Knowledge Management For SMEs In Developing Countries.docx
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Knowledge Management For SMEs In Developing Countries.docx
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KnowledgeManagementForSMEsInDevelopingCountries
JournalofKnowledgeManagementPractice,Vol.11,No.2,June2010
KnowledgeManagementForSMEsInDevelopingCountries
IftikharHussain¹,StevenSi¹,AdnanAhmed²
¹ShanghaiUniversity,China,²MuhammadAliJinnahUniversity,Pakistan
ABSTRACT:
Knowledgemanagementhelpsinincreasingproductivity,effectivenessandefficiencyinoperations.OverlookingKMcanseriouslyhamperthegrowthandprosperityofaSME.Acomprehensiveliteraturestudywasundertaken.ThestudyaccessedthestatusofKMinSMEsindevelopingcountriesandalsoexaminedthefactorsthatinfluencetheadoptionofKMforSMEsindevelopingcountries.ManyorganizationshaveprofitedfromKMbecausetheyrecognizetheimportanceoftheKMinbusinessgrowthanddevelopment.HoweverthestudyfoundSMEs,indevelopingcountrieshavenotrealizedthisimportanceandstillarevulnerable.ThestudytakesthisfactorintoconsiderationandproposedaKMapproachspecifictoSMEsindevelopingcountries.ThestudycontributesonKMandSMEsliteratureindevelopingcountriesandisoneofthefewstudiesconductedindevelopingcountries.
Keywords:
Knowledgemanagement,SME,Developingcountries,Organization
1.Introduction
KMhelpsinincreasingproductivity,effectivenessandefficiencyinoperations.OverlookingKMcanseriouslyhamperthegrowthandprosperityofanSME.KMcreatesalternateprofitableprospectsforSMEs.ThestudyconsideredtheliteratureonKMwithaviewtoascertaininghowthismightbeappliedtoSMEsindevelopingcountries.ThisisimportantbecauseKMhavereceivedrenewedinterestwiththeemergenceoftheknowledgeeconomy.ManyorganizationshaveprofitedfromKMbecausetheyrecognizetheimportanceoftheKMinbusinessgrowthanddevelopment.HoweverthestudyfoundSMEs,indevelopingcountrieshavenotrealizedthisimportanceandstillarevulnerable.ThestudytakesthisfactorintoconsiderationandproposedaKMapproachspecifictoSMEsindevelopingcountries.ThestudycontributesonKMandSMEsliteratureindevelopingcountriesandisoneofthefewstudiesconductedindevelopingcountries.
ThepotentialwhichKMoffersinimprovingefficiencyandinnovationhasbeencitedasakeysourceofcompetitiveadvantage(MacKinnonetal.,2002).Despitethispressingneed,itiswidelyacceptedthatsmallcompanies–eventhemostknowledge-intensiveones–arecharacterizedbyalackofuptakeofKMinitiatives(Nunesetal.,2006).PerhapsduetothereasonthatKMsystemsareexpensivetopurchase,useandmaintain.TheaimofthisstudywastoproposeanalternativeapproachtodevelopingKMsystemsforSMEsindevelopingeconomies.Insteadofusualapproaches,whereKMneedsheavyfinancialandotherresources,studysuggestedsolutioncentricapproach(Patrick&Dotsika,2007).
Smallandmediumenterprises(SMEs)makesubstantialcontributionstonationaleconomiesandareestimatedtoaccountfor80percentofglobaleconomicgrowth(Pavicetal.,2007).Todaythebusinessenvironmenthasbecomemorecompetitivethaneverbefore.Inthiscompetitiveenvironmentknowledgeisthoughttobetheprimaryresource.Theconventionalfactorsofproductionhavebecomesecondary.Itisstraightforwardtoobtainthem,providedthereisknowledge(Chenetal.,2006).DavidsonandGriffin(2003)pointedoutsmallbusinesseshavecontributedmanyinnovativeideasandtechnologicalbreakthroughstooursociety.InordertomaintainanddevelopfurthertheirinnovativeskillsSMEsneedtodeveloptheirunderstandingofknowledgemanagement(KM),asakeybusinessdriverratherthanasaresource-intensiveadditionalinitiative(Zanjanietal.,2008).“KMhasbecomethelateststrategyinincreasingorganizationalcompetitiveness”(DeTienne&Jackson,2001).ThecriticalassumptionofKMisthatorganizationsthatmanageorganizationalandindividualknowledgebetterwilldealmoresuccessfullywiththechallengesofthenewbusinessenvironment.KMisseenasavitalfactorinrealizingandsustainingorganizationalsuccessforimprovedefficiencyandinnovation.Today,knowledgeistheprimarysourceofcompetitiveadvantageandthekeytosuccessfororganizationsintheknowledgeeconomy(MacKinnonetal.,2002;Patriotta,2003).ThisstudyanalyzeddifferentaspectsofKMwithrespecttodevelopingcountriesandproposedstrategiesforbetterimplementationofKMprogramsindevelopingcountries.
Thestudyconsistsofsixsections.Followingintroduction,section2containsliteratureaboutknowledge,KM,SMEs,andKM&SMEs.Section3discussedtheroleofSMEsindevelopingcountriesandtheneedforKMinSMEs.Section4highlightedthebenefitsofKMforSMEsandsection5containstheresearchfindings.Section6concludesthepaperandprovidesfutureresearchdirections.
