Data is a set of discrete symbols or signs used to express facts about events. Still, data tells nothing about why or how these events happen and they do not contain explanations or interpretations of the eventual changes of events. In an organizational context, data is most well described as structured records of transactions.Individual knowledge, Organizational knowledge, Tacit knowledge, Explicit knowledge

Anca MANDRULEANU

English

Research Papers in Economics

Revista Informatica Economică, nr. 4(48)/2008 
 
117
Knowledge Dynamics 
 
Anca MANDRULEANU 
Academy of Economic Studies, Bucharest, România 
anca.mandruleanu@fabiz.ase.ro 
 
  Data is a set of discrete symbols or signs used to express facts about events. Still, data 
tells nothing about why or how these events happen and they do not contain explanations or 
interpretations of the eventual changes of events. In an organizational context, data is most 
well described as structured records of transactions. 
Keywords: Individual knowledge, Organizational knowledge, Tacit knowledge, Explicit know-
ledge. 
 
odern organizations usually store date 
in some sort of technology system. It 
enters into the system by departments, such 
as: accounting, finance, marketing. Until re-
cently, central information system depart-
ments that respond to requests for data from 
management and other parts of the company 
have managed it. Nowadays, data is less cen-
tralized and available on demand, but the ba-
sic structure of what it is and how it is stored 
and used is the same. “Data describes only a 
part of what happened; it proves no judgment 
or interpretation and no sustainable basis of 
action. While the row material of decision-
making may include data, it cannot tell you 
what to do. Data says nothing about its own 
importance or irrelevance. But data is impor-
tant to organization – largely, of course, be-
cause it is essential row material for creation 
of information” (Davenport and Prusak, 
2003, pag 3). 
All organizations need data and some indus-
tries are heavily dependent on it. Banks, in-
surance companies, government’s agencies 
are several examples. Efficiently keeping 
track of millions of transactions is their busi-
ness. However, for many companies, more 
data is not always better than less. Some-
times, companies pile up data because it is 
factual and therefore creates an illusion of 
scientific accuracy. If sufficient data is ga-
thered, correct decision will automatically 
suggest themselves. This is a false in two ac-
counts. First, because there is no inherent 
meaning in a data and second, because too 
much data can make it harder to identify and 
makes sense of the data that matters.  
Information is a result of processing data. In-
formation means to put “in-form” the data, 
by giving it relevance and purpose.(Druker, 
1993).information is like a message, usually 
in the form of a document or a visible or aud-
ible communication. Just like a message, it 
has a sender and a receiver. Information is 
meant to change the way the receiver perce-
ives something, to have an impact on his 
judgment and behavior. It must inform; it is a 
data that makes the difference. Strictly speak-
ing, the receiver and not the sender, decides 
whether the message he gets is really infor-
mation – that is, if it truly informs him. Ac-
cording to Denver and Prusak, we transform 
data into information by adding value in var-
ious ways (200, p.4): 
We will consider the working definition of 
knowledge formulated by Davenport and 
Prusak (2000, p 5). “Knowledge is a fluid 
mix of framed experience, values, contextual 
information and expert insight that provides a 
framework for evaluating and incorporating 
new experiences and information. It origi-
nates and is applied in the minds of knowers. 
In organizations, it often becomes embedded 
not only in documents or repositories but also 
in organizational routines, processes, practic-
es and norms.” 
It is obvious that knowledge is not simple. It 
is a mixture of various elements; it is fluid 
and well structured, it is intuitive and there-
fore hard to capture in words. Knowledge ex-
ists within people and it is part of human 
complexity and unpredictably. 
In any organization, there are two types of 
knowledge: 
MRevista Informatica Economică, nr. 4(48)/2008 
 
