Knowledge management in China

Abstract

China's high-priority effort to become a more knowledge-based economy and society means that knowledge management (KM) is increasingly important. For example, the timely transfer and use of business knowledge can provide a competitive advantage in practically any given industry. Despite its enormous promise in business and science, effective KM also faces formidable obstacles. Here, we explore the most notable ones in the China context.We have used surveys, interviews, focus groups, longitudinal case studies, and anecdotal information for more than a decade to develop an understanding of how knowledge is managed in China and its role in the country's drive for global competitiveness. KM in China is distinctive, constrained somewhat by technological limitations, but influenced more significantly by psychological factors (such as cultural values) among groups and social levels. Here, we describe the distinctive aspects of knowledge generation, documentation, transfer, and use that prevail in China today, highlighting the key factors influencing Chinese KM.

Full text

COMMUNICATIONS OF THE ACM April 2005/Vol. 48, No. 4 73
BY GLEN R. BURROWS, DAMON L. DRUMMOND,
AND MARIS G. MARTINSONS
C
hina’s high-priority effort to become a more
knowledge-based economy and society
means that knowledge management (KM) is
increasingly important. For example, the
timely transfer and
use of business
knowledge can
provide a competitive
advantage in practically
any given industry. Despite its
enormous promise in business and
science, effective KM also faces
formidable obstacles. Here, we explore
the most notable ones in the China context.
We have used surveys, interviews, focus groups, longitudinal
case studies, and anecdotal information for more than a decade
to develop an understanding of how knowledge is managed
in China and its role in the country’s drive for global
competitiveness. KM in China is distinctive, constrained
somewhat by technological limitations, but influenced more
The Chinese tend to manage
knowledge more informally and
personally than their American
and Japanese counterparts,
potentially limiting technological
innovation and business
performance.
KNOWLEDGE MANAGEMENT
IN CHINA

74 April 2005/Vol. 48, No. 4 COMMUNICATIONS OF THE ACM
significantly by psychological factors (such as cultural
values) among groups and social levels. Here, we
describe the distinctive aspects of knowledge genera-
tion, documentation, transfer, and use that prevail in
China today, highlight-
ing the key factors influ-
encing Chinese KM.
It is helpful to first
understand the KM
approaches that prevail
in the U.S. and Japan.
“In the U.S., most
knowledge practices
emphasize the collec-
tion, distribution, reuse,
and measurement of
existing codified knowl-
edge and information”
[3]. Empirical studies of
KM find support for the
idea that the U.S. emphasizes the measurement and
management of explicit knowledge. Within this ratio-
nal and technocratic paradigm, workers are expected
to capture the essence of their experience, decide what
is relevant and hence worth codifying, and spread it
throughout their organizations. Practitioners “often
look to information technol-
ogy to capture and distribute
this explicit knowledge” [3].
In particular, corporate
investment in IT commonly
supports knowledge ware-
housing, data mining, and
knowledge dissemination.
The U.S. approach to KM
has enabled unprecedented
innovation and productivity
across the country’s private
and public sectors.
The Japanese have
adopted the English-derived
phrase “noreji manage-
mento” to represent the rational KM process,
approximating the one widely employed in the U.S.
However, their own national tendency is to create,
transfer, and use contextual knowledge as an inte-
gral part of a broader socialization process. The
indigenous term “chishiki keiei” reflects the Japan-
ese emphasis on cognition and tacit knowledge.
Focusing on group interaction to create and elabo-
rate knowledge supports continuous improvement
(see Figure 1) [10]. Workers, as well as managers, in
practically every Japanese company are involved in
knowledge creation. Middle managers are expected
to bridge the ideals of top executives and the messy
reality faced by workers. The prevailing approach to
KM in Japan has contributed to outstanding levels
of quality and productivity, particularly in such
process-rich manufactur-
ing industries as automo-
biles and consumer
electronics.
Knowledge
Generation in China
China has a rapidly grow-
ing stock of scientific
knowledge that parallels
its social and economic
development over the
past 25 years. Chinese
businesses have acquired
knowledge from a variety
of domestic and foreign
sources while also begin-
ning to create knowledge
of their own. Huge flows
of foreign investment capital into the Chinese econ-
omy since the early 1980s have been accompanied
by the parallel flow of knowledge into the country.
Much of it has come from the
public domain or through
authorized transfers as a result
of joint-venture agreements or
licensing arrangements in a
range of industries.
Much of it is also unautho-
rized and uncompensated. Defi-
ciencies in the rule of law,
particularly concerning intellec-
tual property rights, trouble
those in technology-based
industries seeking to protect
their knowledge and/or be com-
pensated for sharing it. More
transparent and stable rules pro-
mulgated by the Chinese gov-
ernment and regulatory
agencies, as well as stricter and
less arbitrary enforcement, are
needed to move from a com-
pensatory to a punitive perspec-
tive with respect to intellectual
property.
Nevertheless, the recent government-sponsored
economic and social reforms have encouraged domes-
tic knowledge creation in terms of both research and
development activities in Chinese universities and
Making sense of the external environment
Scanning conducted by a few insiders and trusted advisors
Tendency toward groupthink
Difficult to interpret novel or foreign situations
Characteristics typical of Chinese organizations
Creating organizational knowledge to
Restricted use of external sources
Prevalence of top-down information flows
Decision making
Analogical and correlative thinking
encourages incremental innovation
- develop new capabilities
- design new products
- enhance existing offerings
- improve organizational processes
Figure 2. Organizational
knowledge use in China
(adapted from the
process model in [1]),
including characteristics
typical of Chinese
organizations.
Comparatively
weaker in
knowledge
management.
Externalization
is weakest.
Knowledge Management Activities
Comparatively
stronger in
knowledge
management.
Socialization
is strongest.
Knowledge
States
Externalization
Internalization
Combination
Socialization
ExplicitTacit
ExplicitTacit
Figure 1. The knowledge
creation process (adapted from
[10]).

