Knowledge Management in Small to Medium-Sized Enterprises:

How Does the Management of Consumer Information Impact on

Organisational Effectiveness?

Ugwushi Bellema Ihua

Dunnhumby Academy of Consumer Research
Kent Business School
University of Kent
Canterbury
CT2 7PE

Phone: +44(0)1227824845
Fax: +44(0)1227761187
Email: ubi2@kent.ac.uk

Supervisor:
Professor Andrew Fearne (A.Fearne@kent.ac.uk)
Dr. Ben Lowe
Frederick Thomson

17th EDAMBA Summer Academy

Soreze, France
July 2008
Abstract
This thesis attempts to explore the management of consumer information in Small to
Medium-Sized Enterprises (SMEs) and its resultant impact on their organisational
effectiveness. My research adopts the knowledge-based perspective of the firm and I
intend to focus on how small to medium-sized Agri-Food companies manage what they
know about their consumers, hence exploring the processes of generating, conversion,
storing and retrieving, sharing and transferring, applying and evaluating their consumer
as well as enablers to managing the information. I would then explore how the
processes and enablers have impacted on organisational outputs suggesting their
effectiveness, such as identifying new business opportunities, streamlining internal
processes, innovating new products/services, anticipating potential market opportunities,
quick adaptation to unanticipated change and response to market demand, rapid
commercialisation of new product/services innovation among others.

Key words: SMEs, knowledge management, consumer information, organisational

effectiveness.

Research Background
Proponents of the knowledge-based theory or perspective of the firm assert that
knowledge is the most strategically significant resource of any firm (Alavi and Leidner,
2001; Grant, 1996; Sveiby, 2001). This is simply because no organisation, big or small,
private or public, profit or not-for-profit, can operate without one form of knowledge or
another. The current socio-economic order of today’s world is driven by trends such as
globalisation, technological advancements, constant change and information explosion.
However, these trends presuppose that a critical determinant of organisational success is
anchored on the effective and efficient management of organisational knowledge. It is
becoming increasingly significant that for businesses to remain profitable, sustainable,
innovative, and gain competitive in their respective industries, the generation, storage,
retrieval, transfer and utilisation of their knowledge is key (Davenport and Prusak, 1998
and Nonaka and Takeuchi, 1995).

On one hand, knowledge has been defined as information with meaning, or information
combined with experience, context, interpretation, and reflection (Davenport and Prusak,
1998). Leonard and Sensiper (1998) defined knowledge as information that is relevant,
actionable, and based at least partially on experience; and Karl Wiig suggested that
knowledge is made up of insights, understanding and practical know-how we all possess
and which allows us to operate intelligently (Baker et al., 1997). However, the problem
with knowledge and the crucial need of to manage knowledge in organisations stem
from the reality that knowledge, for the purpose of KM, exists in two main forms, vis-à-
vis on one hand, the explicit, codified or hard form of knowledge i.e. knowledge in form
of documents, manuals, articles, handbooks, CDs and so on that can be easily accessed
and that remains within the four walls of the organisation at the end normal work day.
On the other hand, the tacit, implicit or soft knowledge i.e. knowledge in form of know-
how, skills, intuitions, beliefs and mental models that are gained from experience and
are comfortably seated in the heads of employees, managers, customers and other
stakeholders (Nonaka and Takeuchi, 1995; Little et. al., 2002, 2005). Much of the
knowledge exists in the tacit form and as such the challenge for organisations is how to
make these knowledge explicit (Lee and Choi, 2003; O’Dell and Grayson, 1998).
Delong (2004) noted that in far too many companies, knowledge is in the danger of
vanishing with the employees who acquired it and even though companies may not be
able to reduce the deluge of downsizing, resignations and retirements, they still need to
do something to “keep knowledge on board.” It has also been buttressed that the
problem with human assets or intellectual capital is that it has legs to walk home daily
and out of the organisation if it so desires; and when experience leaves the gates,
inexperience walks in unfortunately (Rus and Lindvall, 2002).

