What is Dynamic capability

In Europe, USA, Japan, Korea & Taiwan, which account for nearly 75% of the world’s economic output, SME’s contribute between 50-75% of the countries’ GDP. Developing economies are also increasing the SME contribution rate to GDP. Large organizations represent only one per cent of enterprises throughout the world. A great deal of knowledge management (KM) practice and theorizing however has been based upon the issues facing large (and quite frequently multinational) organizations. Understanding knowledge management within SMEs is fundamental to economic advancement, particularly if priorities and practices transferred from large organizations are sub-optimal or counter-productive. This chapter provides some background upon the definition and nature of SMEs, highlighting some theoretical arguments for why knowledge management in SMEs may be different from larger businesses. It then explores knowledge management in SMEs in terms of knowledge features of SMEs, knowledge management practices of SMEs, and the impact of knowledge management within SMEs. Research highlighting aspects of differentiation amongst SMEs that impinge upon KM is introduced and future trends in the practice and study of KM in SMEs are summarized. The conclusion of the chapter is that evidence-based evaluation of KM in SMEs reveals realistic ways in which SMEs can gain benefit from knowledge management.