Management and Administrative Sciences Review

e-ISSN: 2308-1368, p-ISSN: 2310-872X

Volume: 3, Issue: 1, Pages: 120-128 (January 2014)
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Research Paper
Effect of Tacit Knowledge on Business Success among Igbo Traders
John N.N. Ugoani, Ph.D
Coordinator, College Of Management and Social Sciences, Department of Management Sciences, Rhema
Univesrity, 153 155, Aba-Owerri Road, P. M. B. 7021, Aba, Abia State, Nigeria.

This research was conducted to evaluate the efficacy of tacit-knowledge on business

success among Igbo traders. Tacit knowledge involves everyday problem solving ability
gained through experience that is predictive of successful outcomes. The survey research
design was used for the study. Data were generated through 300 respondents chosen by
simple random sampling technique. To achieve the objective of the research, data were
analyzed through tables, frequencies, percentages and chi-square test. It was found that
tacit-knowledge has positive relationship with traders success. Five recommendations
were made based on the findings of the study.
Keywords: Tacit-knowledge, Emotional intelligence, Rules of thumb, Know-how,
Everyday experience, Ugoani, Boy-boy phenomenon, Okpogho, Igbo traders,
BACKGROUND
Tacit knowledge (TK) generally involves the
capacity to solve everyday problems and at the
same time get on harmoniously with others. This
management skill is closely associated with social
intelligence previously postulated by early
psychologists. The notion that there are different
types of intelligences has been a part of the debate
in the intelligence field almost since its inception.
One type was social intelligence, defined as the
ability to understand and manage people. These
social intelligence skills might also be directed
inward and so social intelligence might include, by
extension, the ability to understand and manage
oneself. Social intelligence essentially involves the
ability to get others consistently and voluntarily to
do the things one wants them to do and even like
doing so. The independence of social intelligence
from other types of intelligences such as academic
intelligence has not been readily demonstrable.
One problem was that social intelligence was
defined so broadly so as to blend imperceptibly

into verbal and visual/spatial intelligences. At

present, there is a resurgent of interest in social
intelligence and its efficacy appears to have
multiple ingredients, some specialized and some
of general use. Some can be covered by tests while
others cannot, such as a traders competence in
dealing with customers and other practical
matters. In this instance, nothing in the intelligence
tests will assess someones commonsense, or street
wisdom, or know-how. A related aptitude is tacitknowledge, the experience and ability to persuade
others and to judge their moods and desires.
Shrewd traders have this ability as do successful
politicians, salespeople, quite independent of if
they have high intelligence quotient or not.
Sternberg, (1996) emphasize the importance of
practical intelligence or what early psychologists
regard as social intelligence. Sternberg, et al (1999)
argue that practical intelligence relies heavily on
what they call tacit-knowledge practical knowhow learned from everyday experience. This

*Corresponding author: John N.N. Ugoani,

Coordinator, College Of Management and Social Sciences,
Department of Management Sciences, Rhema Univesrity, 153 155, Aba-Owerri Road, P. M. B. 7021, Aba, Abia State, Nigeria.
E-Mail: drjohnugoani@yahoo.com

Electronic copy available at: http://ssrn.com/abstract=2388689

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Manag. Adm. Sci. Rev.