118
•  Individual knowledge 
•  Organizational knowledge 
Individual knowledge belongs to each mem-
ber of the organization and can be accessed 
only with individual acceptance. Also, indi-
vidual knowledge is composed of: 
•  Tacit knowledge 
•  Explicit knowledge 
Knowledge can be obtained individually 
through a direct experience, or it can be ob-
tained through a transfer process. Polanyi 
(1983) defined the knowledge obtained 
through a direct experience of life as tacit 
knowledge. The other type is defined as be-
ing explicit knowledge. 
Knowledge integrates both theoretical and 
practical aspects of life and sciences. It is 
both rational and  nonrational, abstract and 
concrete, based on inner feelings and the im-
pact of the environment upon us. Polanyi re-
marked: „We had seen our tacit powers in-
terpreting the world around us by converting 
the impacts between our body and the things 
that come our way into a comprehension of 
their meaning. This comprehension was both 
intellectual and practical” (Polanyi, 1983, 
p.49). 
Tacit knowledge can be obtained form direct 
individual experience and it is stored within 
the unconscious zone of the brain. We are us-
ing it without being conscious of it, thus it is 
non-rational. We just say that tacit know-
ledge is experience or intuition. Tacit know-
ledge is similar to practical knowledge and it 
is the “knowing what” part of a knowledge 
body. 
Explicit knowledge approached the theoreti-
cal knowledge and it is the “knowing how” 
face of the same knowledge body. Explicit 
knowledge is transferred through communi-
cation and it can be explained.  
Knowledge comes in two formats. One is lo-
cated in employees’ heads and it is known as 
a tacit knowledge and the other one is pre-
sented in written form or embedded in prod-
ucts  and it is called explicit knowledge. 
Some organizations have knowledge embed-
ded in their processes and the knowledge that 
is in a format between passive and explicit. 
The challenge for every organization is to 
transform passive knowledge into active 
knowledge and to transform individual, tacit 
knowledge into group, organizational know-
ledge. Organizations have to put processes in 
place and think of knowledge initiatives to 
bring about this transformation. Managing 
knowledge is about creating an environment 
to encourage knowledge creation and trans-
fer. 
Tacit knowledge is transferred from one in-
dividual to another and from individuals to 
groups and teams through conversations, di-
alogues and meetings. Many times, this 
transfer takes place informally. A transfer 
from tacit to explicit knowledge takes place 
through the creation of documents, e-mails, 
reports, memos. Knowledge creation and 
transfer are achieved by interaction among 
individuals and in these kinds of interactions, 
four modes of knowledge conversion take 
place: 
• Socialization: informal meetings, discus-
sions, brainstorming, customer interaction, 
mentoring, learning groups 
• Externalization: cartoons to communicate, 
meetings, workshops, master classes, as-
signment databases 
• Combination: publications, conferences 
• Internalization: knowledge zone, customer 
feedback, development counseling, facilita-
tion skills. 
The knowledge – creating activities take 
place between people. We may find data in 
transactions or record and information in 
messages, but we can only obtain knowledge 
from individuals or group of knowers. 
One main reason for which we find know-
ledge valuable is that it is close to action. 
Knowledge can and should be evaluated by 
decisions or actions that it leads. For exam-
ple, better knowledge can lead to measurable 
efficiency in products and processes.  
Organizational knowledge refer to all the 
knowledge that can be integrated at the orga-
nizational level from individual knowledge 
of its members and form incoming know-
ledge fluxes from the external environment 
(Bratianu, 2006, p.170). Even if the human 
resources of an organization is composed of 
the total number of its employees, the orga-Revista Informatica Economică, nr. 4(48)/2008 
 
