Knowledge Management - Don't Forget The SME's!

The research paper by Cheng Sheng Lee and Kuan Yew Wong in the December of issue of  Business Information Review raises a number of interesting points that deserve wider discussion. Abstract as follows:

Knowledge management (KM) is recognized as an important means for attaining competitive advantage and improving organizational performance. The evaluation of KM performance has become increasingly vital, as it provides the direction for organizations to enhance their performance and competitiveness. A survey was carried out to test the applicability of 14 constructs based on knowledge resources, KM processes, and KM factors in measuring the KM performance for small and medium enterprises (SMEs) in Malaysia. This article intends to further explore the effects of company size (micro, small, and medium) and KM maturity on knowledge management performance measurement (KMPM). Two-way analysis of variance results indicate that company size and KM maturity do affect some aspects of KMPM in SMEs.

The research focused on the effectiveness of knowledge management techniques in Small to Medium Enterprises (SME’s) in Malaysia. Though the scope of the research is limited to one geographic region, the findings could – and should – be tested against a wider and more international cohort.

According to the research paper, in Malaysia, SME’s account for up to 98.5 percent of the total number of businesses and contribute up to 33.1 percent of GDP. They employ 57.5 percent of the total workforce.

To offer some comparison, UK, SME’s account for over 99.8 percent of the total number of businesses, they contributed over half of UK output in 2013 (GVA) and employ 48 percent of the total private sector workforce.

The EU average SME contribution to GDP is 55 percent.

It is clear from this data that SME’s make up a significant, and growing, contribution to the UK and European economies. It seems quite odd, therefore, that so little research has been undertaken into how knowledge management strategies and techniques have been utilized within and across this sector.

The Cheng Sheng Lee/Kuan Yew Wong research gives us some insights that could be tested against a wider geographic sample of SMEs. Some key points from the research as follows:

• The literature research identified that the size of an organization affects its behaviour and structure (Edvardsson, 2006; Rutherford et al, 2001) and how it influences the adoption and implementation of KM (Zaied et al, 2012).

• SME’s should not be perceived as homogenized groups. They themselves can be categorized according to relative size, e.g. micro, small and medium, which can influence the way that KM is implemented.

• In terms of human capital, medium-sized businesses (SMEs) focus more on codification strategies (explicit knowledge) whereas micro-sized businesses (SMEs) are more dependent on socialization strategies.

• An obvious point, but reinforced by the research – the need for better infrastructure, such as tools, office layout, rooms etc. increases as the organizations grows.

• Knowledge Maturity is a key attribute that should be monitored measured. The value of an employee will increase in terms of their contribution to the success of the organization as they progress from beginner, intermediate and advanced staged of KM maturity. Clearly the impact of an employee leaving without an effective knowledge transfer process will be more keenly felt by a small organization. [NB. This is not an excuse for large organizations to treat this is a lower priority!]

• Company size does make a difference to KM performance measurements. A number of factors are proposed, e.g. impact of high turnover, limited resource redundancy in smaller organizations, smaller organizations will likely prioritize implementation processes over performance measurements etc.

• KM performance measurement (KMPM) is still new for SME’s, as the majority of analyst reports and case studies remain focused on large organizations, with a mindset that SMEs do not need or are not ready for KMPM.

Overall, this is an excellent piece of research, and highly recommended reading, which despite its limited sample size and geographic boundary, gives some very useful insight into how KM is being implemented across SME’s. Reassuringly it shows that a growing number of SME’s see KMPM as vital to the growth and success of their business.

The paper is also a wake-up call to academia, research, analyst and consultancy organizations in that we need far more definitive and comprehensive studies in this field, to embrace UK, Europe and other key industrial and economic zones.

To finish with a quote from the authors:

“Enough with large organizations; SMEs should not be neglected as they play a major role in a country’s economic growth”.

On this evidence, who could disagree?

Image source: http://www.denisflorent.fr/small-is-beautiful/