Knowledge management (KM) on the other hand has been defined as the process
through which organisations generate value from their intellectual and knowledge-based
assets. Most often generating value from such assets involves codifying what
employees, partners and customers know, and share that information among employees,
departments and even with other companies in an effort to devise best practices
(Levinson, 2004). In addition, O’Dell and Grayson (1998) defined KM as a conscious
strategy of getting the right knowledge to the right people at the right time; it is also
helping people share and put information into action in ways that strive to improve
organisational performance. KM as a management concept also involves some
processes which include: managing the generation of new knowledge; capturing, storing
and retrieving knowledge and experience; sharing, communication, collaborating and
transferring; and using and building on what is known (Mayo, 1949). It also involves
some enablers such as organisational culture; strategic and leadership support and
infrastructural capabilities (Gold, Malhotra, and Segars, 2001; Lee and Choi, 2003; Yu,
Kim and Kim, 2007).

Research Problem and Focus

All over the world, SMEs have been found to play very crucial roles in the economic
developments of most countries. They constitute the largest proportion of businesses
and play very key roles in generating employment, providing goods and services,
enhancing a better standard of living and of course, contributing significantly to the
gross domestic products (GDPs) of many countries (OECD, 2000; Okpara, 2000).
SMEs are unique in their own right and their contributions towards economic
development have helped to dispel the previous erroneously held view of SMEs being
“miniature versions” of larger companies (Gaskill, Van Auken and Manning, 1993).
Therefore the concept of KM is very much relevant to SMEs, just as it is to large
organisations.

Wong and Aspinwall (2004) characterise the need for KM in SMEs under two factors,
vis-à-vis the “Pull” and “Push” factors. While the “Pull” factors focus on the attraction
to KM from the perspective of knowledge being viewed as a key resource and strategic
asset that can contribute significantly to improving organisational performance; the
“Push” factors highlight the pressures of competition, inadequacy of resources and time
that constrain the operations of SMEs. In addition, Sparrow (2001) in his study of
several SMEs found four distinct components of KM in SMEs: Appreciation of
individual and shared understanding; Effective knowledge base and system; Integrated
and Contextual action; and Effective learning processes. In addition, Wong and
Aspinwall (2005) proposed eleven critical success factors for implementing KM in
SMEs as follows: management and leadership support, culture, IT, strategy and purpose,
measurement, organisational infrastructure, processes and activities, motivational aids,
resources, training and education, and HRM. These factors create a sense of importance
about how SMEs view and manage their knowledge; because knowledge now appears
to be the crucial “survival weapon” for SMEs.

Nonetheless, Alavi and Leidner (2001) asserted that “knowledge is a broad and abstract
notion that has defined epistemological debate in western philosophy since the classical
Greek era.” This is one major problem surrounding knowledge and the concept of its
management. There is therefore a need to create some sense from this abstract notion
by critically defining the essential nature or type of knowledge that organisations need
to run their different operations, sections, departments and units. There is a need to
track knowledge for what it is, how it accessed, stored, shared, used, and what it
delivers or can deliver. Every organisation needs some form of knowledge or another to
operate. For instance, if a medical practice must operate effectively, Doctors and all
allied workers need to have the proper medical knowledge. Law firms need their
Lawyers to have the right knowledge of the various areas of legal practice and so on.
For any business to succeed, a right knowledge of its industry, market,
customers/consumers is very essential. This research has chosen to direct its focus on
how SMEs in the Agri-food sector manage their consumer information i.e. sharp
analysed data on the behaviour of consumers towards products and services. Turner
(1991) asserted that the use of information is critical to helping organisations meet their
strategic objectives. Also, Burke and Jurrant (2004) identified the crucial role
information and advice play in enhancing a competitive strategy for SMEs. Their
findings buttress the importance of personal and business relationships in providing
information for decision making. Rowley (2002) further opined that while managers
may use information to determine their future product innovations, developments and
marketing strategies; the challenge is however, to convert customer data to knowledge.

