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Linking knowledge management to competitive strategies of knowledge-based SMEs

Rohana Ngah (Malaysian Academy of SME and Entrepreneurship Development (MASMED), MARA University of Technology, Shah Alam, Malaysia)
Kuan Yew Wong (Department of Manufacturing and Industrial Engineering, Faculty of Mechanical Engineering, Universiti Teknologi Malaysia, Skudai, Malaysia)

The Bottom Line

ISSN: 0888-045X

Article publication date: 27 April 2020

Issue publication date: 24 February 2020




This paper aims to study the effect of knowledge management in formulating competitive strategies for knowledge-based small- and medium-sized enterprises (SMEs) in Malaysia.


A quantitative approach of a survey was carried out on 135 owners and managers of knowledge-based SMEs in Malaysia. Structural equation modeling technique was used to investigate the relationship between knowledge management and competitive strategies. SmartPLS software is used to analyze the quantitative data. Only SMEs which are involved in R&D and innovation were selected to get the right respondents who meet the objective of the study.


The findings show mixed results. Most dimensions of knowledge management have significant relationships to differentiation strategy except for knowledge creation and knowledge acquisition, with only knowledge acquisition showing a significant relationship to cost leadership. Findings reveal that knowledge management has a positive effect on competitive strategies with more inclination toward differentiation strategy, compared to cost leadership strategy which does synchronize with their commitment in research and development and innovation.

Research limitations/implications

This study is only focused on knowledge-based SMEs in central Malaysia. Second, the use of a survey approach minimized the flow of information.

Practical implications

SMEs do have knowledge management practices but may not be exploiting it well. Mapping knowledge management practices would help SMEs identify their strengths and weaknesses to explore better business opportunities. This proves that SMEs are leveraging their resources through knowledge application, dissemination, storage and protection to be different than their competitors. However, their apparent lack of knowledge in knowledge acquisition and knowledge creation should be addressed accordingly, as it is important for their future continuous sustainability.


This paper contributes to the literature of knowledge management relating to competitive strategies in SMEs. The study offers insights on how competitive strategies were formulated through knowledge management. The mixed results reveal a new different outlook of knowledge management relating to competitive strategies.



This research was supported by the Ministry of Education and Research Management Institute of Universiti Teknologi Mara through research grant 600-RMI/FRGS 5/3 (69/2014).


Ngah, R. and Wong, K.Y. (2020), "Linking knowledge management to competitive strategies of knowledge-based SMEs", The Bottom Line, Vol. 33 No. 1, pp. 42-59.



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