Objectives: Effective knowledge sharing and consequent knowledge management (KM) have been identified as definite approaches to enhancing competitive advantage. The research therefore aimed to establish to what extent small enterprises embrace their knowledge sharing activities and whether their knowledgesharing activities are managed at all. Furthermore, it examined how their knowledge sharing can contribute to their competitive advantage.

Method: A case study approach was followed for this research. Selected SMEs from the engineering sector were the subject of the case study and SME owners,directors and managers of consulting civil engineering firms were interviewed to determine whether there are mechanisms in place to ensure better knowledge sharing within SMEs.

Results: In general, respondents had stated that they possessed special factors that set them above their competitors:

In South Africa, the National Small Business Act (Act No. 102 of 1996) defines micro, small and medium businesses (SMMEs) as: … a separate and distinct business entity, including co-operative enterprises and non-governmental organizations, managed by one owner or more which, including its branches or subsidiaries, if any, is predominantly carried on in any sector or sub-sector of the economy … and which can be classified as a micro-, a very small, a small or medium enterprise by satisfying the criteria … opposite the smallest relevant size or class … (South African Government 1996)

The Act further defines a small business organisation as:

... any entity, whether or not incorporated or registered under any law, which consists mainly of persons carrying on small business concerns in any economic sector, or which has been established for the purpose of promoting the interest of or representing small business concerns, and includes any federation consisting wholly or partly of such association, and also any branch of such organization. (South African Government 1996)

For the purpose of clarification, the term ‘SMME’ is one that is used only in the South African context, whereas ‘SME’ is mostly an international term that encompasses our SMME concept. In this article ’SME’ is therefore preferred and will be used throughout.

In South Africa, there are presently approximately two million small, medium and micro enterprises (SMEs) registered to create long-term employment (South African Government 2009). Nearly a decade ago, Berry et al. (2002:4) already positively indicated the major economic roles SMEs fulfil in South Africa, for example, by manufacturing goods of value or by providing services to both consumers and or enterprises. SMEs also contribute to export performance by offering services and products to foreign clients. Akinwumi and Olawale (2010:2763) assert that, as a result of South Africa’s current high unemployment rate, SMEs are expected to be an important mechanism to address the challenges of job creation, economic growth and development. They further state that SMEs are an important source of innovation when it comes to new products, services and technology. It is therefore clear that both small and medium enterprises play a significant role in the South African economy.

The civil engineering sector was chosen for the purposes of this study because it is characterised as a highly specialised, knowledge-intensive and project-based industry within the Western Cape. Maintaining competitive advantage in this regard is therefore of the utmost importance in this category of enterprises. After careful consideration, 10 SMEs from the civil engineering sector in the Western Cape were selected. An initial pilot study was conducted with three small and medium-sized companies in the construction and consulting engineering field to establish the validity of the questionnaire that had been created in view of establishing the nature of knowledge sharing. However, it was decided to limit the research to only the consulting civil engineering sector as the two spheres of engineering (constructing and consulting) have quite different work practices. More information regarding the companies interviewed, their core business and the number of employees in each is listed in Table 1.

As mentioned above, in-depth interviews were conducted with the owners, directors and senior staff of selected SMEs. All interviews were manually recorded and a case study was written for each SME. The structured questionnaire (see Appendix Interview Questionnaire) was designed under the following broad categories:

The next section briefly discusses the current status of KM implementation in SMEs globally, thereafter the methodology of this is described in more detail and the results of the current research are interpreted.

According to a recent study, many SME managers in German-speaking countries have come to realise and appreciate that the inventiveness and uniqueness of each of their knowledge workers would lead to customer satisfaction, as well as the success of the SME (Fink & Ploder 2009:37). Although these SMEs were often cash-strapped and did not have enough capital to invest in KM initiatives, it was necessary for them that their knowledge was leveraged optimally in order to achieve most of the goals of the enterprise. Fink and Ploder’s (2009) research also emphasises the importance of capturing individual and organisational knowledge, which could result in gaining CA in SMEs, predominantly because human capital is the source of creativity in enterprises. Consequently, it is also imperative that a typical small enterprise’s implicit or tacit knowledge should be converted to explicit formats in order to perform, store and retrieve functions to enhance organisational value (Bozbura 2007:210). In order to achieve this, enterprises should invest in their employees by means of training and mentoring. In other words, for KM to be successful, employees optimally should share both tacit and explicit knowledge and information within the organisational memory base. Tacit knowledge, which is regarded as a key ingredient of socially constructed knowledge, is primarily captured by means of informational discussions in whichever formats. Because this knowledge resides within the minds of people and is therefore difficult to formalise, transfer or spread, it cannot be thought of or argued about in the same way as explicit knowledge. Thus, it seems less complicated to apply KM processes in small and medium companies because it is easier to capture tacit knowledge in less formalised (small) environments such as SMEs.