Research Aims, Objectives and Questions

This dissertation is in its initial phase and the aim of the research is to explore the issue
of how SMEs in the Agri-food sector manage consumer information relating to their
business and how this impacts on their organisational effectiveness. In an attempt to
track the specific type of knowledge that companies manage, the focus of this research
is the knowledge companies derive from consumer information. This research would
focus on SMEs in the Agri-food sector in the South East England Development Agency
(SEEDA) region, co-ordinated by the Food Technology Hub. The main objectives of
this research are:
1. To identify the sources of consumer information for SMEs.
2. To explore the processes through which consumer information is managed by SMEs.
3. To explore the factors that act as enablers to the management of consumer
information.
4. To explore the impact of consumer information on the organisational effectiveness
of SMEs.

The main research questions for this research are:

• Where do SMEs source their consumer information?
• What knowledge processes are involved in managing consumer information?
• What are the knowledge enablers that support the management of consumer
information?
• What is the impact of consumer information on the organisational effectiveness of
SMEs?

Model for Knowledge Management

This dissertation seeks to apply the theory of KM to consumer information and as such,
I would like to build upon and verify existing models of KM. This dissertation attempt
to test a model adopted from a combination of some models used in researching KM
from previous studies. It will incorporate consumer information and present KM from
two major dimensions vis-à-vis knowledge processes and knowledge enablers. It draft
is the following:

Figure 1: Proposed Research Model

Dunnhumby Knowledge
Data Enablers
Organisational
Effectiveness
Other Knowledge
Sources Processes

Consumer Information Knowledge Management Organisational Outputs

Source: Adapted from Gold, Malhotra and Segars, 2001; Lee and Choi, 2003; & Yu, Kim and Kim, 2007.

Research Methodology
This research is a dedicated studentship sponsored by the SEEDA Food Technology
Hub conducted at the dunnhumby Academy of Consumer Research- Kent Business
School, University of Kent. Due to the nature of the project, this research seeks to be
exploratory in nature and requires a case study approach, employing both quantitative
and qualitative information in a three-stage process. In the first stage, case companies
will be recruited through a series of workshops organised by the sponsor – the South
East England Development Agency (Food Technology Hub). These workshops will be
used to expose SMEs in the SEEDA region to consumer information generated from the
dunnhumby database. The second stage will involve the collection of qualitative
information, through a series of case studies and semi-structured interviews conducted
at various stages after the workshops, to explore a) how the information has been used
within their businesses, b) what processes are involved in managing the consumer
information; and what factors are identifiable as enablers to the management of the
information and its use as a source of competitive advantage for SMEs in the agri-food
sector and c) what impact has consumer information had on their organisational
effectiveness. The third stage will involve a survey of all the companies who have
participated in the workshops, during the course of research project, to validate the
evidence drawn from the qualitative analysis earlier conducted. The choice of case
study research is necessitated by the exploratory nature of the research project.
According to Dooley (2002) case study research is one approach that successfully
enhances the understanding of a complex issue and can further anchor what is
previously known, while emphasising detailed contextual analyses of limited conditions
and their relationships.

The number of firms to be studied is not yet known and it depends on the number of
firms that I provide with consumer information through prepared reports and workshops
organised by the Food Technology Hub.

Results
My research proposes to contribute to the better understanding of knowledge
management and its impact on building more successful businesses. It would
investigate the unexplored aspect of this concept from the aspect of consumer
information as opposed to knowledge in its abstract form.

The research is an applied study that seeks to extend the boundaries of KM theory and
businesses practices in the real world situation of SMEs. It would indicate what
processes and enabling factors are relevant to managing consumer information.
Moreover, the research would enhance further research into how specialised knowledge
can impact on businesses as a whole or certain departments and units within the entities.
There would be implications for theory, business practice, practitioners and policy.

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