e-ISSN: 2308-1368, p-ISSN: 2310-872X
Volume: 3, Issue: 1, Pages: 120-128

knowledge is in some cases quite sophisticated but

is in any case knowledge that is specialized for use
in a particular domain. For example the trader
requires tacit knowledge to retain customers but
not pertinent to navigating a ship in the high seas.
Also, the talented footballer has no significant
advantage in tasks away from the football field
(Gleitman, et al, 2004). Sternberg, (2003) share a
knowledge based approach to understanding tacit
knowledge. They believe that individuals draw on
a broad base of knowledge in solving practical
problems, some of which is required through
formal training and some of which is derived from
personal attachment and experience. They posit
that much of the knowledge associated with
successful problem solving can be characterized as
tacit-knowledge. According to Sternberg (2003) the
term tacit-knowledge has roots in works on the
philosophy of science, ecological psychology, and
organizational behavior, and has been used to
characterize the knowledge gained from everyday
experience that has an implicit, unarticulated
quality. He posits that such notions about tacit
quality of the knowledge associated with everyday
problem solving are also reflected in the common
language of the marketplace as people attribute
success to learning by doing, and to
professional intuition, or instinct. Tacit
knowledge is often not openly expressed or stated,
thus, individuals must acquire such knowledge
through their own personal experiences.
Furthermore, although peoples actions may reflect
their knowledge they may find it difficult to
articulate what they know. Sternberg (2003) says
that research on expert knowledge is consistent
with this conceptualization. Sternberg (1996),
Sternberg, et al (1999), Wager
and
Sternberg,(1987), view tacit-knowledge as an
aspect of practical intelligence that enables
individuals to adapt to, select, and shape realworld
environments. They postulate that tacit knowledge
has relevance for understanding success in a
variety of domains. Igbo traders take calculated
risks, and sometimes do risk-free business. They
do not base their plans on the best paper plans.
Based on tacit-knowledge, they do more with less
in achieving greatness. They seem to believe
Johnson (1997), Do not ever base your plans on
achieving the best possible outcomes, but if it

comes welcome it If heaven drops a plum, open

your mouth. (Akanwa & Agu, 2005, Debelak,
2006, Blanchared & Johnson, 2003, Gardner, 1983,
Cianciolo, et al, 2003, Clayton, 1982, Colonia, 1998,
Wagner, 1997, Sternberg and Wagner , 1993,
Ugoani, 2013, Sternberg and Deherman, 1986,
Sternberg , and Kaufman, 1998)
Statement of the Problem
Because people frequently find it difficult to
articulate tacit-knowledge it is not easy to
measure. For example, in most cases, only very
few successful traders articulate the skills behind
their success before their exit, thereby making it
extremely difficult, if not impossible for others to
get the wind of the pattern of their success stories
rather tacit-knowledge tends to be procedural in
nature and operates outside of formal awareness.
It also reflects the structure of the situation more
closely than it does of the structure of the formal,
disciplinary knowledge. For the reason that
problems demanding tacit-knowledge tend to be
poorly defined initially and usually require some
amount of information gathering based on a
particular situation, it is frequently viewed to
conform to professional rules of thumb.
Different combinations and configurations of
intellectual skills engender different types of
success. Individuals differ in their memory,
analytical and practical skills. A person very
strong in memory skills but not in analytical and
practical skills may have a vast amount of
knowledge at his or her disposal, but yet be unable
to retrieve information and analyze it effectively.
Individuals who are strong in practical skills but
not in memory and analytical skills even though
they are shrewd are often short of being smart
or clever in the real sense of the word. Although
such persons may be effective in getting others to
go along with them, they may be misleading them.
A major draw back of tacit-knowledge is the lack
of analytical and memory contents of intelligence.
Delimitation of the study
This study was delimited to Aba and its environs
due to the high population of traders in the areas.
Limitation of the study

John N.N. Ugoani

Electronic copy available at: http://ssrn.com/abstract=2388689

Effect of Tacit Knowledge on Business Success

The study was limited by poor road network and

finance, but never diluted its validity
HYPOTHESES
To guide the course of the study properly, two
hypotheses were formulated and tested at 0.05
level of significance.
H0:
Tacit-knowledge has no significant relationship
with business success.
Hi:
Tacit-knowledge has significant relationship
with business success.
LITERATURE REVIEW
Review of relevant literature is based on three
critical dimensions (i) tacit-knowledge and
experience (ii) tacit knowledge and general
cognitive ability and (iii) tacit knowledge and
success.
Tacit knowledge and experience
According to Sternberg (2003) tacit knowledge by
definition is knowledge gained primarily from
experience while solving and performing everyday
problems. The common phrase experience is the
best teacher reflects the view that experience
provides opportunities to develop important
knowledge and skills related to performance and
success. He opines that many meta-analytical
reviews show that the estimated mean population
correlation between experience and job success
falls in the range of .18 to .32 (Hunter & Hunter,
1984) According to Sternberg, (2003) additional
research suggests that this correlation is mediated
largely by the direct effect of experience on the
acquisition of job knowledge. Also, Sternberg, et al
(1999) find that tacit knowledge severally increases
with experience. Again, Wagner (1987) find a
significant correlation between tacit knowledge
and managers level within an organization.
According to Sternberg (2003) in a follow-up
study, Wagner (1987) finds differences in tacit
knowledge scores among business Managers,
business graduates and others, with the managers
exhibiting the highest scores. Subsequent research,
however, find that TK scores did correlate with

