tu 1999).
Hence these three national cultural dimensions were used to analyze the attitudes and
behaviors reported by SC staff on core features of the learning organization concept. In
particular we report on: learning culture; shared vision; experimentation; team learning;
dialog; trust; and overall perceived usefulness of these learning organization concepts.
Research Findings
Creating a Learning Culture
According to Marquardt (2002), the most important core element of the learning
organization is the learning itself as it has the power to change people’s perceptions,
behaviors, and mental models. This then facilitates, encourages and maximizes learning
at individual, team, and organization levels (Marquardt 1996).
The case study discussions on the importance of learning in relation to individu-
als, teams and the SC organization revealed different interpretations of learning. A sig-
nificant majority of participants perceived learning as important for survival. This was
explained in terms of their awareness of the economic changes that have taken place in
Singapore over the years and the competitive atmosphere in which they now operate.
For example, a junior manager commented:
I guess learning is important to do the job faster and better. Frankly, if you can’t learn, you
will not survive in the organization. The learning organization concept is introduced by the
top management, so we must learn.
Viewed from this perspective, it appears to support Schein’s (in Coutu 2002, 103)
argument that “all learning is fundamentally coercive because you either have no choice
or it is painful to replace something that is already there with some new learning.” The
environmental threats and the launch of the learning organization movement appear to
have created a high level of survival anxiety among the SC staff. According to Schein (in
Coutu 2002), some organizations increase survival anxiety in order to motivate employ-
ees to learn. The SC responses show that staff viewed learning as important owing to the
changes initiated by the top management, and also for economic reasons.
A minority of the participants expressed different feelings about learning. They
explained that more educated people are joining the organization and it is important to
keep abreast with knowledge:
As a leader, I need to improve myself intellectually as well as for the organization. It is
important because we are now having a lot of young managers and we need to maintain
our respect as their superiors.
In part, the implied reason for the preceding quote is power. The idea of superiors
being perceived as more knowledgeable and intelligent than the lower-rung staff is
located within the traditional cultural context. Being a traditional bureaucratic orga-
nization, superiors are seen as people with more power which implies that they also
have so-called superior knowledge. In Hofstede’s terms this reflects Singapore as a high
power distance culture. Furthermore, there is an automatic expectation by junior staff
that superiors must be looked upon as someone with higher or superior knowledge. This
pattern of behavior also reflects the Confucian ideology of governance in Singapore. The
cultural values seemed to influence the notion of learning, in the sense that some senior
managers acknowledged that they need to learn in order not to ‘lose face’ among new or
junior staff. A senior manager summarized:
We cannot lose face with our new graduate managers. As superiors, we need to maintain
our power and respect. This is Confucius wisdom and this is the way our culture is and we
still follow it in our organization and at home.
The concept of face plays a major role in shaping the thinking of organizations and
people at large in Singapore. Briefly stated, face refers to the “social reputation, which
is achieved by getting on in life through success and ostentation” (Hu 1944, 45). As a
result, behaviors are controlled by the desire to enhance one’s face in the community.
In this context, superiors want to maintain their self-esteem among the juniors in order
to feel good about themselves, while juniors want to learn to maintain ‘face’ with col-
leagues and superiors.
In summary, despite attempting to create an environment and processes that encour-
aged learning, it appears that staff in SC did not maximize their learning opportunities.
Although all of them understood the importance of learning, the interpretation of learn-
ing was more associated with the nature of the task and also the kind of position they
held in the organization. It appears that Singapore’s high power distance underlying the
cultural behavior of respect for hierarchy and position has limited thinking about the
nature of learning at work. Learning viewed from this perspective is non-challenging, as
it will only serve to preserve the existing order in the organization. It is clear that these
leaders needed to learn “how to learn” in order to move beyond this level to one that
results in collective learning, that is, organizational learning.
Collective Commitment and Collective Avoidance

One of the much-discussed elements of the learning organization is the principle of
‘shared vision’. Shared vision is building a sense of commitment in an organization by
developing shared images of the future. This includes developing the principles and
guiding practices used to reach the goal. In many organizations the mission or vision
statement is often a tangible symbol of the shared vision (Senge 1990). It is argued that
without a shared vision an organization cannot be called a learning organization (Har-
vey 1988; Senge 1990; Stacey 1993). According to Marquardt (2002, 74), it is difficult for
any organization to have great achievements without a “deeply shared vision.”
Several interesting themes were raised in response to questions about the usefulness
of shared vision to oneself and others in the organization. All participants indicated
their commitment to the big vision of becoming a learning organization. They expressed
strong support and enthusiasm toward this vision that was initiated by the CEO in 1999.
This support was summarized by a manager:
I think it is real … hmm [great]. I know it’s the CEO’s ideas. Everyone is talking about
learning organization and people are working towards it. Though I did not participate in
forming the vision I am committed to it.
Senge (1990) and other researchers (Wheatley 1992; Watkins and Marsick 1994; Mar-
quardt 2002) have pointed out the importance of collective participation in the process
of visioning. However, the interviews and discussions show that the lack of a communal
approach toward crafting of the vision was not an issue for the participants, as can be
interpreted from another manager’s comments:
It is common in our organizations for vision to be from the top. If people don’t like the
vision, then [they] just take it as another instruction from top management.
Although it is crucial for leaders in a learning organization to seek the participation

of staff throughout the organization in the visioning process, the research participants’
responses do not support this. Two factors may have contributed to this situation. The
first was clearly a cultural aspect. Singaporean employees are well known for their com-
pliant mentality. Thus, not surprisingly, the communal approach to visioning may not
be important to staff on the basis of traditional order where visions are exclusively car-
ried out by the top management. The second factor was an assumption that top manage-
ment officers were better thinkers than non-management staff. An example illustrates
this line of reasoning by a junior staff member:
Vision is created by people who are paid highly for thinking and decision-making. Whether
we are involved in it or not is not so important. We are ground people. We take the vision
as a guide to do our work properly.
The assumption that people at the top in the hierarchy are more intelligent and capa-
ble of making decisions that are beneficial to the majority is still prevalent in Singapor-
ean organizations and is consistent with Hofstede’s concept of high power distance. It is
also clear that this kind of cultural thinking among participants may well work against
the process of visioning. Even if given the opportunity to contribute to visioning, it is
uncertain that staff will genuinely participate. The visioning process is an important
step toward becoming a learning organization and the fact that this element was miss-
ing questions the compatibility of learning organization concepts with a culture that
is not able to reconcile personal and organizational goals. The learning organization
seeks synergistic alignment between the two. The overall impression from the interviews
was that the majority of the participants were skeptical about a shared vision and the
importance for staff to be committed to both personal and organizational development.
Two contradictions emerged: one at the cultural level, the other at the individual. At the
cultural level, the participants saw themselves as the recipients of a vision statement, not
the creators of the vision. At the individual level, they were not sufficiently motivated
to be involved in such processes, as they perceived that their involvement would make
little change or contribution. This reflects the overall nonparticipative decision making
process so characteristic of bureaucratic Singapore public service sectors.
According to Senge (1990), the significance of a shared vision lies in the idea that such
a vision would represent a balance of competing interests in the organization. However,
this case study suggests that visioning by the top management is considered acceptable
and natural in Singapore. The participants tended to see the efforts to promote shared
vision as “for show only.” This skepticism is a reflection of their cultural preference for
high power distance.
Constraints over Experimentation

An experimental culture is an important element and a basic requirement for a
learning organization (Argyris and Schon 1996; Gephart et al. 1996: Senge 1990).
According to Nevis, DiBella, and Gould (1995, 80), “if learning comes through expe-
rience, it follows that the more one participates in guided experiences, the more one
learns.” Therefore venturing into uncharted waters and experiencing the failures
that may occur is an important part of organizational learning. The major chal-
lenge in an organization is to encourage members to experiment, innovate and learn
in the process. According to Goh (1998), superiors must facilitate individuals and
teams toward continuous improvement through work processes that result in new
ideas. Special effort must be made to make people realize that risks or mistakes are
a necessary part of achieving organizational learning and effectiveness (Marquardt
2002).
The findings in SC showed that there was some awareness among people that experi-
mentation is valuable to the organization and staff. However, almost all the participants,
including those who were receptive toward experimentation, expressed fears of expos-
ing their vulnerabilities.
There is a strong desire in Singaporeans to succeed. But failure, we cannot imagine. Too
many consequences to face in our job. It is natural for us not to let our bosses and col-
leagues know our failures or mistakes.
One main reason why Singaporean employees hesitate to make mistakes is the fear
of failure and criticism by superiors. Staff members are conscious that if a mistake takes
place in the process of experimentation, it will be met with ridicule and reprimand.
Comments such as “encouraged to experiment, but not to fail,” “mistakes can be very
scary here,” and “I don’t want to become a scapegoat” are indicative that failure is asso-
ciated with embarrassment and low self-esteem. It also appears that staff place great
emphasis on potentially undesirable outcomes and that this strongly inhibits experi-
mentation.
Two factors contributed to the perceived low level of tolerance for failures in the orga-
nization. First, some staff members are risk averse—preferring to use old, safe methods
rather than trying something new that may “get them into trouble.” Second, Singapor-
eans’ face-saving attitude (maintaining self respect), as explained previously, was seen
as a particularly important cultural factor, which explains the tensions between the idea
of experimentation and staff members’ risk averse responses.
In sum, staff generally viewed experimentation in a positive light. At the same time,
in practice, most of the participants did not feel safe to experiment. The fear of mistakes
or failures was influenced by previous reactions in the organization when failure had
occurred. This was further aggravated by the cultural preference toward face saving.
These factors may seriously impede experimentation and recognizing them is essential
in reducing their effects. This is a critical challenge for Singaporean organizations to
address in the journey to become a learning organization.
Team Learning
According to Senge (1990) teams are the key learning group of organizations. He saw
team learning as “the process of aligning and developing the capacity of a team to create
the results its members truly desire” (Senge 1990, 236). He noted that talented teams
are made up of talented individuals and it is team learning, not individual learning, that
adds to organizational learning (Senge 1992).
Discussion in SC of the principle of team learning indicated a common understand-
ing that it is characterized by a sharing of knowledge resulting from team projects and
meetings. SC had structures and processes in place for intra-functional and inter-func-
tional learning among members. This is consistent with the research of Pearn, Roderick,
and Mulrooney (1995), which considered that cross training and continuous learning
are indications of an organization that is evolving to be a learning organization.
Although team learning was portrayed as a characteristic of the organization by a sig-
nificant majority of the respondents, some of them felt that the team learning practiced
in the organization was not the same as that advocated by Senge (1990). For example, a
manager explained:
Teamwork, teambuilding are not new to us. We are doing it all the time. Our kind of
team learning is the same old way of discussion and learning from the more experienced
staff. The team learning that I learnt from the learning organization course is different. It
requires lots of open discussion and learning from each other without the fear of offending
anyone in the session.
This indicates that participants gained a new and different understanding of team
learning associated with learning organization principles. At the same time, there was
some awareness of the difference between teamwork and team learning. For instance,
when participants were asked to explain their process of team learning, one manager
summarized it as follows:
We have the daily review meeting (DRM) for all of us to learn from each other. Every
team reports about its customers/problems and what happened and what it did. Though
members are encouraged to question or disagree most of the staff prefer not to voice their
opinions in the presence of their managers. I am not sure whether any real learning takes
place in our team learning sessions.
This quote and other discussions with participants show no sign of the intellectual,
emotional, social, and spiritual challenges that constitute Senge’s concept of the process
of team learning. A significant number of participants expressed dissatisfaction with the
way it was practiced in the organization. Two reasons were highlighted throughout the
interviews. One was that the staff did not feel comfortable to engage in open communica-
tion in the presence of their team leaders, who were their immediate superiors. Second,
the team learning sessions did not generate interest or open up possibilities for learning
through inquiry. These explanations highlight the predicted relationship between a high
power distance culture and the preferred behavior of staff members. Comments such as
“surely we can’t really question other senior members during the session” and “how to
explain things in front of team leaders” show the influence of a bureaucratic system that
explains the inability of the organization to learn effectively (Senge 1990). In the case of
SC there seems to be more collective avoidance than collective learning.
Muddled Distinctions—Discussion versus Dialog

Dialog is defined as “sustained collective inquiry” into everyday experience that we
take for granted (Isaacs 1999, 357). The learning organization advocates the practice of
dialog to understand the context of daily interaction and experience and become aware
of the processes of thought and feeling that created that experience (Senge et al. 1994).
Also the purpose is to honor the development of individuals, ideas, and organization at
a very deep level. It opens paths to change and clears space for organizational transfor-
mation (Brown 1995). Thus it is argued that dialog is one of the communication tools
that enables organizations to realize the vision of becoming a learning organization
(Kofman and Senge 1994; Schein 1993; Senge 1990).
Participant responses to questions about the practice of dialog and its importance
to organizational learning and effectiveness, showed that there was a general under-
standing that dialog was regarded as a tool to facilitate discussions and meetings with-
out prejudice to status and power. The objective was to promote open discussion and
communication that resulted in effective problem solving among members. Despite
this understanding, the respondents’ receptiveness was not reflected among most of the
middle managers. A supervisor forcefully expressed it as follows:
Dialog is good as it promotes open communication among staff. But this is difficult for us
because it is dangerous to speak what is in your mind. Also, it is not polite to point out that
someone’s idea is not right, especially if they are in a higher position than you.
This quote and other discussions with middle managers show the dilemma associated
with the practice of dialog in the organization. First, it shows the difficulty of changing
the culturally entrenched communication practices among SC staff members. Second,
most of the participants found it “unsafe” to speak or relate their feelings about issues in
the presence of their superiors. Employees in Singapore accept the high power distance
between superiors and subordinates, and this cultural norm inhibits the process of dia-
log from taking root in the organization.
The findings also reveal that although the cultural context in which dialog took place
was important, it was the way it was carried out in the organization that really mattered
for the participants. Traditionally, Singaporeans in lower-level positions are accustomed
to the behaviors expected of them, such as listening and supporting superiors and others
during meetings. Having worked for years under rigid authority, junior staff members
have difficulty transforming themselves into speakers, and as a result, they miss out on
the opportunity for deep thinking and exploration. It is clear that these conservative
values inhibited attempts at dialog in the organization.
Trusting Relationships
According to some researchers trust is an essential element in a learning organi-
zation (Davenport and Prusak 1997; Pillai, Schriesheim, and Williams 1999; Senge
1990). The development of a relationship based on trust between management and
non-management employees is critical to the success of a learning organization. West
(1994) contends that the concept of the learning organization demands a greater recog-
nition of the importance of trust, which influences both individuals and organizational
learning. Trust, in this sense, is a necessary condition for creating a learning culture
(Senge 1990).
Several themes emerged from the interviews and discussions on the importance of
trust among SC staff. First, some managers acknowledged that a low level of trust did
exist among staff in SC, and also affirmed that trust is necessary to achieve the vision of
becoming a learning organization. One senior manager declared:
I must say that without trust, we cannot hope to be called a learning organization. All lead-
ers must know that they need to put much effort in building trust among their men (i.e.,
junior staff). High level appointments can do wonders but not without trust.
As this quote suggests, there seems to be some evidence that the organization has
low levels of interpersonal trust between management and non-management members.
All leaders interviewed commented that it was a difficult and time-consuming task to
develop trust among members. These senior managers also explained that they could
not delude themselves by expecting the junior staff to trust them because of their status
in the organization. The findings show that the majority of the staff understood that
developing a climate of trust takes much time and commitment and is also dependent
on consistent behavior, mutual respect and shared expectations among people. This is
in line with Taylor and Easterby-Smith (1999) who claimed that trust is generally earned
slowly and leaders cannot expect trust from their members solely based on their status
or position. In spite of the efforts of these managers to create a trusting environment,
there was no mutual trust as expected or desired. This was clearly indicated by a middle
manager’s comments:
I have worked here for 12 years. Just because my boss is trained in the learning organiza-
tion now does not mean that I can trust him totally. It is not easy for a leopard to change
its spots. Those who have power cannot change so easily. You can ask anybody, the answer
will be the same.
Similar comments were voiced during other interviews. This suggests that the lack of
trust in superiors is a widely held view among participants. Comments such as “trust
is important, but not with top management”; “we pretend to trust each other”; and
“actually, they don’t trust us as individuals” show that trust cannot be assumed to exist
within SC. The findings also show that the source of the problem lies in the top-down
control dominating the organization. Fear of authority and hierarchy appears to have
generated a low level of trust throughout the organization. Seen from this perspective, it
can be argued that the lack of trust among SC staff has its roots in the authoritarian and
hierarchical culture of Singapore.
Usefulness of the Learning Organization Concept

Responses to questions about the applicability and usefulness of the learning orga-
nization concept were generally positive with some reservations and concerns in rela-
tion to SC. Though most of the respondents favorably viewed the learning organization
as an opportunity for personal and organizational growth and development, they still
expressed concerns that it was not in the interest of a hierarchical organization to effect
sweeping cultural changes, which were critical for pushing the learning organization
concept forward. As commented by a senior manager:
If we over indulge in the learning organization concept, the top management might loose
its authority, its ability to keep its executive command … because learning organizations
encourage a lot of questions, clarifications … I think command and authority is still very
important. We have to be careful and not over do it.
This quote points to a major concern that the practices of the learning organization
could reduce the bureaucratic system and power relations that senior managers have
enjoyed all these years. It appears that for the senior managers, the feeling of losing
control over employees was a strong motivator in opposing the learning organization
concept. At the middle management level, the usefulness of the learning organization
concept was consistent with senior staff thinking which favored ‘good working relation-
ships’ as the desired means for open communication and team learning. Some com-
ments such as “I am more receptive to my staff’s ideas” and “it helps me to look at the
bigger picture” show that some transformation was taking place in the realm of “every-
day practice,” which had an effect among organizational members. Although this tends
to be a positive portrayal of the acceptance of the learning organization concept, more
than a few managers were skeptical about its usefulness in the long run. For example,
one manager, with a tinge of frustration, elaborated:
Quite typical, in that sense that even though we are beginning to learn and change through
learning organization principles but there are still a lot of underlying strings or attach-
ments in it. In SC, still a lot of top down things. I really can’t see much difference in people’s
behavior.
The directive style of management seems to have been a major obstacle for people
who were skeptical about the usefulness of the learning organization. Similar com-
ments such as “we still cannot push our ideas to top management”; “they still think
we are not any better than they are”; and “we need a new set of people in SC to see
the difference” illustrate the traditional working culture that permeated the orga-
nization. The characteristic of good working relationships between superiors and
subordinates appeared to lie principally within the national cultural context of the
organization.
Although the overall view of the usefulness of the learning organization concept
did not deny that traditional behaviors and beliefs are dominant inhibiting factors,
participants saw it as essentially a soft approach. They feared its potential effect on
the overall organization would erode other valued practices such as respect for senior
managers and the paternalistic relationship to employees. A junior manager summed
up this concern:
Learning organization is a soft approach and Singaporeans are not used to a soft and open
style of managing their people. We cannot be like the Westerners. We are Singaporeans.
Participants claimed that the learning organization style of management may not be
“appropriate” for a “tough country” like Singapore. Such responses appear to emanate
from unequal structural relationships between people in society. Again, this is reflective
of Singapore’s high power distance. On this basis, they doubted its effective application
within the Singapore organizational cultural context.
Singapore Organizations and the Learning Organization

Singapore has been a successful country to date, and its future success will depend
upon its ability to become a learning nation, according to Goh (1997). Hence, the Sin-
gapore government aspires to the broad integration of learning organization principles
in its organizations. Many organizations in Singapore have implemented the learning
organization concept and the number doing so appears to be increasing. However, the
findings in this case study show that many traditional Singaporean values and behaviors
are in conflict with learning organization principles, which after all were developed in
a North American context. As Pauleen and Murphy (2005, 22) note “information and
knowledge management models that exclude the influence of national and regional cul-
ture seriously undercut their potential effectiveness, particularly in global applications.”
A key related issue of how Singapore organizations will respond to the learning orga-
nization concept was discussed with all the participants in the case study. The majority
of participants strongly emphasized that the current reality of the work relationship is
an expression of Singapore’s culture, emanating from the unequal structural relation-
ship between people in society. The following example illustrates a manager’s percep-
tions of employee attitudes and behavior toward hierarchy and his concern over the
clash with the practice of learning organization:
Organizations in Singapore are all the same. People are conscious of their status and posi-
tion in the organization and they behave accordingly. It is the same as our family. Learning
organization can only work if we can change this belief in hierarchy.
This highlights the indoctrination of employees into organizations and the impor-
tance employees give to power relationships in organizations. A respectful attitude, obe-
dience and decorum were represented as “appropriate” behavior among employees in
organizations. The majority of the participants claimed that the learning organization
and Singapore organizations represent two opposing ways of being.
This suggests that the source of the issue lies in the beliefs, attitudes, and values of
Singapore society—the national culture. These have a strong impact on the behavior
of employees in the work place. The case study shows that despite the many positive
examples cited for the changes taking place in relation to the practice of learning organi-
zation principles, the respondents’ concern over its continuity and success indicates that
the nature of the traditional style of management with its cultural traits may threaten the
entire process of the learning organization.
IMPLICATIONS OF NATIONAL CULTURE FOR KNOWLEDGE

