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The codification process alters the relationship between the codified and the tacit form of
knowledge. On the one hand, codified knowledge refers to a view of knowledge as
necessarily explicit, formal or systematic which can be expressed in words and numbers,
scientific procedures, or universal principles. This codified category of knowledge is easy to
transfer, to store, to recall and to valorise. On the other hand, the notion of tacit knowledge
refers to that form of knowledge that cannot be easily expressed. The main forms of tacit
knowledge are know-how (that results from the accumulation of practice), the mastering of a
language (that results from the accumulation of the ability to communicate) and
³representations of the world´ (that results from the accumulation of wisdom).4 Whereas
codified knowledge can easily circulate and be exchanged, tacit knowledge is extremely
difficult to transfer and to exploit. However, when compared to codified knowledge, one of
the characteristics of tacit knowledge is that it allows firms to solve specific problems, even
when there is no general understanding of the reasons behind these problems or the optimal
rational methods for their solutions. Skills or know-how are associated with the use of implicit
routines or procedural rules that can be shared via learning, imitation and practical examples,
rather than explanations and manuals, repeated practices. Nevertheless, there is one condition
for the use of tacit knowledge to be efficient: it must be permanently activated. If tacit
knowledge is not activated, after a time, knowledge will be forgotten and lost.5

Among the tacit forms of knowledge, some are fundamentally unarticulable, which means
that it would cost too much, at the current state of knowledge, to try and articulate these
pieces of knowledge.6Cowan et al. (2000) argued that this category of unarticulable
knowledge is infra-marginal. Very little knowledge is inherently tacit and impossible to
codify. Most of the tacit knowledge is just unarticulated, and the process of codification can
be viewed as an attempt to transform, at a finite cost, unarticulated pieces of knowledge into
codified ones. However, reducing the process of codification to mere conversion of tacit
knowledge into a codified form, where the new codified knowledge is just substituting for
some of the tacit form, would oversimplify the complex nature of the process and lead to
misleading interpretations. Nonaka and Takeuchi (1995) showed that the codification process
appears as a complex conversion process, where the codified and the tacit forms are not
substitutes, but rather complements. In most contexts, agents need at least the tacit knowledge
involved in mastering a language in order that codified knowledge can be reconstituted as
operational and generative. Moreover, as more knowledge gets codified, the nature of the tacit
form is also generally changing. In other words, the process of codification is a process of
knowledge creation that alters both the codified and the tacit forms of knowledge. 7 As new
knowledge is codified, new concepts and terminology will inevitably be introduced so that the
codification of knowledge inherently involves further creation of knowledge.

The combination and the composition of tacit and codified knowledge depend strongly on the
context within which agents or organisations manipulate knowledge. This means in particular
that there are contexts in which agents will be willing to invest more on codification, and
other contexts in which they would rather use and reinforce their tacit knowledge. Thus, the
ability of a cognitive agent to exploit different categories of knowledge matters. On the one
hand, the existence of given tacit forms of knowledge (beliefs, languages, know-how), of
accumulated learning and habits, and of norms will shape the ways codified knowledge is
produced. On the other hand, the way codified knowledge is produced (the nature of the
codes, the types of organisation, the nature of physical carriers of knowledge) will also shape
the ways learning processes are directed, focused and assimilated. The context-dependence
nature of knowledge clearly suggests that tacit knowledge also refers to knowledge which is
not mobilised (at least consciously) when conducting some activities in a given context. To
this extent, some codified knowledge can be made tacit by an agent, who places part of her
knowledge in a zone of ³subsidiary awareness, whereas some other part is put under her focal
awareness´ (Polanyi, 1962).

