1984
Managing Knowledge in SMEs
weekly meetings with her employees at a local
pub to impart her discoveries and insights from
the week’s activities. At SMEs, employees are
always in close contact with the owner/manager.
$VDUHVXOWWKHÀRZRINQRZOHGJHJRHVXSDQG
d o w n v i a h i e r a r c h i c a l r a n k s ; t h i s o c c u r s s m o o t h l y
and normally via personalized meetings between
individuals. Employees working in an SME are in
close proximity to each other. The result of being
in close quarters is employees are in conversation
and communication with one another on a daily
basis. Granted that much of the conversation has
nothing to do with the business at-hand, and is
more social in nature, it nonetheless helps build a
friendly environment in which knowledge shar-
ing becomes easier and more effective. As one
PDQDJHURIDUHVWDXUDQWUHPDUNHG³,GRQRWPLQG
if my employees engage in conversations during
work hours…it is important that they like each
other and of course like me…in this way they
will know that when I criticize their work…I am
doing it with good intentions…and not due to a
hidden agenda.”
Socialization is the dominant activity in SMEs
and it subsumes the remaining three acts—ECI.
Let us explain. Due to resource constraints and
the lack of maturity, SMEs seldom have rich or-
ganizational memories. In our sample of SMEs,
organizational memories represented the exper-

tise, experiences, and knowledge of the owner or
managing partner of the SME, these being the
individuals who decided to start-up the business
and who possessed domain knowledge. The own-
ers/managers conducted acts of combination on
their knowledge, internally. They added to their
pieces of knowledge by observing behavior in
their businesses and the environment. Due to
the private nature of the organizational memory
i.e. it resided in the mind of the manager/owner,
other organizational members could not use this
knowledge for acts of combination or even apply it
directly. Hence, they had to rely on getting knowl-
e d g e f r o m a c t s of s o c i a l i z a t i o n . T h e o w n e r s w o u l d
hold training sessions and impart their knowledge
via an apprenticeship mode. Put another way,
internalization of knowledge occurred by social-
ization with the owner/manager. An outcome of
not having dedicated organizational memories is
the absence of efforts on the part of employees to
externalize their knowledge into explicit artifacts.
K n o w le d g e , o n c e i n t e r n a l i z e d b y e m p lo y e e s i s a p -
plied directly to work, and is seldom documented
in a secondary storage medium like a notebook
or information systems.
To summarize, in SMEs there is lack of ex-
plicit knowledge repositories such as an Intranet
tool for sharing knowledge or large databases.
Instead, each manager/owner acts as the knowl-
edge repository. Since the repository is private,

acts of combination are also conducted privately.
Knowledge becomes part of the organization’s
fabric when it is socialized from the manager to
the employees; seldom does knowledge move the
other way i.e. from employee to manager. This
is because employees are not too concerned with
knowledge management details when compared
to executing their operations on a daily basis.
Knowledge, once socialized, is internalized when
apprenticeship based training is conducted. We
can thus argue for the presence of an S
ECI
model
in SMEs in which the S dominates, rather than the
standard SECI model found in larger organizations
in which each activity has an equally important
role in knowledge management.
Finding 2: Common Knowledge
7KHVHFRQGSHFXOLDU¿QGLQJLVWKHLVVXHRI³FRP-
mon knowledge”. Common knowledge, as we
GH¿QHLWKHUHLVNQRZOHGJHWKDWLVNQRZQWRDOO
PHPEHUVRIWKHRUJDQL]DWLRQ0XFKOLNH³FRP-
PRQVHQVH´³FRPPRQNQRZOHGJH´KHOSVLQWKH
conduct of work in organizations by providing
a common frame of reference. Without some
form of common knowledge, the essence of the
WHUP³RUJDQL]DWLRQ´ZLOOEHORVW7RRUJDQL]HLV
to join together or assemble for a common goal.
In most large organizations, knowledge is ir-
1985