MANAGEMENT
Learning organization techniques are good but may not be applicable for all situations.
Ours is a direct and autocratic approach. It may take generations before we can totally
think and work like a learning organization. It is not easy because our government must
change first, then our people can change. (Junior manager)
This case study shows that national culture plays a major and influential role in
constraining the practice of learning organization concepts. Knowledge manage-
ment and learning organization principles share common ground in promoting
learning and a knowledge based culture. They both seek to achieve this by creating
structures, processes, and behaviors for capturing, sharing and using knowledge for
effective organizational performance. As Alavi and Leidner (2001, 123) noted “knowl-
edge management consists of a dynamic and continuous set of processes and prac-
tices embedded in individuals, as well as in groups and physical structures.” Hence,
the cultural barriers that were identified in the case organization are instructive at
a number of levels for practitioners and researchers. At a specific country level the
case study provides a useful set of insights for practitioners considering implementing
knowledge management strategies in Singapore. At a more general level it provides
further evidence of the impact of national culture on organizational behavior, and
raises issues for multinational organizations, trans-national consulting advice and
practices, and any organization considering implementing ideas based on different
cultural assumptions.
In the specific instance of Singapore, the case starkly illustrates how this national cul-
ture conceives of organizations, organizational membership, and all the activities that
occur in relation to organizations. In common with the findings of Hofstede (1980), the
SC case reveals an intellectual sympathy with new ways of doing things but an unwilling-
ness to follow through in changed behavior due to high power distance, low individual-
ism, and Confucian dynamism. One could even argue that the expressed sympathy with
new ideas is merely another way of maintaining ‘face’ which emerged as such an impor-
tant driver of behavior. A key tension in the case was the fear of expressing something
that offended or went against the thinking of superiors in the organization. It is inher-
ent among Singaporean employees to protect themselves from any loss of self-esteem
or self image that has been achieved in one’s position or status in the organization. As
Senge and others (1994) suggested, organizational members are capable of organizing
and operating in ways that are incredibly efficient at keeping themselves from learning.
These case study findings are in line with Senge’s interpretation that cultural factors are
the main inhibitor of the organization’s ability to learn effectively. Practitioners work-
ing with Singaporean organizations to introduce knowledge management strategies will
need to be mindful of these cultural drivers. The respect for power, status, and order
will affect implementation strategies and the ability to get good feedback on issues. For
instance, to address this, feedback groups may need to be made up of similar status
employees so that people feel free to speak.
More generally, organizations seeking to implement knowledge management initia-
tives in non-Western and even different Western cultures must understand and pay
specific attention to the dynamics of cultural behavior and values of the employees. An
understanding of the nuances of cultural traditions is important before an institutional
implementation is attempted. Organizational culture is highly influenced by national
culture and institutional change must take this into account. Essentially practitioners
have two main options: (1) to try to apply a “best practice” approach to knowledge
management, changing the organization and behaviors to fit; or (2) to adopt a more
contingent approach recognizing and embracing the national culture and creating
knowledge management strategies to fit the culture. The best practice option has had
appeal for a number of years to practitioners in other management fields, for instance
human resource management, and to some consulting firms. Often this has been fuelled
by the desire to replicate the strategies employed by successful companies. Sometimes
it has also been encouraged by an aversion to risk or experimentation, and even by lack
of in-depth understanding of the organization. Adopting a more contingent approach
requires the imagination and courage to do things without a best practice template,
and instead, to develop the practices that will be best for that particular organization.
For example, in international businesses Holden (2002) suggests valuing cross-cultural
knowledge and networks, and indeed we would argue that they may be helpful in arriv-
ing at the best knowledge management practices for those particular businesses.
Not surprisingly, we recommend that research on management and organiza-
tional change must take into account the national culture in which the organization
exists. This is particularly important when the change is being guided and driven
by concepts imported from another culture. An understanding of national culture
holds the potential to be a powerful analytic tool with which to lay foundations
for developing models and concepts. Thus, an extended approach to cross-cultural
comparative studies in learning organization and knowledge management practice
across countries is suggested. The broader management research literature, par-
ticularly human resource management, is rich in critiques of “one best way” or best
practice versus contingent or “best fit” approaches (e.g., Purcell, 1999). The knowl-
edge management literature should be mindful of, and learn from, this existing aca-
demic debate of the issues associated with the implementation of management and
organizational strategies.
NOTE
1. A full description of the methodology used in the research can be found in Retna, K. S.
2005. National culture and Senge’s learning organisation. PhD thesis, School of Management,
Victoria University of Wellington, New Zealand.
REFERENCES
Adler, N., and R. Doktor 1986. From the Atlantic to the Pacific century: Cross- cultural manage-
ment reviewed. Journal of Management 12 (2): 295–318.
Alavi, M., and D. E. Leidner 2001. Knowledge management and knowledge management systems:
Conceptual foundations and research issues. MIS Quarterly 25 (1): 107–36.
Argyris, C. 1990. Overcoming organizational defenses: Facilitating organizational learning. Bos-
ton: Allyn and Bacon.
Argyris, C., and D. Schon 1978. Organizational learning: A theory of action perspective. Reading,
MA: Addison-Wesley.
Berger, P., and T. Luckmann 1967. The social construction of reality: A treatise in the sociology of
knowledge. London: Penguin.
Bing, J. W. 2004. Hofstede’s consequences: The impact of his work on consulting and business
practices. Academy of Management Executive 18 (1): 80–87.
Brown, A. 1995. Organisational culture. London: Pitman Publishing.
Carter, C., and H. Scarbrough 2001. Towards a second generation of KM? The people manage-
ment challenge. Education and Training 43 (4/5): 215–24.
Coopey, J. 1995. The learning organization: Power, politics and ideology. Management Learning
26:193–213.
Coutu, D. L. 2002. The HBR Interview: the anxiety of learning, Harvard Business Review 80 (3):
100–106.
know. Cambridge, MA: Harvard Business School Press.
De Long, D. W., and L. Fahey 2000. Diagnosing cultural barriers to knowledge management. The
Academy of Management Executive 14 (4): 113–27.
Fenwick, T. 1998. Questioning the concept of the learning organization. In Learning for life,
eds. S. Scott, B. Spencer, and A. Thomas, 140–52. Toronto: Thompson Educational
Publishing.
Firestone, J., and M. McElroy 2003. Key issues in the new knowledge management. Boston:
Butterworth-Heinemann.
French, W. L., and C. H. Bell 1973. Organization development: Behavioral science interventions for
organization improvement. Englewood Cliffs, NJ: Prentice-Hall.
Gephart, M. A., V. J. Marsick, V. Buren, E. Mark, and M. S. Spiro 1996. Learning organizations
come alive. Training and Development 50 (12): 34–45.
Goh, C. T. 1997. Shaping our future: thinking school, learning nation. Speeches 21 (3): 12–20.
Goh, S. C. 1998. Toward a learning organization: The strategic building blocks. SAM Advanced
Management Journal 63(2): 15–22.
Gorelick, C., and B. Tantawy-Monsou 2005. For performance through learning, knowledge man-
agement is the critical practice. The Learning Organization 12 (2): 125–39.
Hall, E. T. 1960. The silent language in overseas business. Harvard Business Review, May–June:
87–96.
Hall, S. 1978. Policing the crisis: Mugging, the state, and law and order. London: Macmillan.
Hampden-Turner, C. M., and F. Trompenaars 1993. The seven cultures of capitalism: Value sys-
tems for creating wealth in the United States, Britain, Japan, Germany, France, Sweden and
the Netherlands. London: Piatkus.
Harvey, J. 1988. Making it happen. London: Fontana
Hofstede, G. 1980. Culture’s consequences: International differences in work-related values. Bev-
erly Hills, CA: Sage.
———. 1983. The cultural relativity of organizational practices and theories. Journal of Interna-
tional Business Studies 14 (2): 75–89.
Hofstede, G., and M. H. Bond 1988. The Confucius connection: From cultural roots to economic
growth. Organizational Dynamics 16 (4): 4–21.
Holden, N. 2002. Cross-cultural management: A knowledge management perspective. Upper Sad-
dle River, NJ: Financial Times Prentice Hall.
Hoppe, M. H. 2004. Introduction: Geert Hofstede’s culture consequences: International differ-
ences in work-related values. Academy of Management Executive 18 (1): 75–79.
Hu, H. C. 1944. The Chinese concept of “face”. American Anthropologist 46:45–64.
Ikehara, H. T. 1999. Implications of Gestalt theory and practice for the learning organization. The
Learning Organization 8(4): 141–52.
Isaacs, W. 1999. Dialog and the art of thinking together: A pioneering approach to communicating
in business and in life. New York: Currency.
Kilman, R. H. 1996. Management learning organizations: Enhancing business education for the
21st century. Management Learning 27 (2): 203–37.
Kluckhohn, F., and F. L. Strodtbeck 1961. Variations in value orientations. Evanston, IL: Peterson.
Kofman, F., and P.M. Senge 1994. Communities of commitment: The heart of the learning orga-
nization. In The learning organization in action, ed. D. J. Bohl, 7–25. New York: American
Management Association.
Lang, J. C. 2001. Managerial concerns in knowledge management. Journal of Knowledge Manage-
ment 5 (1): 43–57.
Laurent, A. 1983. The cultural diversity of Western conceptions of management. International
Studies of Management and Organization 13 (1–2): 75–96.
Marquardt, M. J. 1996. Building the learning organization. New York: American Society for Train-
ing and Development and McGraw Hill.
———. 2002. Building the learning organization: Mastering the 5 elements for corporate learning.
New York: Davies-Black Publishing.
Metaxiotis, K., K. Ergazakis, and J. Psarras 2005. Exploring the world of knowledge manage-
ment: Agreements and disagreements in the academic/practitioner community. Journal
of Knowledge Management 9 (2): 6–18.
Nevis, E. C., A. J. DiBella, and J. M. Gould 1995. Understanding organizations as learning sys-
tems. Sloan Management Review 36 (2): 73–85.
Pauleen, D. J., and P. Murphy 2005. In praise of cultural bias. Sloan Management Review 46 (2):
21–22.
Pearn, M., C. Roderick, and C. H. Mulrooney 1995. Learning organizations in practice. Maiden-
head, NY: McGraw-Hill.
Piaget, J. 1972. Psychology and epistemology: Towards a theory of knowledge. Harmondsworth,
UK: Penguin.
Pillai, R., C. Schriesheim, and E. Williams 1999. Fairness perceptions and trust as mediators for
transformational and transactional leadership: A two-study sample. Journal of Manage-
ment 25:897–933.
Purcell, J. 1999. Best practice and best fit: Chimera or cul-de-sac? Human Resource Management
9(3): 26–41.
Ralston, D, A., P. Egri, S. Stewart, R. H. Terpstra, and Y. Kaicheng 1991. Doing business in the
21st Century with the new generation of Chinese managers: A study of generational shifts
in work values in China, Journal of International Business Studies, 30: 415–28.
Scarbrough, H., and J. Swan 2003. Discourses of knowledge management and the learning orga-
nization: Their production and consumption. In Handbook of Organizational Learning
and Knowledge Management, eds. M. Easterby-Smith and M. A. Lyles, 493–512. Oxford:
Blackwell.
Schein, E. H. 1985. Organizational Culture and Leadership. 2nd ed. San Francisco: Jossey-Bass.
———. 1993. On dialog, culture, and organizational leadership, Organizational Dynamics 22(2):
40–51.
Scholl, W., C. Konig, B. Meyer, and P. Heisig 2004. The future of knowledge management: An
international Delphi study. Journal of Knowledge Management 8(2): 19.
Senge, P.M. 1990. The fifth discipline: The art and practice of the learning organization. New York:
Doubleday.
———. 1992. Building learning organizations. The Journal of Quality and Participation 15(2):
30–38.
Senge, P., A. Kleiner, C. Roberts, R. B. Ross, and B. J. Smith 1994. The fifth discipline fieldwork:
Strategies and tools for building a learning organization. London: Nicholas Brealey Pub-
lishing.
Singapore Department of Statistics 2000 Census: Handbook of Singapore Population. http://www.
singstat.gov.sg/keystats/c2000/handbook.pdf
Smith, P., R. Fischer, and N. Sale 2001. Cross-cultural industrial/organizational psychology.
In International Review of Industrial and Organizational Psychology, Volume 16, eds.
C. L. Cooper and I. T. Robertson, 147–94. Chichester, UK: Wiley.
Stacey, R. D. 1993. Strategy as order emerging from chaos, Long Range Planning 26(1): 10–17.
Tan, C. H. 1989. Confucianism and nation building in Singapore. International Journal of Social
Economics 16(8): 5–17.
Taormina, R. J. 1998. Employee attitudes towards organizational socialization in People’s Repub-
lic of China, Hong Kong and Singapore. The Journal of Applied Behavioral Science 34(4):
468–85.
Taylor, S., and M. Easterby-Smith 1999. Culture and organizational learning: towards plural-
ism. In Proceedings of the 3rd International Conference on Organizational Learning,
eds. M. Easterby-Smith, L. Araujo and J. Burgoyne, 1039–59. Lancaster, UK: Lancaster
University.
Thomson, A., C. Mabey, J. Storey, C. Gray, and P. Iles 2001. Changing patterns of management
development. Oxford: Blackwell.
Thompson, E. P. 1963. The making of the English working class. London: Gollancz.
Triandis, H. C. 2004. The many dimensions of culture. Academy of Management Executive 18(1):
88–93.
Trompenaars, F. 1984. “The organization of meaning and the meaning of organization: A com-
parative study on the conceptions and organizational structure in different cultures.” doc-
toral dissertation, University of Pennsylvania.
Tu, W. M., ed. 1999. Confucian traditions in east Asian modernity: Moral education and economic
culture in Japan and the four mini-dragons. Cambridge, MA: Harvard University Press.
Vera, D., and M. Crossan 2003. Organizational learning and knowledge management: Toward an
integrative framework. In Handbook of Organizational Learning and Knowledge Manage-
ment, eds. M. Easterby-Smith and M. A. Lyles, 122–41. Oxford: Blackwell.
Watkins, K. E., and V. J. Marsick 1994. Sculpting the learning organization. San Francisco: Jossey-
Bass.
West, P. 1994. The learning organization: Losing the luggage in transit. Journal of European In-
dustrial Training 18(11): 30–38.
Wheatley, M. J. 1992. Leadership and the new science: Learning about organizations from an or-
derly universe. San Francisco: Berrett-Koehler.
Williams, R. 1961. The long revolution. London: Chatto and Windus.
. 1980. Problems in materialism and culture. London: Verso.
11
The Peruvian Asparagus Cluster:
Realizing Profitability from Social Capital
and Shared Knowledge Management in a
Traditionally Low-Trust Environment
Luis S. Chang
ABSTRACT
This chapter presents the Peruvian asparagus cluster story. It discusses how Peru
became the top exporter of fresh asparagus in the world and the second largest pro-
ducer. This success is not only due to Peru’s climate, which allows the growing of
asparagus all year round; the industry’s breakthrough came from the collective action
and shared knowledge management of a group of business people determined to
tackle the problems in the complex asparagus logistic chain. A strong entrepreneurial
vision and perseverance in trust building were key to this hallmark case. Moreover,
this happened in a country with a long history of particularly low trust. The case
study is preceded by a discussion of the low levels of trust in Latin America and Peru,
explained by the analysis of values, culture, institutions, and history. A theoretical
framework is provided by using three approaches: the Prisoner’s Dilemma (from
game theory), evolutionary biology, and mental models. These approaches provide
the background to understand the basis of cooperation and whether it is possible in
noncooperative populations. Some conclusions are drawn by applying insights given
by this framework to the Peruvian asparagus cluster case, signaling hope for trust
and cooperation building in other clusters and eventually in Peruvian society.
INTRODUCTION
Peru is the second-largest producer and the number-one exporter of asparagus in the
world, supplying the American and European markets with high-class fresh asparagus
and competing with suppliers who are much closer to those consumer markets includ-
ing their domestic producers. The success of the Peruvian asparagus cluster is due not
only to particularly favorable climate conditions of the Peruvian coast but primarily to
shared knowledge management by the cluster’s members to significantly improve the
complex asparagus logistic chain. All these joint entrepreneurial efforts took place in a
country that has long been characterized by a low-trust environment.
This chapter provides a discussion on a series of issues related to the low-trust situ-
ation in Latin American societies, including Peru, and how internal and external fac-
tors made collective action in the Peruvian asparagus cluster possible. This, in turn,
helped lead to the dominance of Peruvian asparagus in international markets. Based on
this experience and analysis, strategies are given for improving trust and cooperation in
other clusters and eventually in Peruvian society.
A LOW-TRUST ENVIRONMENT
According to Corporación Latinobarómetro, a nonprofit organization that conducts
an annual public survey in 18 Latin American countries consisting of 19,000 interviews
on social and economic issues, Latin America is the region with the lowest level of inter-
personal trust. The 2004 survey revealed that only 16 percent of Latin Americans trusted
their co-nationals. The same percentage was reported for Peru (Corporación Latino-
barómetro 2004, 31–32). Let us now address some issues that might explain why trust is
so low in Latin American environments.
Trust and Social Capital

Low levels of trust, which have historically existed in the Latin world, pose a severe
problem for those countries. For Francis Fukuyama (1995), the welfare of a nation and
its ability to compete are conditioned by the level of trust inherent in society, a fea-
ture he considers a pervasive cultural characteristic. Trust is the expectation that arises
within a community whose behavior is normal, honest, and cooperative, based on com-
mon norms and shared by all members of that community.
Fukuyama defines social capital as an instantiated set of informal values or norms
shared among members of a group that allows them to cooperate with one another.
Norms that produce social capital must include virtues such as truth telling and reci-
procity. All societies have some stock of social capital. What varies is the extent of the
radius of trust. There may be strong cooperative norms like honesty and reciprocity in a
limited group of people but not farther into the rest of society. This is the case in China
and Latin America, where family ties are strong and their members trust each other but
not strangers, and therefore trust levels in public life are very low. Trust is the essen-
tial lubricant of all social activities that allow people to live and work together without
generating a constant squandering flow of conflict and negotiations. Fukuyama rightly
states that the generalized lack of trust in a society imposes a kind of tax in every form of
economic activity, a tax which societies with high trust levels do not have to pay.
Values, Culture, and Development

The importance of cultural values and attitudes and their link with development
has been extensively discussed in Latin America in the past few years, with some
The Peruvian Asparagus Cluster 197
Table 11.1
Culture and progress
Values and attitudes Progressive culture Static culture
Time orientation Future Present or past

Attitude towards work Work is central to good life Work is a burden
Frugality and investment Frugality is mother of invest- A threat to the egalitarian status
ment and financial security
Education Key to progress Marginally important except for the elites
Personal advancement Merit is central Connections and family are what counts
Community Radius of identification and The family circumscribes community
trust extends beyond the
family to the broader society
Ethical code Rigorous Loose
Justice and fair play Universal impersonal expec- Often a function of who you know or how
tations much you can pay
Authority Tends toward dispersion and Tends toward concentration and vertical-
horizontality ity
Secularism Small influence of religious Substantial influence of religious institu-
institution on civic life tion on civic life
of the analysis presented at the Cultural Values and Human Progress Symposium,
organized by the Harvard Academy for International and Area Studies and held in
Cambridge, Massachusetts, in April 1999 (Harrison and Huntington 2000). Samuel
Huntington defines culture “in purely subjective terms as the values, attitudes, beliefs,
orientations, and underlying assumptions prevalent among people in a society.”
And by “human progress” he means “movement toward economic development and
material well-being, social-economic equity, and political democracy” (Harrison and
Huntington 2000, xv). In this chapter we adopt this notion of culture and will use the
phrase “value system that favors development/progress/prosperity” or “value system
prone to development/progress/prosperity” as opposing a “value system resistant to
development/progress/prosperity” as authors tend to use the terms “development,”
“progress,” and “prosperity” in an interchangeable way to mean advancement of
society. Some authors have defined sets of values, attitudes, or mind-sets that dis-
tinguish a progressive culture (one which favors development) from a static culture
(one that is resistant to development). Although they are theoretical or ideal classifi-
cations, they help analyze how cultural forces shape the ability of a country to make
progress. Lawrence Harrison provides a very interesting set as follows (Harrison and
Huntington 2000, 299–300).
Table 11.1 includes 10 mind-sets that help distinguish progressive cultures from
static ones. The future orientation implies a progressive view of the world, a mind-set
that assumes that one has influence over his or her own destiny and that rewards to
virtue in this life are possible. This is in distinct contrast to the time orientation in static
cultures that tend to exalt the past and emphasize the present, assuming a more fatal-
istic point of view and a belief that rewards to virtue will come after this life. Similarly,
progressive cultures have strong work ethics whereby diligence, creativity, and achieve-
ment are acknowledged and rewarded, whereas static cultures regard work as a burden.
On the other hand, the narrow radius of identification and trust in static societies makes
them more prone to corruption and less inclined to philanthropic practices. Finally,
given the smaller influence of religious institutions on civic life in progressive cultures,
heterodoxy and dissent are encouraged in them, whilst orthodoxy and conformity are
more common in static cultures where religious institutions exert a stronger power over
their members. For Harrison, developed countries score high as progressive cultures
and Third World countries are much closer to the static culture typology.
Mariano Grondona—an Argentine author and opinion maker—sets up a typology
of two ideal value systems, one favoring economic development and the other resisting
it. Actually some of the 20 cultural factors suggested by Grondona (2000) are similar to
those proposed by Harrison. Grondona argues that a value system that favors develop-
ment trusts the individual whereas societies that resist development emphasize control
and oversight as a result of mistrust of the individual. Similarly, in the former there is
general compliance with law; in the latter, law is a utopian ideal expressing people’s
theoretical preferences, whilst the real world is in fact out of touch with all law, where
furtive immorality and generalized hypocrisy predominate.
For Grondona, Latin America is certainly closer to the development resistant value
system which precipitated its severe crisis in the 1980s. He poses what he himself deems
a controversial conclusion: that development or underdevelopment is not imposed from
outside but rather it is society that has chosen either way (Grondona 2000, 47).
These analyses of Latin America almost certainly apply to Peruvian society. In trying
to explain the complexities of the Peruvian situation, Felipe Ortiz de Zevallos—dean
of Universidad del Pacífico and president of Grupo Apoyo in Peru—discusses three
concepts at the social, economic, and political levels related to values and cultures that
stimulate development:
1. The fellow being. A country with values favoring progress and development accepts the
concept of fellow man or neighbor as the set of people who take part in the same social
process, without discriminating among races or social categories. In a nation with a
development resistant culture, the fellow being is ‘my family and my friends.’ In fact,
there is a famous phrase from Latin American literature that illustrates this concept
well: “whatever for my friends, law enforcement on my enemies.” This interpretation of
the fellow man concept ends up generating a double moral standard: one for family and
friends, and another for society. This analysis is similar to the ‘radius of trust’ mentioned
by Francis Fukuyama and other authors.
2. Work. In traditional societies work is defined as a punishment, very much based on the
Genesis text. In progressive societies work is rather a creative outlet for someone who
is building their future.
3. Truth. In developed countries truth is something to be discovered, hence the need to
support science and technological advances. In these societies constructive criticism,
dissent and dialog are welcomed as they help people to find the truth. On the other
hand, in underdeveloped nations truth is revealed by a superior authority and any criti-
cism is deemed destructive. Those who see it a different way are heretics.
These concepts and our attitude towards them are a helpful tool to assess what kind
of values are being taught or transmitted at school and what the implications would be
on the relationship between culture and progress in a given country (Ortiz de Zevallos
1997, 40).
Trust and Institutions

Latin American countries’ low-trust environments have certain implications for the
weakness of their institutions and the inability of companies to cooperate in a given
cluster or industrial segment.
According to Douglass North (1990), formal and informal rules that make up institu-
tions determine the performance of an economy. Institutions in developed countries
have allowed great respect for property rights and have fostered the fulfillment of con-
tracts. They have, therefore, reduced transaction costs and granted long-term stability,
allowing for specialization, and investment and economic growth over a considerable
period of time. In low-trust environments, institutions tend to be weak and companies
end up incurring high functioning costs.
World Bank authors Shahid Javed Burki and Guillermo Perry provide evidence of
the importance of institutions for economic performance and give some insights about
institutional development in Latin America. These authors use five subjective indicators
provided by the International Country Risk Guide—published by investment risk service
company Political Risk Services—to measure institutional development: the perceived
risk of expropriation of property, the perceived degree of contract enforceability, the
extent to which there are mechanisms for peaceful dispute-resolution or the perceived
degree of the rule of law and order, the perceived quality of public bureaucracies, and
the perceived incidence of corruption in government. They constructed a composite
index of institutional development from the sum of the scores on the five indicators
given to each country. By using a sample of 68 countries, they estimated a positive rela-
tionship between this composite index and economic performance in the form of per
capita gross domestic product growth rate (Burki and Perry 1998, 16–17).
Using the same indicators, Burki and Perry also examine the institutional develop-
ment situation in Latin America and provide evidence that this region is lagging behind
the rest of the world, except for Sub-Saharan Africa. According to them, Latin America
has made significant progress in reducing the risk of expropriation and contract repu-
diation, but has hardly improved in the corruption and bureaucratic-quality areas.
Joaquín Vial and José Carlos Orihuela (2003) provide additional evidence on what
kind of institutions are most relevant to economic growth. They used a set of indicators
from the World Bank’s World Business Environment Survey 1999–2000: rule of law, gov-
ernment effectiveness, corruption control, quality of regulation, freedom of speech and
political responsibility, and political stability. By using a total of 52 observations (coun-
tries), the authors estimated that rule of law was clearly the most important category
to explain economic growth. They go further and do the same kind of analysis using
the five types of institutions that support markets as defined by Dany Rodrik (2000):
property rights, regulatory institutions, macroeconomic stability institutions, social
protection institutions, and conflict resolution. Property rights are the most relevant for
supporting the economic growth process, followed by social protection and macroeco-
nomic stability institutions. To assess the institutional capacity of the Andean countries
(Bolivia, Colombia, Ecuador, Peru, and Venezuela) in these same five categories, Vial
and Orihuela used the World Bank’s and the World Economic Forum’s data for 2001–
2002 and an index of rule of law. They conclude that institutions in the five Andean
countries are particularly weak, no better than the average Latin American institutional
performance. Only regulatory and macroeconomic stability institutions seem to have
made some progress. Property rights, social protection, and conflict resolution institu-
tions are the weakest, and the limited rule of law is still a concern.
More recently, the 2005 survey conducted by Corporación Latinobarómetro in 18
Latin American countries reports that 78 percent of Latin Americans do not believe that
their co-nationals obey the law. Rule of law is a problem in the region and is rated with
a score of 5.1 where 1 means “the government cannot enforce any law” and 10 means
“the government manages to enforce all laws.” Public institutions’ performance is rated
as good or very good by only 19 percent of the Latin American population. A majority
(66 percent) of the region’s population do not trust the judiciary and only 30 percent
think that there has been progress in the fight against corruption. Moreover, 68 percent
of Latin Americans perceive that civil servants are corrupt. At the country level, Bolivia,
Ecuador and Peru score very badly in civic culture (low legitimacy of law, rights and
obligations), rule of law, and corruption (Corporación Latinobarómetro 2005, 16–27).
Finally, according to the World Economic Forum’s 2005–2006 Global Competitive-
ness Report, Peru ranks below 85 percent of the 117 countries participating in the survey
in the “contracts and law subindex.” This indicator comprises the answers to the fol-
lowing questions in the survey the World Economic Forum conducts among business
leaders (Blanke and López-Claros 2004, 18):
• Is the judiciary in your country independent from political influences of members of
government, citizens, or firms?
• Are property rights, including over financial assets, clearly defined and well protected
by law?
• Is your government neutral among bidders when deciding among public contracts?
• Does organized crime impose significant costs on business?
More specifically, Peru ranks below 94 percent of the countries in the judicial inde-
pendence variable and below 84 percent in the property rights category (World Eco-
nomic Forum 2005, 402–3), in spite of macroeconomic stability, signaling that there is
still a long way to go to improve and strengthen institutions and law compliance.
The lack of trust in Peru stems from similar roots that explain low levels of trust
in other Latin American countries. However, additional anthropological and historical
factors specific to Peru can help explain such a lack of social capital in this society.
Reciprocity in Ancient Peru

The roots of Peru’s low trust have been studied not only under the light of its Latin
heritage but have also been traced back to the historical clash of cultures and the loss of
traditional Andean values such as hard work and reciprocity.
The Incas built a social and economic system based on reciprocity. No currency existed
and work was organized in a cooperative way. Along with the exchange of goods, labor
was exchanged for labor. Individuals had to devote some work for the community and
the governing and religious class. The system redistributed goods according to people’s
needs. Reciprocity was such a rooted and extended way of life in Inca times that there
was no expression to mean gratefulness in the Quechua (Inca) language. After the Span-
ish conquest, to say “Thank you” Quechua speakers adopted the mixed Spanish-Que-
chua expression “Dios pagarasunki,” meaning “God will pay you.” Such a cooperative
system was backed by three simple but powerful principles or commandments: “You
shall not be lazy,” “you shall not be a liar,” and “you shall not be a thief.”
The Spanish conquest somehow integrated what is Latin America today with Western
civilizations, but superimposed the sixteenth century Hispanic culture over the Inca value
system, with a strong emphasis on individualism, servility, and mercantilism—the pre-
dominant mode of wealth creation at that time—in social and economic life. Reciprocity
was replaced by authority and although some sense of community still remains in today’s
Indian farmer communities, that spirit has faded significantly. We cannot blame the Span-
ish conquerors and colonizers for most problems in Latin America nowadays, but many
of the features of a progress resistant value system prevalent in today’s Peru seem to date
from the time when the Inca culture was replaced by the conquerors’ set of values. And
this was further exacerbated by domination of the native population by the ruling class.
Following three centuries of Spanish colonization, Peru had considerable immigra-
tion from Europe and Asia in the nineteenth and twentieth centuries which brought new
entrepreneurial abilities and made Peru a very diverse country from a cultural and racial
point of view. However, since the needs of the majority of the Indian population—of Inca
and other ethnic groups—were often neglected, and Indians did not participate in public
life, mistrust has long been a barrier against effective social interaction and inclusion.
So far several issues have been discussed in trying to describe and explain the lack of
trust in Latin America and Peru: values, culture, institutions, and historical roots. Given
that cultural values are so rooted in societies and that they condition social behavior
and economic performance, are we doomed to suffer forever from the problems derived
from low levels of social capital? If cooperation is such an important factor for clusters
to bloom and become more competitive nowadays, can we find ways to promote coop-
eration in Latin American countries, and particularly Peru? The next section provides
the background to address this issue.
COOPERATION IN A LOW-TRUST ENVIRONMENT:

