An Empirical Analysis of Knowledge Gaps and Knowledge-Based Constraints Faced by MSMEs

Abstract

Micro, Small, and Medium Enterprises (MSMEs) are integral to employment and development in any economy. Nevertheless, in knowledge-based economies, competitiveness and sustainability within such enterprises require the acquisition, assimilation, and absorption of knowledge, as well as other resource-related considerations. This study explores knowledge gaps, such as market intelligence, managerial knowledge, IT skills, financial expertise, and technology assimilative capability, that may act as a constraint for the growth of such firms. The study takes a knowledge-based approach and re-conceptualizes the barriers within MSMEs as systemic gaps in terms of their knowledge base. Quantitative methodology was used based on primary data gathered from 112 MSME owners in the Thane district employing purposive sampling. Exploratory Factor Analysis (EFA) yielded six categories of knowledge constraints, namely, market intelligence gaps, lack of learning at the employee level, international markets’ knowledge gap, digital literacy limitations, institutional knowledge gaps, and financial knowledge constraints. The results suggest that the diffusion of knowledge, poor IT adoption, and low knowledge about government incentives pose significant challenges for MSMEs.