THE KNOWLEDGE CREATION WITH VIEW TO ...

THE KNOWLEDGE CREATION WITH VIEW TO INNOVATION AS A DYNAMIC CAPABILITY IN COMPETITIVE FIRMS Lilian A. P. Miguel – Universidade Presbiteriana Mackenzie, São Paulo, Brazil Marcos A. Franklin – Universidade Presbiteriana Mackenzie, São Paulo, Brazil Silvio Popadiuk – Universidade Presbiteriana Mackenzie, São Paulo, Brazil ABSTRACT In this paper, we discuss the organizational knowledge creation with view to innovation as one of the most important organizational dynamic capabilities. We present the dynamic capability theory, as well as the individual learning approaches, origin of the organizacional learning and of the knowledge creation process in the organizations. We also discuss the data collected in eight domestic and multinational firms based on the quantitative research using a six-point Likert scale, developed specially for this study. In order to analyze the gathered information it was used the descriptive statistics and the factorial analysis techniques. The study pointed out the existence of more innovative and less innovative organizations, which suggested that the approach the firms give to the knowledge creation could be an important differentiation as to their capacity of innovation, what can be considered a dynamic capability. Keywords: Knowledge, Knowledge Creation Dynamic Capabilities, Innovation. 1. INTRODUCTION The firms have different levels of competitiveness that turn them more competitive or less competitive. That could be related to intangible factors existing in the organizations, which create value, are rare and difficult to copied (WERNEFELT, 1984; BARNEY, 1991). Those intangible factors can be how the firms deal with the knowledge it has and creates. Two questions arise from that: which makes the firms be competitive nowadays, and which makes them deal differently with knowledge? One of the potential answers for those questions can be found in the literature, since several authors defend the innovation as a key factor to the competitiveness, what answers the first question (SCHUMPETER, 1934). The innovation is considered source of competitive advantage (PORTER, 1992). In order to innovation can happen, however, it is essential that the organizations are capable of dominate the organizational learning (NONAKA; TAKEUCHI, 1997). This answer conducted to the following research problem: How the organizational knowledge creation capability can become an organizational dynamic capability. As a technique it is considered the individual learning approaches, which lead to the organizational learning, that in turn conducts to the organizational knowledge, and finally to the innovation. The objective here is to verify if the knowledge creation with view to innovation acts as a dynamic capability and how it occurs. This study used an exploratory and quantitative research approach. It was necessary the comparison between organizations that had opposite competitive position in their markets. To determine that it was used the firm's official published information. A non probabilistic sample was used, for which it was applied a six-point Likert kind scale, assumed as an interval scale, and developed specially for this study. Descriptive statistics and factorial analysis were adopted to analyze the data gathered from the 105 questionnaires answered by the employees of prospected organizations in the product development area in eight different firms. The analysis permitted to point out predominant characteristics in the organizations considered more innovative, as well as in the organizations considered less innovative. The study corroborated the proposition that the organizational knowledge creation can be considered a dynamic capability as well as to outline an amplified organizational knowledge creation process in comparison to that proposed by Nonaka e Takeuchi (1997). This new process embodies the organizational learning inside a knowledge creation in a constructivist approach that contains two macro dimensions: the enabler conditions (challenge, commitment, decision process and orientation towards the external environment) and the knowledge conversion process.