Managing Knowledge in SMEs
regularly distributed across the various sectors
(Tushman & Nadler, 1978). As an organization
grows, areas of specialization emerge such as
¿QDQFH RU RSHUDWLRQV DQG NQRZOHGJH LQ WKHVH
domains get concentrated around the areas of
specialization. Knowledge available in the areas
RIVSHFLDOL]DWLRQZLOOQRWEH³FRPPRQ´DFURVVWKH
organization. The lack of common knowledge has
EHHQNQRZQWRLPSHGHWKHÀRZRINQRZOHGJH
resulting in failures to stimulate innovation and
creativity in the organization (Simonin, 1999;
Szulanski, 1997).
In SMEs, we were pleasantly surprised to see
the prominence of common knowledge in terms of
both depth and breadth. Most SMEs we researched
had deep-levels of common knowledge, that is,
each employee had very similar foundation and
grounding in organizational matters. For example,
LQDFDIpLQ&KLFDJRDPDQDJHUUHPDUNHG³EDVLF
training provided to my employees consists of
equipping them to run the shop…if an employee
KDVVXI¿FLHQWLQIRUPDWLRQDQGNQRZOHGJHRQKRZ
to manage the café from - opening up the door, to
running the register, making a cappuccino, serv-
LQJDVDQGZLFKPRSSLQJWKHÀRRUDQGHQWHULQJ
the receipts at close—the training is viewed as
successful…else we will re-train.” Due to train-
ing initiatives such as these, each employee is
given a deep introduction into the way the SME

conducts business. It is because of this that em-
SOR\HHVFDQIUHTXHQWO\DQGRIWHQGR¿OOLQIRU
one another. The deep level of knowledge along
with the breadth of common knowledge also fa-
cilitates ease of communication and sensemaking.
Common knowledge forms a shared context for
interpretation and communication. For example,
if a restaurant institutes a new work practice that
affects the waiters, chances are high they will be
appreciate it. The reason being they have enough
knowledge about the work of the cooks, busboys,
cashiers, and bartenders, to comprehend whether
the new process will streamline the entire res-
taurant operations, resulting in them leaving for
home early, and may be with increased tips. To
TXRWHDUHVWDXUDQWRZQHU³,GRQRWKDYHWRNHHS
explaining myself to the cooks, busboys, valet
staff, and waiters…they know that they are all in
this thing together…they see the big picture and
work to enhance that…we do not have allegiances
towards being waiters or valet staff, rather we all
work for the restaurant…”
$QRXWFRPHRIKDYLQJ³FRPPRQNQRZOHGJH´
is the speed of knowledge transfer. Ishin-Denshin,
is a Japanese term, can be roughly translated to
³SUHVHQFHRIWDFLWXQGHUVWDQGLQJEHWZHHQFRP-
PXQLFDWRUVWKDWVLJQL¿HVWKHVSHHGRINQRZOHGJH
transfer that will occur if communicators share
W KH VD PH FR Q W H[ W ´ 6S H F L ¿ F D O O \ E HIR U HR QH VS HD N V  
what is going to be spoken and its associated con-

text is known to the other. In restaurants, there are
numerous hand jesters, eye movements, and even
WKHVSHHGRISK\VLFDOPRYHPHQWWKDWVLJQL¿HVLQ-
formation items such as clean this table, bring some
water, two cups of coffee, or even the customer is
livid as we buggered up the order. As we are not
artist, we will not attempt to sketch them out here.
Shorthand writing is found on food orders taken
by waiters, who then pass these to the cooks and
the bartenders for food and drink preparations.
Even orders when given by the manager such as
³SOHDVHVHDWWKLVFXVWRPHULQ6HFWLRQDQGHQVXUH
that he enjoys a pleasant experience” has a dif-
IHUHQWPHDQLQJWKDQ³SOHDVHVHDWWKLVFXVWRPHULQ
6HFWLRQDQGSURYLGHKLPZLWKWKH¿QHVWRIIHU-
LQJV´,QWKH¿UVWFDVHWKHPDQDJHULVDVNLQJIRU
the customer to receive the standard treatment,
while in the latter, the manager is ensuring that
the waiter knows this customer is valuable, is a
frequenter of the establishment, and do not bugger
up his meal or experience at the restaurant. These
expressions are well understood by the members
of the organization, and help in executing tasks
LQHIIHFWLYHDQGHI¿FLHQWPDQQHUV-XVWLPDJLQH
what would happen if the restaurant owner could
not use language in a subtle manner to convey his
intentions?, what would transpire if the manager
KDGWRVD\HYHU\WLPH²³VWDQGDUGWUHDWPHQW´YV
³SUHPLHUWUHDWPHQW´IRUDFXVWRPHUFKDQFHVDUH
high the business would close down soon.