A THEORETICAL FRAMEWORK
This section addresses some theoretical issues about the basis of cooperation. On the
one hand, game theory, and specifically the Prisoner’s Dilemma, provides elements that
can shed some light on whether cooperation can be built in a noncooperative popula-
tion. Evolutionary biology, on the other hand, brings another interesting perspective on
the origin of cooperation. It traces our human social nature to our instincts, which to
most people are animal-related issues. For Matt Ridley, a renowned proponent of this
theory, our minds have been built by selfish genes, and yet they have also been built to
be social and cooperative. According to Ridley (1996) society was not invented by rea-
soning men but is a product of our genes much as our bodies are. And it is in our brains
that we find the instincts to create and exploit social bonds. Finally, a third perspective
is brought by mental models, a tool that helps understand the way people see the world
and explains how these models shape behavior.
Game Theory
Game theory, developed by economists, was started by John von Neumann and
Oskar Morgenstern in 1944, to analyze interactions between agents guided by a set of
rules stipulating the possible moves for each agent and a set of outcomes for each pos-
sible combination of moves. This is how a game is defined. Since this definition of game
applies to most social phenomena, game theory has been widely used by social scien-
tists, and also by biologists. For a given game, game theory tries to identify the rules in
order to define what actions are allowed at any time. Then it finds out how people select
an action from those that are permitted. Game theory’s assumptions are (Hargreaves
Heap and Varoufakis 2004, 7–32):
• Individual action is instrumentally rational. Individuals who are instrumentally rational
have preferences over several things, and are considered rational because they choose
actions which will best satisfy those preferences.
• There is common knowledge of rationality by all players. It is assumed that an agent
plays games with other agents who are instrumentally rational too so it makes sense to
model that opponent as instrumentally rational.
• Common priors. Rational agents will draw the same inferences on how a game is to be
played, that is, no instrumentally rational person can expect another similarly rational
person who has the same information to develop different thought processes.
• Individuals know all the possible actions and how the actions combine to yield particu-
lar payoffs for each player.
• An individual’s motive for choosing a particular action is strictly independent of the
rules of the game which structure the opportunities for action.
The Prisoner’s Dilemma

The game that popularized game theory is the Prisoner’s Dilemma, devised by Cerril
Flood and Melvin Dresher of the RAND Corporation in 1950 and formalized by Albert
Tucker a few months later (Axelrod 1986; Hargreaves Heap and Varoufakis 2004). This
game shows how what is individually rational and optimal can lead to a collectively self-
defeating result. That is, each agent is pursuing his best option and yet participants get
less than they would have got, had they cooperated between them. This paradox, which
portrays many real social phenomena where the collective result is less than desired,
seems to have caused the fascination for the Prisoner’s Dilemma.
The Prisoner’s Dilemma anecdote goes as follows. Two people are caught by the police
for doing robbery and placed in separate cells. The police officer does not have hard evi-
dence to prosecute them but knows they are the culprits. So the District Attorney poses
the following conditions to each of them separately:
• If both of them confess, they will be sentenced to three years’ imprisonment.
• Given that evidence is insufficient, if both prisoners deny the charge, both of them will
be set free.
• If one prisoner denies the charge, but the other one confesses, the former will be sen-
tenced to five years’ imprisonment as an exemplary punishment.
• In the reverse situation, if the former prisoner confesses and the other one denies the
charge, the former will get a suspended sentence on grounds of his assistance and will
additionally be rewarded with the alcohol license he had requested earlier.
Both accomplices are trapped in a dilemma. Given that we are assuming that each
individual is instrumentally rational, he will be pursuing what is best for him. Although
both accomplices would be better off denying—that is, cooperating—neither will do
so, since each can separately get a higher payoff by confessing. If one confesses and the
other denies, the former will walk free with the alcohol license. Even if the other con-
fesses, the former is better off confessing too, since if he denies, he gets a worse sentence.
Whatever the other prisoner decides, he is better off confessing. So the certain outcome
is that both accomplices will confess and will get a three year sentence.
Even if both prisoners communicated with each other and agreed to deny, it is still
rational not to fulfill such an agreement, since the final decision to confess will render
a higher payoff.
The Prisoner’s Dilemma is based on two assumptions. One is the order of the payoffs,
as stated in the anecdote above. The other is that the payoff for cooperating must be
greater than the average of the sucker’s payoff (what the denying prisoner gets when the
other prisoner confesses) and the temptation’s payoff (what the confessing accomplice
gets when the other one denies).
The Prisoner’s Dilemma provides a framework to analyze interaction in a moral vac-
uum without any ethical imperative, making additional assumptions unnecessary, and
using pure logic. This, in turn, allows us to examine how cooperation can come about
when it is not based on concern for others or for a group’s well-being, without the inter-
vention of a central authority.
In the 1960s mathematicians worked hard to contest the rationally strong lesson of
the Prisoner’s Dilemma: that the only rational approach was to defect. Many experi-
ments were conducted. Surprisingly, they showed that in one-shot versions of the
game, people cooperated much more than game theory may lead one to expect. Peo-
ple chose to cooperate 30–70 percent of the time. Pre-play discussion also produced
cooperative moves. Additionally, experiments suggested that cooperation was likely
to be highest when it was expected to be reciprocated (Hargreaves Heap and Varou-
fakis 2004, 181–83).
Reciprocity and Cooperation: Axelrod’s Theory of Cooperation

Robert Axelrod (1986) set up a tournament to explore the fundamentals of coop-
eration. It involved 14 computer programs playing the Prisoner’s Dilemma 200 times.
Each program played against the other contestants, against itself and against a random
program. The tournament was played five times. The winner was Anatol Rapoport’s
Tit-for-Tat, the simplest program, which starts with a cooperative move and then does
whatever the opponent did in the last move. A second round of the tournament took
place with 62 participating programs. The rules were basically the same but this time the
sequence followed by any two opponents had a random end. Surprisingly the winner of
this round was again Anatol Rapoport’s Tit-for-Tat. Moreover, Tit-for-Tat additionally
won a series of hypothetical tournaments based on computer algorithms and success-
fully passed the test of a survival-of-the-fittest contest: a simulation of a tournament’s
future generations.
According to Axelrod, Tit-for-Tat is robust because it is nice, retaliatory, forgiving,
and clear (1986, 60). Tit-for-Tat shows itself as cooperative by cooperating first, and
manages to enforce cooperation by threatening to punish a contestant who defects

on cooperation by defecting until that person cooperates again. This way Tit-for-Tat
smartly faces free riders or too exploitative strategies. By being forgiving, it restores
mutual cooperation (if the opponent has defected and wants Tit-for-Tat to cooperate
again, he or she only has to cooperate). Its clarity makes it easy to recognize, fostering
long-term cooperation. However, Axelrod himself admitted that Tit-for-Tat was not
always the optimal strategy to play interactive Prisoner’s Dilemma. He actually warned
about the danger of defection “reverberation” if Tit-for-Tat was confronted with too
nasty strategies. As Tit-for-Tat responds to defection with defection, an endless series
of mutual recriminations could be the result of such a confrontation. This, in turn, has
been seen in long-standing international religious-ethnic-territorial conflicts. Thus,
Axelrod recommends analysis of strategies similar to Tit-for-Tat, but which would be
able to prevent the danger of defection “reverberation.”
Tit-for-Tat states the case in favor of cooperation in a non-zero sum world, which is
actually the way many real life situations work. In a non-zero sum world—unlike chess
or most sports—there is no need to get more than the other player in order to attain
good results. In a long and repetitive version of the Prisoner’s Dilemma, the success of
the opponent is virtually a condition for one’s own success. In the Prisoner’s Dilemma,
what makes cooperation possible is the fact that players can meet again. That means
that choices made today not only determine the result of this move, but can influence
future moves. Thus, the future projects a shadow over the present, and can influence the
actual strategic situation. This continuous interaction is what makes reciprocity-based
cooperation stable. The main condition for Tit-for-Tat to work is a stable and repetitive
relationship. It is a Nash equilibrium when the Prisoner’s Dilemma is repeated indefi-
nitely and the chance of the game being repeated in any round now and in the future
is sufficiently high (Hargreaves Heap and Varoufakis 2004, 192). A Nash equilibrium
occurs when each player’s strategy is an optimal response to the strategies adopted by
other players, and nobody has an incentive to deviate from their chosen strategy.
For Axelrod, the real foundation of cooperation is not trust, but a lasting relationship
over time. Individuals can come to cooperate by finding the most prosperous strategies.
Trust conditions are not as important as the suitability of conditions for the construc-
tion of a stable norm of mutual cooperation. Moreover, it seemed to Axelrod that even
rationality was not needed for cooperation to arise as the evolutionary process would
allow successful strategies to prosper. Nor was a central authority necessary to enforce
cooperation. Again, all that was needed for effective strategies to produce cooperation
even from the selfish is that they are based on reciprocity.
Axelrod brings additional hope by stating that in a noncooperative population, coop-
eration can evolve from a small clustered group of individuals whose cooperative prac-
tice is based on the principle of reciprocity, as long as a proportion of their interactions
happen with members of the same group. Axelrod’s work has been criticized for draw-
ing general conclusions extrapolated from computer simulations. Some argue that spe-
cific conditions could be designed for Tit-for-Tat not to do well and that it would seem
impossible to model a world where nice and nasty strategies coexisted. But some of his
propositions have illustrations in real life. For example, Axelrod analyzes the behavior
at the Western Front in the First World War. Since combatants were involved in a long
battle over the same ground, encounters between the two units were repeated over time.
As it happens when the Prisoner’s Dilemma is played indefinitely, repetition allowed for
cooperation to replace hostility, and a reciprocal “live-and-let-live” norm developed.
Truces were established between Allied and German units, which were also policed by
revenge, resembling the Tit-for-Tat strategy of providing cooperation but responding to
defection with defection. Axelrod also explains that at the beginning of the new United
States republic, congressmen were known for their double-standard and treacherous
way of behavior. Through the years, however, cooperative norms based on reciprocity
appeared and became established among members of Congress, and have proved quite
stable. This is used as evidence of how a nice strategy can positively “invade” a noncoop-
erative community or population, and once established, it will resist nasty strategies.
Human Instincts and Cooperation

Matt Ridley acknowledges that Axelrod proved that the hard lesson from the Prison-
er’s Dilemma—that the only result was to defect—could be challenged when introduc-
ing the time variable or “the shadow of the future,” and thus ‘nice’ strategies could be
dominant. He also recognizes that Axelrod turned the Prisoner’s Dilemma from a zero-
sum game to a non-zero sum game, more like real life situations.
Ridley goes further in asserting that reciprocity in society is an inevitable part of our
instincts. Accordingly, we do not actually need to be taught to reciprocate, as it simply
develops within us and we naturally know that we can get more from social living than
from being alone.
Ridley advocates the social nature of human beings. According to him, we are unable
to live without each other. We are far more dependent on other members of our spe-
cies than any other animal. Thus, we have social instincts and predispositions to learn
how to cooperate, to discriminate the trustworthy from the treacherous, to commit
ourselves to be trustworthy, to earn good reputations, to exchange goods and informa-
tion, and to divide labor. Our social instincts have enabled us to reap unimaginable
benefits from the division of labor for our genes. Our instinctive cooperativeness is the
very hallmark of humanity that has set us apart from other animals (Ridley 1996, 249).
The best recipe for cooperation is social and material exchange between equals. This
is the raw material of trust, and trust is the foundation of virtue, defined as pro-social
behavior.
Ridley puts it very simply—it is in our nature to be cooperative and trust others—
questioning the basic assumption of pure selfishness on which some economic analyses
and game theory are based.
Mental Models: The Underlying Variable

A third approach for analysis is provided by the mental models component of Fair-
banks and Lindsay’s Action Framework (1997).
Michael Fairbanks and Stace Lindsay, founders of the Monitor Company’s Coun-
try Competitiveness Practice, advised the government and the private sector in four
Andean countries (Bolivia, Colombia, Peru, and Venezuela) in the early 1990s. As part
of their activities in Peru, they studied the agricultural industry, including the asparagus
producing and exporting companies.
In analyzing the countries’ strategies for prosperity in Latin America, Fairbanks and
Lindsay found seven patterns of uncompetitive behavior at the microeconomic level:
1. Over-dependence on basic factors of advantage (natural resources and cheap labor)

2. Poor understanding of customers
3. Lack of knowledge of competitor activities
4. Failure to forward integrate
5. Poor inter-firm cooperation
6. Defensiveness in government, the private sector, the unions, and the media
7. A paternalistic relationship between government and the private sector
An interesting analytical tool they used was the Action Framework, applied to assess in
a systemic and dynamic way the competitiveness of a country, both from the government’s
and the private sector’s perspectives. It is also a useful innovative tool to help build consen-
sus between public and private sectors in trying to envision a common shared future and in
working on how to attain that vision. As the Action Framework allows constant review of
its categories or components, it is also a powerful instrument for learning. It begins by stat-
ing what are the results (actual if analyzing the present; targeted if envisioning the future);
then what strategic actions are needed to attain them; what steering mechanisms (organiza-
tional structures and policies) allow those actions; what paradigm and framework (mental
models) are behind them; and what context conditions all previous elements.
Results, strategic actions, and steering mechanisms are the visible part of competi-
tiveness and usually the focus of policy-makers and strategists. When results are not
satisfactory, actions and strategies are changed (react) or institutions and structures
modified (redesign).
The invisible part of competitiveness is the mental models which consist of paradigms
and frames of reference. Paradigms are systemic ways in which individuals or institutions
think about the world. According to Fairbanks and Lindsay, the predominant paradigm
governing Latin American economies has been a vision of wealth creation through com-
parative advantages such as natural resource endowment. Frames of reference are beliefs,
inferences, and goals through which an individual sees the world. They are concrete, first
person, and specific. Frames are informed by the paradigm available to the individual. A
common private-sector frame found by Fairbanks and Lindsay in Latin America was the
view of government as inconsistent, untrustworthy, and unconcerned with the private sec-
tor. On the other hand, a common public-sector frame viewed the private sector as used to
state-favoritism and privileges. Certainly, these insights set the groundwork to overcome
defensiveness and divisiveness, by reorienting patterns of thought and behavior.
Mental models are very useful to find insights on individuals’ motivations, the way
they see the world, and their attitudes toward innovation and progress. “The results tend
to be a function of the way people think the world works, which informs the way they
frame their problems and relationships, which in turn affects the way they act. The way
people think—their mental models— … is where the point of leverage for creating last-
ing change lies” (Fairbanks and Lindsay 1997, 248).
A common feature Fairbanks and Lindsay found in most clusters was the lack of
cooperation among member firms and their inability to learn from one another. The
lack of trust and cooperation seriously limited the capacity of suppliers and client com-
panies to specialize in the development of fundamental industrial inputs, a fact that
finally impaired the ability of the industry to innovate and improve. The Latin American
culture of self-sufficiency inhibits the development of interdependent relationships and
restrains the capacity of companies to provide innovative answers to competitive chal-
lenges. For these authors, changing mental models is possible and powerful, and should
be done at the individual and firm levels, trying to understand first which mental models
drive strategic decision-making.
So far, we have reviewed three approaches that argue that cooperation is possible:
1. Robert Axelrod’s Theory of Cooperation, based on repeated settings of the Prisoner’s
Dilemma, provides the argument that cooperation based on reciprocity can increase if
players can interact over time. The underlying assumption is mere individual rationality
and no moral imperative or concern for others is accounted for.
2. Matt Ridley provides an evolution biology point of view, in which cooperation arises
naturally by instinct.
3. Michael Fairbanks and Stace Lindsay’s Action Framework helps us see that our struc-
tures, norms, institutions, strategies, and actions are very much determined by the way
we see the world, and this is where we can look for underlying factors that allow or deter
cooperative behavior.
In the next sections we will look for elements of evidence that may support some
insights provided by these three approaches. In particular, some issues are of particular
interest:
• What made it possible for cooperation to arise in the Peruvian asparagus cluster?
• Given the traditionally low-trust environment in Peru, is it possible to replicate the
asparagus cluster cooperation experience in other clusters? That is, how applicable to
the Peruvian situation is Axelrod’s proposition that mutual cooperation can arise in a
noncooperative population if their members have contact with a small group of indi-
viduals who cooperate or have a nice strategy?
• What is the role of mental models? Are they changing?
THE PERUVIAN ASPARAGUS CLUSTER

This section presents the case study of the asparagus cluster of Peru, a pioneer expe-
rience of business success based on the determination and entrepreneurial vision of a
group of businessmen to overcome distrust and collectively strengthen the asparagus
logistic chain. The section is extensively based on the innovative material produced by
Lawrence Prusak, Don Cohen and Alvin Jacobson of Hartwell Associates, consultants
to the Competitiveness Program of the Andean Development Corporation (CAF), for
the project Knowledge Assets and Social Capital which aimed at applying knowledge
management theory and tools to assess and help improve the competitive capabilities
of the asparagus cluster in Peru and the cosmetics cluster in Colombia (Hartwell Asso-
ciates 2004). Most parts of Don Cohen’s case study Frío Aéreo: Shared action, shared
knowledge, shared rewards are reproduced here (2003).
Background: The Agricultural Industry Revolution in Peru

In the early 1990s Peru’s stabilization program and deep structural reforms ended
two decades of macroeconomic instability which prevented a steady flow of private
investment. Bad economic policy and the results of an ill-fated land reform undertaken
in 1968 had impaired production and investment in the agricultural industry. However,
the 1990s open market reforms which liberalized the economy had profound effects in
this sector. The Economist (2005) reports that “over the past 15 years, the country has
added almost 400 different export crops to its traditional staples of coffee, cotton and
sugar. Farmland has increased from 1.7 million hectares in 1993 to 2.6 million today,
according to the National Statistics Institute. Farm exports totaled US$1.1 billion in
2004, up a third on the previous year … In the Ica area [four hours south of Lima],
export agro-industry has created some 40,000 jobs in the past decade.”
Apart from economic policies, trade preferences in the European Union and the
United States that allow duty-free import of Peruvian goods have helped propel growth
of agricultural exports.
The star product has been asparagus. Artichokes, olives, citrus fruits, mangoes, avo-
cados, grapes, and paprika are following the same path. Fernando Cillóniz, president of
Inform@cción (a strategic information consulting company), who was very much involved
in the competitiveness study undertaken by Monitor Company (Michael Fairbanks, Stace
Lindsay, and other consultants) in the 1990s, states: “The exporting agricultural business
in Peru has dramatically changed in the past 15 years. From being a sluggish sector, it has
become internationally hypercompetitive” (personal communication).
Emerging Champions
How have members of agricultural industry clusters managed to cooperate in order
to compete successfully while operating in a low-trust country environment which
poses severe deterrents to progress? Two significant factors can be identified in trying
to answer this question.
First, the agricultural industry revolution has been undertaken by a new business
leadership in Peru. They are part of a new generation of entrepreneurs and business peo-
ple who have been trained in managerial issues and understand better what is required
for competitiveness. Far from adopting the still extant old-fashioned rent-seeking men-
tality, they have embraced the new competition paradigm. As we will see later with the
asparagus cluster, they have shown that some clusters or industrial segments can actu-
ally break away from the patterns of uncompetitive behavior found by Fairbanks and
Lindsay at the microeconomic level (see mental models discussion above). They do not
ask for government subsidies or preferential treatments, but are eager to compete in the
international arena provided free competition rules apply.
Second, external forces and cultural issues have had their role. Globalization, the
information and telecommunication technologies revolution, and the liberalization of
world trade have particularly influenced the manner in which this new breed of agri-
cultural business people in Peru are tapping the country’s natural endowments to build
competitive advantage by strategically using and sharing knowledge under innovative
forms of cooperation.
Exposure to international trade rules and trade relationships with developed coun-
tries’ firms, based extensively on trust, have spurred the adoption by Peruvian compa-
nies of a stricter sense of responsibility and contract fulfillment which otherwise would
make them lose valuable business. International trade somehow acts a cross-cultural
force for companies operating in a low-trust environment to enhance trust and values
such as responsibility, honesty, reliability, and cooperation.
In the case of the asparagus cluster, a third factor related to the first one can be
accounted. Asparagus business people are open-minded and naturally eager to learn
from other successful international experiences. There are several cross-cultural knowl-
edge management instances present in the asparagus case. First, cluster members man-
aged to jointly set up their refrigerated warehouse in part because they were inspired
by the model of an organization—a Dutch farmers’ export cooperative—that proved
that competing grower/exporters could cooperate successfully. Second, their members
adopted an irrigation system from Israel.
A Star Product
One of the earliest successful agribusiness ventures in Peru is the asparagus cluster.
Such a delicate and perishable product as fresh asparagus has become the star product
of non-traditional Peruvian exports. According to Peru’s Association of Exporters, from
1994 to 2004 fresh asparagus exports increased six-fold. In 2004, 72 percent of the coun-
try’s 99,000 tons of exports by air were perishables, and of that 72 percent (or 71,000
tons), 66,000 tons were fresh asparagus (the information sources for perishables and
asparagus exports by air are Peru’s Customs Department and Frío Aéreo). Currently
Peru is the second largest producer and the top exporter of fresh asparagus in the world.
Peru sends approximately 75 percent of its production (mainly green asparagus) to the
United States and 22 percent (predominantly white asparagus) to Europe. Peru shares
the US asparagus market with Mexico and with producers in the US itself.
The perishable nature of fresh asparagus has a high impact on its final cost, with
transportation cost accounting for 46 percent of the total cost. How then could Peruvian
asparagus companies beat other competitors who are significantly much closer to those
consumer markets including their domestic producers? Given the higher transportation
costs, Peruvian exporters cannot compete on price: they must therefore compete on
quality—delivering consistently fresh, high-quality product to the produce departments
of supermarkets in the United States. Peru has special climate conditions that allow the
growing of asparagus all year round, which is certainly an advantage over other coun-
tries. But the actual breakthrough for this cluster’s success came from joint efforts and
the shared knowledge management of a group of business people determined to tackle
the main problems they faced in the complex asparagus logistic chain.
The Weakest Link in the Logistic Chain

The critical issue for the asparagus industry to become successful was its cooling
chain, as Peruvian companies compete on consistent quality and freshness of the prod-
uct. To that end, the asparagus has to be kept at a temperature close to 2°C and at
98 percent humidity from harvest to the retail sale point. Asparagus maintained at a
near-ideal temperature and humidity will remain in prime condition for up to three
weeks. With the trip from field to market taking 8–10 days, Peruvian asparagus has a
maximum shelf life of just less than two weeks. But handling that exposes the product to
higher temperatures, even for a few hours, can reduce shelf life by three days or more,
increasing the likelihood that some of it will deteriorate at the market and go unsold. In
a consignment market this issue has a direct effect on the exporting companies’ prof-
itability. Deteriorating product also potentially degrades the exporter’s reputation for
quality and reliability. So the cooling chain is a critical element of asparagus quality and
of the long-term success of the Peruvian asparagus industry.
Until 1998, the weakest link in that chain was at Lima airport, where field deliveries
were loaded on pallets in the open air and typically waited on the tarmac for four hours
before being loaded onto planes. Some of the produce was partly protected from the
heat by thermal blankets, but even so, its temperature often rose to 8° C or higher, well
above the optimal range.
Getting from Idea to Commitment and Construction