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2. THEORETICAL SUPPORT Last century showed an increasing transformation. A Industrial Era claimed the capital and labor as the basic resources, which competences were based on technical aspects and fragmented work as the main source of productivity, emphasizing learning as a mere repository of information, as well as incremental changes DRUCKER, 1991, 1997, 2002; DAVENPORT, PRUSAK, 1998; STEWART, 1998). The Post-industrial Era reinforced the employment movement from the agricultural fields to the service area, amplifying the concept of work to something much higher than just surviving, given emphasis to the initiative attitude, to the risk consideration, to the continuous change and training. The globalization and the production offer lower than the market demand, promoted the change, i.e. the customers and consumers dictate the market rules, reinforcing the individual capacity of systemizing the knowledge as a main resource for the organizations, which saw the need of developing organizational competences based on the individual ones, to answer the transformation faced in the business environment (DRUCKER, 1991, 1997, 2002; DAVENPORT, PRUSAK, 1998; STEWART, 1998; PRAHALAD, HUMMEL, 1995). Later on, the Informational Era brought a revolution as a consequence of a world transformed in a global village, which the Canadian sociologist Marshal McLuhan anticipated almost three decades ago (SABBATINI, 1993). The globalization was consolidated through the electronic commerce and the Internet, emphasizing the knowledge as an element generator of technological innovation, now source of productivity. The man starts focusing his work in not only acquiring information, but also mainly in generating useful information, in order to produce the speed in the answer demanded by the market (DRUCKER, 1991, 1997, 2002; DAVENPORT, PRUSAK, 1998; STEWART, 1998; FLEURY, FLEURY, 2001; CAMPANÁRIO, 2002). The competitiveness implies the organizations need to create and renew their competitive advantages before their competitors, which occurs by the innovation in technologies as well as in management (PORTER, 1992). Innovation and competitiveness are related concepts coupled to firms and countries performance (FURTADO, 2001). The innovation capacity is an imperative so that the organizations keep their competitive level and grant they can survive. The organizations look for identifying internal and external competences difficult to be copied so that they can create and sustain their competitive advantages that require the existing competences besides the creation of new ones, as the markets change. A sustained competitive advantage demands that resources that are rare, valuable and difficult of being copied are developed by the organization, so that the firm can have a significant advantage before its competition. The phenomenon of replacing continuously the existing advantages for new ones was called by Schumpeter (1934) as "creative destruction", i.e. the competences must adequate to that change in the same speed they happen (SCHUMPETER, 1934; PENROSE, 1959; WILLIAMSON, 1975, 1985; BARNEY, 1986; NELSON; WINTER, 1982; TEECE, 1988; TEECE et al., 1994). As a counterpoint to Barney (1986) resource based view, with emphasis in the firm internal resources, Teece, Pisano and Shuen (1997) postulated that the resources that cannot be bought or sold without the firm is involved as a whole or in its units are considered strategic resources, since the essence of the competences and "capabilities" – term coined by those authors to define the combination of the ability with the organizational capacity – is embedded in the organizational processes. The appropriation of those capabilities by the firm transforming them in a competitive advantage depends on how the firm uses its assets (internal and market). Thus, those process outlined by the firm assets explain the "dynamic capabilities" essence and its competitive advantage (TEECE, PISANO, SHUEN, 1997). In the taxonomy created by those authors, the dynamic capabilities can be classified in three segments: positioning, process and orientation. The positioning capabilities relates to the organization alignment with its environment and has a strong component in the intellectual property, involving technological assets – intellectual property; complementary assets – e.g. commercialization; financial assets – e.g. cash flow; reputation assets – e.g. name, brand, image, structure – institutional assets – e.g. public policies, different in each country; and market assets (structure) – market positioning upon the market structure.

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The dynamic capabilities related to the management and organizational processes embody three holes: coordination and integration – information processing linking the market to the firm abilities; reconfiguration and transformation – the ability developed by the firm to change internally in order to reflect the changes in the environment; learning – considered the most important, since it enables the other ones to be effective and fast. The dynamic capabilities related to the firm orientation refer to the organization positioning – where the organization is able to go – it depends on where the organization is, the possibilities ahead and the technological opportunities – which can determine the firm positioning, as well as not being totally exogenous. The innovation is seen as a strong competitive advantage and it is based in the knowledge. To enable it the firm needs to have the ability of dominating the organizational learning process (NONAKA, TAKEUCHI, 1997), since the innovation base the knowledge and the continuous learning (LAZONICK, 2002; CASSIOLATO; LASTRES, 1998). To innovate, the organizations need to develop the capacity of creating knowledge – creation, diffusion and transformation in products, services and systems (NONAKA; TAKEUCHI, 1997; SABAN et al., 2000). The knowledge creation occurs through the learning process and nowadays it is critical mainly to the product life cycle shortening, as well as the aggressive demand for new products (HUGHES; CHAFIN, 1996). The organizations learning occur through the individuals (KIM, 1998). Mizukami (1986) suggested two sets of learning approaches, based on how the individual sees him/herself and the world around. The first one refers to the traditional-behaviorist approach that considers the existing knowledge transmission from one person to another and the man as a passive receptor, capable of accumulating and storage information. The second refers to the constructivist approach that consider the man as the center of world, capable of reconstructing him/herself as well as the world around (humanism), and the man-worldman, where the knowledge creation occurs in a interactive way (cognitivism). Nonaka and Takeuchi (1997) model of knowledge creation considers the conversion of the individual tacit knowledge in collective explicit knowledge by the utilization of discussion forums, among other tools. Based on those discussions, the explicit knowledge ends up internalized by the individuals, becoming a new and expanded tacit knowledge. This movement is called by the authors “knowledge spiral”. However, some condition are necessary to the knowledge creation – the intension from the firm to achieve its objectives, the autonomy of employees to create knowledge, fluctuation and creative chaos related to the employees integration with the environment, redundancy that makes the knowledge flows in all levels of the organization, and requirement variety to enable the organization integrating its internal environment to the external where it is inserted. These conditions enable the innovation, which demands a certain emerging kind of knowledge that evolves continuously toward more complex and uncertain structures. The organizational knowledge creation is based on the organizational learning, which in turn on the individual learning. Mizukami (2001) pointed out two major approaches related to the individual learning process, which can be summarized in the traditionalism/behaviorism and constructivism movements. In the first, the man is a blank slate that receives the information from another one, in a passive and formal way, retransmits that to others, in a repetitive way, as well as reproducing behaviors expected from him/her. In the second, the man creates the world based on his/her own experiences and bases the reality in his/her own perceptions, which allows the individual to create and transform the world around continuously, coupling with the uncertainty, and searching for answers to solve the uncomfortable feeling it brings him/her. Analyzing the process of knowledge creation proposed by Nonaka and Takeuchi (1997) in light of Mizukami (2001) approaches, it is possible to infer that the enablers conditions pointed out by the authors and the knowledge conversion phases postulated by them pass by both approaches, making the knowledge necessary to the innovation is created as the man leaves his/her individual passive context and walks towards an interactive and interdependent context, with no rules or guidelines that shape or limit his/her action. However, Nonaka and Takeuchi (1997) suggest with the enabler conditions that the organizational knowledge creation does not occur in any conditions, which arises a first reflexion: in view of the knowledge created in the organization based on a traditional approach is repetitive, copying models and solutions from the past, and considering that the knowledge created in a constructivist approach help to emerge new solutions in the inherent creativity process, we can assume the organizational knowledge creation that serves the innovation can only find room to occur in an organization where the constructivist