119
nizational knowledge is not the sum of all in-
dividual workers knowledge. In fact, only the 
explicit knowledge can be integrated into a 
new body of knowledge at the organizational 
level. The tacit knowledge remains at the in-
dividual level due to its implicit nature.  
When workers leave the company, they take 
with them all the tacit knowledge accumu-
lated in time. Professional workers rapidly 
evolve in scientific and technical fields, ob-
taining a lot of theoretical and practical 
knowledge, which is not contained and ex-
plained in the organization’s documents. 
Thus, when theses professionals leave the 
company there is a significant loss of know-
ledge, which is discovered only when succes-
sors become aware of missing insights due to 
some mistakes or difficulties in solving their 
problems. 
Knowledge develops over time, through ex-
perience that includes what we absorb from 
courses, books and mentors as informal 
learning. Experience refers to what we have 
done and what had happened with us in the 
past. “Expert” and “experience” are similar 
words and they mean “to put to the test”. Ex-
perts – people with many knowledge on a 
subject – have been tested and trained by ex-
perience. 
Knowledge born of experience recognizes 
familiar patterns and can make connections 
between what is happening now and what 
happened then. The experience – based in-
sights are what firms pay premiums for and 
they show why experience counts. 
Knowledge strategies become crucial for any 
accurate understanding of how an organiza-
tion works and a mastering of the dynamics 
of knowledge can determine the competitive-
ness of an economic agent. 
Organizations exchange information and 
knowledge with the external environment, 
which means to yield and to receive informa-
tion and knowledge. Just like a human body, 
an organization can identify, capture, filter 
and interpret knowledge and information 
coming from processing all the knowledge. 
Integrating it into its own knowledge basis, 
an organization can accommodate its level of 
knowing with that required by a competitive 
capability. That means to accept the idea that 
we may consider a kind of cognitive system 
at the organizational level. Individuals may 
come and go, but the organization preserves 
its knowledge, its values and its behavior. In 
this perspective, organizational culture is a 
form of the organization knowledge basis.  
The importance of experience is one indica-
tion of knowledge’s ability to deal with com-
plexity. Knowledge is not a rigid structure 
that excludes what does not fit; it can deal 
with complexity in a complex way. This is 
one essential source of its value. Even if it is 
tempting to look for simple answers to com-
plex problems and deal with uncertainties by 
pretending they do not exist, knowing more 
usually leads to better decisions than know-
ing less. Certainty and clarity often come at 
the price of ignoring essential factors. Being 
both, certain and wrong is a common occur-
rence. 
The knowledge is represented by all the in-
formation and knowledge existing in docu-
ments and in the structural elements of the 
organization itself. In management, we may 
say that any exchange of information be-
tween an organization and its environment 
modifies the knowledge state of organization 
and contributes to the decision making 
process. Actually, any decision making 
process is generated because of knowledge 
variation and any implementation of theses 
decision-making processes and to action gen-
eration.  
Many people assume that organizations are 
neutral and objective and that their purpose is 
to create a product or provide a service and 
that the goal is unrelated to values. In fact, 
people’s values and beliefs have a powerful 
impact on organizational knowledge. After 
all, organizations are made up of people 
whose values and beliefs influence their ac-
tions and thoughts. The organizations them-
selves have histories derived from people’s 
actions and words that also express organiza-
tional values and beliefs. 
Beliefs and values are integral to knowledge, 
determining in large part what the knower 
sees, absorbs and concludes from his obser-
vations. People with different values see dif-Revista Informatica Economică, nr. 4(48)/2008 
 
120
ferent things in the same situation and orga-
nized their knowledge by their values.  
People in organizations have sought, used 
and valued knowledge, at least implicitly. 
Company hire for experience or education 
because they understand the value of know-
ledge that has been developed and proven 
over time. Managers making difficult deci-
sions are much more likely to go to people 
they respect and avail themselves for their 
knowledge than they are to look for informa-
tion in databases. Most people in organiza-
tions consult a few knowledgeable people 
when they need expert advise in a particular 
subject. 
Explicitly recognizing knowledge as a corpo-
rate asset is new, however, as it understands 
the need to manage and invest it with the 
same care paid to getting value from other, 
more tangible assets. The need to make the 
most of organizational knowledge, to get as 
much value as possible from it is greater now 
than in the past.  
 In any organization there is a given knowing 
state based on the knowledge quantity and 
quality existing in a certain moment of time. 
This knowing state can be changed as a result 
of knowledge variation at the organizational 
level caused by different knowledge process: 
generation, acquisition, integration, codifica-
tion, sharing, storage, retrial and transforma-
tion.  
Any organization can be considered as an 
open system with respect to information. Be-
tween the internal and external environment 
there is a continuous exchange of informa-
tion. By processing the incoming information 
flux the organization acquires new know-
ledge with respect to its knowing state. Also, 
within the organization there is a process of 
knowledge creation, especially  by trans-
forming tacit knowledge into explicit know-
ledge at the individual level and then by shar-
ing and integrating the new knowledge at the 
organizational level. Knowledge acquisition 
is important in improving the knowing state, 
by reducing the complexity and uncertainty 
of the decision making process. 
It is well known that people interaction is 
how individuals share emotions, feelings and 
experience. Individual face – to – face inte-
raction is the only one way to capture the full 
range of psychical sensations and emotional 
reactions that are necessary for transferring 
tacit knowledge. 
It is interesting to consider a knowledge 
cycle, starting with the tacit - explicit trans-
formation, continuing with explicit – explicit 
sharing and ending up with explicit – tacit 
transformation. While for organizations it is 
important the sequence of the first two: 
  Tacit - explicit 
  Explicit – explicit 
for the individuals it is important the last one: 
explicit – tacit. 
This cycle is similar to a learning cycle, con-
sisting of the following processes: 
  Concrete experience 
  Observation 
  Reflection 
  Forming abstract concepts 
  Testing them in operational contexts 
The concrete experience is the source of the 
tacit knowledge and the next two stages con-
tribute to the generation of the explicit know-
ledge. 
 
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