More than 12 years ago, a few farsighted members of ADEX (the Exporters Associa-
tion of Peru) including Jorge Checa, then general manager of Exfrusur, and José Letts
of Roots Peru, recognized the value of fixing this weak link in the cooling chain. They
began to promote the idea of asparagus exporters banding together to build a refrig-
erated facility at the airport. Roots Peru and Flores Esmeralda already had their own
cooling rooms near the tarmac, but the idea of a joint enterprise among rival exporters
was new. Cooperative action would make it possible to construct a facility that no single
small or medium-sized exporter could individually afford. “This is an obstacle that can
only be overcome together,” Checa told his fellow exporters (Cohen 2003, 3). The exam-
ple of CEBECO, a cooperative of Dutch farmers who had successfully combined their
supply and marketing efforts, showed that this kind of collaboration among competitors
was possible. This strong entrepreneurial vision, for which CEBECO was a source of
inspiration, is represented at the beginning of the “S” curve in Figure 11.1 whose x-axis
sets the timeline for the Frío Aéreo endeavor.
But winning the agreement and support of enough exporters to fund the project was
not easy. Many were skeptical about the feasibility of the project and the possibility of
cooperation. Some exporters insisted that no problem existed, that their use of thermal
blankets to insulate pallets of asparagus at the airport was sufficient protection from the
heat. Given this lack of belief and lack of trust, Checa and his company decided to work
with an airline—Challenge Air Cargo—to create an airport refrigeration facility that
Exfrusur could use. That transport company backed away from a possible deal, however,
when they saw an opportunity to buy an inexpensive cooler from a bankrupt Chilean
company on their own.
When that plan failed, Checa and his colleagues renewed talks with other export-
ers while carrying on an extended conversation with the commercial managers of the
airport. “That is where the miracle really happened,” Checa says, but it did not happen
right away. He adds, “The commercial managers said, ‘yes, yes,’ but nothing happened”
(Cohen 2003, 4). In fact, inconclusive negotiations with airport management went on
for two years. The breakthrough came when Checa and Letts asked Mr. Pendavis, the
president of ADEX, to call Peru’s Minister of Agriculture. He in turn called the president
of the airport authority to stress the importance of the refrigerated warehouse project,
known as Frío Aéreo. That call led to an appointment with the president the next day,
and soon to an agreement granting permission to a partnership of asparagus exporting
Figure 11.1
The road to Frío Aéreo.
companies to build a refrigerated warehouse at the airport. With this assurance dem-
onstrating the practical reality of the project, two formerly reluctant exporters agreed to
help finance the $1 million facility. Soon two other companies joined as well. That criti-
cal mass attracted others, creating a group of 10 producers committed to the project.
This long saga of early stops and starts, disappointments and delays, illustrates some
key points. One, clearly, is the importance of persistence by a few strong leaders who
maintain faith in a goal they value. The process of convincing competitors to do some-
thing new together necessarily entails overcoming distrust and modifying accepted
beliefs and long-established practices. Few of the benefits were foreseen by the export-
ers at the beginning, and many doubted that the project could succeed at all. Some
thought that cooperation among competitors was not possible; some believed that air-
port authorities would never permit the proposed facility to be built there. Also, poten-
tial partners were at different stages of maturity in what was still a young industry; new
companies that had just completed their first plantings of asparagus were not ready to
give much attention to product handling at the airport. Only repeated conversation over
time can build the necessary trust and convince potential participants of the value of
unfamiliar ideas (especially the idea of competitors cooperating). Flexibility—in effect
an element of persistence—is important too. The willingness to look for a new way when
one path proves to be a dead end kept the project alive.
The story also critically demonstrates the importance of social and professional ties.
Without the involvement of ADEX, that organization’s relationship with the Minister
of Agriculture, and his influential connection to the president of the airport authority,
permission to build the refrigerated facility at the airport might never have been granted.
Finally, the relative rapidity with which the 10 partners joined together after years of
little or no progress demonstrates the dynamics of the “tipping point.” That concept,
borrowed from epidemiology, suggests that movement toward innovation is often not
a gradual progression but a sudden breakthrough at the moment when the preponder-
ance of barriers to change gives way to a preponderance of forces in its favor. In the case
of Frío Aéreo, that tipping point came when the airport president’s agreement led the
first few producers to join the project and their commitment quickly brought others
along. This is represented on Figure 11.1 at the turning point of the “S” curve, a point
from which the flow of events for Frío Aéreo to become reality accelerated.
Agreeing to build a shared refrigerated warehouse at the airport does not automati-
cally lead to unanimous agreement about its design and construction. After Frío Aéreo
was founded in January 1997, the partners found themselves involved in negotiations
over details of the proposal. These lengthy and not always fruitful discussions convinced
them that the organization needed to hire an independent manager, one not linked to
any particular member company, to help the group achieve consensus and to supervise
the operation of the facility once it was built. Fernando Cillóniz, manager of Fundación
Perú (created to foster agricultural development), served as coordinator while the part-
ners looked for a permanent manager. Cillóniz brought in an outside expert on cooling
equipment and warehouses to design a layout all of the partners could agree on. Con-
struction of the facility began in August 1997.
In December, Alvaro Salas was hired as Frío Aéreo’s first manager. Salas was respon-
sible for solving operational problems, but he said that a full 30 percent of his time was
spent listening to the partners, hearing their ideas and stories of their experiences, and
looking for the points of agreement and mutual understanding that could become the
basis of cooperative action. As part of this important role as a link or bridge between
partners, he also tried to be a buffer or peacemaker, downplaying or defusing destruc-
tive comments and disputes. The main aim of these efforts was to increase trust within
the group. He considered building trust among the partners his most important task
because, he said, trust is essential to coordination. The need for trust throughout the
organization led him to hire—not the cheapest possible labor—but employees whose
reliability and commitment he could depend on. Salas also shared the positive approach
of Checa and the other Frío Aéreo pioneers. “Creativity,” he says, “is thinking that noth-
ing is impossible, so you start to look for real solutions instead of giving up” (Cohen
2003, 5).
Reward for Virtue

The facility began operating in 1998 and was filled to capacity from the beginning.
Eight million kilos of asparagus passed through it that first year. In 2002, the same facil-
ity handled 40 million kilos, the increase possible in part because of greater efficiency
in loading practices. After five years of operation, Frío Aéreo reduced the typical time
needed to load asparagus on planes from four hours to one hour and 20 minutes. The
typical temperature range of the product went from 2°–8°C or higher to 2°–4°, a reduc-
tion that directly and significantly improves quality. So the cooperative organization has
clearly achieved its initial goal of improving the cooling chain.
Making Knowledge Visible

The availability of a refrigerated warehouse is of course instrumental in this improve-
ment in temperature management, but improvements reflect better work practices as
well as better facilities. The dramatic reduction in loading time, for instance, cannot be
directly attributed to the warehouse itself, although another Frío Aéreo service—pro-
viding standard boxes to all exporters—contributes to that efficiency. A significant part
of the success of the Frío Aéreo partnership has come from defining, measuring, and
sharing practices that speed and improve handling of the perishable product. In other
words, the partnership has been a knowledge partnership as well as one of shared facili-
ties. In fact, its greatest value (and that of other collaborations) may ultimately derive
more from the shared knowledge resources that have fostered process improvement
than from pooled investment in infrastructure or influence.
At Frío Aéreo, knowledge sharing has been systematically pursued. What makes
knowledge sharing and process improvement work is frequent and regular collection
and distribution of detailed information about the asparagus exports: product quality,
temperature change during “palletization” and loading, and time needed to load the
produce. These statistics record the effects of process knowledge rather than the knowl-
edge itself, with consistently superior results demonstrating superior knowledge of how
to do the work well. These careful and comprehensive measurements are the foundation
of knowledge collaboration. Knowledge management experience in many settings has
shown that trying to quantify productive knowledge directly is virtually impossible, but
charting the positive outcomes that knowledge generates is both possible and useful
because it shows where productive knowledge resides and which practices deserve to be
widely adopted. Alvaro Salas rightly defined Frío Aéreo as a “glass house,” as knowledge
was always made visible (see top right hand corner of Figure 11.1).
Frío Aéreo management sends each partner company daily information on product
received at the facility, reports on the volume of asparagus exported to principal mar-
kets three times a week, and distributes rankings of temperature and quality twice a
month—reports that compare all of the companies on quality, speed, and temperature.
The quality reports each partner receives blank out the names of all the others, so that
each recipient sees his rank and detailed information on quality without knowing which
of the other companies occupy the other lines on the reports. For partners that score
significantly below the others, the reports show, first and most importantly, that the
work can be done more effectively and efficiently. This objective proof of superior per-
formance helps overcome a principal barrier to convincing experienced professionals to
adopt new practices—that is, the belief that they are already doing the right thing and
that their current results are the best that anyone can expect. Knowledge management
experience in a range of settings has shown that clear evidence of better performance
helps motivate adoption of best practices. Frío Aéreo’s rankings of export airlines in
terms of the amount of time they needed to get their planes in the air once the cargo is
released by the warehouse show the slower performers that improvement is possible. A
healthy competition among airline employees has significantly reduced average han-
dling time.
This sharing of techniques may look like giving away trade secrets responsible for
a competitive advantage and therefore seem ill-advised or inexplicable, but in fact the
overall improvement in quality and efficiency benefits the entire industry. Although
the same exporters tend to remain at the top of the quality rankings, all of the partners
learn from one another. Improved quality and efficiency can increase the profitability
of all the partners’ businesses, and the exporters’ collective improvements help them
compete more effectively with Mexican, US, and European producers. By collaborating
to improve the international reputation of Peruvian asparagus in general (rather than
their individual brands), the partners have all gained.
Working to Strengthen Sustainable Competitive Advantage

Sharing premises and good practices of sharing knowledge at Frío Aéreo support a
successful strategy which has three components: set up a quality standard (e.g., stan-
dardized packaging to boost efficiency); deliver accurate projections of production and
exports; and promote consumption of the product, a task in the hands of the Peruvian
Asparagus Institute (IPEH) with the assistance of Frío Aéreo. Economies of scale (sav-
ings from the joint purchase of raw materials and goods and from negotiating joint con-
tracts for air freight and other services) have begun to reduce costs, making the product
even more competitive and freeing up funds for these development efforts.
The collective care to prevent asparagus shipments from being used to smuggle drugs
has made Frío Aéreo the first Peruvian company to receive certification from the U.S.
government that exempts it from time-consuming drug searches on arrival in the United
States. It is also working with the University of California at Davis to develop a new
fumigant that will increase shelf life of the product and reduce environmental damage.
Managing Growth
In 2003, a new facility, 75 percent larger than the original 9,300 square foot ware-
house was built, and since then 20 additional exporters have joined the cooperative. The
30 members of Frío Aéreo account for 85 percent of all Peruvian asparagus exports. In
2004 Frío Aéreo handled 60 million kilos of perishables. This cooperative has helped
fresh asparagus export value increase at a compound growth rate of over 23 percent per
annum since it started operations.
Most of Frío Aéreo’s members export only asparagus, but some ship other perishables
as well, including flowers, figs, mangoes, peas, beans, and other fruits and vegetables
which Frío Aéreo is already catering to. The expanded organization will have the size
and financial resources to develop new programs for research, promotion, and export,
and to extend the richness and reach of its knowledge sharing.
A larger partnership can bring problems as well as benefits, however. Expansion to
30 partners, most of whom have not shared the learning and trust-building experience
of the first five years, has the potential to undermine the group’s focus, vision, and the
ability to act. The 10 “pioneer” partners have spent years developing trust and under-
standing; they share the satisfaction of turning a visionary idea into a successful reality.
The new members do not have this communal history. Even among the 10 original
members, of course, consensus has not always been easy to come by. Conflicts of inter-
est, perceived or real, can make unanimity impossible.
Anticipating these problems and hoping to reduce them, Frío Aéreo offered “B share”
memberships that allow new members to use the facility and take part in knowledge-
sharing but not vote on decisions regarding future action and direction, and “A share”
memberships that include voting rights. They also moved from requiring unanimous
agreement on decisions to a more manageable majority rule. The two-tier system makes
it possible to increase the scope and resources of Frío Aéreo without overwhelming the
core group with a flood of newcomers who might change the organization before they
fully understand it. Organizations are living organisms that can be affected in unexpected
ways by even small changes. Even with the safeguard of A and B share memberships,
expansion will probably have unanticipated effects. They will have to be monitored and
managed to make sure that the spirit and the principles of Frío Aéreo survive.
Change is not always for the worse, of course. The influx of new members brings
new energy and innovative ideas to Frío Aéreo. Small, cohesive groups face the poten-
tial problem of becoming set in their ways and tired or complacent. Checa recognizes
this danger, saying, “We were too happy with what we achieved. We did not want any
more in the group. We were very comfortable among ourselves” (Cohen 2003, 10). New
blood is an important source of continued vitality and creativity, and no closed organi-
zation can maintain its strength (or its access to new knowledge) for long. To maintain
a balance between faithfulness to its original vision and openness to new possibilities,
the Frío Aéreo partners should make certain to tell their story to the newcomers while
listening to the stories of their needs and goals.
Any new organization that grows and matures faces this combination of pitfalls and
possibilities. Moving successfully from the pioneering stage to become a larger, estab-
lished entity is not easy but promises important gains. Frío Aéreo is in the early stages
of that transition, with a history of success and creative choices to help it on its way. The
past seven years have proved the value of this cooperative cluster; the next seven should
show what it has the potential to become.
Building Trust: Essential for Success

The development of Frío Aéreo from an idea to a functioning organization to a
successful and growing enterprise has been an eventful 12-year process that illustrates
many of the resources and approaches needed to create a cooperative organization.
Some of the details and circumstances described here may be unique to the Frío Aéreo
experience, but the story calls attention to factors that are likely to be important in
other collaborative efforts. Achieving any effective and lasting cooperative partner-
ship requires:
• Committed and visionary leadership
• Time and effort to develop trust and mutual understanding among potential partners
• Having and using social networks—existing relationships—to provide knowledge,
assistance, and connections with influential agencies and organizations (these relation-
ships are not used here for lobbying to get preferential treatment or privileges from
government, but to solve problems and overcome barriers to business development in
a transparent and honest way)
• An independent coordinator or manager to work with partner organizations to aid
communication and trust building
• Making best practices (and therefore superior knowledge) visible through regular
measurement of results
• Encouraging conversation and observation to share knowledge and practices
• As the cooperative matures and grows, developing an explicit strategy for expansion
and change that will preserve the basic principles, practices, and spirit of the organiza-
tion and build trust relationships with the newcomers
It is not an accident that several of these items mention trust. Of all of the contribu-
tors to Frío Aéreo’s success, the long and continuing person-to-person process of trust
building is probably the most important. Distrust would eventually destroy any coop-
erative venture; trust holds it together.
SHARING THE BASIS FOR SUCCESS

Frío Aéreo illustrates both the potential rewards of cooperation and the kinds of
efforts needed to make cooperative action possible. As Don Cohen and Larry Prusak
point out, the best social capital investment business leaders can make is to build and
maintain trust (Cohen and Prusak 2001, 45). Frío Aéreo’s social capital payoff is the
hallmark of a revolution in the Peruvian exporting agribusiness industry based on trust
and shared knowledge management and the emergence of a new paradigm where joint
action is possible in spite of a tradition of low trust and a cynical attitude against united
efforts. Mental models, therefore, are changing.
The asparagus cluster’s success based on trust and cooperation and its “contagion” to
the rest of the agricultural industry in Peru seem to set the case in favor of Robert Axelrod’s
proposition that a small cluster of individuals who have an efficient nice cooperative strategy
can actually ‘invade’ a noncooperative population, as long as the members of the cluster have
a minimum degree of interaction over time. And that brings hope that at least in this indus-
try, conditioned by the international trade rules—very much based on trust—coordinated
efforts towards enhanced competitiveness are possible, setting the foundations for the adop-
tion of certain values of a progress-prone value system: more cooperation and trust.
An additional element that reinforces the prospects of success in the agricultural
industry of Peru is that it encompasses labor intensive activities. With high unemploy-
ment levels in the economy, this industry is deemed to help solve an important issue not
properly addressed by recent governments.
Matt Ridley is certainly right to say that we human beings are social animals, and it
is instinctive for us to cooperate. But the Frío Aéreo case also shows that it takes time
and repeated efforts to make people cooperate, as Axelrod worked in conditioning the
surge of cooperation to the “shadow of the future.” For a country such as Peru, the chal-
lenge is to arouse people’s instinctive cooperativeness in a reasonably short period of
time, and have cooperation and trust rooted in social behavior, to reinforce the role of
clusters in building sustainable competitive advantage and in spurring innovation, and
to strengthen the ability of companies to compete in the global economy. Government
certainly has a role in shortening such a period of time: by building institutions and
enforcing rule of law, by fostering science and technology development for business
innovation, and by supporting collective or joint efforts such as the Frío Aéreo endeavor.
For that, along with the business community’s change of mental model, must come the
government’s understanding of the foundations and sources of competitiveness and its
adoption of this new paradigm. And both mental models should be aligned. Success
stories can certainly inspire others to go in that direction.
REFERENCES
Axelrod, R. 1986. La evolución de la cooperación. El dilema del prisionero y teoría de juegos.
Madrid: Alianza Editorial.
Blanke, J., and López-Claros, A. 2004. The Growth Competitiveness Index: Assessing countries’
potential for sustained economic growth. In World Economic Forum Global Competi-
tiveness Report 2004–2005, chapter 1.1, 3–18.
Burki, S. J., and Perry, G. E. 1998. Beyond the Washington consensus: Institutions matter.
Washington, DC: The World Bank.
Cohen, D. 2003. Frío Aéreo: Shared action, shared knowledge, shared rewards. Working paper,
Hartwell Associates and Corporación Andina de Fomento.
Cohen, D, and Prusak, L. 2001. In good company: How social capital makes organizations work.
Boston: Harvard Business School Press.
Corporación Latinobarómetro. 2004. Summary-Report. Latinobarómetro. A decade of measure-
ments. Santiago, Chile: Corporación Latinobarómetro.
Corporación Latinobarómetro. 2005. Informe Latinobarómetro 1995–2005. Santiago, Chile: Cor-
poración Latinobarómetro.
The Economist. 2005. Peru: Blooming desert: An agricultural revolution. July 7, sec. World, Latin
America, 32.
Fairbanks, M., and Lindsay, S. 1997. Plowing the sea: Nurturing the hidden sources of growth in the
developing world. Boston: Harvard Business School Press.
Fukuyama, F. 1995. Trust: The social virtues and the creation of prosperity. New York: Free Press.
Grondona, M. 2000. A cultural typology of economic development. In Culture matters. How val-
ues shape human progress, ed. L. E. Harrison and S. P. Huntington, 44–55. New York:
Basic Books.
Hargreaves Heap, S., and Varoufakis, Y. 2004. Game theory. A critical text. London: Routledge.
Harrison, L. E., and Huntington, S. P. 2000. Culture matters: How values shape human progress.
New York: Basic Books.
Hartwell Associates. 2004. Knowledge assets and social capital: Exploring opportunities for increasing
the effectiveness of PAC projects. Hartwell Associates and Corporación Andina de Fomento.
North, D. 1990. Institutions, institutional change, and economic performance.Cambridge:
Cambridge University Press.
Ortiz de Zevallos, F. 1997. La economía peruana y sus perspectivas. In II cumbre de la competi-
tividad. El reto de la productividad, ed. Ministerio de Industria, Turismo, Integración y
Negociaciones Comerciales Internacionales, 20–40. Lima, Peru: MITINCI.
Ridley, M. 1996. The origins of virtue: Human instincts and the evolution of cooperation. London:
Penguin.
Rodrik, D. 2000. Institutions for high-quality growth: What they are and how to acquire them?
Cambridge, MA: National Bureau of Economic Research.
Vial, J., and Orihuela, J. C. 2003. Instituciones y crecimiento en los países andinos. New York:
Center on Globalization and Sustainable Development, Earth Institute at Columbia Uni-
versity, and Corporación Andina de Fomento.
von Neumann, J., and Morgenstern, O. 1944. Theory of games and economic behavior. Princeton,
NJ: Princeton University Press.
World Economic Forum. 2005. Global Competitiveness Report 2004–2005. www.cdi.org.pe/
Informe_Competitividad_Global.htm.
12
Research and Development Knowledge
Transfer across National Cultures
Marjolyn S. W. Thiessen, Paul H. J. Hendriks,
and Caroline Essers
ABSTRACT
With the increased tendency of multinational corporations (MNCs) to disperse their

research and development (R&D) activities over various countries, the integration
of the dispersed R&D knowledge via knowledge transfer across cultural borders be-
comes crucial for understanding and managing MNCs. The chapter describes an
investigation of knowledge transfer processes between R&D facilities of Akzo Nobel
Car Refinishes (ANCR) in The Netherlands, the United States, and India. It inspects
the barriers involved by hypothesizing and testing how specific scores on dimensions
of national culture affect particular aspects of knowledge transfer. The main objective
of the research is, via the situation of ANCR, to explore the information value and
workability of linking culture and knowledge transfer as described previously. The
research confirms the notion that cross-cultural knowledge transfer can be and very
often is problematic, but it also provides that notion with a more positive outlook.
The research shows that cultural differences are not just barriers to knowledge trans-
fer, but may also provide a stimulus to learn from and with others in other cultures.
Contrary to what is commonly suggested in the literature, the case study shows that
cultural differences increase the difficulties of transferring explicit knowledge but the
increase is smaller for those associated with the transfer of tacit knowledge.
INTRODUCTION
Ongoing trends of globalization continue to lead organizations to disperse their
activities throughout the world. Although, for strategic reasons, R&D was tradition-
ally intimately linked to the home seat of the organization, in recent decades, multina-
tional corporations (MNCs) have also started dispersing their R&D activities due to the
increasingly international competitive environment (Chiesa and Manzini 1996; Chiesa,

Manzini, and Pizzurno 2004). In such situations, the transfer of knowledge among
business units becomes a crucial aspect of R&D and business performance. Kogut and
Zander (1993) even argue that MNCs only exist because they are efficient vehicles for
cross-border knowledge creation and transfer. Therefore, it comes as no surprise that
processes of knowledge transfer within MNCs have received much research attention
(e.g., Eisenhardt and Santos 2002; Ghoshal, Korine, and Szulanski 1994; Gupta and Gov-
indarajan 2000; Zander and Kogut 1995). Although the process of knowledge transfer
among units is far from trivial in one and the same country, difficulties in understanding
this process are bound to increase when knowledge is transferred across geographical
and cultural borders (Bresman et al. 1999; Ford and Chan, 2003). Consequently, national
culture is a crucial facet in research concerning knowledge transfer at multinationals.
Although the concepts of MNCs and culture have received ample attention in past
decades and much research has been done on the phenomenon of knowledge manage-
ment (KM), there is little literature on knowledge transfer within MNCs specifically
discussing the influence of national culture. Yet due to cultural differences, the transfer
of knowledge in an international context can be expected to pose other and probably
more severe difficulties than knowledge transfer in a purely domestic organization. A
major shortcoming in the current literature is that there is no instrument for assessing
differences in national culture with regard to aspects of knowledge transfer and how
they influence that process. In the current class of instruments for the measurement
of culture, knowledge transfer is absent, and in the models and instruments for study-
ing knowledge transfer, culture at best plays a black-boxed, broad role (e.g., Roman-
Velazquez 2005).
The objective of this research is to provide new insights into how diversity in national
cultures affects knowledge transfer in MNCs. This paper describes an investigation of
knowledge transfer processes between R&D offices of Akzo Nobel, a Dutch multina-
tional producing a wide range of goods and services in the domains of health care, coat-
ings, and chemicals.1 The study focuses on Akzo Nobel Car Refinishes (ANCR), which
has its main R&D facilities in three countries: the Netherlands, the USA, and India. The
main objective of this research is to explore how, in the situation of ANCR, the cross-
cultural transfer of R&D knowledge is affected by the diversity in the national cultures
of the parties involved. This chapter presents a dedicated instrument for measuring dif-
ferences in the knowledge transfer cultures among R&D facilities that are set in different
national cultures. It also describes the outcome of using this instrument in the situation
of ANCR. This research aims to contribute to the current theory on knowledge trans-
fer within MNCs and explores the practical implications insight based on this theory
may have concerning the cross-cultural transfer of knowledge among R&D facilities
for MNCs such as Akzo Nobel. The qualitative and explorative character of this study
dictates that its conclusion cannot be generalized and is based on assumptions, which
require further exploration to be confirmed.
This chapter is organized as follows. Firstly, the notions of distributedness of R&D
in MNCs, the consequent relevance and challenges of knowledge transfer, and the role
of national cultures are explored. Next, the conceptual approach is described for (1)
tackling differences in national cultures based on received notions of Hofstede (1980;
2001) and Hampden-Turner and Trompenaars (2000), (2) understanding aspects of
Research and Development Knowledge Transfer across National Cultures 221
knowledge transfer, and (3) perceiving cross-cultural knowledge transfer as indicative

of the embracing of national cultures by linking (1) and (2). Subsequently, the case of
ANCR and the research methods are presented. The fifth section describes the research
outcome. Finally, the last section discusses the main insights this study produced, its
limitations, and practical implications.
DISTRIBUTED R&D, KNOWLEDGE TRANSFER,

