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Research has shown that employers in small businesses may not provide, or fund, off‐the‐job training for reasons including that they believe that no training was considered necessary in their business. The research reported in this paper aims to focus on a study of software‐related companies that form part of an important sector for potential growth.

This article reports findings from a study of 20 software related small‐ to medium‐sized enterprises (SMEs). The overall purpose of the research was to establish a model whereby companies within the cluster could identify the training and development needs of their employees, and also of their management team(s). Interviews were held with owner managers and senior staff, and a training needs analysis was conducted in each organisation.

A number of factors were hindering the development of managerial talent in the sample. These included their small size, a lack of resources and availability of personnel for release to undertake development programmes as well as a shortage of specialist human resource management (HRM) expertise.

This research contributes to the growing body of knowledge in the field of strategic human resource development in SMEs. However, the identification, understanding and development of knowledge capital are vital to compete within international markets and the knowledge economy. The approach suggested by the research provides a framework for improvement by identifying requirements for a “toolkit” that meets the needs of organisations and bridges the gap within the existing literature and empirical evidence.

This paper presents the findings from an Objective 4 research project funded through the European Social Fund. A total of 60 innovative technology based SMEs in the Aberdeen area agreed to take part in structured interviews which addressed a broad range of strategic issues. Information was gathered on the knowledge exchange practices utilised by these companies for example seminars, co‐operative working arrangements and in‐house training. Many other sources of learning such as project reviews, practical experience and brainstorming meetings were also discussed. Although the 60 companies taking part in this research have many processes in place which can aid organisational learning, it is unclear how conscious they are of the value of these processes. The sample companies are moving through a learning cycle, akin to that developed by Kolb, by reviewing and acting on learning experiences. However there are considerable differences in the time invested in this process. Few firms are translating their learning experiences into documented format to ensure that knowledge is available to all.