Research Paper

leadership rank such that leaders at higher levels

of command and authority exhibited greater tacit
knowledge than did those at lower levels.
Subsequent research supports the correlation
between tacit knowledge and experience. The
correlation tend to be moderate, falling in the
range of .20 to .40, which suggests that although
tacit knowledge has some basis in experience, it is
not simply a proxy for experience. (Sternberg,
1996, Feldman, 2007 , Wagner, 1985)
Tacit knowledge and general cognitive ability
Sternberg (2003) posits that general cognitive
ability (g) is considered by many to be the best
single predictor of job performance. He maintains
that the relationship between (g) and performance
is attributed largely to the direct influence of (g) on
the acquisition of job related knowledge. It is
believed that many job knowledge tests assess
majorly declarative knowledge of facts and rules.
But tacit knowledge tests consist of problems that
are poorly defined and context-specific. Sternberg
et al (1999) find that a test of commonsense for the
workplace predicted self-ratings of practical
abilities but not of academic abilities. They insist
that TK tests measure abilities that are distinctive
from those assessed by traditional intelligence
tests.
Tacit knowledge and performance success
Tacit knowledge has been found to predict
performance success in different domains with
correlations ranging between .2 to .5. According to
Sternberg (2003) in further studies with general
business managers TK scores correlated in the
range of .2 to .4 with criteria such as salary, years
of management experience, and whether one
worked for a large or small organization. Again in
a different study he finds significant correlations
between TK scores and average percentage of
merit-based salary increase (r= .48, p< .05) and
average performance rating for the category of
generating new business (r= .56, P< .05). He states
that TK predicts success in several domains. Thus,
there is growing evidence to suggest that TK not
only explains individual performance success but
also distinct from traditional intelligence like (g).
At the heart of tacit knowledge is the basic idea to

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e-ISSN: 2308-1368, p-ISSN: 2310-872X
Volume: 3, Issue: 1, Pages: 120-128

link success to more fine-grained differences in the

way people perceive, attend, learn, remember, and
think. Sternberg and Wagner (1993) propose that
large scale differences in intellectual capacity
actually derives from some remarkably low-level
cognitive operations skill in carrying out these
simple operations is far from what we typically
think of as intelligence. But these low-level
operations are used again and again in intelligent
performance, and so they may well be the building
blocks of success and reflects what is tacit
knowledge (Gleitman, et al, 2004, Goldman, 1995,
1998a)
METHODOLOGY
The survey research design was used for the study.
The area of study covered Ala-Oji Market, Ariaria
Market, Ngwa Road Market, Nkwo Market, and
Ekeakpara Market. A population of 1850 was
extracted from the register of members during
field work. A sample size of 300 was derived using
Yamanes (1967) formula, and the 300 respondents
were picked, through the simple random sampling
technique to ensure that all had equal opportunity
of being selected. The measuring instrument was a
researcher designed questionnaire on a 5 point
Likert scale structured through highly agree to
disagree over 20 items. Personal interview was
also used to obtain additional information from
respondents. The two methods were used to
complement, supplement, and validate data
through each other.
Reliability of the instrument was 0.705 derived
from
Cronbachs
Alpha
technique.
To
systematically analyze data, tables, frequencies,
percentages and the chi-square were used, and
opinions, recommendations and conclusions were
formed based on the results achieved.
The X2 equation used for the analysis was:
X2

