Knowledge Management Practices towards Competitive Advantage: Study on SMEs in Sri Lanka

Purpose: Knowledge Management (KM) can be defined as capturing, distributing, and effectively using knowledge. Organizations become more knowledge intensive and they are hiring “minds” more than “hands”. The organization practice has shown that knowledge, when properly used and leveraged, could drive it to become more innovative and thus, more competitive. The investments on intangible resources and the creation of capabilities made by the SMEs are quite problematic. The main reason of conducting this study is to examine the effects of Knowledge Management Practices (KMP) to gain competitive advantage (CA) of SMEs in Sri Lanka.

Methods: Explanatory research approach was utilized followed with quantitative research method. Knowledge Creation, Knowledge Validation, Knowledge Presentation, Knowledge Distribution and Knowledge Application were considered as Knowledge Management Practices. The study was conducted with 32 SMEs in Colombo District.

Findings: According to the overall assessment of Knowledge Management Practices in SMEs, 12.5 percent of respondents were never heard about Knowledge Management while 6.3 percent were thinking that it is just a management activity that organizations are already engaging with. Further, 34.4 percent opined that Knowledge Management is a strategic part of the business while 15.6 percent stated Knowledge Management is not existence at their organizations. Fortunately, 40.6 percent believed that Knowledge Management Practices could be beneficial for the organizations. Correlation analysis result indicated moderate positive correlation among knowledge creation, validation, presentation, distribution, application and competitive advantage of SMEs. Regression analysis results revealed that of knowledge distribution was the only significant determinant of competitive advantage of SMEs.

Research Implications: The findings could be beneficial to SMEs to share and manage tacit and explicit knowledge and information effectively within their entity to achieve competitive advantage. Organizational learning will help them to enhance their decision-making process more effectively. The smooth and accelerate access to information and knowledge and manages to engage in work will be bonuses of having a good Knowledge Management Practices in the society.

Limitations: The study was conducted based on the sample of SMEs in Colombo District, as in Colombo area population is relatively high and it is the business hub of Sri Lanka. Generalizability of the findings might be restricted.