1986
Managing Knowledge in SMEs
In summary, common knowledge possessed
by members of the SMEs is deep and broad. This
common knowledge helps in the organization
of work by easing issues of knowledge transfer,
sensemaking, and application.
Finding 3: Knowledge Loss:
A Problem? Or Is it?
When an employee leaves the organization he/she
takes knowledge out the door. In the present time
RI ¿H UF HF R PS HW LW LR Q D Q G K L J K H PS O R\H H PR E LO LW \ 
dealing with issues of knowledge loss has become
a management imperative. We asked SMEs how
they faired with issues of knowledge loss. Surpris-
i n g l y, m a n y r e m a r k e d t h a t t h e y n e v e r c o n s i d e r e d i t
DUHDOSUREOHPRULVVXH$W¿UVWJODQFHZHWKRXJKW
this can be attributed by the fact that these busi-
nesses have only been in existence for a few years
and hence did not have much knowledge to lose.
Through deeper analysis, we discovered that the
answer was not that simple. Some of the mature
SMEs in our sample had deliberate mechanisms
in place to prevent knowledge loss from becom-
ing a problem.
As we have discussed earlier, much of the core
knowledge is held by the owner/managers of the
organization. In addition, common knowledge is
found in all employees. Obviously, if the owner
was to leave, knowledge loss would occur, but the

business would close down, at least in its present
form. So, the real knowledge loss issues center
around employees and managers. Due to the ease
o f a v a i l a b i l i t y of c o m m o n k n o w l e d g e , t h e b u s i n e s s
is not affected if one or more employees leave. As
is found commonly in the hospitality industries,
front-line employee turnover is high—employees
come and go, and other employees take on their
work in the interlude. In addition to the ease by
which existing employees can be moved to cover
positions impacted by knowledge loss, most SMEs
have streamlined the process whereby a new hire
can be indoctrinated with common knowledge.
Their quick execution of the hire-and-train cycle
is salient. In most café’s and restaurants we stud-
ied, a new hire would be given a day’s worth of
training, which would involve observations of
how work was conducted, meetings with manag-
ers, and standard discussions on do’s and don’ts,
WKLVZDVVXI¿FLHQWWRJHWWKHHPSOR\HHVWDUWHG
with work. New hires, almost always, have the
basic background knowledge about work in the
industry of the SME. Differences across SMEs
in an industry are minimal resulting in ease of
knowledge portability. One dry-cleaning/laundry
EXVLQHVVRZQHUH[SODLQHG³,KLUHSHRSOHZKR
have worked in the laundry business…they will
not be experts…but they nonetheless know the
operational aspects of the trade…there is not much
difference between my store and Kim’s [another