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approach is present, making the difference between the firms that innovate and those that do not? Thus, the hypothesis presented herein can be defined as: H1: The knowledge creation with view to the innovation conducts to a sustained competitive advantage (SCA); i.e. SCA = F (knowledge creation). 3. METHOD The exploratory research applied the quantitative method to answer the research problem of this study, to which it was necessary the comparison among organizations that had opposite competitive positions in their respective segments (MALHOTRA, 1999). Information about the competitive level as to the innovation capacity of the organizations involved in the research was previously gathered. It was analyzed official information published both in the organizations and in the specialized media. The criteria applied to identifying the firms to compose the sample of this study classified as more innovative and less innovative organizations are presented in the Exhibit 1. EXHIBIT 1 – IDENTIFICATION CRITERIA (a) Percentage of investment in R&D in comparison to the average percentage in Brazil = 3.8%, in 2003 (Guia Valor Econômico de Inovação nas Empresas, 2004). (b) Number of new product launches with brand new technology in comparison to the average in Brazil = 4.3 products/year (Guia Valor Econômico de Inovação nas Empresas, 2004). (c) Average evolution of the percentage of new products and technologies in the revenue, during the last three years. (d) Prizes received by the organizations by innovative performance, in the last three years. (e) Existence and application of a policy of incentive and retention for talented people linked directly to the innovation development. (f) Strategic partnerships with competitors and universities to foster the innovation, both in product and managements, in the last three years. (g) Acknowledgement by the organization stakeholders, as well as specialized press, as having an image of effectively innovative and pioneer.

Following to that, the next step was the prospection of organizations with more and less innovative organizations profiles. The research was concentrated in the product development area of the organizations involved in the sample. This decision is explained by the great involvement that area has with the innovation process. However, the decision caused the exclusion of some organizations due to the small number of respondents to attend the research, what resulted in ten organizations remaining from the total prospected of 14 organizations (Table 1). Finally, based on the criteria adopted eight organizations were considered, which were classified as more innovative and less innovative upon the documents and published information analyzed. This classification was confirmed with the organizations a posteriori. We observed a certain variation in the composition of the areas involved in the product development function from one organization to another. The configuration of the organizations researched is presented in Exhibit 2. As it can be remarked, only one from the eight firms highlights as a more innovative, which suggested the study in two different clusters: the more innovative and the less innovative. Due to that division, the research ended up with one more innovative organization and seven less innovative organizations.

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EXHIBIT 2 - PARTICIPANT ORGANIZATIONS Est. Revenue Number of Industry Brasil - 2004 Employees (1) US$ Mils. (1) (1) (1) A Brazilian $8 150 Service B American $ 400 2.400 Manufacturing C American $ 40 200 Manufacturing D American $ 300 2.500 Several E American $ 100 1.750 Manufacturing F Brazilian $ 40 1.000 Manufacturing G Brazilian $2 50 Manufacturing H Brazilian $3 40 Service (1) Source: The authors of this study, upon the published information.

Org.

