Knowledge Management (KM)

Knowledge Management (KM)

Stephen M. Mutula (University of Botswana, Botswana)
Copyright: © 2010 |Pages: 20
DOI: 10.4018/978-1-60566-420-0.ch012
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Abstract

There are a growing number of studies on knowledge management (KM) in SMEs for various reasons. One has been the growing realisation that SMEs are in a unique situation because their most significant assets are intangibles comprised mainly of knowledge. SMEs constitute the largest number of enterprises in the economies of both developed and developing countries, as already discussed in preceding chapters. In Germany, for example, 97.9% of all companies fall within the scope of SMEs and provide approximately 36% of all industrial investments (Wimmer and Wolter, 2000). Likewise in Australia, SMEs account for 97% of all private sector businesses and produce 30% of the nation’s output (Australian Bureau of Statistics- ABS, 2001). Handzic (2006) stresses that organizations that manage knowledge better will deal more successfully and effectively with the challenges of the new business environment. KM is therefore perceived to be a key factor in realizing and sustaining organizational success for improved efficiency and innovation.
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Introduction

There are a growing number of studies on knowledge management (KM) in SMEs for various reasons. One has been the growing realisation that SMEs are in a unique situation because their most significant assets are intangibles comprised mainly of knowledge. SMEs constitute the largest number of enterprises in the economies of both developed and developing countries, as already discussed in preceding chapters. In Germany, for example, 97.9% of all companies fall within the scope of SMEs and provide approximately 36% of all industrial investments (Wimmer and Wolter, 2000). Likewise in Australia, SMEs account for 97% of all private sector businesses and produce 30% of the nation’s output (Australian Bureau of Statistics-ABS, 2001). Handzic (2006) stresses that organizations that manage knowledge better will deal more successfully and effectively with the challenges of the new business environment. KM is therefore perceived to be a key factor in realizing and sustaining organizational success for improved efficiency and innovation.

Although there has been a lot of literature on the practise of KM within large organisations, the same cannot be said for SMEs. Rasheed (n.d) argues that this is because in SMEs, the managers are also in most cases the owners, which implies that decision-making is centralized and that fewer layers of management exist. Decision-making processes are therefore shorter in SMEs than they are in large organisations, and therefore KM practices are not prevalent. However, the owners of SMEs have the opportunity to become the key drivers of knowledge management implementations in their organisations. SMEs have an advantage over larger enterprises with regard to KM because they have a simpler, flatter and less complex structure. This kind of structure can comfortably facilitate change across the organisation because functional integration, both horizontally and vertically, is easier to achieve, and fewer complications are likely to arise. Comparatively, larger organisations have a bureaucratic structure, making them slower and less flexible in adopting new schemes. However, larger organisations also have the advantage of specialization in their staff roles, which gives them better expertise in implementing knowledge management. In terms of the culture of organisation, SMEs tend to have a smaller number of people, usually united under common beliefs and values, which implies that it is easier for them to change and implement knowledge management. Generally, it is therefore easier to create a knowledge sharing culture in small-sized enterprises than it is in larger ones.

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