Small and medium-sized enterprises (SMEs) are a vital and growing part of any national economy. Like most large businesses, SMEs have recognized the importance of knowledge management. This Chapter investigates the use of knowledge processes and knowledge methods for SMEs. The learning objectives of this Chapter are to assess the role of knowledge management and knowledge processes in SMEs. Furthermore, the reader should be able to describe major knowledge management programs in SMEs and assess how they provide value for organizations. Empirical studies conducted by the authors show that for SMEs, only four knowledge processes are important: (1) knowledge identification, (2) knowledge acquisition, (3) knowledge distribution and (4) knowledge preservation. Based on the research result of several empirical studies, an integration concept for knowledge processes, knowledge methods, and knowledge software tools for SMEs is introduced and discussed.
The academic literature on knowledge management has become a major research field in different disciplines in the last decade (Davenport & Prusak, 1998). Through knowledge management, organizations are enabled to create, identify and renew the company’s knowledge base and to deliver innovative products and services to the customer. Knowledge management is a process of systematically managed and leveraged knowledge in an organization. For Mockler and Dologite (2002, p. 18) knowledge management “refers to the process of identifying and generating, systematically gathering and providing access to, and putting in use anything and everything which might be useful to know when performing some specified business activity. The knowledge management process is designed to increase profitability and competitive advantage in the marketplace”. Before implementing a knowledge integration concept, there must be a common understanding of the term knowledge, its characteristics, and its impact on knowledge management. The multi-faceted nature of the term knowledge is reflected in a variety of definitions (Kakabadse, Kouzmin, & Kakabadse, 2001, p. 138). Davenport and Prusak (1998) use the term “knowledge in action” to express the characteristics of the term knowledge management in a way it is valuable for the company and to capture it in words because it resists in the minds of the humans and their action. Davenport and Prusak (1998, pp. 6) identify five key components that describe the term knowledge management:
The first component is experience. Knowledge develops over time, and it builds on the lifelong learning and training practice of an employee. Experience has a historical perspective, and it is based on the skills the knowledge-worker applies to familiar patterns to make connections between these links.
The second component of the term knowledge is “ground truth” (Davenport & Prusak, 1998) which is a term used by the U.S. Army’s Center for Army Lessons Learned (CALL). CALL used the term “ground truth” to express experiences that come from the ground rather than from theories and generalizations. “Ground truth” refers to the way that the people involved know what works and what does not. CALL experts’ take part in real military situations, and they pass their observations to the troops through videotapes or photos. The success of this knowledge management approach lies in “After Action Review” programs which try to cover the gap between what happened during an action and what was supposed to happen. This reflection process helps uncover disparities and differences
The third component is complexity. The skill to solve complex problems and the ability to know how to deal with uncertainties distinguish an expert from a normal employee.
A forth characteristic of knowledge is judgment. An expert can judge new situations based on experience gained over time. Furthermore, they have the ability to refine them through reflection. Knowledge, in this sense, is a living system that interacts with the environment.
Finally, knowledge is about heuristics and intuition. An expert acts based on their intuitive knowledge.
Key Terms in this Chapter
Knowledge Management: Can be seen as the overall dealing with knowledge. Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of those who know. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices and norms (Davenport & Prusak, 1998).
Knowledge Integration Concepts: Aim to customize knowledge processes and knowledge methods for SMEs in a single enterprise solution platform. Enterprise application such as knowledge management systems are designed to support the SME orientation of business and knowledge processes to that the SMEs can operate efficiently.
Knowledge Processes: Accelerate the company’s business processes while ensuring compliance with the knowledge of the employees. Knowledge processes concentrate on the identification, acquisition, dissemination and preservation of knowledge in order to gain competitive advantages and enhance the value of the company. Organizations have to use the ability to incorporate their knowledge into their business processes.
Enterprise: Considered to be any entity engaged in an economic activity, irrespective of its legal form. This includes, in particular, self-employed persons and family businesses engaged in craft or other activities, along with partnerships or associations regularly engaged in economic activities. The category of micro, small and medium-sized enterprises (SME) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EURO 50 million, and/or an annual balance sheet total not exceeding EURO 43 million. Within the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EURO 10 million. Within the SME category, a micro enterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EURO 2 million.
Knowledge Management Systems: A fast growing area of corporate software investment. Contemporary technologies such as Portals, Content Management Systems, Search engines, ontologies help managers and employees in their daily decisions and processes. At each level of the organization, knowledge management systems support the major knowledge processes of the business.
Knowledge Distribution: Can be defined as the transfer of knowledge within and across settings, with the expectation that the knowledge will be “used” conceptually (as learning, enlightenment, or the acquisition of new perspectives or attitudes) or instrumentally (in the form of modified or new practices.). There are those who see distribution as having other legitimate outcomes. Some of these outcomes include: (1) increased awareness; (2) ability to make informed choices among alternatives and (3) the exchange of information, materials or perspectives.
Knowledge Methods: Support knowledge processes and are designed to add value to these within organizations. Depending on the identification of industry specific knowledge processes, SMEs have to choose from a knowledge method repository the corresponding knowledge method.