Capital Origin

Time of Existence (1)

37 years 35 years 5 years 42 years n/a* 60 years 53 years 6 years

Data gathering – The self completion questionnaires was build up for this study and composed by two sections: the first one related to the assertives referring to the organizational knowledge creation (NONAKA; TAKEUCHI, 1997) and to the individual learning approaches (MIZUKAMI, 1986). The second section involved the assertives to identify the demographics of the participants, as age, gender, function, area, time in the organization, since those features could affect the respondent's perception (SUPER, 1995). It was used an ordinal scale for identifying the respondent age. In the construction of the set of assertives related to the organizational knowledge creation, the content validity was analyzed by forwarding of 21 questionnaires to professionals, from trainees to directors, age from 24 to 58 years old, in different industry firms. The return was of 13 answers with remarks and questions, which were answered and clarified, as well as the suggestions taken for the questionnaire improvement. In addition, a specialist in Education was consulted to cover the individual learning approach suggested by Mizukami (1986). TABLE 1 – RETURN RATE Organization

Delivered Questionnaires (*)

Returned Questionnaires

Return Rate

A 40 10 25% B 45 15 30% C 45 11 24% D 150 52 35% E 15 4 27% F 20 7 35% G 15 5 30% H 15 2 13% I 35 0 J 30 0 KàN 0 0 Total 410 106 25% Source: The authors of this study upon the research data. (*) Quantity correspondent to the total of employees linked to the product development function. A total of 410 questionnaires were distributed, with a return rate of 25%, resulting in a total of 106 questionnaires answered, from which one was disregarded since it presented a percentage higher than 50% of missing answers. The more innovative organization ("D") showed a higher commitment with the

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research than the other ones. The research and the data analysis were cross sectional. The data obtained through the questionnaires were analyzed with the utilization of the software SPSS (Statistical Package of Social Science), version 11.0. Applying the classification given to the two different groups of organizations prospected in this study, the summary of the return rate between the clusters is shown in the Table 2. TABLE 2 – RETURN RATE – MORE INNOVATIVE AND LESS INNOVATIVE ORGANIZATIONS Delivered Returned Classification Return Rate Questionnaires Questionnaires More Innovative 180 52 29% Less Innovative 230 54 23% Total 410 106 25% Source: The authors of this study upon the research data. The knowledge creation scale, six-point Likert type, was assumed as an interval scale, since that would not cause significant difference for the results, as postulated by Selltiz (1967). As the scale was created for this study, to data analysis it was used the factorial rotation method: (a) orthogonal (VARIMAX) aiming to reduce the number of assertives, and (b) oblique (PROMAX), where we assumed the correlation among factors, aiming to identify the dimensions of thought and the validation of the factorial from the VARIMAX analysis (HAIR, 1998). As per Stevens (1996), the choice for either orthogonal or oblique depends on the case, although he says that many authors defend to be more reasonable in the most cases to assume correlated factors, reason why we opted by the PROMAX to validate the factorial analysis. Sample – The research subjects were the member (employees) of the organizations elected to the study related to the function of product development, even when they develop an administrative work. It was a non-probabilistic sample and the subjects were selected by judgment. The selection criteria considered were: (1) be an effective employee, which excluded part-time/temporary employees); (b) belong to any hierarchical level; (c) belong to areas directly bonded to the product development function; and (d) both genders. 3.1 Analysis and discussion Following, we describe the phases of the statistic analysis: first, it was confirmed that the respondents answered the criteria for being of the sample; second, it was verified the existence of missing values in the samples, as well the existence of cases and values considered outliers; third, we proceeded the factorial analysis, aiming to reduce the number of assertives; fourth, a descriptive analysis was made in order to know the samples behavior as to the relevant aspects of this research, as well as verifying a possible segmentation from the demographics. The last phase focused on comparing the averages in order to identify the different behaviors between the more innovative and the less innovative organizations, in function of the importance that matter had in the scope of this study. The sample presented the following demographics: 48% of the respondents were from the more innovative organization; 62% work in technical functions, 31% in management, 7% in administrative functions; 66% work in the product development area, 29% in areas bounded to this one (Sales, Marketing, Service); 54% work from 1 to 10 years in the organizations, 22% from 11 to 20 years,, and 16% for more than 21 years; 39% are between 26 and 35 years old, 28% between 26 and 35 years old; 66% are male. In summary, the major part of respondents work in technical functions, works from 1 to 10 years for the organizations, is from 26 to 45 years old and is male. Although the sample was considered adequate to the study purposes, it was also considered the limitations as to possible generalization due to its size. To enable the outliers identification, the data were converted in standard values and identified the cases which value were out of the limit between -3 and +3, as indicated by Hair et al (1998) to samples higher than 80 cases. The outliers variables were analyzed and to reduce the number of variables the VARIMAX rotation was used with main component extraction. The factorial analysis followed the steps suggested by Hair at al. (1998): first, the convenience of applying the factorial analysis was evaluated using the Bartlett's sphericity test and the MSA (measure of sampling adequacy) of the ante image correlation