entrepreneurial activities
in the business sector.
Growing numbers of
both state-owned and
private enterprises are
also seeking to improve
their performance by
learning from their own
experience.
Codification is essen-
tial to knowledge pro-
cessing in U.S. business
and society. Consistent
with their cultural tradi-
tions, the Chinese favor
informal and implicit
forms of communication
[7], preferring to transfer knowledge through inter-
personal contact rather than through formal and/or
written means. This reliance on interpersonal contact
inhibits codification and restricts information access
much more than technological factors [8].
Explicit knowledge is comparatively rare in China
due to the strong cultural preference for personal
social and economic rela-
tionships. The prevalence
of this tacit knowledge, or
how we do things, has frus-
trated the government’s
effort to systematically
develop nationwide knowl-
edge bases. Information sys-
tems designed to capture
reusable and transferable
knowledge are also rare, as
are data warehouses and
intranets for enabling wide-
spread access to organiza-
tion-specific knowledge.
Despite the increasingly widespread application of IT
across China, personal interaction remains the pre-
ferred form of knowledge transfer.
Knowledge throughout Chinese society is
shared primarily with fellow in-group
members. But business innovation and
coordination can be hindered by in-group
rivalries, as well as by the few opportunities
(such as quality circles) and incentives (such as sug-
gestion bonuses) employees are offered to share their
knowledge.
Knowledge transfer requires donors and recipients
alike to be willing and capable. Given a natural ten-
dency in most societies to hoard knowledge, knowl-
edge sharing must be
encouraged and
rewarded [4]. Chinese
employees in some pri-
vately owned firms have
responded positively to
changes in performance
evaluations and rewards.
Other firms, notably
Lenovo, the largest IT
enterprise in China
(www.l enovo.com), and
Yum! China, a quick-ser-
vice restaurant operator
(www.yum.com), have
developed a knowledge-
sharing ethos through
systematic efforts to
recruit, select, and social-
ize their workers. A focus
on selecting and socializ-
ing individual workers tends to be more effective in
China than in the U.S., whereas the development of a
supportive company culture is more difficult due to
the strong respect for
tradition in and hierar-
chical structure of Chi-
nese society [2].
At the organizational
level, China resembles
Japan in that substantial
learning occurs through
the observation and
benchmarking of com-
petitors, but knowledge
sharing among compa-
nies and universities is
weak due to a lack of
both incentives and
infrastructure. How-
ever, status-based hierar-
chies in China restrict
the kind of vertical transfer of knowledge that is com-
mon in Japan; Chinese managers rarely acquire or
accept knowledge from their subordinates [7]. We’ve
commonly observed a unidirectional flow of knowl-
edge from foreign firms to their Chinese partners,
rarely the reverse. Knowledge transfer between part-
ners in Sino-Western joint ventures is also limited by
competing interests, lack of trust, and large cultural
distances [6]. We foresee greater KM difficulties as
more Chinese business activity crosses organizational
and national boundaries.
Each of the three main stages in the organizational
COMMUNICATIONS OF THE ACM April 2005/Vol. 48, No. 4 75
View of
knowledge
Measurable and
manageable entity
Key
assumption
Knowledge
management
roles
Knowledge
management
goals
Communities
of practice
Example
Knowledge is mostly
objective and can be
made explicit
Knowledge workers
capture, codify, and
share knowledge
from experience
Profits are paramount
and result from
improved productivity
Achieving acceptance
in industry despite
resistance to changing
work rules, particularly
in unionized Old
Economy industries
U.S. auto industry
develops e-platform
for knowledge
exchange
Largely tacit
and contextual
Knowledge is mostly
subjective and
socially dependent
Everyone creates
and shares knowledge
as an integral part of
socialization
People are
paramount
(social consensus)
Widespread in
application; seen in
both Kaizen (internal)
and Keiretsu
(external) knowledge
sharing
Toyota encourages
knowledge sharing
by its business
partners
Largely tacit and
contextual
U.S. Japan China
Knowledge includes
both objective and
subjective elements
Senior management
and trusted supervisory
staff are repositories of
knowledge
Pragmatic
(profits and people)
Limited by one-way flow
of information (superior
to subordinate) and by
difficulties in building
trust in short-term
contractual relationships
Chinese partners share
knowledge and look
beyond their industries
Table 1. Distinctive characteristics
of knowledge management in
the U.S., Japan, and China.
Distinctive
Characteristic
Specific Company and
Context
Knowledge
viewed as
an object
Knowledge viewed
as a process, albeit
a top-down
process (one-way
information flow)
Knowledge viewed
as a valuable asset
for going global but
locked in the minds
of foreigners
Primary aim of the Chinese
partner in a Sino-foreign
joint venture is to receive
both technical knowledge
and business knowledge
(technology transfer)
Chinese firms with
complex manufacturing
operations must manage
and continually upgrade
their technical knowledge
Chinese firms seeking to
gain access to foreign
markets, expanding beyond
mainland China, must
access international
business knowledge
Detailed Description
Knowledge viewed as explicit,
codifiable, and replicable; joint
venture contracts are structured
to extract maximum knowledge
from foreign partners
Knowledge creation is viewed as
the purview of senior manage-
ment and of trusted, long-serving
supervisory staff in whom tacit
knowledge resides
Knowledge, specifically market
knowledge, viewed as a function
of language and cultural
understanding; boundary-spanning
Chinese recruited to act
as cultural/linguistic bridge
Table 2. Exemplars of knowledge
management in China.