AND NATIONAL CULTURES
Knowledge Transfer in MNCs
Globalization trends continue to shape the competitive and operational landscapes
of organizations, and in particular those of MNCs. Part of the explanation for this phe-
nomenon is cost-efficiency. However, many authors have emphasized that the reasons
for ‘going global’ cannot be fully or satisfactorily explained by considerations of effi-
ciency and transaction costs alone. These authors argue that intangible assets make the
difference between success and failure in the international arena (Evans, Pucik, and
Barsoux 2002). Such assets will surface in the dynamic organizational capabilities and
knowledge presumed in and constituted by these capabilities. Such argumentation, that
combines insights of the resource-based view (Penrose 1959) with a knowledge-based
view (Eisenhardt and Santos 2002; Grant 1996), put the focus on the organizational
value of knowledge. Moving organizational knowledge to the foreground feeds on the
recognition of competitive advantage derived from creating, transferring and integrat-
ing knowledge throughout the organization. The ability to transfer, recombine, and
leverage knowledge across borders is becoming especially significant in this globalizing
economy (Bartlett and Ghoshal 2000; Kogut and Zander 1992).
The extent of this internationalization differs widely among the functional fields in
the MNC. The internationalization of sales, production, and procurement activities
occurred rapidly, whereas R&D remained predominantly a domestic activity. In man-
agement literature, R&D is “traditionally treated as the last activity to be international-
ized” (Chiesa and Manzini 1996, 463). Yet, in the past few decades internationalized
R&D has gained tremendously in importance as European, American, and Oceanic
MNCs have outsourced their R&D activities to such countries as India and China
(Chiesa, Manzini, and Pizzurno 2004), for instance. The reasons for decentralizing R&D
units to different countries include a better absorption of local knowledge leading to
improved adaptation to local market needs, a shortening of the time-to-market of new
products by better coordination and cooperation with local production activities, the
regional availability of specific skills, and the low wage costs of R&D specialists in such
countries as India and China (Chiesa and Manzini 1996; Chiesa, Manzini, and Pizzurno
2004). Also, starting R&D facilities in other countries serves as a means for MNCs to
convey to the local market the message that they recognize its supreme importance to
the overall company.
From a knowledge point of view, the MNC is seen as a repository of knowledge that
spans national boundaries. When this view is combined with network theory (e.g.,
Bartlett and Ghoshal 2000) and theories of the learning organization (e.g., Hedlund
1986), the MNC appears as a ‘distributed knowledge system’ (Tsoukas 1996), acquir-
ing and transferring knowledge across its dispersed but interconnected international
network through vertical and lateral relationships (Bartlett and Ghoshal 2000; Hedlund
1986). These combined perspectives make knowledge and its transfer the focus of atten-
tion. Knowledge is not easy to identify. It is broader, deeper, and richer than information
as this solely concerns “a message, usually in the form of a document or an audible or
visible communication” (Davenport and Prusak 1998, 3) between a transmitter and a
recipient. Information can be found in messages, whereas knowledge resides in indi-
viduals and groups of knowers.
The well-known distinction between explicit and tacit knowledge, as defined by
Polanyi (1967) and popularized by Nonaka and Takeuchi (1995), has proven useful here.
Explicit knowledge, which borders on information, is “knowledge that you know you
have; objective, formal, systematic, incorporated in texts and manuals, and easy to pass
on to others” (Evans, Pucik, and Barsoux 2002, 35). By using software systems, explicit
knowledge can be collected and distributed throughout organizations. Tacit knowledge,
in contrast, is “knowledge that you do not know you have; personal, context specific,
hard to formalize and communicate” (Evans, Pucik, and Barsoux 2002, 35). Polanyi
(1967) explains the idea of tacitness by asserting that scientists “know more than they
can tell,” especially when operating on the cutting-edge of technology. Tacitness of
knowledge refers to “the indeterminacy of knowledge” (Tsoukas 1996), its contextual,
contestable, and power-laden nature and the absence of knowledge when information
is divorced from the act of knowing (Thompson and Walsham 2004). Tacit knowledge
is not a separate category next to explicit knowledge, as Nonaka and Takeuchi treat it
(Thompson and Walsham 2004), but a characteristic that pervades all knowledge. As
Tsoukas explains, “all articulated knowledge is based on an unarticulated background, a
set of subsidiary particulars which are tacitly integrated by individuals” (1996, 17). The
comparative ratio of explicit-tacit knowledge varies according to the context and nature
of the knowledge under consideration. It has been argued that in recent years, the rapid
pace of industry evolution and change has caused a shift in balance towards the tacit
aspects of knowledge, thereby increasing the importance of social interaction in orga-
nizations (Murtha et al. 2001). The transfer of this type of knowledge always presumes
an active reconstruction on the part of the recipient, which is probably most effectively
performed in case of personal contacts between knowledge transmitters and recipients
(Evans, Pucik, and Barsoux 2002). When the transfer of R&D knowledge is at stake, the
exploratory nature of that activity, the causal ambiguity and uncertainty of the implied
knowledge put a high pressure on the tacit elements in knowledge transfer (Cummings
and Teng 2003).
Many mechanisms for knowledge transfer have been identified and discussed (for an
overview, see Chiesa and Manzini 1996). These can be distinguished into person-based
mechanisms, such as temporary assignments, international teams, personnel flows, and
codification mechanisms such as the dispersal of manuals, electronic mail, and common
systems based on or combined with ICT (Howells 1996; Pedersen et al. 2003). Available
evidence suggests that communication based on codified sources is much less effective
for knowledge transfer—and in particular for the transfer of tacit knowledge (Pedersen
et al. 2003)—than personal communication, specifically when intuitive and experience-
based knowledge is at stake (Buckley and Carter 2004; Cross and Sproull 2004). The effi-
cient transfer of tacit knowledge depends on whether or not the people involved know
each other beforehand (Bresman et al. 1999).
The Role of Culture in Knowledge Transfer

The understanding of organizations, and more particularly of MNCs, as ‘distributed
knowledge systems’ (Tsoukas 1996), has stimulated theoretical and empirical research
on the processes and mechanisms through which knowledge is managed and transferred
within MNCs (e.g., Gupta and Govindarajan 2000). Much of the research on knowledge
transfer in MNCs focuses on characteristics of knowledge (Szulanski 2003; Zander and
Kogut 1995) and of transmitters and recipients (Gupta and Govindarajan 2000; Szulan-
ski 1996), and the relationship between organizational design and knowledge transfer
(e.g. Birkinshaw et al. 2002; Nobel and Birkinshaw 1998; Szulanski 1996).
The influence of culture on knowledge transfer is also distinctly recognized in studies
of MNCs and in the broader literature on knowledge transfer in KM debates. In the many
overviews of critical success factors for KM, culture always appears at the top of the list
(for an overview, see Alazmi and Zairi 2003; Roman-Velazquez 2005). As regards the col-
lected insights into the impact of culture on knowledge transfer, several observations can be
made. Firstly, it is striking that thorough studies of the link between culture and knowledge
transfer are more the exception than the rule. Of the many hundreds of articles and books
discussing knowledge-friendly cultures, only dozens pursue a systematic development of
the culture’s role in knowledge transfer. Secondly, the use of analysis frameworks produced
by culture research, such as Quinn and Rohrbaugh’s competing values model (2003) or
Hofstede’s models of culture types and dimensions, is not common practice in the majority
of studies discussing cultural impacts on knowledge transfer. Thirdly, most studies give the
impression that there is such a thing as an ideal culture for knowledge transfer, or a ‘one size
fits all’ culture typified by ideal behavior and an ideal value set. Pauleen and Murphy’s com-
plaint, set forth in their “In Praise of Cultural Bias” (2005), is appropriate. Western analyti-
cal assumptions concerning knowledge and its management dominate the discussion and
provide the frame of reference to stipulate what is considered an ideal knowledge culture.
Fourthly, little attention is given to cultural differences, which, given the predominating
notion of a ‘one size fits all’ culture can hardly be surprising. Exchanging ideas between
cultures, singularities of knowledge creation in multicultural surroundings, the existence
of subcultures in organizations and the—also possibly positive—impacts of these differ-
ences on knowledge transfer are all subjects for the still mostly blank pages in discussions of
culture offered by literature on KM (exceptions of articles that focus on cultural differences
with respect to knowledge are Bhagat et al. 2002; Pauleen and Murphy 2005).
An exploration of the role of culture in knowledge transfer should build on an under-
standing of that concept. Culture, both organizational culture and national culture, is
generally considered a key factor for understanding how and when knowledge transfer
develops. A general theme underlying the many conceptions of culture is the notion of
sharing, which means that “each member participates in and contributes to the broad
patterns of culture, but the contributions and experiences of individual members of the
culture are not identical” (Hatch 1997, 206). The result of this notion of sharing is that
culture is not only concerned with similarity—having something in common—but also
with separateness—dividing something into individual pieces (Hatch 1997). Further-
more, the notion of sharing shows that culture is not merely a descriptive and static col-
lection of artefacts, values, and assumptions of a group of people. Instead, “it consists of
a common set of assumptions and values that constantly influence artefacts, especially
behavior, and are passed on from older to younger members of the group” (Black et al.
1992, 35). Therefore, culture is not just a pattern of action, but is a pattern for action
(Collins 2000). According to this view, cultures are created, preserved, and developed
on the basis of human interaction (Martin 1992).
Thus, it can be argued that culture has an all-pervading influence on individuals’
actions, values, and perceptions, which they take with them when entering an orga-
nization. An organization is also affected by the culture in its environment at various
levels, such as the industrial, the occupational, or the professional level. A corporation
is inextricably bound up with its environment, which results in a high degree of similar-
ity between the culture of the organization and the culture of its environment (Hatch
1997). Accordingly, the organization is a product of the societies and times in which it
exists; it is solely a manifestation of prevailing beliefs and values (Harris et al. 2003). The
same argument is provided by Hofstede (2001), who argues that within a given national
culture, organizational cultures differ very little with respect to the deeper values, but
diverge with respect to rather superficial perceptions of daily practices. Therefore, Hof-
stede argues, “multinational organizations are kept together by shared practices, not
by shared values … international cooperation consists of doing things together, even if
each partner does them for a different reason” (Evans, Pucik, and Barsoux 2002, 168).
CONCEPTUAL APPROACH
The discussion in the previous section shows the all-pervading influence of culture on
actions, values, and perceptions, including those affecting knowledge transfer within an
organization. What it also indicates is the limited value of the conception, which is recog-
nizable in many KM writings on culture, that culture as the independent variable is caus-
ally related to knowledge transfer as the dependent variable. Culture pervades knowledge
transfer and surfaces in the visible and invisible knowledge transfer behavior in organiza-
tions. The connections between the two are therefore best understood as conceptual rela-
tions, where notions of culture may act as selection mechanisms for approaching those
aspects and facets of knowledge transfer that are culturally laden. Without developed
notions of culture, such aspects and facets will become less visible or not visible at all.
Therefore, a study such as this one, that aims to detect how national culture influences
knowledge transfer, needs to assess the state of knowledge transfer in an organization
by a selection of knowledge transfer aspects guided by cultural notions. Such an assess-
ment will simultaneously serve as a measurement of the knowledge transfer culture of
the organization and the culturally determined state of knowledge transfer. It presumes
the construction of an instrument for dedicated culture appraisal based on aspects of
knowledge transfer, showing how differences in national culture guide knowledge trans-
fer. Below, an instrument for performing such an assessment is presented along with its
application within the context of the ANCR case study. The conceptual approach taken in
this research for defining and linking the two elements that are combined in this assess-
ment—culture and knowledge transfer—are described in the following paragraphs.
Operationalization of Culture
An extensive body of literature has emerged concerning values relating to cultural
diversity among countries. In the early 1970s, Hofstede (1980) undertook a landmark
study in this field by conducting an opinion survey at IBM with over 116,000 respon-
dents from 53 countries around the world. For the comparison of nations, Hofstede
borrowed four dimensions from earlier anthropological culture research: those of
power distance, uncertainty avoidance, individualism vs. collectivism, and masculin-
ity vs. femininity, later adding the fifth dimension of long-term vs. short-term orien-
tation to reflect cultural differences in East Asian societies. Although this model has
been subject to criticism as regards the internal validity of the dimensions and may
be understood as the cultural product of a European mindset, Hofstede’s work con-
tinues to dominate the field of national cultural values (Evans, Pucik, and Barsoux
2002). More recently, Hampden-Turner and Trompenaars (2000) have also com-
piled a large database on the variety of value orientations among different countries.
Their approach is based on seven cultural dimensions, which partly overlap with
Hofstede’s dimensions. Based on the above-mentioned authors, seven dimensions
of national culture have been selected that can be related to knowledge transfer. The
next paragraph describes how these dimensions were connected to aspects of knowl-
edge transfer.
The first dimension is that of power distance. According to Hofstede (2001), power
distance concerns the extent to which less powerful members of organizations accept
that power is distributed unequally. Nations with a ‘large power distance’ tend to accept
centralized power and depend heavily on superiors for structure and direction. Sec-
ondly, this research uses the dimension of uncertainty avoidance, defined by Hofstede
(2001) as the extent to which people feel threatened by ambiguous situations, and have
created beliefs and institutions that try to avoid these. This feeling is expressed through
nervous stress, an avoidance or even punishment of risk-taking and the need for secu-
rity, predictability, and written and unwritten rules. The third dimension is that of indi-
vidualism vs. collectivism. According to Hofstede (2001), individualism is concerned
with the tendency of people mainly to look after themselves and their immediate family,
which tends to produce much individual initiative and a focus on gaining self-respect
and personal achievement. Collectivism, on the other hand, involves the tendency of
people to belong to groups or collectives and to look after each other in exchange for
loyalty. In these countries, people focus on fitting in harmoniously and on face-saving.
Fourthly, the cultural dimension of masculinity vs. femininity is examined. Masculin-
ity pertains to dominant social values being material success, money, and possessions,
and embraces assertiveness, competition, recognition, and advancement as key values
(Hofstede 2001). Dominant values in societies characterized by femininity are caring for
others and the quality of life. In these countries, great importance is placed on a friendly
atmosphere, consensus and cooperation through interpersonal and interdependent
relationships. The fifth dimension brought into this research is that of long-term vs.
short-term orientation, described by Hofstede (2001) as the extent to which people’s ref-
erence time frame is focused on achieving either long-term goals or the more immediate
short-term goals. Countries with a ‘long-term orientation’ adhere to the values of long-
term commitment and respect for tradition, thereby supporting a strong work ethic
where today’s hard work will result in long-term rewards. However, countries with a
‘short-term orientation’ do not embrace long-term devotion to traditional and forward
thinking values. As a result, commitment will not form a barrier to change, thereby
increasing the speed of change.
Sixthly, from the work of Hampden-Turner and Trompenaars (2000) their dimen-
sion specific vs. diffuse was added. According to these authors, people from a specific-
oriented culture (low context) believe that relationships with others should be explicit,
regulated and purposeful as a contract. Separate chunks of information are valued, as
individuals later integrate these into a whole. In diffuse cultures (high context) on the
other hand, relationships are established carefully but once established they encompass
multiple areas of life and are not restricted to “just business.” Information is always seen
as fully embedded within the context of conveying it, implying that individual pieces of
information are void of meaning without that context. Finally, the dimension neutral
vs. affective is explored. Hampden-Turner and Trompenaars (2000) describe neutral
cultures as those in which emotions are held in check whereas affective cultures express
emotions openly and naturally.
Knowledge Transfer Model

A multitude of factors affecting knowledge transfer have been identified in the
literature, and many models have been proposed to capture these factors. Based on an
intersection of these models (e.g., Cohen and Levinthal 1990; Gupta and Govindarajan
2000; Hinds and Pfeffer 2003) and borrowing Cummings’ and Teng’s (2003) terminol-
ogy, but expanding their model, these factors can be ordered into eight contexts: (1) the
pre-transfer context, (2) the transmitter context, (3) the recipient context, (4) the channel
or activity context, (5) the knowledge context, (6) the relational context, (7) the environ-
mental context, and (8) the post-transfer context (see Figure 12.1). The core of knowledge
transfer lies in an individual or group (transmitter context) transferring knowledge to
another individual or group (recipient context) via a selection of channels (activity con-
text). As regards both transmitter and recipient, a distinction is typically made between
(a) factors affecting the disposition of the involved parties, captured by such concepts as
motivation, trust, willingness, eagerness, and attitude, and (b) factors affecting ability,
proficiency, competence, and skill. The knowledge context (3) refers to the properties of
knowledge affecting the transfer process between transmitter and receiver. The pre- and
post-transfer contexts (1 and 8) refer to those factors that relate to recognition of knowl-
edge transfer value and the absorptive capacity of the organization in using the transferred
knowledge (Cohen and Levinthal 1990; Gupta and Govindarajan 2000). The relational
(6) and environmental (7) contexts refer to the factors that affect the distances between
transfer parties (for instance, physical distance, distance caused by organization structure
and other institutional settings) and the organization’s economic and social environment
(including national culture and market pressures). These two contexts concern factors
affecting receiver, transmitter, and connection, given the type of knowledge.
For this research, the distinction between the disposition and competence of trans-
mitters and recipients was chosen as the starting point for selecting indicators (see Figure
12.1). From among the factors affecting knowledge transfer described in the literature
(Cummings and Teng 2003; Hinds and Pfeffer, 2003), those factors have been selected
that appear as most relevant in cross-cultural R&D settings and that can readily be
interpreted in terms of the selected seven cultural dimensions. Because of their inter-
pretation in cultural terms, the selected factors serve as indicators for the knowledge
transfer culture within MNCs. The first group of factors contains indicators related to
Figure 12.1
Knowledge transfer model (adapted from Cummings and Teng 2003; Hendriks 1999;
Hinds and Pfeffer 2003).
the disposition of individuals to engage in knowledge transfer, both for the transmitter
and recipient context. The second group concerns indicators that relate to the ability of
individuals (both transmitter and recipient context) to effect complete and successful
transferral, which depends heavily on the content of the knowledge to be transferred
(knowledge context). The third group of indicators refers to the channel choice (activity
context). The other contexts in the model—the environmental, relational, pre- and post-
transfer contexts—are represented by the selected indicators.
Connecting Culture and Knowledge Transfer

Figure 12.2 summarizes the knowledge transfer factors used in this research and the
assumed cultural dimensions behind them. The cultural dimensions have been linked
to knowledge transfer determinants based on literature (including Bhagat et al. 2002;
De Long and Fahey 2000; Ford and Chan 2003; Hooff and Hendrix 2004; Kayworth and
Leidner 2003).
The factor of disposition—the willingness to transfer knowledge—has led to the iden-
tification of six indicators of a knowledge transfer culture. Firstly, the structure and
management practices within organizations can induce an atmosphere of competi-
tion between individuals or units. In these circumstances, knowledge is equated with
status, promotions, and power (Hinds and Pfeffer 2003). Furthermore, an intolerance
for mistakes and need for help will discourage the transfer of knowledge throughout the
organization (Davenport and Prusak 1998). In this research, this is linked to the cul-
tural dimension of masculinity. As Ford and Chan (2003, 13) argue, “Cultures that are
high in masculinity (i.e., competitiveness) may also have more difficulty with knowledge
sharing if the competitiveness is between individuals and not only between organiza-
tions.” Moreover, the atmosphere of competition in masculine cultures makes it more
likely that these cultures equate knowledge more frequently with status, promotions,
and power than feminine cultures.
Figure 12.2
Indicators of the impact of national culture on knowledge transfer.
Legend: PD = power distance; UA = uncertainty avoidance; IDV = individualism; MAS = mascu-

linity vs. femininity; LTO = long-term orientation; SPEC = specific vs. diffuse; NEUT = neutrality
vs. affectiveness (Hofstede 1980; Hampden-Turner and Trompenaars 2000). The plus and minus
signs after the description of the indicators indicate the assumed direction of the relationship
between dimension and indicator (plus = “agree” implied by/follows from higher score on
dimension, minus = “agree” implied by/follows from lower score on dimension).
Secondly, institutionalizing explicit rules for transferring knowledge is not always an

effective method for facilitating the transfer process since it is excessively focused on
compliance and conformity. This is not in line with the practice of knowledge transfer
since it entails the development of a shared understanding that requires time and room.
Uncertainty avoidance can be assumed to be the main cultural influence here (Bhagat
et al. 2002; Kayworth and Leidner 2003). Uncertainty avoiding cultures are expected to
have more institutionalized rules for transferring knowledge compared to uncertainty
embracing cultures because explicit rules have to be created to maintain security and
predictability. Kayworth and Leidner (2003) argue that when cultures favor stability and
direction, as uncertainty avoiding cultures do, knowledge storage is bound to increase.
Knowledge storage can be perceived as knowledge transfer with an added retention

focus. An associated aspect is the tendency of organizations to focus on explicit instead
of tacit knowledge in their knowledge transfer routines.
Thirdly, a related organizational characteristic is the existence of traditional status
hierarchies. The formal status hierarchies are mainly focused on transferring instruc-
tions downward and information upward. This means that people are reluctant to
transfer knowledge in ways that violate the rules of the hierarchy. Consequently, there
are less horizontal and lateral knowledge flows and even vertical flows are limited
since high status personnel do not acknowledge the value of knowledge that they
receive from lower-status people (Davenport and Prusak 1998; De Long and Fahey
2000; Hinds and Pfeffer 2003). The associated cultural dimension is that of power
distance. When power distance is high, knowledge is more likely to flow top-down
through the hierarchy than bottom-up and it is more likely to follow the paths of the
hierarchy than not (Ford and Chan 2003). The existence of formal status hierarchies
in cultures that emphasize power distance will make people more reluctant to trans-
fer knowledge in ways that violate the rules of the hierarchy than people from power
distance avoiding cultures.
Fourthly, a similar argument applies to the horizontal direction of an organization,
i.e., the ‘not-invented-here’ syndrome. If this syndrome occurs, knowledge and ideas
that are developed in a different context will be valued less in the environment of the
recipient, thereby inhibiting the process of knowledge transfer (Davenport and Prusak
1998; Hinds and Pfeffer 2003; Hooff and Hendrix 2004). Differences between individu-
alistic and collectivistic cultures are considered to lead to differences with respect to
this factor (Ford and Chan 2003; Hooff and Hendrix 2004). Individualistic cultures are
more likely than collectivistic cultures to run the risk of a ‘not-invented-here’ syndrome
because knowledge and ideas that are developed in a different context will be valued less
due to the emphasis on individual initiative and personal achievement.
Fifthly, the practice of transferring knowledge requires effort and time for document-
ing expertise and for being involved in social interactions. Organizations do not always
provide the necessary time and meeting places for transferring knowledge, based on
the belief that conversations are not ‘real work,’ Consequently, people will be reluc-
tant to be involved in the transfer of knowledge (Davenport and Prusak 1998). This is
related to the dimension of long-term orientation (Ford and Chan 2003). Organizations
in long-term oriented cultures are expected to provide more time and meeting places
for documenting expertise and being involved in social interactions than short-term
oriented cultures since the advantages of KM are acknowledged by their emphasis on
thinking ahead.
Sixthly, relationships of trust and credibility between the transmitter and recipient
represent a crucial dispositional factor. Knowledge transfer is a people-to-people pro-
cess, thereby asserting that a lack of personal ties will inhibit the transfer of knowl-
edge, especially the transfer of tacit knowledge (Szulanski 2003). Furthermore, trusting
the larger institution in which knowledge is transferred is important. In this respect,
any actions by the organization that destroy trust will make knowledge transfer less
likely to occur (Hinds and Pfeffer 2003). Masculinity versus femininity is bound to
surface in this knowledge transfer factor. Feminine cultures are more likely to view
knowledge transfer as a people-to-people process than masculine cultures because
the development of relationships of trust and credibility between the transmitter and
recipient is facilitated.
While dispositional factors constitute an important element in understanding the dif-
ficulty in transferring knowledge across organizations, it is clear that also competence
factors, which concern the way experts store and process information, could be barri-
ers for transferring expertise to others (Hinds and Pfeffer 2003). This factor of ‘being
able to’ can originate from various aspects. Four factors were used in this research. For
reasons explained subsequently, three of these factors were included separately for the
transmitter and recipient viewpoints, which explains the presence of seven indicators
covering the competence side in the instrument.
Firstly, competence is related to how ‘visible’ knowledge can be made, due to what
Tsoukas calls the indeterminacy of knowledge as embedded in social practice (1996).
During their work, experts will view their task in a holistic way, thereby automating
certain aspects and leaving the details aside. Consequently, the mental representations
of experts will become abstract and conceptual (Hinds and Pfeffer 2003). These sim-
plified representations of the task serve the experts well, although they can be prob-
lematic if this knowledge needs to be transferred to people with less expertise. The
establishment of a common ground and the use of a language that is understandable
to the recipient can be very helpful for the transmitter as well as the receiver in the
transfer process (Davenport and Prusak 1998; Hinds and Pfeffer 2003). The associated
cultural dimension is that of individualism versus collectivism. Knowledge about a
task is likely to be more invisible in individualistic cultures than in collective cultures
because individualism tends to lead to explicit knowledge being transferred more
easily than tacit, whereas collectivism implies a balance in explicit-tacit knowledge
transfers (Bhagat et al. 2002; Hooff and Hendrix 2004). The cause for this invisibility
lies in the fact that an expert can automate certain aspects of the task, thereby leaving
the details aside. In individualistic cultures this is likely to have a negative impact on
knowledge transfer, due to the fact that a common ground for interaction is neither
apparent nor necessary. Because the resulting lack of visibility takes on a different
meaning for transmitters and receivers in knowledge transfer situations, it was used
as an indicator twice (first, to assess how transmitters experience difficulty in deduc-
ing visible chunks from their holistic, automated knowledge; next, to check how well
receivers are able to recognize the more encompassing knowledge below the visible
surface of the transferred information).
Secondly, a difficulty is the causal ambiguity of knowledge, which means that experts
experience uncertainty in their understanding of why the exemplar works. This implies
that the precise reasons for functioning cannot be determined, thereby causing a gap
between the formal description and the actual work practices. This limits the under-
standing of the transmitter of what has to be transferred and of the receiver of what
knowledge is actually received (Simonin 1999; Szulanski 2003). The most obviously
related cultural dimension is that of uncertainty avoidance, since experts in cultures that
embrace uncertainty will experience less causal ambiguity in their knowledge because
they rely less on formal descriptions as compared to cultures that avoid uncertainty (cf.
Bhagat et al. 2002). Once more, the situation for transmitters is different from that for
recipients. Therefore, in this research a distinction was made between radiating and
understanding causally ambiguous knowledge.
Thirdly, the articulation of tacit knowledge, rather than explicit, is a challenging

activity, due to the fact that tacit knowledge exists at an unconscious or semicon-
scious level and because of its embeddedness in the social context (Hinds and Pfeffer
2003). These characteristics imply that human, cultural, and communication factors
are of crucial importance to transferring knowledge. More particularly, due to the
cultural and communication differences between the transmitter and the recipient in
the international arena, transfer of knowledge is more complex and extensive face-
to-face communication is needed (Marcotte and Niosi 2000). An obvious connec-
tion is established with the cultural dimension of femininity versus masculinity. Tacit
knowledge will be articulated more easily in feminine than in masculine cultures.
Feminine cultures value cooperation through interpersonal relationships, which is
required for transferring tacit knowledge. The relevance with regard to the distinction
between the transmitter and receiver position changes for this factor, too. Therefore,
separate statements are included in figure 12.2 to represent the involved barrier for
either of these roles.
Fourthly, the absorptive capacity of recipients can vary widely among the subunits of
an organization. This capacity is concerned with the “ability to recognize the value of new
information, to assimilate it into their own different context, and to apply it to commer-
cial ends” (Evans, Pucik, and Barsoux 2002, 433). Furthermore, absorptive capacity chal-
lenges the existing way of doing things, thereby inducing the recipients to unlearn and
making knowledge very “sticky” (Lin et al. 2002; Szulanski 2003). Differences as regards
long-term vs. short-term orientation are bound to surface in this factor. Long-term cul-
tures are more likely to recognize the future value of new knowledge, thereby assisting
the absorption of knowledge, than short-term oriented cultures since their time horizon
focuses on forward thinking and achieving long-term goals (Ford and Chan 2003; Kay-
worth and Leidner 2003). Because this factor is mostly relevant from the receiver’s per-
spective, no statement is included in Figure 12.2 for the transmitter standpoint.
In addition to the disposition and competence factors, knowledge transfer is influ-
enced by the existence and richness of communication or transmission channels, i.e.,
the mode of transfer. A multitude of transfer mechanisms can be observed, such as
electronic linkages, face-to-face meetings, seminars, project groups, personnel flows,
and boundary spanning roles. Some of these channels are “narrow band,” which only
permit the transfer of information and explicit knowledge, such as intranet systems
or electronic communication. In contrast, “broad band” channels, such as personnel
transfers, allow for transferring tacit knowledge (Evans, Pucik, and Barsoux 2002).
Davenport and Prusak (1998) assert that it would be advisable for organizations to
transfer knowledge through multiple transfer modes in order to reinforce each other’s
usage. Specific and neutral cultures, that characterize such countries as the Netherlands
and the USA, are expected to more often choose the “narrow band” transmission chan-
nels that are mainly focused on explicit knowledge (cf. Straub et al. 1997). The reason-
ing behind this choice is that relations are only needed for business activities—not for
social affairs—thereby making it unnecessary to show emotions since these would only
confuse the issues. The “broad band” transmission channels that are predominantly
focused on tacit knowledge are most likely to be used by diffuse and affective cultures,
such as the Indian culture, in order to make interaction possible and allow emotions to
be expressed naturally and openly.
CASE DESCRIPTION AND RESEARCH METHODS