laundry business only two streets away]…if you
have worked in one…you will be successful in
working in others.” Basic knowledge in operations
KHOSVQH ZK L UHV TX LFN O\OH D U QQHZGHW D L OV VSH FL ¿F
to the organization and begin applying them on
the job. The knowledge space of interest to SMEs
LVOLPLWHGDQGZHOOGH¿QHGFRPSDUHGWRODUJHU
organizations; hence new employees do not feel
overwhelmed with the amount they must learn
in order to work effectively.
Instances of managers leaving an SME are
rare. In our sample of 25 SMEs, with an average
age of 2.8 years, we found only two instances of
managers quitting. Managers seldom quit SMEs
because they have built a tenure and rapport with
the business and the owner. In cases where, the
owner’s family members are not the managers, the
mangers are usually long-standing friends of the
owners. In most instances these friends probably,
went to the same school or college, had similar
previous places of employment in the past, lived
in same locality, or had some other form of thick
social bond. One organization in our sample, a
PD QDJHPH QWFRQVX OWLQJ¿ U PZDVIRU PHGE\W ZR
buddies who played Rugby at their college. Besides
playing Rugby, they graduated from the same
Business School. Upon graduation, the two went
to work for different consulting houses and lost
1987
Managing Knowledge in SMEs

their job due to downsizing in late 2000. During a
reunion of the College Rugby Team, they engaged
in a conversation leading to the creation of the
SME. Due to close ties between senior members,
VHOGRPGRZH¿QGLQVWDQFHVRINQRZOHGJHORVV
due to individuals leaving the organization.
In the two cases in our sample, where senior
PHPEHUVGLGTXLWWKHEXVLQHVVWKH¿UVWRQHZDV
due to a disagreement over salaries and company
direction with the owner. The second case was
due to health reasons which forced a 72 year-old
FRRNWRUHWLUH,QWKH¿UVWFDVHWKHRZQHUKDQGOHG
the knowledge loss by simply promoting the next
most competent person to the title of manager.
When we asked if there was serious issues that
stemmed from departure of the manager, the
RZQHUUHSOLHG³QR«QRWUHDOO\«-DVRQ«ZDVDEOH
to take on the work left behind by Stuart…more-
over Jason and Stuart are friends…so if things
were missing or needed…Stuart is only a phone
call away…Stuart does not hate us…he just found
a position where he could push his program and
ideas.” The ability to quickly promote someone
WR¿OODYDFDWHGSRVLWLRQLVDQLPSRUWDQWVNLOOIRU
SMEs. SMEs cannot afford to lose customers by
having gaps or breaks in knowledge application
and the conduct of work. All SMEs we spoke to
have high redundancy of requisite knowledge,
there is no knowledge nugget, skill, or expertise
that is rare and housed in the mind of only one

employee.
In the second case, where the chef quit for
health reasons, the second in-command of the
kitchen was made head chef. The second-in-com-
PD QGJRWK LV¿ UVWF RRN L QJMREI URPW KHKH D GFKHI 
his boss! So over the past 24 years, dating back
to several previous employment instances, of
working with him, he had acquired knowledge of
the chef’s way of cooking and mastered his style
of managing the kitchen. Hence, knowledge loss
was again not a serious issue here. One thing we
must stress here is the fact that all SMEs, which
we spoke with, promote from within. They almost
never hire an outsider for senior positions; all hires
are made at the front-lines. Over time, experi-
ences, and efforts one is promoted to the higher
ranks. This is one of the critical reasons why,
knowledge loss is not an issue, as there are many
in the organization that have a similar repertoire
of experiences and knowledge to draw on.
To summarize, SMEs by their nature and due
to deliberate mechanisms are skilled at avoiding
pitfalls of knowledge loss. The close social ties
between members of the SME act as a deterrence
against employees leaving the business. In cases
where employees do leave the business, there are
plenty of available knowledge resources that can
EHPRELOL]HGWRTXLFNO\¿OOWKHYRLG
Finding 4: Exploitation of External
Sources of Knowledge