knowledge-use process [1] is constrained by Chinese
cultural factors (such as acceptance of status differ-
ences) (see Figure 2). Senior managers tend to rely on
trusted advisors to analyze and interpret the external
environment, limiting overall corporate sense-making
while encouraging a groupthink mentality that makes
it difficult to comprehend novel or foreign situations.
The creation of new knowledge is hampered by senior
managers restricting external inputs and unidirec-
tional (top-down) information flows within Chinese
companies [7]. For example, new product develop-
ment is typically viewed as an engineering rather than
as a marketing function, and customer knowledge
about desirable product features tends to be ignored.
More generally, Chinese decision making by cor-
porate managers, as well as by government officials, is
comparatively implicit, relying on analogical and cor-
relative thinking, rather than on rational and analytic
thinking [9]. This narrow view of available business
and technological options tends to favor incremental
rather than groundbreaking innovation, and requires
outsiders to read the tea leaves in order to understand
the thinking and tacit knowledge of those in power.
This difficulty interpreting messages and signals has
impeded economic modernization and constrained
technological innovation in China.
Implications
We have explored how the distinctive
approach to KM that prevails in
China reflects the country’s prevail-
ing management systems and culture
[6]. To some extent, the Chinese
integrated the technological, market-oriented
processes used to manage knowledge in the U.S.
with the social elaboration of knowledge common in
Japan (see Table 1).
IT often provides a platform for KM (wuli) in
China, but knowledge tends to be managed in con-
text (shili) rather than as a process, depending on rela-
tionships (renli) more than rules. KM activities in
Chinese organizations are also influenced by the
desire of both managers and employees to avoid con-
flict and loss of face, to respect hierarchical status, and
to achieve “collective” goals (often determined by the
“big boss”).
Nevertheless, many of the obstacles to good KM in
China closely resemble those in the U.S. The three
most frequently reported problems in China mirror
those identified by a survey by consulting firm
KPMG [5]. These problems are exacerbated by a lack
of trust (of workers by management as well as of man-
agers by workers) within Chinese firms. In addition,
social hierarchies circumscribe the opportunities for
creating and sharing knowledge. Chinese firms seek-
ing to compete in global markets wisely employ
boundary spanners to partially overcome these limita-
tions (see Table 2), an approach that has been effec-
tive when dealing with non-Chinese partners and
organizations. However, internal opportunities for
capturing and enriching organizational learning are
still overlooked by most Chinese firms, especially
state-owned ones. To compete and succeed globally,
the Chinese must draw on their relative strengths and
overcome their own inherent cultural constraints.
The ability to harness available knowledge is not just
a potential source of competitive advantage. Effective
KM today is a competitive necessity in technology-
based and information-intensive industries.
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Glen R. Burrows (msglen@cityu.edu.hk) is a management
consultant and a Visiting Fellow in Management Sciences at the City
University of Hong Kong.
Damon L. Drummond (drummond@apu.ac.jp) is a professor of
global comparative and human resources management at Ritsumeikan
Asia Pacific University, Beppu City, Oita Prefecture, Japan.
Maris G. Martinsons (mgmaris@cityu.edu.hk) is a professor of
management at the City University of Hong Kong and Research
Director of the Pacific Rim Institute for Studies of Management,
Hong Kong.
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