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So far, there are very few empirical research studies available on the outsourcing pattern among small- and medium-sized enterprises (SMEs). The purpose of this paper is to examine strategic outsourcing among Icelandic SME service firms, from 2009 to 2018.

The data presented in this paper cover responses from 802 small service firms, which were collected through telephone and online questionnaires. In order to have sufficient data on strategic outsourcing and to ensure a decent analysis, three surveys were combined.

The main finding of the present paper is that SMEs that have a developed strategy on outsourcing seem to perform better than those who do not have. The former are more likely to have achieved cost reduction, especially in housing and finance, and they use outsourcing to increase core businesses. They select vendor firms more on the bases of cost and services, rather than personal contacts. Also, these firms have improved service quality, by focusing on their core competences.

To the authors‘ knowledge, the present study is one of the few empirical studies that have examined outsourcing in SMEs from a strategic perspective. The findings are valuable for managerial practice and could be a base for outsourcing strategies in SMEs.

The purpose of this paper is to analyse the effect of knowledge management (KM) on value creation in Icelandic service firms. The aim is to examine how KM contributes to value creation, and measure the ways in which KM affects intangible assets, such as customer capital, innovation, and human capital.

The authors propose a survey approach conducted in 2007 among 222 firms (46.1 percent response rate). Of these firms 97 had KM programmes in place and this paper is based on these firms. Service firms were 60 percent of the firms that had implemented KM.

The findings of the study show that firms with KM report more value creation in the fields of customer capital, innovation and human capital compared to firms that have not introduced KM. This indicates that KM has a positive impact on intangible assets in firms, but given the few firms involved in the survey, findings need to be interpreted with care.

The findings of the study have highly practical implications for managers and researchers, as KM programmes seem to enhance the creation of intangible assets so vital for the competitive advantage of firms in a knowledge economy.

The paper analyses the effect on value creation of knowledge management in Icelandic service firms.