www.sciedu.ca/ijba International Journal of Business Administration Vol. 2, No. 3; August 2011 Published by Sciedu Press 61 Knowledge Creation and Transfer: Role of Learning Organization Farhad Alipour (Corresponding author) Department of Professional and Continuing Education Faculty of Educational Studies, University Putra Malaysia 43400 Serdang, Malaysia Tel: +60-132687691 E-mail: alipoor_f@yahoo.com Khairuddin Idris Department of Professional and Continuing Education Faculty of Educational Studies, University Putra Malaysia 43400 Serdang, Malaysia E-mail: kidin@putra.upm.edu.my Roohangiz Karimi Department of Professional and Continuing Education Faculty of Educational Studies, University Putra Malaysia 43400 Serdang, Malaysia E-mail: roohangizkarimi@yahoo.com Received: April 25, 2011 Accepted: July 27, 2011 doi:10.5430/ijba.v2n3p61 Abstract This paper describes how knowledge is created and transferred in organizations. It also discuses conditions required in promoting knowledge creation, the techniques used to capture knowledge in organizations, the nature of learning organizations and how it can influence knowledge creation and transfer. By utilizing previous studies, the researchers present an integrated view of how learning organization affects knowledge creation and transfer. Keywords: Knowledge Creation, Knowledge Sharing, Knowledge Transfer, Knowledge Conversion, Learning Organization 1. Introduction and problem statement Fostering competitive advantage and optimizing organizational performance in the current complex and dynamic environment requires an organization’s capability to create and transfer new knowledge and practice. Based on Ichij & Nonaka (2007) the success of a company in the twenty-first century will be determined by the extent to which an organization’s members can develop their intellectual capabilities through knowledge creation. Thus, in order to sustain competitive advantage, managers’ understanding of knowledge creation and transfer is vital as the success of a company might be determined by managers’ intellectual capital. Although a variety of studies were conducted on the knowledge creation and transfer, most of them have focused on the source and state of knowledge (Alavi & Leidner, 2001) and not much has been paid to explore conditions and organizational cultures that facilitate knowledge creation and transfer within organizations. There are various means by which an organization can facilitate and support the knowledge creation and transfer processes, however not much has been said on the role of learning organization as a valuable means of facilitating learning and knowledge management (Weldy, 2009). Learning organizations comprise of embedded systems to capture and share knowledge (Marsick & Watkins, 2003; Watkins & Marsick, 1993), so that they may continue to progress and develop competitively. 2. What is Knowledge? Before discussing knowledge creation and transfer, understanding the concept of knowledge is vital as employees sometimes fail to obtain new knowledge due to their misunderstanding of the true concept. For a better understanding of the meaning of issues like data, information and knowledge need to be recognized. Generally, data are defined as raw facts, information is viewed as an organized set of data, and knowledge is conceived of as meaningful information (Bhatt, 2001). Based on Davenport & Prusak (2000) knowledge is rooted in information and information is in turn