= n (O1 E1)2
E1
n=1

Where

Oi = Observed frequencies

E1 = Expected Frequencies
n = no. of categories considered
PRESENTATION OF TABLES
Tables 1-5 Here
PRESENTATION OF RESULT
From the test statistics in table 5, it was seen that
the calculated value of 13.342 was greater than the
table of 13.277 at 0.05 level of significance with 4
degrees of freedom. The implication of the
empirical result is that tacit knowledge has
positive influence on traders success. Therefore
the hypothesis that stated that tacit knowledge has
significant relationship with success was accepted.
This result validates the findings of previous
researchers like Sternberg (2003) Fox & Spector
(2000) that tacit knowledge has positive
relationship with performance. Also, Eddy (1988)
states that tacit knowledge has significant effect on
managerial effectiveness. Again, Wagner (1987)
find that tacit knowledge has significant
relationship with managerial skills of bank
managers, whereas psychometric and verbal
knowledge did not.
DISCUSSION OF RESULTS
This result confirms the usual notion in Nigeria
among Igbo traders that one does not need to have
superior academic intelligence to be a successful
trader. In fact, the Igbo trading community is used
to the primitive boy-boy phenomenon, which
means that one must gain experience through an
already successful trader. It is greatly believed that
such experience is the highest single requirement
to succeed. For example, in Aba most successful
traders will easily point to a master they served
painstakingly before branching out on their own
and eventually becoming successful. In some
cases, if not most cases, young people are attached
to others as boy-boy (apprenticeship) for say 3
5 years after which they are settled with an
agreed sum of money to start their own trading
business. Such people usually forego higher formal
education to gain experience which will lead and
guide them in their trading expedition. They

John N.N. Ugoani

Effect of Tacit Knowledge on Business Success

gained over time through solving everyday

problems, knowing the customers form the basis of
their tacit knowledge for success. Such people do
not even envy people with high academic
qualifications, because to them it does not translate
to okpogho (money). There is this popular joke
of a successful trader, on hearing another
gentleman in a public gathering promising moral
support, retorted moral support oputa okpogho
ole, literarily meaning how much is moral
support worth in terms of money. Despite the
disdain for academic intelligence these traders
have succeeded based on tacit knowledge.
SCOPE FOR FURTHER RESEARCH
Further research should examine the relationship
between tacit knowledge and the public service to
see if it has any significant effect on performance.
RECOMMENDATIONS
(i)
The primitive boy-boy phenomenon is not
a proxy for formal education. Because of
technological changes sweeping across the world,
parents should encourage their children and wards
to complement apprenticeship with formal
education, where possible.
(ii)
Successful traders should endeavor to
record the path of their journey through life for
others to follow. Such records will prove relevant
for researchers in the areas of tacit knowledge and
success.
(iii)
The government through appropriate
agencies should have a databank for successful
traders to serve as a reference point for interested
parties and the public.
(iv)
Government vocational training centres
should evolve a curriculum of competency
training for traders to complement tacit
knowledge. This will prove beneficial in the way
and manner they handle their customers and the
general public.
(v)
Pressure groups like the Amalgamated
Traders Associations should come together and

Research Paper

produce an enduring code of conduct and ethics

for traders. This will go a long way in shaping
their behavior to be in tandem with what is
obtainable in civilized cultures. The present trend
where traders see themselves as agberos touts
is not acceptable, because some hide under the
cover of the agbero mentality to misbehave.
CONCLUSIONS
Tacit knowledge rises with experience and has
been the bedrock of many successful people.
People who do not have the benefit of formal
academic intelligence have succeeded relying on
social intelligence or what is regarded as tacit
knowledge. These competencies necessary for
solving everyday problems have been found to be
predictive of performance success, whereas
psychometric and verbal knowledge associated
with academic intelligence where not. The result of
this study supports previous evidence that tacit
knowledge as a form of intelligence is a necessary
ingredient for traders success. Tacit knowledge
involves but not limited to the low-level operations
used again and again everyday that help in
building the blocks of success in trading and other
business activities. Igbo traders may not be super
traders, but they do more with less in achieving
greatness.
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Entrepreneurship Theory and Practice.
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knowledge and Practical intelligence.
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Clayton, V, (1982) Wisdom and Intelligence:

