The impact of knowledge management capabilities and processes on SME performance

Abstract

Knowledge management (KM) is a practice where knowledge is captured, distributed and utilized effectively, leading to enhanced productivity and performance of an organization. The prime objective of this study is to examine the influence of KM processes and capabilities on the performance of small and medium-sized enterprises (SMEs) in Saudi Arabia. KM capabilities comprise people, IT, the organizational structure and the organizational culture, which are measured in this research by T-shaped skills, IT support, the level of centralization, and learning. The other dimension is KM processes, which consist of accessing, generating, embedding, representing, facilitating, using, measuring and transferring knowledge. Moreover, KM performance is measured via two factors: the organization’s financial performance and customer satisfaction. The research reviews previous literature related to the KM components (processes, capabilities and performance) to develop the research model and a number of hypotheses to evaluate the research problem. The data is collected through a questionnaire-based survey completed by a total of 126 managers working in different sectors of Saudi SMEs. With the help of a number of statistical tests, the research study found that that the KM capabilities, IT support, learning culture, decentralized structure and the people of the organization contribute to the success of KM practices or processes, validating the theoretical model. The results also show that KM processes, including accessing, generating, measuring, transferring, use, embedding, representing and facilitating, are positively associated with the performance of SMEs in Saudi Arabia.