strength in CEECs have not taken place.

The French

experience presented by Garrouste and Villeval

demonstrates the role of management consulting ser-

vices and technology centres as external source for

learning, training and knowledge building.

From empirical evidence in Hungary, Poland and

the Czech Republic Havas concludes that opportuni-

ties associated with foreign direct investment often

do not materialise as expected. However there are

examples of supplier upgrading through trade rela-

tions with foreign ventures. Holmes points out the

ambiguous incentive framework of the EU towards

CEECs. While transition countries have to apply

European standards their access to the Common

Market which is important for technology transfer is

not guaranteed. Bzhilianskaya sees opportunities to

converse Russia's large defence sector in specific

areas of dual-use technology, e.g. in which success is

based on original Russian developments or niches

can be occupied. Cases of spin-offs and new SMEs

which have brought advanced technologies into in-

dustrial application are a sign of small-scale viable

technological restructuring.

Under the difficult conditions of research on tech-

nology and science policy in CEEC, the book gives a

founded overview on some major challenges to sci-

ence and technology systems in CEECs and illus-

trates the urgent need for action. Applying the in-

sights of the theory of technological change, the

precondition for technological renewal and innova-

tion is to adapt individual competencies and ade-

quate organisation of the science and technology

sector. As several articles have shown, countries in

transition have to develop an appropriate technology

policy response, especially to realise the opportuni-

ties arising from international technology transfer.

For the support of CEECs, the publication demon-

strates again that there is no single way of moderni-

sation and the limited effects of methods and tools

for doing so. Providing experiences and judgements

will remain the major tasks herein.

Ulrike Bross

Fraunhofer Institute for Systems

and Innovation Research

Breslauer Strasse 487

6139 Karlsruhe, Germany

I. Nonaka & H. Takeuchi, The Knowledge-Creat-

ing Company: How Japanese Companies Create the

Dynamics of Innovation (Oxford University Press,

London & New York, 1995), 284 pp., $25.00, ISBN 0

19 509269 4.

In 'The Knowledge-Creating Company' Ikujiro

Nonaka and Hirotaka Takeuchi set out not only to

'present a new theory of organizational knowledge

creation' and 'provide a new explanation for why

certain Japanese companies have been continually

successful in innovation' but also 'to develop a

universal model of how a company should be man-

aged'.

Critical to Nonaka and Takeuchi's view of knowl-

edge creation is the distinction between explicit and

tacit knowledge, between 'knowledge of the mind'

and 'knowledge of the body'. Nonaka and Takeuchi

maintain that the Western philosophical tradition of

separating the subject who knows from the object

that is known has restricted development of a theory

of knowledge creation. In their view knowledge is

created by interaction between four modes of knowl-

edge creation: socialization, the conversion of tacit

into tacit knowledge; internalization, from explicit to

tacit; combination, from explicit to explicit and ex-

ternalization, from tacit to explicit. In particular they

maintain that Western organizations, and manage-

ment research, has underemphasized the importance

of externalization as a factor in knowledge creation.

As well as attempting to bridge the dichotomy be-

tween tacit and explicit knowledge, Nonaka and

Takeuchi aim to synthesize a theory that mediates

between the individual and the organization, be-

tween top-down and bottom-up management, be-

tween bureaucracy and 'task forces' and ultimately

between East and West.

Nonaka and Takeuchi are not the first to stress the

importance of linking tacit and explicit knowledge in

the study of innovation. Von Hippel (1994) also

draws Polanyi's distinction between tacit and explicit

in explaining sources of 'stickiness' in information

transfer during information based innovation. Ouchi