Knowledge Management in SMEs – Current Practices and Potential Benefits

Knowledge management (KM) is fast growing as a distinct source of competitive advantage among businesses. KM usually requires allocation of significant resources which are utilized through a greater focus on definite knowledge assets and the cultivation and development of channels through which knowledge flows. While such resource allocations and subsequent effective utilization can be associated with larger businesses; Small and Medium Enterprises (SMEs), being resource constrained by their very nature find it difficult to undertake and institutionalize KM. It can also be argued that among all the resources required for successful running of a business, SMEs can possibly mobilize and manage the Knowledge resource most effectively. This situation can be particularly crucial when we consider that SMEs form more than 90% of businesses in most countries; a SME sector doing effective KM can make significant contribution to any national economy. This paper investigates KM practices in SMEs. A particular focus is placed on existing literature that addresses the issues and opportunities concerning adoption of KM by SMEs. Based on the literature review, a survey of SMEs is conducted that probes into barriers prohibiting a wider adoption of KM by SMEs. Sectoral trends have also been investigated. All investigations have been conducted in northern industrial belt of Pakistan. Results indicate a greater want for KM adoption in SME sector and a clear performance gaps between adaptors and non-adaptors are shown. Results also show a need for a reliable model of KM in SMEs in contemporary literature. The results can potentially be used for public sector policy making regarding Small Businesses and successful entrepreneurial initiatives in SMEs.

Keywords:

Knowledge Management , SMEs , Pakistan , Developing Economy