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matrix. The MSA index below 0.5 is unacceptable, between 0.5 and 0.6 is bad, between 0.6 and 0.7 is mediocre, between 0.7 and 0.8 is medium, and above 0.8 is considered good. In this study, the initial solution showed a KMO = 0.865, with ten factors covering 72% of the variance, communalities among the variables higher than 0.636, and two variables with MSA lower of 0.5, which caused their exclusion. A new analysis resulted in a KMO = 0.876, com nine factors, covering 71% of the variance, and communalities among the variables higher than 0.610. The next step was to analyze the MSA below 0.6 that excluded five variables, resulting in a new KMO = 0.894, with eight factors that covered 72% of the variance and communalities among variables higher than 0.576. Following, the analysis of MSA below 0.7 did not exclude any variable. Finally, the analysis of MSA below 0.8 excluded four variables, resulting in a KM) = 0.917, with six factors, that covered 68% of the variance, communalities among the variables higher than 0.569 and Cronbach´s Alpha between 0.7 and 0.9. At the end, a total of 11 variables were excluded, eight from the traditional approach and three from the constructivist approach, what suggests a process more oriented to the constructivism in the thought dimensions to the knowledge creation. In order to validate the factorial analysis through the orthogonal rotation, Hair et al. (1998) suggest applying the oblique rotation, and indicate the PROMAX is the most used. Comparing the factors obtained by the orthogonal (VARIMAX) with those obtained by the oblique rotation (PROMAX), we adopt the solution that presented five factors, which showed more similarity between the two rotations, rather than the six-factor solution. The chosen solution presented a Cronbach´s Alpha higher than 0.7 (HAIR et al., 1998), that explained 65% of total variance, as detailed in Table 3. TABLE 3 – FACTORIAL SOLUTION Factor Eigenvalue % of Variance To date variance % 1 15.085 47.1 47.1 2 1.916 6.0 53.1 3 1.495 4.7 57.8 4 1.213 3.8 61.6 5 1.145 3.6 65.2 Source: The authors of this study upon the research data.

Cronbach´s Alpha 0.9149 0.9101 0.8740 0.8376 0.7539

Description and analysis of factors – The factors identified in the oblique rotation were analyzed individually to determine their individual Cronbach´s Alpha. The result of that analysis is showed, factorby-factor, below: Factor 1 – Challenges – Cronbach´s Alpha = 0.9149, explains 47% of total variance, composed by ten variables, which meaning suggested the complexity faced by the employees in the current business environment. This factor showed a combination between the enabler conditions to the knowledge creation and the attitudes before the individual learning, as well as a combination of the traditional and constructivist approaches, although the last one is predominant. Factor 2 – Commitment: Cronbach´s Alpha = 0.9101, explains 6% of total variance, composed by six variables, which meaning suggested the obligations and commitments faced by the employees referring the organization targets. This factor showed predominance of the enabler conditions to the knowledge creation indicating the employee commitment is important to the knowledge creation. This factor shows a combination between the traditionalism and the constructivism, although the traditional approach is emphasized, what can suggest a behaviorist trait in the employees’ commitment. Factor 3 – Decision Process: Cronbach´s Alpha = 0.8740, explains 5% of total variance, composed by seven variables, which meaning suggested the involvement of the lower level employees in the decisions and guidelines defined in the organization. There is predominance in two points: (a) enabler conditions to the knowledge creation aligned to the attitudes of employees before the individual learning approaches, suggesting the importance of learning to the knowledge creation, (b) the constructivist approach, indicating that it is the kind of decision process important to the knowledge creation. Factor 4 – Knowledge Conversion: Cronbach´s Alpha = 0.8376, explains 4% of total variance, composed by five variables, which meaning suggested the way the organizations manage learning and generate knowledge. This is the only factor that was totally related to the conversion process, indicating the way

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the knowledge is shared, i.e. the way people learn in the organizations. The combination of approaches is not a surprise, since Nonaka and Takeuchi (1997) conversion process shows that combination as well. Factor 5 – Orientation to the External Environment: Cronbach´s Alpha = 0.7539, explains 4% of total variance, composed by four variables, which meaning suggested the organization concern with the variations and dynamism observed in the external environment. This factor showed a predominance of the characteristic of enabler condition for the knowledge creation, suggesting that the orientation to the external environment is a capacity necessary to the organizations in the process of knowledge creation. It was observed the accentuate predominance of the constructivist approach, which is aligned with the theory. Comparing the dimensions postulate by Nonaka and Takeuchi (1997) to those found in this study, it is possible to say that Challenges, Commitment, Decision Process and Orientation to the External Environment are enabler conditions to the knowledge creation so that the firms can innovate, aligned with the process of knowledge conversion. In this analysis is observed that the Challenges and Decision Process involve the individual learning as a enabler condition, since it was not found any factor that showed variables exclusive to the attitudes related to the individual learning, suggesting a interface among them, in an intrinsic combination, widening the original dimension postulated by Nonaka and Takeuchi (1997). The more innovative versus the less innovative The more innovative organizations differentiate from the less innovative in all of the factors of the scale applied, showing evidences that the knowledge creation is outlined as a dynamic capability important to innovation. The more innovative present averages significantly superior than those showed by the less innovative organizations, as detailed in Table 5. TABLE 5 – AVERAGES AND STANDARD DEVIATIONS – MORE INNOVATIVE AND LESS INNOVATIVE ORGANIZATIONS