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(1996)
Successful
Intelligence. New York, Simon & Schuster
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(2004) Psychology, 6th Edition New
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everyday intelligent behavior: Journal
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Goleman, D, (1995) Emotional Intelligence:

Why It Can Matter More Than I. Q. N. Y.
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John N.N. Ugoani

Effect of Tacit Knowledge on Business Success

Research Paper

Wagner, R. K. & Sternberg, R. J. (1987) Tacit

knowledge in Managerial Success. Journal
of Business and Psychology, 1, 301 -312.
AUTHORS BIOGRAPHY
John N. N. Ugoani, holds a PhD degree in
management. He is a lecturer at Rhema
University and teaches courses on
business,
management,
production
management,
human
resource
management,
industrial
relations,
psychology and industrial psychology. He
is listed among Ten Top Authors by Social
Science Research Network . His present
research interests are in the areas of
emotional
intelligence,
managerial
psychology, bank management, as well as
conflict management, among others.

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Volume: 3, Issue: 1, Pages: 120-128

APPENDIX
Table 1: Questionnaire administration
S/
N

1
2
3
4

TOTAL
ADMINISTERED
350
350

NO RETURNED

300
300

NO
NOT
RETURNED

PERCENTAGE
OF TOTAL

50
50

85.71
14.29
100

Source: Field work: 2013

Table 2: Analysis of population distribution of study by areas

S/
N

Areas
study

1
2

Alaoji Market
Ariaria Int.
Market
Ngwa Road
Market
Nkwo
Market
Ekeakpara
Total

3
4
5
6

of

Stock fish
dealers

Building
accessories

General
merchants

Others

Total

51
95

Iron
&
Rod
dealers
80
70

61
48

35
81

103
118

330
412

21

100

60

88

51

320

60

81

70

50

159

420

47
274

56
387

35
274

90
344

140
571

368
1850

Source: Field work: 2013

Table 3: Analysis of sample size by areas of study

S/
N

1
2
3
4
5
6

Areas
of
study
Alaoji
Market
Ariaria Int.
Market
Ngwa Road
Market
Nkwo
Market
Ekeakpara
market
Total

Stock
dealers
5

Iron & Rod

Dealers
20

Building
accessories
15

General
merchants
17

Others

Total

21

78

10

10

12

14

53

20

21

10

16

70

10

16

10

31

71

12

28

62

68

52

94

300

24

fish

Source: Field work: 2013

John N.N. Ugoani

Effect of Tacit Knowledge on Business Success

Research Paper

Table 4: Profile of Respondents

Variables
Sex

Age

Education

Dependent relatives

Occupation

Measuring group
Female
Male
Total
18 25
26 45
46 above
Total
None
Up to primary six
Up
To
National
Diploma
Others
Total
None
3 children to 7
7 children/Above
Others
Total
Stock fish dealers
Iron and wood
Building accessories
General merchants
Others
Total

Frequencies
100
200
300
48
105
147
300
17
96
79

Percentage
33.33
66.67
100
16
35
49
100
5.67
32.00
26.33

108
300
13
106
91
90
300
24
62
68
52
94
300

36.00
100
04.33
35.34
30.33
30.00
100
8.00
20.67
22.67
17.33
31.33
100

Source: Fieldwork: 2013

Table 5: Test Statistics

Respondents

Agreed

Disagree

Strongly

Strongly

agreed

disagreed

Neutral

Total

Female

15

20

10

30

25

100

Male

20

30

50

40

60

200

Total

35

50

60

70

85

300

Calculated

Table

Level

value

value

significance

13.342

13.277

0.05

of d/f

Source: X2 Test Statistics

128