The context of this research is the Research and Development (R&D) facilities of MNC
Akzo Nobel. This multicultural company is headquartered in the Netherlands and serves
customers throughout the world with healthcare products, coatings, and chemicals. Akzo
Nobel conducts these diversified activities in over 80 countries through the decentralized
business units of Pharma, Coatings, and Chemicals and employs approximately 64,500
people. This research focuses on Akzo Nobel Car Refinishes (ANCR), which forms part
of Coatings. This group is operational in 60 countries and employs approximately 30,000
people. ANCR supplies the paint, services, and the required software for car repair and
commercial vehicles, while acknowledging local customer needs. This research has been
conducted within the main R&D facilities of the product area Car Refinishes at Sassen-
heim (the Netherlands), Troy (USA), and Bangalore (India). The R&D facility of Sassen-
heim, established in 1939, is the oldest of the three. In 1984, the R&D facility in Troy was
founded, while the R&D facility in Bangalore has been operational since 2001. In total,
these three R&D facilities employ approximately 300 R&D professionals.2
Although the KM movement has been apparent throughout Akzo Nobel for some
time, KM activities have only recently been employed consciously within ANCR due
to the strong internationalization of the product area, the expansion of its R&D activi-
ties and the possibility to share knowledge with other product areas. In this start-up
phase, the KM practices of Car Refinishes are predominantly focused on developing a
multitude of transmission channels and creating a structured approach for document-
ing knowledge in order to allow the R&D professionals to share knowledge. In the end,
these efforts should enable the R&D professionals to gain world-wide access to high-
quality knowledge and retain this knowledge within the organization. Nevertheless, at
present, the KM activities are surfacing at the data and information level, whereas the
broader and deeper notion of knowledge is hardly touched. This is because the lion’s
share of the efforts are focused on building systems, which indicates that the emphasis
is on hardware, i.e., the technology, while the soft elements are still largely ignored.
Furthermore, these KM practices are currently not employed on a large and broad scale
throughout the product area of Car Refinishes.
This research focuses on the differences in perceptions and practices of knowledge
transfer among the three distinct national cultures of the Netherlands, the USA, and
India. Akzo Nobel has traits of a decentralized organization that, according to inter-
viewees at the start-up phase of this research, does not have a strong organizational
culture. Moreover, within the various R&D facilities distinct organizational cultures
cannot be found. As a result, the influence of the diversity in national cultural values on
knowledge transfer is considered more important. Consequently, it can be argued that
ANCR provides a proper context for exploring the knowledge transfer process in rela-
tion to diversity in national cultures.
As shown in Figure 12.3, the national cultures of the three countries involved in this
research are quite different. For some dimensions, all three countries are relatively simi-
lar (uncertainty avoidance and neutrality), whereas for others all are relatively different
(long-term orientation). Furthermore, the Netherlands and the USA have rather simi-
lar ratings regarding power distance, individualism, and specificity. For the masculin-
ity dimension, the Netherlands distinguishes itself from the other two countries. This
Figure 12.3
National cultures of the Netherlands, the United States, and India (source: Hampden-
Turner and Trompenaars 2000; Hofstede 2001).
indicates some of the complexities involved in the bipartite and tripartite knowledge
transfers among these R&D facilities.
The assumed relations between cultural dimensions and aspects of knowledge trans-
fer have been described in 17 statements, which are verbalizations of the connections
described in Figure 12.2. Via questionnaires, these statements have been presented to the
R&D professionals at the R&D facilities in the Netherlands, the US, and India. For every
statement, respondents were asked whether they agreed with it and what effect the cross-
cultural situation as regards the statement had on knowledge transfer (“makes transfer
easier,” “has no effect,” or “makes transfer more demanding”). Preceding the statements,
a question was included to assess the relative weight of electronic linkages and personal
contacts in actual knowledge transfers (ratio electronic linkages-personal contacts 0–100,
25–75, 50–50, 75–25, or 100–0). An interview with the International Product Develop-
ment manager at Akzo Nobel Car Refinishes showed that, at the time of the investigation,
65 of them were involved in international knowledge transfers. All these 65 R&D profes-
sionals were approached via a questionnaire, of which 33 responded, either immediately
or after a reminder (a response rate of 50.8%). The small size of the sample shows the
explorative nature of this research. The aim is, via the situation of ANCR, to explore the
information value and workability of linking culture and knowledge transfer in the way
described above and thus to typify ANCR’s knowledge transfer in a multi-cultural context.
The aim is not to generate general conclusions for other knowledge transfer situations.
FINDINGS
The presentation of the research findings is ordered around four topics. These con-
cern (1) an assessment of knowledge transfer culture at ANCR, (2) the impact of cultural
differences on knowledge transfer, (3) the relative influence of disposition, competence,
and channel choice, and (4) differences in cultural impact as regards tacit versus explicit
knowledge.
The first topic concerns whether and how the knowledge transfer culture of the units
included in this research differ compared to the diversity in culture of the countries
involved. In other words, how far do differences in national culture pervade the R&D
units when their knowledge transfer is at stake? The empirical data presented in Table
12.1 show that the different national cultures frequently score differently on the various
cultural dimensions proposed by Hofstede, Hampden-Turner, and Trompenaars (see
Figure 12.3). More specifically, on the one hand, the research findings show that often a
cultural incompatibility is experienced in a cultural dimension in which the national cul-
tures are expected to be attuned. On the other hand, national cultures appear to be well-
matched in cultural dimensions in which large cultural inconsistencies are anticipated.
Regarding power distance, the difference between the two nations is echoed for the
Indian and Dutch R&D facilities. The Indian site shows a much higher power distance
than the Dutch one. This is reflected in an average verdict of 1.25, or mostly “Agree,” as
to the experienced effect of power distance on knowledge transfer. However, the USA,
which would be expected to be close to the Dutch value, is equidistant between the other
two countries. This indicates that the knowledge transfer behavior at the US site is more
affected by the rules of the hierarchy than anticipated.
The scores for uncertainty avoidance are remarkably attuned to the national figures.
All sites appear more uncertainty avoiding than risk-taking in their knowledge transfer
behavior and all equally uncertainty avoiding (all around 1.78). This indicates that the
transfer process is to some extent directed by rules and formal descriptions.
Collectivism appears visible in all sites, not just—as would be expected—in the Indian
R&D facility. It is particularly striking that the US site appears even less individualistic
than the Indian one. Regarding masculinity the higher score on that dimension in the
national figures is reflected in the data for the American and Indian sites. It is evident
that the Dutch site appears more close to a neutral score than in the national figures,
which shows a mixed picture as regards the importance of trust, the absence of competi-
tion, and personal contacts.
The national differences with respect to long-term orientation appear not to permeate
the knowledge transfer cultures of ANCR since the Indian, Dutch, and American facili-
ties have similar ratings on this orientation. This indicates that, just like the Indian site,
the Dutch and American sites do not experience the barriers associated with lacking a
long-term orientation, such as insensitiveness to future knowledge value or time needed
for reflection. Also as regards specificity, all sites appear to incline towards a diffuse cul-
ture. This implies that relations are not just considered necessary for business, but should
also be of a social nature. Consequently, face-to-face interactions are seen as important.
It is also noteworthy that, when it comes to specificity, at ANCR’s R&D facilities the
Indian and Dutch cultures are much closer than the Dutch and American cultures, as
Hofstede’s national figures would suggest. Regarding neutrality the data reproduce to a
great extent the similarity between the three cultures that appears at the national level.
All scores are not far from 2, which could be read as an indication that a combination of
electronic linkages with seminars and project groups is considered valuable. Knowledge
transfer partners would need broad band channels such as are present in seminars and
teams so they can openly convey the emotions associated with the shared knowledge.
Table 12.1
The knowledge transfer cultures at Akzo Nobel Car Refinishes R&D units
Dimension Country Agree Neutral Disagree Average
PD NL 0.25 0.19 0.56 2.31
United States 0.30 0.56 0.15 1.85
India 0.75 0.25 0.00 1.25
UA NL 0.35 0.50 0.15 1.79
United States 0.34 0.53 0.12 1.78
India 0.32 0.59 0.09 1.76
IDV NL 0.17 0.51 0.32 2.15
United States 0.15 0.30 0.55 2.39
India 0.20 0.23 0.57 2.37
MAS NL 0.27 0.43 0.30 2.03
United States 0.31 0.45 0.23 1.92
India 0.41 0.41 0.17 1.76
LTO NL 0.34 0.47 0.19 1.84
United States 0.35 0.47 0.19 1.84
India 0.50 0.32 0.18 1.68
SPEC NL 0.07 0.28 0.66 2.59
United States 0.15 0.40 0.44 2.29
India 0.04 0.39 0.57 2.54
NEUT NL 0.21 0.34 0.45 2.24
United States 0.23 0.44 0.33 2.10
India 0.15 0.42 0.42 2.27
Legend: The rows represent the seven cultural dimensions used in this research (see Figure
12.2). The cell figures give the proportion of respondents that selected the corresponding
answers aggregated over the indicators per dimension. The average scores have been calculated
by coding the first answer category as 1, the second as 2, and so on. For indicators that are
inversely related with the dimension (see the minus signs in Figure 12.2), the “Agree” answers
have been counted as “Disagree” and vice versa.
The most striking differences in knowledge transfer cultures of the three R&D sites
relate to the dimension of power distance. For the dimensions of individualism, mas-
culinity, long-term orientation, and specificity, clear disparities are also recognizable,
but for the other dimensions the differences appear smaller compared to the situation
in which the differences in national culture would have fully surfaced in ANCR. The
scores for uncertainty avoidance and neutrality appeared most clearly aligned with the
national figures. These combined findings suggest that the professional culture of R&D
work with its centripetal forces is generally stronger than the national culture. What
the aggregate level of the data in Table 12.1 disguises is that respondents from differ-
ent countries in some instances appear to experience different cultural distances on a
single cultural dimension since they have provided different answers for questions that
relate to one specific cultural dimension. This occurrence complicates the exploration of
knowledge transfer in relation to the diversity in national cultures along various cultural
dimensions.
The second topic addresses the impact differences in national cultures have on
knowledge transfer. When differences occur, do these make transfer easier or more
demanding, or do they have little effect? Table 12.2 presents a summary of the data
collected in this research that answer this question. The results show that the respon-
dents from each national culture perceive knowledge transfer to often be demanding.
However, when the transfer of knowledge is deemed demanding, small cultural dis-
tances are perceived among the national cultures. The indicators that appear associated
with most knowledge transfer problems in Table 12.2 do not typically coincide with the
dimensions with the largest cultural differences as shown in Table 12.1. Apparently,
the knowledge transfer process is not perceived to be demanding due to large cultural
distances. What the aggregate figures in Table 12.2 do not show is that both American
and Dutch respondents mostly argue that large cultural distances will have no effect
on the transfer process. A major difference between the American and Dutch respon-
dents groups is that those American respondents who do recognize an effect of cul-
tural distances on knowledge transfer typically think that these will make the transfer
of knowledge easy, whereas Dutch R&D professionals who see an impact of cultural
diversity mostly argue that this diversity makes knowledge transfer more demanding.
However, voices pointing to a positive or negative effect of cultural difference on knowl-
edge transfer are the minority; the prevalent opinion is that cultural diversity has little
or no impact on knowledge transfer. This implies that the arguments of such authors
as Simonin (1999) and Ford and Chan (2003), who assert that diversity in national cul-
tures complicates the transfer of knowledge, are only partially supported by the research
findings. Overall, the research findings suggest that transferring knowledge is problem-
atic, whether in a situation of diverse or compatible national cultures. This suggests
that the impact of national culture on the transfer of knowledge is less powerful than
the influence of the three general elements of the transfer process (the dispositional,
competence, and transfer mode factors).
The third topic discussed here concerns the relative impact of the discerned groups of
factors—the disposition, ability, and channel choice factors. Table 12.2 shows that the
average for indicators 1 through 6 (disposition) is 2.09 (close to “no effect”), for indica-
tors 7 through 13 (competence) it equals 2.43 (more demanding) and for 14 through 17
(channel) the average value is 2.02 (also close to “no effect”). Overall, these data suggest
that ability factors involve more impediments to knowledge transfer than both disposi-
tion and choice of channel. Below the surface of aggregation in Table 12.2, the outcome
indicates that each country holds a different view on how diversity in national cultures
affects the three general elements of the transfer process. According to Dutch R&D pro-
fessionals, the dispositional factors are perceived to be mainly affected by diversity in
national cultures, the mode of transfer sometimes, and the competence factors hardly
ever. On the other hand, the American R&D professionals feel that the effect of a diver-
sity in national cultures is large for the mode of transfer, moderate for the competence
factors and small for the dispositional factors, while the Indian group leaders primar-
ily experience effects of cultural differences on the dispositional and competence fac-
tors, whereas the choice in mode of transfer is influenced only sporadically. Therefore,
the research findings indicate that within each culture the three general elements of
Table 12.2
Assessment of cultural differences and their impact on cross-cultural R&D knowledge transfer
at Akzo Nobel Car Refinishes
Opinion on statements Effect on knowledge transfer
Agree Neutral Disagree Average Easy No effect Demanding Average
1 0.08 0.37 0.55 2.47 0.16 0.58 0.26 2.11
2 0.49 0.44 0.06 1.57 0.26 0.26 0.47 2.21
3 0.38 0.38 0.24 1.85 0.18 0.36 0.45 2.27
4 0.17 0.28 0.54 2.37 0.17 0.42 0.42 2.25
5 0.34 0.46 0.20 1.86 0.50 0.20 0.30 1.80
6 0.40 0.45 0.15 1.75 0.50 0.09 0.41 1.91
7 0.09 0.39 0.52 2.43 0.06 0.35 0.59 2.53
8 0.26 0.53 0.21 1.96 0.10 0.14 0.76 2.67
9 0.36 0.42 0.22 1.87 0.14 0.48 0.38 2.24
10 0.24 0.38 0.38 2.13 0.05 0.40 0.55 2.50
11 0.22 0.67 0.11 1.89 0.00 0.23 0.77 2.77
12 0.42 0.51 0.07 1.65 0.05 0.37 0.58 2.53
13 0.43 0.40 0.17 1.74 0.47 0.26 0.26 1.79
14 0.10 0.36 0.54 2.44 0.19 0.52 0.29 2.10
15 0.20 0.45 0.35 2.14 0.45 0.23 0.32 1.86
16 0.53 0.37 0.10 1.58 0.45 0.25 0.30 1.85
17 0.07 0.37 0.56 2.48 0.10 0.52 0.38 2.29
Legend: The rows represent the 17 statements used in this research (see Figure 12.2).The cell data give
the proportion of respondents that selected the corresponding answers. The average scores have been
calculated by coding the first answer category as 1, the second as 2, and so on.
the knowledge transfer process are affected by diversity in national cultures to varying
degrees. A possible explanation is that during the action of transferring knowledge, the
various cultural dimensions coming into play are rated differently in the three coun-
tries. Accordingly, these different value orientations distinctly influence the three gen-
eral elements of the transfer process. This is congruent with Hofstede’s line of argument
(2001), asserting that national culture distinguishes groups of people, in this case from
the Netherlands, the United States, and India, thereby influencing the “shoulds” and
“oughts” of their actions—in this case, the transfer of knowledge.
Fourthly, the cultural diversity surfacing in the content-related side of knowledge
transfer was inspected—more specifically, the tacit and explicit sides to knowledge. The
results provide indications that the respondents experience a more complex process
for transferring explicit knowledge than tacit knowledge. These indications stem from
two sources. Firstly, two variables were calculated to represent the explicit-tacit ratio in
knowledge transfers and the experienced transfer problems generated by cross-cultural
distance, respectively. The first variable was computed based on the question asking
respondents about the ratio between the use of electronic linkages and personal contacts
in their actual knowledge transfers with other sites (the answer category “0% via elec-
tronic linkages—100% personal contacts” was recoded to 1, the answer category “25%
via electronic linkages—75% personal contacts” to 2, etc.). This variable shows an
average of 3.45 (standard deviation of 0.75), which indicates that the R&D professionals
use a mixture of personal contacts and electronic linkages for the transfer of knowledge
between the R&D facilities, with a certain preference for personal contacts. The assessed
effect of cultural distance on knowledge transfer was determined by recoding “easy”
answers for the 17 statements as -1, “no effect” answers as 0, and “demanding” answers
as 1, and calculating per respondent the ratio between these recoded answers. This vari-
able shows an average of 0.14 (standard deviation of 0.3), indicative of the fact that over-
all, respondents deem knowledge transfers demanding. The correlation between the two
variables is -0.37 (significant at 95% reliability). The negative sign for the correlation
between the ratio electronic linkages-personal contacts (or explicit-tacit knowledge)
and the variable representing the effect of culture on knowledge transfer indicates that
cultural distances will mainly affect the transfer of explicit knowledge, while this effect
will decrease during the transfer of tacit knowledge. The second indication of more
severe problems associated with explicit knowledge transfer across cultures is given by
the figures in table 12.2. On the whole, respondents “disagree” with the group of indica-
tors relating to explicit knowledge (indicators 7, 10, 14, and 15 in Table 12.2), whereas
they fluctuate between “Neutral” and “Agree” regarding indications of tacit knowledge
transfer (indicators 9, 12, 16, and 17 in Table 12.2). However, when this is compared to
how cultural differences have an impact on the knowledge transfer processes (the last
column in Table 12.2), it shows that the effects of cultural distances will increase when
explicit knowledge is being transferred. These latter empirical results are at odds with
the argument offered by many authors, including Bhagat and others (2002) and Evans,
Pucik, and Barsoux (2002), who stress that the influence of diversity in national cultures
should be most prevalent in the transfer of tacit knowledge, because this requires more
social interaction than transferring explicit knowledge. However, while the sample size
prevents any definitive conclusions, it makes sense that transferring explicit knowledge
is considered to be more affected by cultural differences than tacit knowledge transfer.
The story told by explicit knowledge is necessarily incomplete. When culture affects the
ability to interpret explicit knowledge communicated via impersonal channels, doubts
as to interpretability and reliability are bound to increase compared to a situation where
the people who explicated their knowledge are present to provide the necessary back-
ground information and fill in the blanks.
CONCLUSION
The following list summarizes the key implications of the research presented in this
chapter.
• Differences in national culture at country level are unreliable indicators of differences
in the national cultures among R&D facilities located in different countries. As the basis
for an adequate understanding of the cultural differences among R&D facilities in dif-
ferent countries and as a guide for drafting appropriate KM programs, generally avail-
able figures on differences in national cultures have limited value. Within an individual
MNC, a dedicated assessment of the cultural differences and compatibilities is called for
that includes notions of national culture, for instance, along the lines described in the
chapter.
• The research suggests that differences and compatibilities in the professional cultures of
R&D are more important factors affecting cross-cultural R&D knowledge transfer than
aspects of national culture or organization culture.
• Knowledge transfer among R&D professionals and R&D facilities is challenging and
often problematic. However, other factors than differences in national culture are
stronger explanations for the perceived problems than cultural diversity. Also within
the same cultural group, R&D knowledge transfer is typically demanding.
• In the case study, cultural differences were experienced most frequently as having no
or only little impact on R&D knowledge transfer. Less frequently, they were thought to
ease knowledge transfer among R&D facilities. Least frequently, cultural diversity was
seen as an impediment to R&D knowledge transfer.
• The ability to engage in R&D knowledge transfer was considered a more important
factor for understanding barriers to knowledge transfer than disposition or channel
choice.
• Perceptions of the impact of culture on R&D knowledge transfer, both regarding the
nature of that impact and the differentiated role of such factors as ability and disposi-
tion, were found to differ with culture.
• Cultural differences have less impact on the transfer of tacit R&D knowledge trans-
fer compared to when explicit knowledge is being transferred. However, that does not
mean that tacit knowledge transfer is considered to be less demanding. Instead, the
demanding nature of this type of knowledge transfer is seen as mostly independent
from cultural differences.
The case of the three R&D facilities of Akzo Nobel Car Refinishes confirms the view
that knowledge transfer within a multinational is a complex and difficult issue. How-
ever, a diversity in national cultures does not necessarily have to cause or intensify
disturbances in knowledge transfer, since respondents have indicated mostly experi-
encing only small cultural differences, while undergoing a demanding transfer process.
Moreover, several R&D professionals have asserted that large cultural discrepancies
will not affect the transfer of knowledge, or will even make it easier. Consequently, it
can be argued that the impact of national culture on the transfer of knowledge is less
than the influence of the three general elements of the transfer process: disposition
and competence of transfer partners, and transfer mode. Furthermore, on the whole,
competence factors are considered to imply more important potential barriers than
the other two elements. However, the R&D sites in the different countries appear to
hold divergent views on the relative weight of these factors. In comparison to the
overall picture, the American respondents attached more importance to the mode
of transfer, whereas the Dutch respondents gave priority to dispositional factors. An
interesting outcome of the study is also that diversity in national cultures was found
predominantly to affect the transfer of explicit knowledge, and much less that of tacit
knowledge. Nonetheless, the responses also suggest that the transfer of tacit knowledge
may be more demanding than transferring explicit knowledge. Apparently, transfer-
ring tacit knowledge is considered difficult in any situation, either within or between
cultural groups. Cultural incompatibilities will not significantly add to the difficulties.
In contrast, the lower degree of effort associated with transferring explicit knowledge
appears to lead to the appearance or reinforcement of all kinds of barriers when that
transfer crosses cultural borders. Similar culturally-determined interpretation back-

