Learning to Build a Car: An Empirical Investigation of Organizational Learning

abstract This study provides a longitudinal empirical examination of the basic elements of Nonaka's (1994) dynamic theory of organizational knowledge creation. First, the data illustrate the notion that knowledge creation in organizations proceeds through an intertwined four‐phase process: (1) socialization (tacit knowledge amplification); (2) externalization (tacit knowledge is transformed into explicit knowledge); (3) combination (explicit knowledge amplification); and (4) internalization (explicit knowledge is transformed into tacit knowledge). Second, the study extends Nonaka's theory by comparing the relative amount of intra‐organizational knowledge transfer occurring during periods of product redesign with the amount of knowledge transfer occurring during steady‐state periods. The questionnaire data suggest that the overall level of knowledge transfer is higher during periods of product redesign than it is during the steady state, whereas the interview data indicate that there were more mentions of knowledge transfer during the steady state. Third, the data suggest that there may be benefit in adding tacit error correction as a fifth phase in the learning cycle. This phase is characterized by a dual emphasis on externalization and internalization. Implications of these findings are discussed.