The context-dependence of the codification process is particularly important when

considering the type of tacit knowledge that is the point of focus of the codification effort.
The nature and the costs of the codification process is not the same if one aims at codifying a
belief, a representation of the world, a specific know-how, or the mastering of a given
language. Cowan (this issue) showed that in the case of expert systems analysed by Hatchuel
and Weil (1995), different types of know-how (the ³artisan´, the ³repairer´, the ³strategist´
know-how) lend themselves with different degrees of compliance to the codification process.8
Moreover, even in the cases where the codification processes fail to come at a reasonable cost
to a usable codified form, and lead to only partially codified knowledge, there could be some
indirect advantages of the codification efforts in terms of increase of some form of tacit
knowledge. For instance, there are numerous cases in industry where ISO certification efforts,
as attempts to codify some tacit knowledge embodied in collective practice, did not succeed
or just partially succeeded. But they generally lead to an improvement of the strategic vision
of the firms concerned (Benezech et al., this issue). More precisely the analysis of such
examples suggests, through a codification process, the transformation of some tacit
knowledge (embodied in collective know-how) into ³higher level´ types of tacit knowledge
(embodied in the strategic vision and representation of the firm).

When emphasising the importance of the context in the analysis of the relationships between
tacit and codified knowledge, Polanyi (1962) showed that what matters is the degree of
attention of the cognitive agent. In a modem economy, the rapidity of knowledge production
and codification processes and the low and decreasing costs of storing codified knowledge,
make the problem of degree of attention more and more acute. It is attention rather than
information that is becoming a rare resource, as screening and selection of information
become important functions. Information abundance is generating a problem for agents to
discriminate between information which are important to store and memorise, and
information that can be simply ³put in the basket´.9 The more knowledge is being stored and
made available in codified form, the more knowledge management problem changes shape.
To use Lundvall¶s taxonomy, when the knowledge we seek (to understand) is tacit, ³know-
who´ is extremely important. When it is stored in codified form, ³know-where´ becomes
important. A new skill must be cultivated, namely, how to find things using, for example,
search tools on the web.10 As we will see later, the question of degree of attention is a key
phenomenon to understand the process of building competencies by firms.

The process of codification allows the modularization of knowledge. This has positive
potential impacts in terms of cost reductions, for it contributes to facilitating the division and
the dispersion of knowledge in different phases or domains (

Machlup, 1983
). The division of knowledge is a result of the division of labour in the field of knowledge
production. The dispersion of knowledge is related to local situations in which knowledge is
produced (a site, a workshop, a laboratory). However, there could be also negative impacts
from knowledge being more specialised and dispersed. An increase in the division and
dispersion of knowledge makes it more and more difficult for economic agents to locate and
retrieve elements of knowledge that would be particularly useful to them. It is probably not
disputable that the division of knowledge is increasing over time (specialisation), raising the
marginal cost of knowledge integration. The dispersion trend is less clear, but one can expect
a higher dispersion as knowledge production becomes more collectively distributed (located
in many places). And this increasing tendency of knowledge division and dispersion again
makes the problem of memory more acute. How to build storage processes that are
integrative; that is to say which are not just reproducing the state of division and dispersion of
knowledge as it was at the moment of its creation?

‡ Through the process of codification, knowledge may be used by agents as a signal. The
signal could indicate a specific capability or a competence for an agent who wants to enter a
specific commercial relationship (such as a joint venture), a strategic development
partnership, or a given network. A better signalling capability for agents facilitates the
formation of reputation and trust. This in turn lowers the risks to enter into contractual
relationships when co-operative schemes seem more adapted.




‡ Codification directly affects the speeding-up of knowledge creation, innovation and

economic change.
25

Moreover, codification has significant consequences for the technologies of learning (

David, 1994
). It contributes to increasing the value of ³on line learning´ (learning by doing, learning by
using). It facilitates the emergence of new forms of learning, such as ³experimental learning´,
that make the differentiation between ³on-line´ and ³off-line´ learning activities less and less
relevant.
26

It contributes to increasing the speed and decreasing the cost of developing prototypes. It
contributes to enhancing the ability to generate technological options.

‡ Codification reduces some of the costs in the process of knowledge acquisition and
technology diffusion. It improves the reliability of information storage and retrieval.
However, when reflecting the recent history of the use of information and communication
technologies (ICT) to achieve ³direct´ codification of knowledge that is related to individual
and organisational memory,

Steinmueller (2000)
showed that the contribution of ICT has been relatively modest.Ê