Knowledge Management in SMEs

The attention that has lately been paid to the importance of knowledge in companies is not a recent phenomenon. Companies have always been based on knowledge. Knowledge is an important resource and undoubtedly one of the sources of sustainable competitive advantage. We tackled the doctoral dissertation from conviction that the significance of knowledge in Slovenian companies is underestimated and in the wish to prove in our research to what extent the individual component/dimensions of knowledge can influence business performance. The conception that a company is nothing but a series, i.e. a string, of different resources, is readily accepted and accordingly, by counting knowledge among the resources we agree that knowledge is a significant component of a company' performance. We were well aware of the fact that it is very difficult to define every dimension of knowledge and even harder to measure/quantify them. We have thus developed a knowledge model in entrepreneurship, tested it empirically on a sample of Slovenian small and medium-size companies and thus proved its multidimensional character. The model unites knowledge dimensions with performance ratios. For the purpose of the model design we have developed a model of the factors which constitute and measure knowledge, as well as a company's performance. In the empirical analysis wee have used structural equation models. By using the final model in our research we have proved that almost 52% of the variability in a company's performance can be accounted for with knowledge.