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Despite several insightful empirical studies on how new knowledge is created in organizations, there is still no satisfactory answer to the question, how is new knowledge created in organizations? The purpose of this paper is to address this question by focusing on direct social interaction, adopting a dialogical approach. The following argument is advanced. From a dialogical perspective, new knowledge in organizations originates in the individual ability to draw new distinctions concerning a task at hand. New distinctions may be developed because practitioners experience their situations in terms of already constituted distinctions, which lend themselves to further articulation. Further articulation develops when organizational members engage in dialogical exchanges. When productive, dialogue leads to self-distanciation, namely, to individuals taking distance from their customary and unreflective ways of acting as practitioners. Dialogue is productive depending on the extent to which participants engage relationally with one another. When this happens, participants are more likely to actively take responsibility for both the joint tasks in which they are involved and for the relationships they have with others. Self-distanciation leads to new distinctions through three processes of conceptual change (conceptual combination, conceptual expansion, and conceptual reframing), which, when intersubjectively accepted, constitute new knowledge. Several organizational examples, as well as findings from organizational knowledge research, are reinterpreted to illustrate the above points.

It is argued here that the victory of Greenpeace over Shell in the North Sea, in June 1995, exemplifies the empowerment of small organizations in the semiotic environment in which organizations in late modernity increasingly tend to operate. More specifically, it is argued that in late modern societies risk production tends to be at least as important as wealth production. In the risk society, symbolic power is of great importance, at times more important than economic power; social reflexivity, unfolding within a public discourse which favours post-materialist values, is an integral part of societal functioning; and the role of mediated communication occupies a central place. In a semiotic environment, business organizations do not only compete in the marketplace but, increasingly, in a discursive space in which winning the argument is just as important. These concepts are used to throw light on the conflict that broke out between Shell and Greenpeace in the North Sea, over the offshore dumping of a defunct oil platform.

Chaos and complexity science are part of an emerging new imagery in the scientific and lay cultures, which helps us conceive of the social world as chaosmos-a combination of chaos and cosmos, disorder and order. Notions like nonlinearity, sensitivity to initial conditions, iteration, feedback loops, novelty, process, emergence and unpredictability, which for a long time were not part of mainstream science, have now come to the fore and furnish us with a new vocabulary in terms of which we may attempt to redescribe organizations, and the social world in general. The Newtonian style, whose most significant feature has been the pursuit of the decontextualized ideal, is gradually receding in favour of the chaotic style—the ability to notice instability, disorder, novelty, emergence and self-organization. For organization theory, it is argued that such developments are of great importance for they make central to our study of organizations) the notions of time, history, human finitude, freedom and circularity of behaviour. Moreover, the chaotic style, by privileging qualitative analysis, favours narrative descriptions of organizational phenomena.