Factor Challenges Commitment Decision Process Knowledge Conversion Orientation to the Environment

More Innovative Factor Factor Standard Average Deviation 4.80 1.00 5.02 0.83 3.93 1.22 4.91 0.91 4.75 0.94

Less Innovative Factor Factor Standard Average Deviation 3.72 1.23 3.64 1.34 3.06 1.32 3.62 1.14 3.89 1.20

Source: The authors of this study, upon the research data. Factor 1 – Challenges: The analysis of quartiles indicated the more innovative organization has a tendency to encourage the employees to assume challenges, be flexible, dynamics and committed to its goals. The less innovative organizations seem not being positioned as to challenges pursuing when compared to the more innovative firms. Factor 2 – Commitment: The analysis suggests the more innovative organizations tend to value their employee commitment as to the organization's goals and guidelines, diffusing and emphasizing them to the employees. As to the less innovative organizations, commitment seems not being an overweighted by them. This can block the innovation, since this factor is an enabler condition to the knowledge creation. Factor 3 – Decision Process: The analysis demonstrate that, in spite of encouraging the integration among people and areas, the decision process in the more innovative organization shows weak points, suggesting a possible centralization of power or eventual flaws in the communication to be treated. In the less innovative organizations, that matter is even more accentuated, what can also be a block for innovating, since a participative decision process is an enabler to innovation. Factor 4 – Knowledge Conversion: The more innovative organization focuses on the process of knowledge creation, although there are opportunities for improvement. As to the less innovative organizations, that process seems to occur in a moderate level, in spite of the enabler, conditions mentioned in the previous factors are present.

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Factor 5 – Orientation to the External Environment: The more innovative organization seems to be oriented to the environment, although in a more moderate level for reflecting internally the dynamism of the external environment in the same proportion. This should be a factor to be improved, since it is an enabler condition to innovation. That orientation is shy in the less innovative organizations, what suggests a transition process or a policy of market creation, which can lead them to continuous incremental improvement rather than to innovation. In short, the more innovative organization pay more attention to the external environment, reflecting its dynamism into the organization, as well as shares the information and guidelines in a more effective way, although the decision process indicates nuances of centralization. On the other hand, as the organization is oriented to the external environment it encourages the knowledge acquisition to its targets achievement, to which it has the employees' commitment. The less innovative does not show a clear position mainly to the attention to the external environment, to the diffusion of their guidelines and to the information sharing. For this reason, they lose their employees´ commitment, at the same time they show a low commitment with their stakeholders. 3.2 The enabler conditions in the more innovative and less innovative organizations The analysis of the convergent and divergent points between the two groups suggests that the knowledge creation in the more innovative embodies aspects related to the effective use of the knowledge existing in the organization as leverage of new knowledge and concepts, through the discussion of those concepts and the exchange of experience among the organization members. The more innovative organization has the autonomy to create new products and concepts, although it occurs based exclusively on its business objectives. In this aspect, by the way, both the more and the less innovative organizations are similar, including the process of communication – top-down, as well restrict to certain levels. The lower level receives the information on what has to be achieved in terms of result, similar to the autocratic processes. However, the knowledge creation process in the more innovative organization considers the employees´ personal aspirations, as well as their insights, linked to the intention to commit, creating new challenges, aligned with the proposal made by Nonaka and Takeuchi (1997), although it is made in the boundaries of the organization targets. Based on its objectives, the more innovative organization seems to define clearly the profile of the employee desired, although not disregarding those that do not adjust completely to that profile, what can be seen as a talent management, emphasizing the creativity and challenging that helps the employee to self promote through the individual competence development. The knowledge creation process in the more innovative organization involves the concept that freedom for thinking and acting helps in creativity, in a resulted oriented process. Those points seem to differentiate the innovative knowledge from the repetitive knowledge. The less innovative organizations, on the other hand, take less advantage of the existing knowledge, besides not fostering exchanging of information, neither discussion forums, although they have conditions to make it. These organizations limit the discussion to the existing concepts, influenced by their market characteristics and because they believe, they have just to answer the demand created by the customers. They encourage the employees to consider their insights and assuming challenges rewarding them for that, weakening the commitment they could have with the organizations. In addition, these organization showed to be less connected to the market, because some of them have a better condition over the competitors, or for a less proactive attitude before the customers, and no matter the dynamism and flexibility are valued by them, this is communicated in an authoritative and manipulative way, not as a contributive form for competence development. Thus, the creativity is less valued and promoted compared to the more innovative organization. 4. CONCLUSION In a first view, the organizational knowledge creation found in this study seems to differentiate from that postulated by Nonaka and Takeuchi (1997) for presenting five dimensions (challenges, commitment, decision process, knowledge conversion and orientation to the environment), while the authors defend their process in two dimensions (enabler conditions – intention, redundancy, autonomy, fluctuation and creative chaos, redundancy and variety of requirements – and knowledge conversion).

