Knowledge Management Process and Organizational Performance in SMEs

Knowledge Management Process and Organizational Performance in SMEs

Varintorn Supyuenyong (Knowledge Management Professional Center Asia, Thailand) and Fredric William Swierczek (Thammasat University, Thailand)
Copyright: © 2011 |Pages: 21
DOI: 10.4018/jkm.2011040101
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Abstract

The benefits of knowledge management are recognized mainly for the large organization. Small and medium-sized enterprises (SMEs) can also achieve the real benefits of KM. This paper investigates the relationship between the KM process and the organizational performance of SMEs. The objective of this paper is to assess the KM process and its relationship to different components of organizational performance in small and medium enterprise application service providers in Thailand. A survey approach was used with a sample of 81 respondents. The results show that knowledge organization, and retention and knowledge utilization improve individual performance, product performance, and overall organizational performance. Only knowledge organization and retention increases process performance. Knowledge dissemination influences customer satisfaction and reputation and cost reduction. These results demonstrate the benefits of the KM practices on the organizational performance in SMEs.
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Background

Knowledge Management and SMEs

Knowledge management is usually adopted by large organizations because they have a wide range of knowledge available. Large organizations have sufficient resources and capabilities for KM adoption. They have the technical competence and social processes necessary for the effectiveness of a KM system (Kim et al., 2003; Gandhi, 2004). However, the organization culture in large organizations to support KM is difficult to change because of the inertia related to size. The adoption of KM often causes employee resistance or turnover.

SMEs need a competitive advantage in a dynamic business environment (Huin, 2004). They require employees to be able transform individual knowledge to become organizational knowledge as well as to apply and create new knowledge for better business results.

Research on SMEs has suggested the potential of adopting KM and identified the current applicable KM practices. There are major differences in the perspectives and understanding of KM adopted by SMEs (Wong & Aspinwall, 2004; McAdam & Reid, 2001). Knowledge management in SMEs is usually at the operational level and relates to daily working activities (uit Beijerse, 2000; Disterer, 2002). Many SMEs do not have formal KM practices (Salojarvi et al., 2005). Limited resources are the main reason why SMEs do not adopt a formal and systematic KM system. The capabilities of SMEs in generating new knowledge internally, scanning the industry environment, or maintaining organizational knowledge repositories are limited (Muzyks et al., 1997; Lim & Klobas, 2000). However, SMEs have some advantages in KM adoption (Wong & Aspinwall, 2004). For example, an informal communication environment supports SMEs to capture tacit knowledge they have more effectively (Salojarvi et al., 2005).

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