SMEs have a knack for exploiting foreign sources
of knowledge (Robinson, 1982). Since they are
resource constrained, and cannot spend efforts to
create knowledge, they look outside the organi-
zation for knowledge. One café we studied was
located about 300 meters from one Starbucks on
its right and about 800 meters from another one
on its left. At the face of it, opening up a café in
between these two, would seem economically
irrational. One would venture, that the SME
will not have the resources, reach, or prestige to
compete with the established Giants and would
fail. To our surprise, the SME is thriving and
has actually managed to lure customers away
IURPWKHLQFXPEHQW¿UPV:HDVNHGWKHRZQHU
why would she do something, what in our minds
felt as irrational, opening up a business in the
midst of two rival competitors, she remarked,
³6WDUEXFNVKDVGRQHWKHUHVHDUFK«PDUNHWLQJ
research…and has found this locality to be one
of interest to them…I am just using their research
WRP\HQG«$OOWKDW6WDUEXFNVKDVFRQ¿UPHGYLD
research is that people will spend money on cof-
fee and pastries…they never said that they would
drink Starbucks coffee…just coffee…so why not at
my café.” The owner has been very successful in
1988
Managing Knowledge in SMEs
exploiting research conducted by her larger com-
petitors to her ends. For instance, she uncovered

that one of the common complaints regarding the
chain coffee-shops was that the environment was
not homely or community geared. All Starbucks
or Seattle’s Best coffee shops have the same
look and feel, serve the same drinks, and even
play the same music; this is a natural outcome of
being in the franchise business. Exploiting this
knowledge, she decided to build her café on the
premise of making it a central meeting place for
the neighborhood, this point has been the biggest
reason why her café has faired very well.
In addition, to using ready-made external
knowledge, SMEs make it a priority to be well
connected with their localities. In many cases
these localities house their customers and sup-
pliers. Being well-connected in the community,
helps the SMEs use environmental knowledge in
an effective manner towards business ends. For
instance, some of the restaurants in our sample
were located near universities. These establish-
ments hired college students for their waiter and
bartender positions. We thought that this was be-
c a u s e o f t h e e c o n o m i c r e a s o n of g e t t i n g c o s t s a v i n g
associated with hiring student workers. However,
the manager informed us that we were wrong, and
the cost savings were minimal. Managers hired
students so that they could keep abreast of events
on campus. Using the knowledge about events on
campus, marketing programs would be geared
for attracting students to dine at the restaurant.

Common examples include discounted prices for
drinks and appetizers during and after college
sport games. Discounted prices were provided
to student groups, such as the various clubs on
campus, to host their meetings at the restaurant. In
fact, employees were given bonuses based on how
they contributed to the revenues of the restaurant
by sharing pertinent knowledge.
In our experience, and in the literature, larger
organizations are less apt at exploiting external
sources of knowledge (Prahalad & Ramaswamy,
2004). Individuals within the organization may
rely heavily on outside sources of knowledge,
but as a whole the organization does a poor job
at leveraging such sources. As a classic example,
consider the failure to various US intelligence
agencies to heed the warning about terrorist plots
from their counterparts in Egypt, the Philippines,
Germany, and other foreign governments (De-
souza & Hensgen, 2002). As we all know now,
the external knowledge, if appreciated could have
helped curtail the terrorist plots. We postulate that
the reason for lack of care on exter nal knowledge
is the obsession with generation of knowledge
in-house and independent of the external world.
In recent times, we have seen an interest in get-
ting organizations to embrace external sources of
knowledge. Prahalad and colleagues have called
on organizations to cocreate value with their
customers; this will require the organization to

accept the fact that they do not have all the answers
and to work in conjunction with its constituents
(Prahalad & Ramaswamy, 2004). In some cases,
it may also be in the organization’s best interest
to collaborate with its competitors (Hamel, Doz,
& Prahalad, 1989).
Finding 5: People-Centered
Knowledge—Technology in the
Background
SMEs knowingly or unknowingly, manage
knowledge the right way—the humanistic way.
Technology is never made part of the knowledge
management equation. The use of technology in
an SME is mostly limited to acts of automation
(such as the use of cash registers) and at times for
informative purposes (storing of employee contact
information in databases). Technology is never
used as a means to manage knowledge.
Knowledge is created, shared, transferred,
and applied via people based mechanisms. These
include the use of face-to-face meetings, obser-
vations, apprenticeship training methods, and
so on. Knowledge generated is immediately put
into practice, rather than being stored in some
1989
Managing Knowledge in SMEs
obscure technology artifact, like a database. Put-
ting knowledge into practice helps in immediate
institutionalization of the insight and the improve-
ment of work practices.