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However, a more accurate analysis indicates that as the postulation made by those authors, the knowledge creation found in this study has two macro dimensions: enabler conditions (challenges, commitment, decision process and orientation to the environment) and the knowledge conversion. Yet, those are the only similitude between both processes. Important differences can be pointed out: the enabler condition presented by Nonaka e Takeuchi (1997) are different from the above mentioned found in this research, which can be considered as organizational dynamic capabilities (TEECE; PISANO; SHUEN, 1997). This studied indicated the evidence of how the knowledge created to innovate differentiates from the repetitive knowledge, which can be considered a significant dynamic capability of the organizations, enable them to not only react to the market demands, by influencing the market on it, as pioneer in the process of competition. In addition, the knowledge conversion found in this study presents a remarkable characteristic as to the individual learning embodied in the dimensions challenge and decision process, what makes them part of the enabler conditions. This is a significant different from the process proposed by Nonaka and Takeuchi (1997). Nevertheless, it was not possible to understand how that learning influences the knowledge creation, i.e. if it refers to a single loop (there is not change in the individual behavior), to a double loop (it changes the individual behavior), or even to the higher level, the deutero learning, that occurs when the organization learned how to cope with in a way it learned how to learn – as a learning organization (ARGYRIS; SCHON, 1978). Some limitations of the present study refer to the sample size and to the identification of only one more innovative organization among those prospected. In addition, we focused the research in the product development professionals. Further studies should widen the number of people involved by the enlargement of the number of firms prospected, as well as the adjustment in the profile of the organizations, bringing a balance number of more innovative and less innovative organizations. We also suggest that the research is applied to all the employees in the organizations, no matter their area, since in a certain way, all professionals are involved with innovation. REFERENCES: ARGYRIS, C. Double loop learning in organizations. Harvard Business Review, [s.l.], 1977, p.115-125 ______; SCHON, D. A. Organizational learning: a theory of action perspective. Reading Massachusetts: Addison_Wesley, 1978 BARDIN, L. Análise de conteúdo. Lisboa: Edições 70, 2002. BARNEY, Jay Organizational Culture: Can It Be a Source of Sustained Competitive Advantage? Academy of Management Review. v.11, n.3, 1986b. BARNEY, J.B. Firm resources and sustained competitive advantage, Journal of Management, [s.l.], issue 17, 1991. CAMPANÁRIO, M.A. Tecnologia, Inovação e Sociedade. Paper presented in the VI Seminar Module de La Cátedra CTS I, Colômbia, 2002. CASSIOLATO, J.E, e LASTRES, H.M.M. Inovação, Globalização e as Novas Políticas de Desenvolvimento Industrial e Tecnológico. Rio de Janeiro: Instituto de Econômica da Universidade Federal do Rio de Janeiro – IE/UFRJ – Technical note 21/98. Presented in the Symposium "Globalização e Inovação Localizada: Experiências de Sistemas Locais no âmbito do Mercosul e Proposições de Políticas de C&T", Rio de Janeiro, 1998. COSTA NETO, P.L.O. Estatística. São Paulo: Edgard Blucher, 2002. COUTINHO, L.G. Superação da fragilidade tecnológica e a ausência de cooperação. In: Daft e Weick 1984 DAVENPORT, T.H. e PRUSAK, L. Conhecimento Empresarial: como as organizações gerenciam o seu capital intelectual. Rio de Janeiro: Campus, 1998. DRUCKER, P.F. As novas realidades: no governo e na política, na economia e nas empresas, na sociedade e na visão do mundo. São Paulo: Pioneira, 1991 . ______. Sociedade pós-capitalista. São Paulo: Pioneira, 1997. ______. Managing in the next society. New York: St. Martin´s Press, 2002. FERRAZ, J.C. et al. Made in Brazil. Rio de Janeiro: Campus, 1996.

