Key Contributing Factors to Effective Knowledge Management and its Subsequent Impact on Innovation

Abstract: Knowledge Management (KM) is considered as a major driving factor of innovation, a key component of building companies’ competitive advantage. Although knowledge management is gaining recognition in large companies, there is little evidence on both the prerequisites and outcome of it, in Small and Medium-sized Enterprises (SMEs). Understanding both contributors of efficient KM and in turn its impact in innovation, is of vital importance for the survival and success of SMEs; this holds especially true for Greek SMEs suffering from the recent economic recession. The purpose of this study is to provide valuable insights to SMEs on this area, through identifying the key contributing factors towards establishing effective knowledge management and subsequently validating its impact on innovation enhancement. More specifically, this thesis is initially providing evidence on the theoretical positive contribution of the six -most commonly met in literature- enablers of effective knowledge management and its subsequent impact on innovation. These evidences are used as hypothesis and are evaluated following a quantitative methodology. The results of a survey conducted among 136 Greek SMEs are analyzed through structural equation modeling via which the weights of these hypotheses are calculated. The results of the study in Greek SMEs, reveal that the key contributors of effective knowledge management are Culture and Measurement, followed by some moderate contribution of Leadership, Knowledge Strategy and People Management, while Technology‘s impact is not statistically proved. Additionally the significant impact of effective knowledge management to innovation is proved. The aspects investigated in this thesis and results of our work will hopefully empower the decision makers in taking informed decisions towards innovation enhancement, through striving towards establishing effective knowledge management by focusing on the suggested key contributors.