Larger organizations spend inordinate amount
of resources on building, managing, and deploying
technology artifacts for knowledge management.
These seldom help the organization get a knowl-
edge management program running, because they
do not get at the crux of the issue—knowledge
sharing and managing is one of human endeavor.
Humans generate the knowledge and apply it.
We do agree that technology can help the pro-
cess of knowledge management by streamlining
knowledge generation, storage, distribution, and
application. However, for technology to be suc-
cessful there must be a solid foundation for it to
lie on. This foundation is built by addressing the
humanistic issues involved in fostering knowledge
management. SMEs have the advantage, due to
resource constraints, of not looking at technol-
ogy for the solution to knowledge management
problems. Larger organizations can learn from
their efforts, in the fact that when issues surface
LQYROYLQJ LQIRUPDWLRQ DQGNQRZOHGJHÀRZV RU
their application, the interventions used to resolve
the problem are human based. Examples include,
helping bond employees via informal meetings,
job rotations for employees to gain experiences
in all facets of the business, and most important
reminding employees of the core mission of the
organization and rallying support behind the mis-
sion. For our last quote, consider the statement
PDGHE\DQ60(RZQHU³,GRQRWKDYHWKHFDSLWDO

to think about technology…but if I did…I would
ask two question…will it help me deliver better
products to my customer and can I attract new
customers using the technology…if the answer is
no…I do not need it…no matter what fancy things
the computer [technology] can do…I am in the
people business…I rather use the money to take
my employees for a picnic…spending money on
my employees will ensure that they will be happy
with me and the organization and they will do
their best to help me serve my customers…hence
make me money…technology will cost me more
than I will reap.”
Finding 6: Managing Ignorance
In our research we found that SMEs are humble
organizations, especially when compared to their
larger counterparts. One critical aspect of being
humble is their quick admittance of knowledge
of areas they lack competency in. Put another
way, SMEs were very apt at telling us knowledge
spaces they had no competency in, and more im-
portantly, where they would seek such knowledge
from. One of the managers of a restaurant put it
VXFFLQFWO\³ZKLOHLWLVLPSRUWDQWIRUXVWRUHDOL]H
our strengths, we are well aware of our weaknesses
and things we do not know…we constantly seek
out ways to gain more information…but know
that we will still be ignorant of much.”
Being humble about what one is ignorant
about, is a salient capability required to man-

age knowledge adequately. For one, it helps the
organization identify areas where it needs to get
knowledge. Needed knowledge can come from
new hires, scanning external sources, or even
creating it in-house. Second, realizing that one
is ignorant in a domain, forces a more cautious
exploration of the unknown. This we argue is
one of the reasons why SMEs, who are not in the
technology business, are cautious in investing in
technology artifacts. Technology management,
information systems, and information technol-
ogy, are areas where most SMEs, obviously, have
the least amount of knowledge in. Hence, many
are cautious with how they invest, hard earned,
revenues in information technologies. Most SMEs
do not dive in and go all out, that is commit to
a new system in total or switch to new systems
of operations. They like to work in piece-meal.
They may start out with experimenting with a
new technology, then working with one or more
components of the overall system, and then may
be expand the scope of the information technology.
1990
Managing Knowledge in SMEs
This cautious trajectory helps the SME increase
its knowledge of the technology in the domain,
and also test out the viability of the system.
SMEs are also not afraid of calling on experts
t o h e l p t h e m g a i n k n o wl e d g e i n a r e a s o f i g n o r a n c e .
However, understandably, they have resource