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FIOL, C.M. & LYLES, M.A. Organizational Learning. Academy of Management Review, [s.l.], vol. 10, n° 4, 1985. FLEURY, A. & FLEURY, M. T. L. Estratégias empresariais e formação de competencies: um quebracabeça caleidoscópico da indústria brasileira. São Paulo: Atlas, 2001. FODDY, W. Constructing questions for interviews and questionnaires: theory and practice in social research. Cambridge: Cambridge University Press, 1993. FURTADO, R. P. M. A inovação e a competitividade como fatores determinantes na gestão das empresas: um desafio para as empresas mineiras. [s.l.] Paper, 2001. GUIA Valor Econômico de Inovação nas Empresas, Edição de 2004. HAIR, J.F.; ANDERSON, R.E.; TATHAM, R.L.; BLACK, W.C. Multivariate Data Analysis. New Jersey: Prentice Hall, 1998. HUGHES, G.D., CHAFFIN, D.C. Turning new product development into a continuous learning process. The Journal of Product Innovation Management, New York, vol. 13, Num. 2, mar, 1996. KIM, D.H. O elo entre a aprendizagem individual e a aprendizagem organizacional. In: KLEIN, D.A. A gestão estratégica do capital intelectual. Rio de Janeiro: Qualitymark, 1998. Capítulo 4. LAZONICK, W. Corporate governance and sustainable prosperity. Editado por William Lazonick e Mary O´Sullivan. New York: Palgrave, 2002. MALHOTRA, N. K.. Marketing Research: An applied orientation. New Jersey: Prentice Hall, 1999. MIZUKAMI, M.G. Nicoletti. Ensino: As Abordagens do Processo.São Paulo: EPU, 1986. NELSON, R.R. e WINTER, S.G. An evolutionary theory of economic change. In: FOSS, Nicolai J. (compilador). Resources firms and strategies: a reader in the resource-based perspective. Nova York: Oxford University Press, 1997. NONAKA, I. e TAKEUCHI, H. Criação de conhecimento na empresa: como as empresas japonesas geram a dinâmica da inovação. Rio de Janeiro: Campus, 1997. PATTEN, M.L. Questionnaire research: a practical guide. Los Angeles: Pyrczak Publishing, 2001. PENROSE, E.T. The theory of the growth of the firm. In: FOSS, Nicolai J. (compilador). Resources firms and strategies: a reader in the resource-based perspective. Nova York: Osford University Press, 1997. PORTER, M. Estratégia competitiva. Rio de Janeiro: Campus, 1986. ___________. Vantagem competitiva: criando e sustentando um desempenho superior. Rio de Janeiro: Campus, 1992. PRAHALAD, C.K. & HAMEL G. Competindo pelo futuro: estratégias inovadoras para obter o controle do seu setor e criar os mercados de amanhã. Rio de Janeiro: Campus, 1995. SABAN, K., LANASA, J., LACKMAN, C., PEASE, G. Organizational learning: a critical component to new product development. The Journal of Product and Brand Management, Santa Bárbara, vol. 9, Num. 2, 2000. SELLTIZ, Clavie. Metodos de pesquisa nas relacoes sociais. São Paulo: Edgard Blücher, 1967. STEVENS, J. Applied multivariate statistics for the social sciences. New Jersey: Lawrence Erlbaum Associates, 1996. STEWART, T.A. Capital intelectual: a nova vantagem competitiva das empresas. Rio de Janeiro: Campus, 1998. SUPER, D.E. Life roles, values, and careers: international findings of the Work Importance Study. San Francisco: Jossey-Bass Inc., 1995. TEECE, D.J, PISANO, G. e SHUEN, A. Dynamic capabilities and strategic management. In: FOSS, Nicolai J. (compilador) Resources firms and strategies: a reader in the resource-based perspective. Nova York: Oxford University Press, 1997.

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AUTHORS´ PROFILES: Ms. Lilian A. P. Miguel earned her Masters degree at Universidade Presbiteriana Mackenzie, São Paulo, Brazil, in 2005; she is pursuing her PhD title at the same university. She is Mackenzie’s professor of International Marketing and International Business at Universidade Presbiteriana Mackenzie for under graduate and lato sensu degree courses. Ms. Marcos Antonio Franklin earned his Masters degree at Universidade Estadual de Campinas – UNICAMP, São Paulo, Brazil, in 1997; he is pursuing his PhD title at Universidade Presbiteriana Mackenzie. He is Mackenzie´s professor of Service Business Management and Administration for under graduate and lato sensu courses. Dr. Silvio Popadiuk earned his PhD in Administration at Universidade de São Paulo, in 1996, he also earned his post doc title at Faculty of Information Studies, Toronto, Canada, in 2004; he is professor in the stricto sensu program at Universidade Presbiteriana Mackenzie where he teaches Knowledge, Decision Making Process, and other disciplines related to competitiveness in the organizations. He is also the team leader for CNPq research projects on that area.

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