Abstract
In Europe, USA, Japan, Korea & Taiwan, which account for nearly 75% of the world’s economic output, SME’s contribute between 50-75% of the countries’ GDP. Developing economies are also increasing the SME contribution rate to GDP. Large organizations represent only one per cent of enterprises throughout the world. A great deal of knowledge management (KM) practice and theorizing however has been based upon the issues facing large (and quite frequently multinational) organizations. Understanding knowledge management within SMEs is fundamental to economic advancement, particularly if priorities and practices transferred from large organizations are sub-optimal or counter-productive. This chapter provides some background upon the definition and nature of SMEs, highlighting some theoretical arguments for why knowledge management in SMEs may be different from larger businesses. It then explores knowledge management in SMEs in terms of knowledge features of SMEs, knowledge management practices of SMEs, and the impact of knowledge management within SMEs. Research highlighting aspects of differentiation amongst SMEs that impinge upon KM is introduced and future trends in the practice and study of KM in SMEs are summarized. The conclusion of the chapter is that evidence-based evaluation of KM in SMEs reveals realistic ways in which SMEs can gain benefit from knowledge management.
Key Terms in this Chapter
Balanced Scorecard: A business performance measurement and management system developed by Kaplan and Norton that analyzes organizational success by reviewing the combination of financial, customer, internal business process and employee learning and growth perspectives.
Dynamic capability: A firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments.
Innovativeness: A firm’s propensity and capability to rapidly incorporate change in business practices through creation and/or adoption of new ideas, that add value in the form of increased competiveness and sustainability.
Small and Medium Enterprises (SMEs) (or Small and Medium Businesses (SMB): In the US are defined differently across the world. The key principles are thresholds for employment, turnover and assets that mean that they are typically autonomous (not wholly-owned subsidiaries), owner-managed and have less than 250 employees.
Knowledge Loss: The loss of critical knowledge through labour turnover. It involves what the departing employees know about their job tasks, but also who they know and collaborate with to get work done.
Codification Strategy: A knowledge management strategy whereby information is harvested and codified in a manner that enables it to be shared by others in order to leverage expertise.
Absorptive capacity: A firm’s ability to value, assimilate, and apply new knowledge. A distinction can be drawn between potential absorptive capacity (capability to acquire external knowledge) and realized absorptive capacity (capability to convert and exploit the knowledge).