constraints, but they are innovative in how they
tap into the knowledge spaces. The owner of a café
invited her customers who were subject matter
experts for a half-day event. The event was hosted
at the café and was designed for the owner to gain
knowledge from these experts. She provided the
experts with a free breakfast and coupons for
future coffee purchases, in return each patron
helped her understand ways she could improve
her business. Suggestions ranged from marketing
plans to even technology enhancements, such as
making the café a wireless hotspot. The owner
took these suggestions, and implemented a few
of them. For one, the café was made a wire-
less hotspot; this instantaneously became a key
customer attraction mechanism, as many of the
larger franchisee cafés charged for the wireless
Internet access.
Finding 7: Knowledge Management
or Management by Knowledge
7KHODVW¿QGLQJGHDOVZLWKWKHWHUP³NQRZOHGJH
management”. It is common to think of knowl-
edge management as one of many undertakings
in an organization. Most books treat knowledge
management as a distinct discipline from other
organizational facets (Davenport & Prusak, 1998).
In our interactions with SMEs, we failed to see
WKHFRQFHSWRI³NQRZOHGJHPDQDJHPHQW´DVRQH
that was isolated. Rather, we assert that SMEs
IRFXV RQ ³PDQDJHPHQW´E\NQRZOHGJHWKDW LV

knowledge guides all management efforts.
7 K L VL V DU D W KH U L Q WH UH V W L QJ ¿ Q G L QJ D V 6 0 ( V D U H
engage in managing knowledge in a more cohesive
manner when compared to larger organizations.
You do not have knowledge managers or chief
NQRZOHGJHRI¿FHUVLQ60(VKRZHYHUNQRZOHGJH
guides all management efforts, and we must say
that most SMEs are successful at leveraging
knowledge. The larger organizations can learn
from SMEs, in how knowledge is integrated into
the work practices and imbedded into the fabric
of the organization. Managing knowledge is not
an afterthought or a distinct activity in the SME.
Engaging knowledge management into all facets
of the organization makes such efforts successful
and mandatory.
CONCLUSION
In this chapter we have elaborated on seven key
peculiarities in knowledge management prac-
tices found at SMEs. While we have painted a
rosy picture of how SMEs manage knowledge,
we must acknowledge that SMEs have their fair
share of problems. In a future paper, we could
explore the problems and suppressors to effective
knowledge management at SMEs. Compared to
research on larger organizations, investigations
into the intricacies of managing knowledge at
smaller enterprises remain largely unexplored.
It would be wrong to assume that SMEs practice
knowledge management in similar ways as larger

organizations with the only difference being in
magnitude or scale. We hope this article has
opened up avenues for future research, by stressing
s o m e o f t h e u n i q u e i s s u e s i n v o lv e d w i t h m a n a g i n g
knowledge at SMEs. Future research is needed
WRH[SDQGRQRXU¿QGLQJVKHUHYDOLGDWHWKHP
across a larger sample, and even help improve
the state-of-the art.
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Chapter 7.3
A Typology of
Interorganizational
Relationships:
A Marriage, a Fling, or
Something in Between
Wonyoung Lee
Marketing Lab, Korea
Praveen Aggarwal
University of Minnesota Dulut, USA
Hyonkil Shin
Hankuk University of Foreign Studies, Korea
Taihoon Cha
Hankuk University of Foreign Studies, Korea
Seunghan Kim
Samsung SDS, Korea
ABSTRACT
The decreasing cost of IT has encouraged or-
ganizations to seek new ways of cooperating
with members of the supply chain and other key

strategic partners. This increased cooperation is
giving rise to a new type of interorganizational
system (IOS). Before the advent of the Internet,
,6 LQWHJUDWLRQ UHTXLUHG VLJQL¿FDQW LQYHVWPHQWV
on the part of organizations participating in an
IOS. Such heavy investments, in turn, neces-
sitated close strategic cooperation in the non-IS
domain, as well. Thus, IS integration went hand-
in-hand with non-IS (relational) integration in the
pre-Internet era. However, advances in Internet
technology have commoditized IS integration to