2.LiteratureReview
2.1.Knowledge
Knowledgehasbeendefinedinmultipleways.DavenportandPrusak(1988)definedknowledgeasfollows:
‘Knowledgeisafluidmixofframedexperience,values,contextualinformation,andexpertinsightthatprovidesaframeworkforevaluatingandincorporatingnewexperiencesandinformation.Itoriginatesandisappliedinthemindsofknower.Inorganizations,itisoftenbecomesembeddednotonlyindocumentsorrepositoriesbutalsoinorganizationalroutines,processes,practices,andnorms.’Knowledgeistheprimaryresourceforindividuals,organizationsandtheeconomy.Delahaye(2003)concludedthatknowledgeisadistinctivesourceasithasnolawofdiminishingreturns,growsfromsharing.Wiig(1997)arguedthatknowledgeisnotanewconcept,fromveryearlytimespeoplehavetransferredknowledgebysuccessiontothenextgeneration.Inancientcultures,thishastakentheformofnarrativesandsongs,whichwereintendedtoteachthenewgenerationnewskillsandsurvivaltechniques.
Samuel(1775)wroteinhisearlydictionary"Knowledgeisoftwokinds:
weknowasubjectourselves,orweknowwherewecanfindinformationuponit”.Knowledgecanbedividedintotwocategories:
tacitandexplicit.Explicitknowledgereferstotheknowledgewhichcanbearticulatedinformallanguagesuchasgrammaticalstatements,mathematicalexpressions,specifications,manuals,andthuscanbetransmittedacrossindividualsformallyandeasily.Onthecontrary,tacitknowledgereferstotheknowledgewhichishardtoarticulatewithformallanguage,butispersonalknowledgeembeddedinindividualexperienceandinvolvesintangiblefactorssuchaspersonalbelief,perspective,andvaluesystems(David,2006;Nonaka&Takeuchi,1995).
2.2.KnowledgeManagement
KMinvolvesknowledgeidentification,creation,acquisition,transfer,sharingandexploitation.KMisvitalforefficiencyandorganizationalcompetitiveness(Egbu,2001).Boh(2007)describedthatKMisasystematicprocessforacquiring,organizing,sustaining,applying,sharingandrenewingboththetacitandexplicitknowledgeofemployeestoenhanceorganizationalperformanceandcreatevalue.Menkhoffetal.,(2002)definedKMasthetaskofdevelopingandexploitingbothtangibleandintangibleknowledgeresourcesofanorganization.Pillania(2006c)definedKMas“asystematic,organized,explicitanddeliberateongoingprocessofcreating,disseminating,applying,renewingandupdatingtheknowledgeforachievingorganizationalobjectives''.KMisaprocesswhichinvolvesthemanagementofexplicitandtacitknowledge(Nonaka&Takeuchi,1995).
2.3.SMEsAndTheirRoleInDevelopingCountries
AccordingtoOECD(2000)SMEsmake-upthelargestproportionofbusinessesallovertheworldandplaytremendousrolesinemploymentgeneration,provisionofgoodsandservices,creatingabetterstandardofliving,aswellasimmenselycontributingtothegrossdomesticproducts(GDPs)ofmanycountries.TheEuropeanCommissiongaverisetothetermSMEin1996anddefinedthetermasorganizationsemployingfewerthan250people(Burns,2001).Indevelopingcountries,SMEsaredefineddifferentlyforvariouscountries.ThetermSMEcoversaheterogeneousgroupofbusinessesinadevelopingeconomy,rangingfromasingleartisanworkinginasmallshopmakinghandicraftsforavillagemarkettosophisticatedengineeringfirmssellinginoverseasmarkets(Fischer&Reuber,2003).GenerallySMEsindevelopingcountrieshavenotmorethan250employees.SomeimportantcharacteristicsofSMEsinclude:
ØThecompanyischaracterizedbytheentrepreneurwhoveryoftenalsoistheownerofthecompany.
ØTheentrepreneurnormallyisthe“generalmanager”,thusheactsonhisownrisk.
ØTheentrepreneurhasanetworkofpersonalcontactstocustomers,suppliersandtherelevantpublicsector.Sothecontactiscloseandratherinformal.
ØThecompanyusuallyactsverylocal.
ØTheproductsofferedcanbeveryindividualtothecustomer’sneeds.
ØTheformoforganizationisratherinformalandflat.
ØThecompanycanreactquicklytochangesintheenvironment.
ØThecompanyisnotdominatedorruledbyanothercompany,e.g.partofbigbusinessconcern.
ØThemarketshareisnormallysmall.
ØTheproductsarelittlediversified.
ØAbout36%oftheSMEsarenotolderthan10years(specificdevelopmentstage).
SMEsarethebackboneoftheindustrializationprocessofmanydevelopingcountriesandplayavitalpartinexpandingacountry'seconomy.InThailand,SMEsaccountformorethan90%ofthetotalnumberofestablishments,65percentofemploymentand47percentofmanufacturingvalueaddedwhileinPhilippines,SMEscomprise99percentofthetotalmanufacturingestablishmentsandcontribute45percentofemploymentand18percentofvalueaddedinthemanufacturingsector.AcrosstheSouthAsia,thecontributionofSMEstotheov
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