grounds are apparently considered crucial for grasping the subtleties that hide below
the surface of the explicated knowledge, such as its applicability in new situations and
the level of confidence and trustworthiness associated with that knowledge.
Any generalizations based on this research should be made with care because of its
limitations. These include the small sample size, the imbalance in the sample composi-
tion with an underrepresentation from the Indian site, the fact that it was not assessed
how strong culture is at the different sites, and the fact that no test was performed to
check the results against a measurement of culture in ANCR other than by using gener-
ally available figures of national cultures. However, the results described above provide
interesting observations with clear practical implications for ANCR and comparable
MNCs. These include the idea that paying attention to KM practices aimed at facilitating
knowledge transfer among R&D facilities in different national cultures is indispensable.
More specifically, it is advisable to direct different dedicated KM activities to the three
general elements of the transfer process—the dispositional and competence factors, and
the mode of transfer—while respecting the knowledge-friendliness of the local cultures.
In this case study, an overall focus on competence factors appears to be advisable, e.g.,
through knowledge transfer training classes or adaptations in the organization struc-
ture. Such an overall programme should be complemented with additional measures
honoring the local approach to knowledge transfer. For instance, in the case study an
additional focus on dispositional elements appears wise for the Dutch site—for instance,
via an HRM programme—whereas the American situation calls for specific attention to
channel considerations. This research confirms that it makes sense for MNCs to distin-
guish between the transfer of explicit and tacit knowledge since these two processes are
influenced in a different way by diversity in national cultures. In contrast to common
views, however, this research implies a definite need to pay attention to cultural barriers
for transferring explicit knowledge, since cultural incompatibilities mainly affect this
transfer. At the same time, the transfer of tacit knowledge should not be ignored, as this
forms the basis for facilitating explicit knowledge transfer.
Other MNCs with R&D seats in similar countries as ANCR’s should not automati-
cally copy this combined focus in their KM programmes. Differences in national cul-
ture have proven to be unreliable predictors of different knowledge transfer cultures. A
general assessment of national or organizational culture is therefore hardly useful as a
basis for drafting KM programmes. The type of cultural assessment attuned to the needs
and peculiarities of knowledge transfer that was described in this paper generates much
more useful information. Overall, it is recommended, based on a dedicated assessment
of differences in knowledge transfer cultures, not to rely on standard KM programmes
but to use a set of KM practices that is attuned to the specific situation of the organi-
zation in order to reduce the potentially negative, culturally differentiated, impact of
the three general elements (disposition, competence, and channel) on the transfer of
explicit and tacit knowledge within MNCs.
Many authors have argued that knowledge transfer in itself can be and very often is
a problematic affair, mostly because of its cultural connotations. While this research
does not dispute this statement and even confirms it in several respects, it refines it and
provides it with a more positive interpretation. Cultural differences among the trans-
fer partners may have the effect of intensifying knowledge transfer problems, but they
may also lead to a reduction of these. This research therefore confirms that cultural
differences are not just barriers to knowledge transfer, but may also provide a stimulus
to learn from and with others in other cultures (Pauleen and Murphy 2005). Further
research in this area could explore the value of adopting an emic approach to reduce the
risk of essentializing representationalism inherent in etic approaches such as those of
Hofstede, Hampden-Turner, and Trompenaars.
NOTES
1. The research described in this chapter was performed in 2004 by Marjolijn Thiessen as the
basis for her master’s thesis in business administration. The other two authors were involved in
this research as supervisor (Caroline Essers) and coreader (Paul Hendriks).
2. For further information on the company, see their Web site: www.carrefinishes.com.
REFERENCES
Alazmi, M., and M. Zairi. 2003. Knowledge management critical success factors. Total Quality
Management & Business Intelligence 14(2): 199–204.
Bartlett, C. A., and S. Ghoshal. 2000. Transnational management: Text, cases, and readings in
cross-border management. New York: McGraw-Hill.
Bhagat, R. S., B. L. Kedia, P. D. Harveston, and H. C. Triandis. 2002. Cultural variations in the
cross-border transfer of organizational knowledge: An integrative framework. Academy of
Management Review 27(2): 204–21.
Birkinshaw, J., R. Nobel, and J. Ridderstrale. 2002. Knowledge as a contingency variable: Do the
characteristics of knowledge predict organization structure? Organization Science 13(3):
274–89.
Black, J. S., H. B. Gregersen, and M. E. Mendenhall. 1992. Global assignments: Successfully expa-
triating and repatriating international managers. The Jossey-Bass Management Series. San
Francisco: Jossey-Bass.
Bresman, H., J. Birkinshaw, and R. Nobel. 1999. Knowledge transfer in international acquisitions.
Journal of International Business Studies 30(3): 439–63.
Buckley, P., and M. I. Carter. 2004. A formal analysis of knowledge combination in multinational
enterprises. Journal of International Business Studies 35(5): 371–84.
Chiesa, V., and R. Manzini. 1996. Managing knowledge transfer within multinational firms. Inter-
national Journal of Technology Management 12(4): 462–76.
Chiesa, V., R. Manzini, and E. Pizzurno. 2004. The externalization of R&D activities and the grow-
ing market of product development services. R&D Management 34(1): 65–75.
Cohen, W. M., and D. A. Levinthal. 1990. Absorptive capacity: A new perspective on leaning and
innovation. Administrative Science Quarterly 35(1): 128–52.
Collins, D. 2000. Management fads and buzzwords: Critical-practical perspectives. London: Rout-
ledge.
Cross, R., and L. Sproull. 2004. More than an answer: Information relationships for actionable
knowledge. Organization Science 15(4): 446–62.
Cummings, J. L., and B. S. Teng. 2003. Transferring R&D knowledge: The key factors affecting knowl-
edge transfer success. Journal of Engineering and Technology Management 20(1–2): 39–68.
Davenport, T. H., and L. Prusak. 1998. Working knowledge. How organizations manage what they
De Long, D. W., and L. Fahey. 2000. Diagnosing cultural barriers to knowledge management.
Academy of Management Executive 14(4): 113–27.
Eisenhardt, K. M., and F. M. Santos. 2002. Knowledge-based view: A new theory of strategy? In
Handbook of Strategy and Management, eds. A. Pettigrew, H. Thomas and R. Whittington,
139–64. London: Sage.
Evans, P., V. Pucik, and J.-L. Barsoux. 2002. The global challenge: Frameworks for international
human resource management. Boston: McGraw-Hill/Irwin.
Ford, D. P., and Y. E. Chan. 2003. Knowledge sharing in a multi-cultural setting: A case study.
Knowledge Management Research & Practice 1 (1): 11–27.
Ghoshal, S., H. Korine, and G. Szulanski. 1994. Interunit communication in multinational-
corporations. Management Science 40 (1): 96–110.
Grant, R. M. 1996. Toward a knowledge-based theory of the firm. Strategic Management Journal
17: 109–22.
Gupta, A. K., and V. Govindarajan. 2000. Knowledge flows within multinational corporations.
Strategic Management Journal 21 (4): 473–96.
Hampden-Turner, C. M., and F. Trompenaars. 2000. Building cross-cultural competence: How to
create wealth from conflicting values. Chichester, UK: Wiley.
Harris, H., C. Brewster, and P. R. Sparrow. 2003. International human resource management.
London: Chartered Institute of Personnel and Development.
Hatch, M. J. 1997. Organization theory: Modern, symbolic, and postmodern perspectives. Oxford:
Oxford University Press.
Hedlund, G. 1986. The hypermodern MNC: a heterarchy. Human Resource Management 25(1):
9–35.
Hendriks, P. H. J. 1999. Why share knowledge? The influence of ICT on the motivation for knowl-
edge sharing. Knowledge and Process Management 6(2): 91–100.
Hinds, P. J., and J. Pfeffer. 2003. Why organizations don’t ‘know what they know’: Cognitive
and motivational factors affecting the transfer of expertise. In Sharing expertise: Beyond
knowledge management, eds. M. S. Ackerman, V. Pipek and V. Wulf, 3–26. Cambridge,
MA: MIT Press.
Hofstede, G. H. 1980. Culture’s consequences: International differences in work-related values.
Beverly Hills, CA: Sage.
. 2001. Culture’s consequences: Comparing values, behaviors, institutions, and organizations
across nations. 2nd ed. Thousand Oaks, CA: Sage.
Hooff, B. v. d., and L. Hendrix. 2004. Eagerness and willingness to share: The relevance of different
attitudes towards knowledge sharing. Paper read at Organizational Knowledge, Learning
and Capabilities Conference (OKLC 2004), Innsbruck.
Howells, J. 1996. Tacit knowledge, innovation and technology transfer. Technology Analysis &
Strategic Management 8(2): 91–106.
Kayworth, T., and D. Leidner. 2003. Organizational culture as a knowledge resource. In Hand-
book on Knowledge Management, ed. C. W. Holsapple, 235–52. Berlin: Springer.
Kogut, B., and U. Zander. 1992. Knowledge of the firm, combinative capabilities, and the replica-
tion of technology. Organization Science 3(3): 383–97.
. 1993. Knowledge of the firm and the evolutionary-theory of the multinational-corporation.
Journal of International Business Studies 24(4): 625–45.
Lin, C. H., B. R. Tan, and S. F. Chang. 2002. The critical factors for technology absorptive capacity.
Industrial Management & Data Systems 102(5–6): 300–308.
Marcotte, C., and J. Niosi. 2000. Technology transfer to China: The issues of knowledge and learn-
ing. Journal of Technology Transfer 25(1): 43–57.
Martin, J. 1992. Cultures in organisations: Three perspectives. New York: Oxford University
Press.
Murtha, T. P., S. A. Lenway, and J. A. Hart. 2001. Managing new industry creation: Global knowledge
formation and entrepreneurship in high technology. Stanford, CA: Stanford University Press.
Nobel, R., and J. Birkinshaw. 1998. Innovation in multinational corporations: Control and com-
munication patterns in international R & D operations. Strategic Management Journal
19(5): 479–96.
Nonaka, I., and H. Takeuchi. 1995. The knowledge-creating company: How Japanese companies
create the dynamics of innovation. Oxford: Oxford University Press.
Pauleen, D. J., and P. Murphy. 2005. In praise of cultural bias. MIT Sloan Management Review
46(2): 21–22.
Pedersen, T., B. Petersen, and D. D. Sharma. 2003. Knowledge transfer performance of multina-
tional companies. Management International Review 43(3): 69–90.
Penrose, E. T. 1959. The theory of the growth of the firm. Oxford: Blackwell.
Polanyi, M. 1967. The tacit dimension. London: Routledge Kegan Paul.
Quinn, R. E., and J. Rohrbaugh. 1983. A spatial model of effectiveness criteria: Towards a compet-
ing values approach to organizational analysis. Management Science 29(3): 363–77.
Roman-Velazquez, J. 2005. An empirical study of organizational culture types and their relation-
ship with the success of a knowledge management system and the flow of knowledge in the
U.S. government and nonprofit sectors. In Creating the discipline of knowledge manage-
ment, ed. M. Stankosky, 66–91. Amsterdam: Elsevier.
Simonin, B. L. 1999. Ambiguity and the process of knowledge transfer in strategic alliances. Stra-
tegic Management Journal 20(7): 595–623.
Straub, D. W., M. Keil, and W. Brennan. 1997. Testing the technology acceptance model across
cultures: A three country study. Information & Management 33:1–11.
Szulanski, G. 1996. Exploring internal stickiness: Impediments to the transfer of best practice
within the firm. Strategic Management Journal 17:27–43.
2003. Sticky knowledge: Barriers to knowing in the firm. Sage Strategy Series. London:
Sage.
Thompson, M.P.A., and G. Walsham. 2004. Placing knowledge management in context. Journal
of Management Studies 41 (5): 725–47.
Tsoukas, H. 1996. The firm as a distributed knowledge system: A constructionist approach. Stra-
tegic Management Journal 17(Winter): 11–26.
Zander, U., and B. Kogut. 1995. Knowledge and the speed of the transfer and imitation of organi-
zational capabilities: An empirical test. Organization Science 6(1): 76–92.
Afterword
First of all, I would like to offer my congratulations to the authors for taking on
such a difficult but valuable assignment. It would be hard to imagine management
research more abstract then investigating the relationship between knowledge and
culture, to say nothing about then offering some help to these managers in actually
doing something about these issues. Yet it also would be hard to find work more
needed by organizations.
As our work becomes more complex, more virtual, and more dependent on geo-
graphically distributed cognition, we are all assailed by what Toffler notably called “dis-
economies of complexity.” However, neither he nor almost anyone else took on the
greatest yet most subtle constraint of them all—culture.
Culture is a killer concept. In the 1950s it was reckoned to have more than 160 distinct
definitions, and Raymond Williams wrote in his classic Keywords (1975) that it was one
of the two or three most complex words commonly used in English. Even in common
conversations, just a bit of reflection will indicate how elusive the varied meanings of the
term can be. Yet, just travel a bit to a different culture than your own and you can see,
feel, apprehend, sense, and touch just how different everything is. Even in cultures such
as Japan’s that seemingly look like Western ones (or Anglo-based ones), the assump-
tions and underlying emotions, values, and beliefs are very different.
Yet when one takes apart, as best one can, the concept of culture and tries to see what
influence it has on knowledge, there are three threads, or distinct and measurable parts
of culture, that emerge from both theoretical and empirical research and from working
with management.
The first one that is clear is beliefs. One widely quoted definition of knowledge (origi-
nating in classical Greek thought) is “justified true belief.” Although one may pick at this
definition, or any other definition of knowledge, it is generally thought of as legitimate
and at least partially true. Well, how much of culture is made up of beliefs? Surely, a great
deal. Some would say that culture is nothing else but beliefs. In any case, it is impossible
246 Afterword
to speak of knowledge without speaking of beliefs in some way, and it is equally impos-
sible to speak of culture without speaking of beliefs. Yet this easy syllogism is ignored
over and over again in the day-to-day practice of management. Firms continue to buy
systems and develop processes to manage global activities with scarcely any reference to
either concept (though knowledge gets its nose under the tent more often these days).
It surely is easier to just buy a system or develop a process without reference to these
concepts. It is nearly impossible to actually measure knowledge or cultures in the whole,
and as we all know, what cannot be measured does not get done in our efficiency-crazed
world. Yet at what cost do we ignore these things? How do we measure misunderstand-
ings and false assumptions? Does any one person stand up and say, “This project was
delayed or done poorly because we did not understand the cultural beliefs and assump-
tions of our varied global team members.” Just writing this sentence out illuminates how
rare its utterance would be in any meeting or boardroom. But it is true, based on my
own observations and those of many colleagues in the knowledge movement, that lack
of understanding of underlying beliefs of project participants is a major cause of project
failures. And these beliefs are a major part of any person’s cultural inheritance.
A second critical part of culture is trust. There has been a bull market in trust lately,
with economists and sociologists leading the charge in researching and attempting
to measure trust in societies and organizations and in one’s personal life. Some of
these writings have been very helpful in bringing the concept to the meeting and
even to the boardroom. I would go so far as to state that like social network analysis,
trust is one of those subjects that have made a successful migration from the acad-
emy directly into practice. Yet trust, too, is a vital part of culture, as all good social
theorists know well. There are high-trust and low-trust societies and cultures, as well
as organizations, and this variable alone has a terrific effect on the economics of an
organization. It is also vital to effective knowledge management. How can one ever
think of having a knowledge system or process in place when there is no trust. Who
would share anything of value with people one did not trust? Not only would that be
irrational; it would also be self-destructive. Most organizations that I have worked
with made an assumption of general trust throughout the organization in terms of
knowledge sharing. This has proven to be false, and this failure has caused many
executives to question the very value of any systematic way to work with knowledge.
Again, because trust (and lack of trust) is a substantial part of what we mean when we
discuss culture, we had best understand it better if we ever want to improve knowl-
edge flows and sharing in any setting.
The last aspect of culture and knowledge is in a sense the most abstract one. It is
the simple but complex fact that knowledge itself is never a stand-alone entity; it is
entwined with culture, institutions, and the economic structures of any society. This
embeddedness is one of the most important things we have learned about knowl-
edge since organizational knowledge research began in earnest about 15 years ago.
It makes knowledge a very different resource than land, labor, or capital, which can
be moved around the world with greater and greater speed and efficiencies. Knowl-
edge is contextual, sticky, and local. It requires greater understanding of its setting
and environment for it to be effectively used. In short, knowledge is so wrapped
up with culture that it can almost be seen as being a part of culture, as some have
claimed.
Afterword 247
All of these reflections leave us with many puzzles. Serious researchers will be look-
ing at how these issues will, or will not, be addressed for many years to come. The now
small number of studies such as this one will be growing greatly in the near future as
work becomes increasingly global and complex. Again, the current authors are to be
applauded for being pioneers in a new land with porous boundaries and unsettled land-
marks.
Laurence Prusak,
Distinguished Scholar in Residence, Babson College
REFERENCE
Williams, R. 1975. Keywords: A vocabulary of culture and society. London: Fontana.
Index
Absorptive capacity: knowledge transfer and, Cadres, 139–43

72, 76, 231; management of, 72, 76 CAF. See Competitiveness Program
Academic settings, KM and, 111 of the Andean Development
Academy of Management Executive Council
(AME), 67 Canada, patenting in, 103–4, 106
Action Framework, mental models Canadian Patent Act, 106
component of, 205–7 Cerf, Vincent, 51
ADEX. See Exporters Association of Peru Checa, Jose, 210
Adler, N. J., 7–9 China: bribery and corruption in, 169–70;
Adler’s model, national culture and, 8–9 business, interpersonal relationships in,
Advanced Research Projects Agency 163–65; central planning in, 169; culture
(ARPA), 51 of fear in, 168–69; group-based incentives,
Akzo Nobel Car Refinishes (ANCR), 219; KM rewards in, 166; IJVs in, 161; knowledge
movement at, 232–38; R&D at, 232–33 sharing in, 158, 160–62, 164, 170–71; mar-
AME. See Academy of Management ket economies in, 169; means vs. ends in,
Executive 164; organizational structures in, 162, 171;
ANCR. See Akzo Nobel Car Refinishes property rights in, 103, 107; SOEs in, 164;
ARPA. See Advanced Research Projects trust, implicit communication in, 165–66
Agency Cillóniz, Fernando, 212
ARPANET, 51 Civilization, culture and, 36
Asian culture: concept of face in, 181; Euro- Cognitive processes: Asian vs. Western,
American management theories within, 26–27; neurological basis for, 27, 32; Sapir-
175 Whorf hypothesis and, 27
Axelrod, Robert, 203–4 Communication: technology impact on,
Axelrod Theory of Cooperation, 203–4, 207 53–54; twentieth century, 140. See also Im-
plicit communication
Berman, Sanford, 85 Competence, 69; knowledge transfer and,
Berners-Lee, Tim, 52 230–31
Boundary spanning model: for KM, 29–31; Competition: mental models and, 206; at
syntactic vs. semantic levels of, 29–32 microeconomic level, 206; in socialist
Burki, Shahid Javed, 199 economies, 145
250 Index
Competitive advantage: knowledge and, 176; Exfrusur, 210

knowledge sharing and, 157 Expatriates: as knowledge mediators, 77; local
Competitiveness Program of the Andean business community and, 74; management
Development Council (CAF), 207 and, 75
Confucian society: consensus, collectivism in, Exporters Association of Peru (ADEX),
129; hierarchy in, 112 210–11
Context: holistic understanding of, 85;
Klemke typology of, 86; knowledge and, Fairbanks, Michael, 205, 207
72–73, 84–87 FDI. See Foreign direct investment
Contextual knowledge, 72–73 Flood, Cerril, 202
Contingency: knowledge and, 59; manage- Foreign direct investment (FDI), 158
ment of, 59; in portal societies, 46–48 Foreign employees, as cultural resources,
Cooperation: foundation for, 204; human in- 74–75
stincts and, 205; in low-trust environment, Frió Aéreo, 211–16
201–7; in zero sum world, 204. See also Fundación Perú, 212
Reciprocity and cooperation
Corporación Latinobarómetro, 196 Game theory, 202
Country Competitiveness Practice, 205 Globalization: cost-efficiency of, 221; ICT
Craft knowledge, patenting and, 97 and, 3; MNCs and, 221; patents, patenting
Cross-cultural knowledge, management and, 107; Peru impact by, 208
models, schemes and, 69–71 Global knowledge economy, ICT and, 3
Cultural convergence: HKNET projects and, Global outsourcing, 4
125–27; normative need for, 127 Global patent system: KM and, 95. See also
Cultural learning, HKNET projects and, Patents, patenting
123–25 Govindarajan, V., 70
Cultural stretch, 72, 77 Grondona, Mariano, 198
Cultural Values and Human Rights Sympo- Groundwork of the Metaphysics of Morals
sium, 197 (Kant), 45
Culture: Adler’s model of, 8–9; anthropologi- Group, communal ownership, 101–2; indi-
cally derived concepts of, 5; civilization vidual vs., 102. See also Ownership
and, 36; conceptual approach to, 223–31; Group Support System technology, in
construction of, 4–5; content of, 4–5; de- HKNET projects, 129
fined, 4, 26, 197; incentives and, 168; Japa- Guanxi, 112
nese, 7, 36; knowledge sharing across, 81; Guilds, 97, 102, 105
knowledge system of, 112; learning and, Gupta, A. K., 70
26–29, 28; operationalization of, 224–25;
practice, research and, 14–15; progress Hermeneutic theory, 87–88
and, 197; progressive vs. static, 197–98; Hierarchy: in Confucian society, 112;
romantic, 35–36; sharing and, 223; subcul- employee attitudes toward, 187, 189;
ture and, 6; sustainability of, 4–5; trans- harmony within, 112; HKNET projects
mission of, 5; values, attitudes, behaviors and, 121–23; knowledge transfer and, 229;
and, 7–8. See also National culture modern bureaucratic, 50; network order
Cybernetics, 55 vs., 50; normative, cultural need for, 113;
order and, 48, 50; patron-client, 48
Data, information, knowledge and learning, HKNET projects: characterization rankings
23–25 and, 124; cultural convergence and,
Dewey Decimal System (DDC), 84 125–27; cultural learning and, 123–25;
Dresher, Melvin, 202 evolution of, 115; expected, encountered
problems and, 120–21; findings of, 119–27;
E-commerce: intellectual property and, 101; Group Support System technology in,
patent protection and, 101 129; hierarchy, leadership and, 121–23,
Economic development, patenting and, 126; HKNET1, 115–16; HKNET2,
100–101 116; HKNET3, 116–17; HKNET4, 117;
Europe, socialist economies in, 136 HKNET5, 117–18; HKNET6, OHKNET,
Index 251
118; HKNET7, BOHKNET, 118; KM in KM. See Knowledge management

VTs and, 112; Mainland Chinese and, 119; KMS. See Knowledge management systems
participation in, 113; research questions Knowledge: aesthetic ordering and, 38; art
for, 114; synchronous vs. asynchronous of systems and, 36–39; causal ambiguity
communication and, 112–13, 130–32; of, 230; cognitive-aesthetic, 60; commons
team activities in, 114; team composition roots of, 59; competitive advantage and,
in, 114; technology for, 114; technology 176; conceptualization of, 23; context
providers and, 131 and, 72–73, 85–87; contingency and, 59;
Hofstede, Geert, national cultural dimensions cross-contextual discovery of, 89–91;
of, 180–81 cross-cultural, 69–71; cultural dimension
Hong Kong, 41 of, 21; data, information, learning and, 23;
definitions of, 86; distribution of, 38; East-
ICT. See Information and communication ern vs. Western traditions of, 7; formative,
technologies 37; holistic vs. analytical, 7; as ignorance,
IJV. See International joint ventures 37; individualism vs. collectivism and, 230;
Implicit communication, trust and, 165–66, information vs., 222; KM and, 175–76;
170–71 learning and, 21; literature on, 137; man-
Incentives, cultural conventions and, 168 agement of, 57–60; national culture and,
Individuality: in Latin America, 201; perfor- 7; recursive, circular, 22, 24–25, 52–57; as
mance vs., 141 strategic asset, 21–22; symmetry and, 37;
Information: design and, 59; knowledge vs., tacit vs. explicit, 25–26, 67, 69, 73, 77, 136,
222; uncertainty and, 44–46 138, 151, 222, 231, 239; universal order-
Information and communication technolo- ing of, 83; upstream, downstream shar-
gies (ICT): globalization and, 3; global ing of, 12–13. See also Craft knowledge;
knowledge economy and, 3; KM and, 3 Knowledge management; Knowledge
Information infrastructure, standardization organization; Knowledge transfer; Pattern
vs. flexibility in, 83 knowledge
Information management, KM and, 11 Knowledge community, 82
Information retrieval (IR), in networked Knowledge creation, 69–70; Nonaka and
environment, 81 Takeuchi theory of, 69–70; socialization
Information theory, hermeneutics for, 87–88 stage of, 70
Innovation: economic, social force of, 36; Knowledge management (KM): academic
ownership of, 103; patents and, 95; portal settings and, 111; best practice vs. con-
cities, regions and, 40 tingent approach to, 190–91; boundary
The Intellectual Foundation of Information spanning model for, 29–31; cultural biases
Organization (Svenonius), 90 regarding, 14; generational development
Intellectual property, 95; in China, 107; e- of, 176; goals for, 24; HKNET project and,
commerce and, 101; protection of, 108 111–12; ICT-based strategies and, 3; infor-
Intelligence, pattern production and, 56 mation management and, 11; knowledge
International Country Risk Guide, 199 and, 175–76; learning organization and,
International joint ventures (IJVs), 159; in 175–78; literature on, 4, 176; models of, 12;
China, 159 motivational foundations of, 150; in mul-
Internet: KO and, 82; semantic Web and, 83 ticultural organizations, 29–31; national
Invention: act of, 99; defined, 107; patenting culture and, 11, 13, 128–32, 189–91; Non-
and, 99–100 aka SECI model of, 12; organization, cul-
IPEH. See Peruvian Asparagus Institute ture and, 10–13; research on, 220; socialist
IR. See Information retrieval economies and, 137–38; social process of,
11; strategies for, 190–91; in VTs, 111–12.
Japanese culture, 7, 36 See also Management
Journal of Managerial Psychology (JMP), 68 Knowledge management systems (KMS): cul-
tural, ethnic backgrounds and, 22; cultural
Kahn, Robert, 51 gap in, 22; limitations of, 29
Kant, Immanuel, 45 Knowledge organization (KO): bias and, 84;
Klemke, R., 85–86 cross-contextual, 89–91; hermeneutics for,
252 Index
87–88; Internet and, 82; library concept and, 177; management style and, 188;
of, 82–83; ontology and, 84–85; semantic national culture impact on, 189–90;
tools for, 82–83; subject access in, 83–84; power relations and, 188; shared vision in,
unified classification systems for, 84–85 182–84; Singaporean government as, 179;
Knowledge sharing: in China, 158, 160–62, Singapore organizations and, 189; trusting
164, 170–71; competitive advantage of, relationships in, 186–87
157; cross-cultural, 160; institutional, Lenin, Vladimir, 139–43
cultural influences on, 162–70; one-way Letts, José, 210
knowledge transfer vs., 158; resistance to, Library of Congress Subject Headings
161; in Russia, 158, 160–62, 164, 170–71 (LCHS), 84
Knowledge transfer: absorptive capacity and, Licklider, J.C.R., 51
72, 76, 231; anticipation in, 68–69; atmo- Lindsay, Stace, 205, 207
sphere of, 71; competence and, 230–31; Loyalty, performance and, 143–46, 150–51
cultural stretch and, 72, 77; culture’s role
in, 223–24, 227–31; explicit rules and, Management: absorptive capacity of, 72, 76;
228; Gupta/Govindarajan typology of, 70; of contingency, 59; cross-cultural issues in,
linear, 71; literature review, 159; manage- 178; expatriates and, 75; as informants, 74;
ment failure and, 71; meaningless, 73; of knowledge, 57–60; knowledge transfer
mechanisms for, 222; in MNCs, 220–22; and, 71; political task of, 138
model of, 226–27; modes of, 231; national Matsushita, 9
culture impact on, 228; research, practice Meaning, construction of, 26
in, 159; status hierarchies and, 229; trust, Mental models: competition and, 206; moti-
credibility and, 229 vation and, 206; strategic decision-making
KO. See Knowledge organization and, 206
Konosuke Matsushita, 9 MNC. See Multinational corporations
Kuhn, T. S., 87 Morgenstern, Oskar, 202
Motivation: KM and, 150; for patenting, 150;
Labor: classes of, 141; international move- socialist economies and, 150
ment of, 157; political control of, 139; Multicultural organizations, KM in, 29–31
work vs., 140, 149 Multinational corporations (MNCs), 158; as
Language, contextual bias of, 81 distributed knowledge systems, 223; glo-
Latin America: individualism in, 201; insti- balization and, 221; knowledge transfer in,
tutional development in, 199–200; social 220–22; research and development activi-
capital in, 196; Spanish conquest impact ties of, 219–20
on, 201; trust levels in, 195–96, 199–200;
values, culture, development in, 196–99 NAFTA. See North American Free Trade
LCHS. See Library of Congress Subject Agreement
Headings Napier, Nancy, 75
Leadership, 9–10; HKNET projects and, 121– National borders, subcultures within, 6
23, 126; national culture and, 9–10; in orga- National culture, 5–7; Adler’s model and,
nizations, 9–10; in Peruvian business, 208 8–9; Hofstede model of, 180–81; incentives
Learning: coercive, 181; culture and, 26–29, and, 168; individualism vs. collectivism
28; infant studies on, 28; knowledge and, and, 225; KM and, 11, 13, 189–91; knowl-
21; learning organization and, 177; organi- edge and, 7; knowledge transfer impact by,
zational, 177. See also Team learning 228; leadership and, 9–10; learning orga-
Learning and knowledge, individual, organi- nization impact by, 189–90; legitimacy of,
zational, 23 5–6; long- vs. short-term orientation and,
Learning culture, creation of, 181–82 225; masculinity vs. feminism and, 225;
Learning organization: bureaucratic system neutral vs. affective, 226; organizational
and, 188; collective commitment, avoid- culture and, 8, 13; organizational literature
ance and, 182–85; as concept, 187–88; on, 180; power distance and, 225; specific
cultural gap and, 177–78; ethnographic vs. diffuse, 226; uncertainty avoidance
fieldwork in, 179; experimentation con- and, 225; VTs and, 128–32; work-related
straints of, 184; KM and, 175–78; learning attitudes and, 5
Index 253
Navigational order, 51 invention and, 99–100; inventor’s interests

