The Power of Unstructured Data: A Study of the Impact of Tacit Knowledge on Business Performance

The Power of Unstructured Data: A Study of the Impact of Tacit Knowledge on Business Performance

Armando E. Paladino (University of Phoenix, Raleigh, NC, USA), Kathleen M. Hargiss (University of Phoenix, Bradenton, FL, USA) and Caroline Howard (HC Consulting, Oceanside, CA, USA)
DOI: 10.4018/IJSITA.2016100102
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Abstract

This study examined the incorporation of tacit knowledge into corporate business intelligence and its impact on business performance, specifically analyzing individual productivity. Business productivity in relation to the use of knowledge has been investigated but using macro-dimensions not specifically oriented to individual workers' productivity. This study was based on externalization, one of the modes in the theory of organizational knowledge creation (that is, converting tacit knowledge into explicit knowledge). The findings on the literature stated that knowledge is the most important piece of business competitive advantage and that tacit knowledge is a key part of that knowledge. This research found that tacit knowledge did not influence individual engineers' productivity and as such did not affect business performance. Additionally, it found that tacit knowledge was not a factor that could be used to predict individual productivity. This research was the first attempt to investigate individual productivity in relation to tacit knowledge.
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Background

In his seminal work, Nonaka (1991) introduced the concept of perceiving the company as “a living organism. Much like an individual, it can have a collective sense of identity and a fundamental purpose and not as a machine for information processing” (p. 8). Nonaka (1994) expanded his previous work and postulated the theory of organizational knowledge creation. He explained that knowledge possessed by individuals, organizations, and societies can be expanded through a spiral process in which tacit knowledge is converted into explicit knowledge, and then back into tacit. Tacit knowledge is hidden behind behaviors, skills competencies, and experiences (tacit actionable knowledge); articulated knowledge resides in individual thoughts and language use. Explicit knowledge resides inside computers in codified form, and by nature has a clear organization (Delen & Al-Hawamdeh, 2009).

Regarding tacit knowledge, Polanyi (1966) stated, “I shall reconsider human knowledge by starting from the fact that we can know more than we can tell” (p. 4). He also declared, “We recognize the moods of the human face, without being able to tell, except quite vaguely, by what signs we know it” (Polanyi, 1966, p. 5), and he classified this human characteristic as tacit knowledge, a knowledge that is hard to formalize and communicate. He further stated, “I think I can show that the process of formalizing all knowledge to the exclusion of any tacit knowing is self-defeating” (Polanyi, 1966, p. 20). As Inmon and Nesavich (2009) noted, “Stated differently, organizations that look only at their structured data—usually transaction-based data—miss an entire class of information that waits to be used for the decision-making process” (p. 11). Accordingly, this research is trying to demonstrate the extreme importance of tacit knowledge and its impact to increase business performance.

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