Network connections, relations, 49; in open and, 100; of life forms, 98; management
society, 57 and, 96, 103, 107; monopolies and, 100;
Network orders, hierarchies vs., 50 motivations for, 99–101; NAFTA and, 106;
Networks: IR and, 81; large scale effectiveness ownership and, 98; Paris Convention for
of, 51; TCP for, 51 the Protection of Industrial Property and,
Network society, 50 106; PCT and, 106; property rights and,
Neumann, John von, 202 96; of software, 98–99, 101, 105; specifica-
New generation KM (NGKM), 11 tion and, 104; trade secrets and, 99; TRIPS
Nonaka, I., 70 and, 106; WIPO and, 106; WTO and, 106.
Nonaka SECI model, of KM, 12 See also Global patent system
North American Free Trade Agreement Pattern knowledge, 37, 47, 56; contextualiza-
(NAFTA), 106 tion and, 42
Pattern thinking: in aesthetic forms, 35;
Open society, network connections, relations knowledge origin in, 35
in, 57 PCT. See Patent Cooperation Treaty
Order: aesthetic, 38; contingency and, 44–48; Perception, culture and, 28
hierarchy and, 48, 50; navigational, 51; Performance: first-order, 144; individuality
planar, 49; in portal cities, regions, 40; self- vs., 141; loyalty and, 143–46, 150–51; in
organizing, 40; technology and, 49 socialist economies, 145–47
Organizational culture: national culture and, Perry, Guillermo, 199
8, 13; in subsidiary operations, 163 Peru: agricultural industry revolution in,
Organizational learning. See Learning orga- 207–8; asparagus exports of, 209–10; busi-
nization ness leadership in, 208; economic stabili-
Organizational psychology, cross-cultural zation program in, 207–8; export crops of,
issues in, 178 208; Frió Aéreo in, 211–16; globalization
Organizational structures: Chinese, 162, 171; impact on, 208; judicial independence
Russian, 162–63, 171; Western, 162 variable of, 200; reciprocity in, 201–2;
Organizations: as distributed knowledge sys- trade preferences for, 208; trust levels in,
tems, 223; global rights of, 95; leadership 195, 200
in, 9–10; structure, management practices Peruvian Asparagus Institute (IPEH), 214
within, 227. See also Multicultural organi- Pierer, Heinrich von, 67–68
zations Portal cities, regions, 35, 38, 43; arts and
Outsourcing. See Global outsourcing sciences in, 41; Chicago, 43; company
Ownership: individual vs. group, 102; of in- headquarters in, 57; dominance of, 57;
novation, 103; patenting and, 98. See also emergent forms of, 41–44; Hong Kong,
Group, communal ownership 41; information dissemination and, 42;
innovative capacity of, 40; intelligence
Paris Convention for the Protection of concentration in, 43; as intermediary,
Industrial Property, 106 41–42; political economy of, 41; popula-
Patent Cooperation Treaty (PCT), 106 tion growth and, 43; self-organizing order
Patents, patenting: in Canada, 103–4; craft in, 40; uncertainty and, 45; unsuccessful,
knowledge and, 97; cross-cultural perspec- 39; Venice, 58
tive on, 95–96; cross-licensing agreements Portal societies, 39–41; contingent choices in,
and, 105; cultural systems of, 108; 47; historic cases of, 39
e-commerce and, 101; economic devel- Prejudices and Antipathies (Berman), 85
opment and, 100–101; enforcement of, Prisoner’s Dilemma, 201–3
103–5; English vs. American system, Property rights, in China, 103, 107
103–4; first-to-file principle and, 104; first- RAND Corporation, 202
to-invent principle and, 104–5; globaliza- Reciprocity and cooperation, 203–5
tion and, 107; guilds and, 97; historical Research and development (R&D): at ANCR,
roots of, 96–99, 101–2, 105–6; individual 232–33; distributed, 220–22; international-
vs. corporate, 103; infringements of, 105; ized, 221; in MNCs, 219–20
innovation and, 95; international, 106–7; Ridley, Matt, 205, 207
254 Index
Rights, enforcement of, 103–5 Team learning, 185

Roberts, Larry, 51 Technology: communication impact by,
Roots Peru, 210 53–54; for HKNET projects, 114, 129, 131;
Russia: bribery, corruption in, 169–70; order and, 49; synchronous vs. asynchro-
business, interpersonal relationships in, nous, 130–32
163–65; central planning in, 169; culture Tit-for-Tat, 203–5
of fear in, 168–69; group-based incentives, Trade-Related Aspects Intellectual Property
rewards in, 166; knowledge sharing in, Rights (TRIPS), 106
158, 160–62, 164, 170–71; market econo- Trade secrets: patenting and, 99; sharing
mies in, 169; means vs. ends in, 164; orga- of, 213
nizational structures in, 162–63, 171; SOEs Transport Control Protocols (TCP), 51
in, 164; trust, implicit communication in, TRIPS. See Trade-Related Aspects Intellectual
165–66 Property Rights
Trotsky, Leon, 145
Salas, Alvaro, 212 Trust: building, 215–16; in China, 165–66;
Sapir-Whorf hypothesis, 27 cooperation and, 201–7, 216; creating
Semantic Web, 83 atmosphere for, 75–76, 78; implicit com-
Singapore: concept of face in, 182; culture, munication and, 165–66, 170–71; knowl-
learning organization in, 179–81, 189 edge transfer and, 229; in Latin America,
Social capital, in Latin America, 196 195–96, 199–200; in learning organiza-
Social geometries, 48–52 tion, 186–87; between management and
Social Identity Theory, 8 employees, 186–87; in Peru, 195, 200; in
Socialism, economy, politics in, 143 Russia, 165–66
Socialist economies: competition in, 145;
cultural standards of, 135; in Europe, 136; Uncertainty: information and, 44–46; proce-
KM and, 137–38; motivation and, 150; dural guarantees and, 45; Taoism and, 45;
planning system of, 146; public vs. private in traditional settings, 44
in, 148; subversive surviving and, 148–49; U.S. Patent and Trademark Office (USPTO),
workgroup size in, 147; work initiatives in, 98
147; work/organization vs. communica- USPTO. See U.S. Patent and Trademark Of-
tion/organization in, 140; workplace per- fice
formance in, 145–47
SOE. See State-owned enterprises Value differences, cultural dimensions of, 180
Software, patenting of, 98–99, 101, 105 Venice, 102; as portal city, 58
State-owned enterprises (SOEs), in Russia Videoconferencing, HKNET projects use of,
and China, 164 114
Subculture, within national borders, 6 Virtual teams (TM): HKNET projects and,
Subsidiary operations, organizational culture 111–12; KM in, 111–12; national culture
in, 163 and, 128–3
Svenonius, Elaine, 90
Symmetry, knowledge and, 37 Wiener, Norbert, 55
Systems: art of, 36–39; contingency and order WIPO. See World Intellectual Property Or-
in, 44–48; information, uncertainty in, ganization
44–46; self-organizing, 37; self-steering in, Work: labor vs., 140; subversive surviving by,
55–56 148–49
World Intellectual Property Organization
Takeuchi, H., 70 (WIPO), 106
Taoism, uncertainty and, 45 World Trade Organization (WTO), 106
TCP. See Transport Control Protocols WTO. See World Trade Organization
About the Editor and Contributors
David J. Pauleen is a senior lecturer of Information Management at Victoria University

of Wellington, New Zealand. He has done extensive research in the areas of virtual
team leadership and collaboration, cross-cultural communication and management,
and knowledge management. He is currently involved in research on the relationship
between information and communication technologies and emerging work behaviors.
His work has appeared in a number of journals including Sloan Management Review,
the Journal of Management Information Systems, and the Journal of Global Informa-
tion Management. He is the editor of the book Virtual Teams: Projects, Protocols and
Processes (2004).
Jane E. Bryson is a senior lecturer in the Victoria Management School at Victoria Uni-
versity of Wellington, New Zealand, and has taught in human resource management and
industrial relations, organization development, and public management over a number
of years. She is an organizational psychologist who has extensive practical experience in
the public and private sectors as a consultant and as a human resources manager. Her
recent research has included examining responses to ethical dilemmas of managers and
professionals, investigating how human resource management contributes to organiza-
tional capability, and exploring influences on the development of human capability in the
workplace.
Luis S. Chang is an economist from the Pontifical Catholic University of Peru and holds
a master’s of science degree in business studies from the London Business School. He
worked for 10 years at the Central Reserve Bank of his native Peru and was general
manager of the National Society of Exporters and vice-chairperson of the Securities
Commission. As advisor to the minister and secretary-general of the Ministry for In-
dustry, he coordinated the study “Building the Competitive Advantage of Peru.” He
represented Peru at Asia Pacific APEC and PECC forums’ working groups. He con-
ducted the Competitiveness Program at the Andean Development Corporation (CAF),
a multilateral financial organization in Latin America. He has edited several books on
competitiveness issues.
256 About the Editor and Contributors
Mike Chiasson is currently a senior lecturer at Lancaster University’s Management

School, in the Department of Management Science, United Kingdom. His research
examines how social context affects information science development and implemen-
tation, using a range of social theories (actor network theory, structuration theory,
critical social theory, ethnomethodology, communicative action, power-knowledge,
deconstruction, and institutional theory). In studying these questions, he has examined
various development and implementation issues (privacy, user involvement, diffusion,
outsourcing, cyber-crime, knowledge management, and system development conflict)
within medical, legal, engineering, entrepreneurial, and governmental settings. Most of
his work has been qualitative in nature, with a strong emphasis on participant observa-
tion.
Sally Dexter is currently completing her doctoral thesis exploring knowledge sharing
within collaborative projects in the public sector. Her research interests include public
and private sector knowledge management, cross-culture knowledge management, so-
cial network analysis, and gender issues in information systems.
Caroline Essers is a lecturer and doctoral candidate at the Department of International

Management at the Nijmegen School of Management, Radboud University of Nijme-
gen, The Netherlands. She holds a master’s degree in Human Geography. Her research
focuses on the identity constructions of female entrepreneurs of Moroccan and Turkish
descent in the Netherlands. She previously worked for the Department of the Middle
East, Radboud University of Nijmegen.
Gerhard Fink is Jean Monnet Professor of applied microeconomics in European inte-

gration and director of the doctoral program at Wirtschaftsuniversität Wien, Austria.
He was chair of the business faculty at Wirtschaftsuniversität Wien during 2001–2002
and director of the Institute for European Affairs (Jean Monnet Centre of Excellence)
during 1997–2003. He has also taught at the Johns Hopkins University Bologna Center
and at universities in Munich, Trieste, Linz, Vienna, and Krems. During 1973–1990 he
was affiliated with the Vienna Institute for Comparative Studies (WIIW), of which he
was director from 1984 to 1990. He is certified as a business consultant by the Austrian
Chamber of Commerce. Professor Fink has published 180 articles in academic journals
and authored, edited, or coedited about 15 books. He is coeditor of a Special Issue of the
Academy of Management Executive on the global transfer of management knowledge
(2005). He speaks German and English, and has a working knowledge of Russian, Ital-
ian, and French.
Michiel van Genuchten is general manager of Philips HDSoftware, a unit of Phil-
ips electronics. He is also a professor at Eindhoven University of Technology, The
Netherlands, for one day a week. He holds a master’s degree (1987) and a doctorate
(1991) from the Eindhoven University of Technology. He has worked in indus-
try since 1987, among others at Philips Electronics and GroupSupport, a software
company he founded. His main interests are software as a technology, software as
a business, and information technology support for virtual teams. Results of his re-
search work have been published in journals such as IEEE Software, Journal of MIS,
IEEE Transactions on Software Engineering, and IEEE Transactions on Professional
Communications.
Paul H. J. Hendriks (PhD, Social Sciences, 1986, University of Nijmegen, The Neth-
erlands) is Professor of Organization Studies, particularly knowledge, structures, and
networks at the Nijmegen School of Management of Radboud University in Nijmegen,
the Netherlands. His work has been published in a broad range of academic journals, in-
cluding Organizational Research Methods; Organization, Information & Management;
Journal of Information Technology; International Journal of Geographical Information
Science; Knowledge and Process Management; Decision Support Systems; Knowledge-
Based Systems; Expert Systems with Applications; and International Journal of Informa-
tion Technology and Management. His research interests include motivation aspects of
knowledge work, knowledge-friendly organization structures, knowledge exchange in
regional innovation systems, and knowledge management. He teaches master courses
on organizations and knowledge; master courses on technology, innovation, and or-
ganizations; and various courses on social capital, knowledge-friendly organization
structures, and knowledge management at undergraduate and graduate levels at the
Nijmegen School of Management and elsewhere.
Nigel Holden has been Professor of Comparative and International Management at

Nottingham Business School, United Kingdom, since July 2004. He previously held
professorial appointments in Germany and Denmark. His book Cross-Cultural Man-
agement: A Knowledge Management Perspective (2002) was published in a Russian-lan-
guage version in 2005 and will appear in Chinese translation in 2006. He is coeditor of
a Special Issue of the Academy of Management Executive on the global transfer of man-
agement knowledge, which appeared in 2005. A widely traveled management educator
and researcher, he has given keynote addresses to professional audiences throughout
Europe as well as in Taiwan, the United States, and Russia. He speaks English, German,
and Russian.
Kate Hutchings (PhD, University of Queensland) is an Associate Professor in the De-

partment of Management, Monash University, Australia. She was previously employed
at the Queensland University of Technology and prior to that at the University of
Queensland. She has taught in China and Malaysia as well as having held visiting posi-
tions in the United States, Denmark, and France. She has coauthored and coedited three
books, and her research has appeared in Asia Pacific Journal of Management, Human
Resource Management Journal, International Journal of Human Resource Management,
Journal of Management Studies, and Thunderbird International Business Review, among
others. A specialist in international management, her current research interests include
human resources management in China, intercultural networking, and intercultural
knowledge management.
Maren Lehmann (Dphil) trained in print and studied design, pedagogy, and sociol-
ogy at the University of Art and Design Burg Giebichenstein, Halle, Germany; at
Martin-Luther-University Halle-Wittenberg, Germany; and at Bielefeld University,
Germany. She has a diploma in pedagogy and a doctorate in sociology (thesis topic: in-
clusion and exclusion in religious observations). Dr. Lehmann was a research assistant
at the Department of Sociology and Business Administration at Martin-Luther-University
Halle-Wittenberg, and guest lecturer at universities in Halle, Leipzig, Weimar, and
Vienna. She is working on her post-doctoral dissertation (on careers as organizational
258 About the Editor and Contributors
calculations with individuals) in cooperation with the Department of Fundamental

Studies at University Witten/Herdecke. She speaks German and English and has a
working knowledge of Russian.
Chern Li Liew is a senior lecturer at Victoria University of Wellington School of Informa-

tion Management, New Zealand. Chern Li’s main research interest is in understanding and
enhancing user-information interaction in a digital environment. She is also interested in
social informatics theory and applications, particularly in the area of cross-domain and
cross-cultural knowledge discovery. She has published in Journal of the American Society
for Information Science and Technology, Journal of Documentation, The Journal of Infor-
mation Science, and Online Information Review. She also serves on the editorial advisory
boards of Library and Information Science Research and Online Information Review.
Robert Mason joined the faculty of the Information School at the University of Wash-
ington, United States, in 2005. His current research interests focus on the philosophy
and ethics of technology management and the cultural aspects of knowledge manage-
ment. He recently completed a research project that examined how knowledge was cre-
ated and shared during implementation of enterprise systems in a consortium of state
universities. He was previously on the faculties of the College of Business at Florida
State University and the Weatherhead School of Management at Case Western Reserve
University. Prior to working full time in academia, he operated two consulting compa-
nies and worked in industry. He is a former president of the International Association
for the Management of Technology (IAMOT) and serves on the senior editorial board
of Technovation. He has bachelor’s and master’s degrees of science in electrical engi-
neering from Massachusetts Institute of Technology and a doctorate in industrial and
systems engineering from Georgia Institute of Technology.
Snejina Michailova is Professor of International Business at the University of Auckland

Business School, New Zealand (PhD, Copenhagen Business School, Denmark). Her
research interests are in international management (especially cross-cultural manage-
ment), knowledge management (particularly knowledge sharing), and emerging econo-
mies (Russia and China). Much of her research has bridged these three areas in different
constellations. Her work has appeared in, among others, The Academy of Management
Executive, California Management Review, Journal of Management Studies, Manage-
ment Learning, Journal of World Business, Organizational Dynamics, and International
Management. Dr. Michailova is Europe Editor of the Journal of World Business.
Peter Murphy is Associate Professor of Communications at Monash University, Aus-

tralia. His most recent books include Civic Justice (2001), Dialectic of Romanticism
(2004), and Australian Perspectives on Southeast Asia, Australia and the World (2005).
He is currently working on a study of creativity and intellectual capital.
Kala S. Retna is a lecturer at the University Teaching Development Centre at Victoria

University of Wellington, New Zealand. She provides professional staff development
workshops for tutors and also teaches courses in Victoria Management School, spe-
cifically an organizational behavior module for undergraduates. She has worked as a
trainer and management educator for many years in a large organization in Singapore
and retains an ongoing research interest on management issues in Singapore. Her main
areas of research, training, and consultancy at Victoria University are learning and
teaching in higher education, learning organizations, and cross-cultural management.
Anne-Francoise Rutkowski is assistant professor of Information Systems at the Tilburg

University, The Netherlands. She received her doctorate in cognitive and social psychol-
ogy. Since 1994, she has been involved in education and research activities in fundamen-
tal psychology (i.e., cognitive dissonance, causal attribution processes, post-modernist
theories, and methods of research in human sciences). Since 1999, her research interests
and publications have been oriented toward group support systems and bridge informa-
tion science and human sciences in addressing topics such as group decision making,
problem solving, virtual teams, and e-learning.
Chad Saunders is a doctoral candidate in Management Information Systems at the

Haskayne School of Business, University of Calgary, Canada. He has worked in various
capacities within academia as an instructor and lecturer and in industry as a consultant
to rapid-growth technology-based firms. His research interests focus on the knowledge
management practices of professional groups with a particular interest in how technology
enhances and hinders the practices of professionals such as lawyers, physicians, and soft-
ware developers. Mr. Saunders has published articles in IEEE Transactions on Software
Engineering, Journal of Business Venturing, and Entrepreneurship Theory & Practice.
Marjolyn S. W. Thiessen holds a master’s of science in business administration (special-

izing in international management) from the Nijmegen School of Management, Rad-
boud University of Nijmegen, The Netherlands. Her research has focused on the impact
of national culture on the transfer of knowledge among business units of a multinational
enterprise that are positioned at considerable geographical and cultural distance.
Doug Vogel is professor (chair) of Information Systems at the City University of Hong
Kong and an AIS Fellow. He received his master’s of science in Computer Science from
University of California, Los Angeles, in 1972 and his doctorate in business from the Uni-
versity of Minnesota in 1986. Professor Vogel has published widely and directed extensive
research on group support systems, knowledge management, and technology support for
education. His research interests bridge the business and academic communities in address-
ing questions of the impact of information systems on aspects of interpersonal communi-
cation, group problem solving, cooperative learning, and multicultural team productivity
and knowledge sharing. Dr. Vogel is especially active in introducing technology into enter-
prises and educational systems and researching mobile e-learning applications. Additional
detail can be found at http://www.is.cityu.edu.hk/staff/isdoug/cv/.
Ling-Ling Wu received her doctorate in psychology from the University of Chicago,

United States, in 1995. She is currently an Assistant Professor in the Department of Infor-
mation Management, National Taiwan University. Her research interests include cross-
cultural knowledge management and cognitive science approaches to decision making,
learning, negotiation, and problem solving in the interactive information technology
environment. She is on the editorial board of Research in Applied Psychology. Her work
has been published in Memory and Cognition, Psychology & Marketing, Current Issues
in Linguistic Theory, Sun Yat-Sen Management Review, Research in Applied Psychology,
and Taiwan Academy of Management Review.

David J. Pauleen Cross-Cultural Perspectives

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

David J. Pauleen Cross-Cultural Perspectives

Uploaded by

Copyright:

Available Formats

Cross-Cultural

Libraries Unlimited Knowledge Management Series

British Library Cataloguing in Publication Data is available.

Copyright © 2007 by Libraries Unlimited

All rights reserved. No portion of this book may be

Library of Congress Catalog Card Number: 2006028274

First published in 2007

Libraries Unlimited, 88 Post Road West, Westport, CT 06881

The paper used in this book complies with the

List of Figures vii

SECTION 1: CONCEPTUAL APPROACHES TO CULTURE

1 Exploring the Relationship between National and

2 Culture: An Overlooked Key to Unlocking Organizational Knowledge 21

3 The Art of Systems: The Cognitive-Aesthetic Culture of Portal Cities

SECTION 2: EFFECTS OF CULTURE ON KEY ASPECTS

4 Cultural Stretch: Knowledge Transfer and Disconcerting

5 From Concept to Context: Toward Social-Cultural

6 Managing Innovative Knowledge: Cultural Perspectives on Patenting 95

7 The Influence of National Culture on Knowledge Management

8 People’s Twist: The Cultural Standard of Loyalty and Performance

SECTION 3: RESEARCH AND CASES ON CULTURE

9 Institutional and Cultural Influences on Knowledge

10 Asian Organizations Meet North American Management Theory:

11 The Peruvian Asparagus Cluster: Realizing Profitability from

12 Research and Development Knowledge Transfer across

1.1 Culture, values, attitudes, and behaviors (Adler 2002) 8

1.3 KM model emphasizing the development of knowledge sharing behavior 12

1.4 National culture, organizational culture, and KM 13

5.1 Klemke’s context typology 86

5.2 Structure of a cross-contextual knowledge organization system 90

11.1 The Road to Frío Aéreo 211

12.1 Knowledge transfer model 227

12.2 Indicators of the impact of national culture on knowledge transfer 228

5.1 Selected definitions of knowledge 86

7.1 Synchronous versus asynchronous communication activities 115

7.2 Experience of HK and Dutch respondents 119

7.3 Expected and encountered problems 120

7.4 Pre- and post-test characterization rankings 124

11.1 Culture and progress 197

12.2 Assessment of cultural differences and their impact on cross-cultural R&D

Companies, educational institutions, nongovernmental organizations, governments

THE STRUCTURE OF THE BOOK

relationships exist between the different cultural contexts of national, regional/ethnic,

Globalization and ICT have opened up opportunities for organizational knowledge to

• to move accurately and swiftly with clear, specific goals

Yu and ChiangLin’s five life experiences, although not proven in an experimen-

National Culture and Knowledge

Culture, Values, Attitudes, and Behaviors

The Relationship between National and Organizational Culture

National Culture and the Inﬂuence of Leadership

can also influence leadership and leadership processes in organizations (Ayman,

Knowledge Management, the Organization, and Culture

The first categorization of KM is the management of information (Sveiby 2001). This

Model of National Culture, Organizational Culture, and

CONCLUSIONS AND IMPLICATIONS

Implications for Culture, Practice, and Research

In the knowledge-based view of the ﬁrm, knowledge is a potentially strategic asset

“Once people have learned to learn in a given way it is extremely difficult

is increasingly global and that an organization’s knowledge has become a strategic

These propositions provide a foundation on which we might develop a set of prin-

DATA, INFORMATION, KNOWLEDGE, AND LEARNING

Individual and Organizational Learning and Knowledge

The Nature of Data, Information, Knowledge, and Learning