In his research on KM practices in Turkish SMEs, Bozbura (2007:211) emphasises the importance of capturing and acquiring knowledge, which is gained by arranging and managing an organisation’s relationship with its customers, shareholders, suppliers, rivals, the state, the official institutions, society, and so on. His research reveals that their success can be attributed to four factors:

Massa and Testa (2008:2) state that although information and data management are important aspects of KM, the latter involves broader issues, such as the creation of processes and behaviours that allow people to transform information within the organisation to enable them to create and share knowledge. Therefore, it is imperative that KM in SMEs should also include people, process, technology and culture.

Du Plessis’s research (2008:61–66) on the impact of communities of practice (CoPs) as vehicles for knowledge sharing in SMEs revealed that CoPs can be an effective KM tool for SMEs. Du Plessis (2008) defines CoPs as groups of people who work together with the aim of achieving specific goals by means of creating, sharing and leveraging information. Although these groups of people are often from different backgrounds, they can work together towards achieving a common goal, using their knowledge, skills and abilities to achieve this. They also share a common concern or passion for what they do and each one brings unique skills to the CoP, which are then shared amongst members of the community. These members do not necessarily work together on a daily basis, but they benefit and find value in their regular meetings and interactions. They share information, insight and advice, explore new ideas and often act as sounding boards for one another. CoPs can be either technologically advanced, for example, they may use particular management systems, or they could be simplistic in nature, such as a group of like-minded people discussing a work-related problem, or seeking a solution with minimal or no use of technology. Some of the points extracted from Du Plessis’s (2008:61–66) research focus on knowledge sharing and how CoPs can impact on SMEs in this regard, for example, (1) CoPs can assist in managing the knowledge sharing life cycle and (2) CoPs can serve as vehicles to combat knowledge loss.

Du Plessis’s research shows the enormous impact that CoPs can have on SMEs, emphasising the fact that knowledge is a definite factor for CA within SMEs. In this research project, the researchers therefore also aimed to establish whether they could assist with the creation, sharing and leveraging of knowledge in these smaller communities, as well as whether they could assist these communities to cope with knowledge losses when employees retire or leave the organisation. These and other research findings are discussed below.

The findings highlighted the importance of creating a culture in which the sharing of knowledge is encouraged, supported and promoted by management. Although informally approached, a definite culture of sharing and trust amongst management and staff was found amongst the companies within this study and, in this way, the sharing of knowledge, both tacit and explicit, was facilitated, for example, by means of hands-on training, focused staff discussion and debriefing sessions. The findings also showed the importance of converting tacit knowledge into explicit knowledge in order for it to have added value. This ensured that if a skilled person retires or leaves the company, some of those skills would remain with the company. One of the ways in which tacit knowledge was shared was by means of informal debriefings and the less formalised structure of SMEs provided unique platforms where these informal discussions could take place. Additionally, the findings emphasised the importance of these companies’ knowledge assets, which included their past projects, processes and procedures, competitor information and drawings that were captured and retained in the corporate memory, such as within databases, portals and digital libraries, to facilitate the retrieval thereof. In this way, these knowledge assets could be used and leveraged to the companies’ advantage. Training of staff and mentoring were distinguishing factors that contributed to the effective management of the SMEs and enabled their staff to work together as a cohesive unit in which staff felt appreciated and valued. In this way, staff performance was enhanced, which ensured that an enterprises’ strategic objectives were realised, which could eventually lead to gaining CA. From our research it is clear that most SMEs definitely implement KM processes, albeit in an informal and very intuitive basis.

In terms of information and knowledge sharing practices, it can therefore be concluded that:

All respondents stated that they do not have to search for information on a regular basis, but when they did, their first port of call was the Internet. They were seldom bombarded with loads of information as their information needs were industry-specific and they often found what they are looking for without having to conduct lengthy searches. Thereafter, they would consult other sources such as digital libraries, manuals, engineering journals and textbooks, as well as experts who have the relevant experience from within industry.

Companies C and D had intranet access to a document management system where pro-forma documents, templates, policy guidelines and other information regarding projects were stored. Others (Companies C, D and F) had built up internal traditional and digital libraries over the years, which served as a good source of information. Information in this regard was stored in a manner that facilitated easy retrieval.

Therefore, from the above it is clear that:

Although indirectly applied, it was clear from the interviews that information and knowledge per se was seen as a very important driving force for business success. The acquisition of external information, as well as the storage and dissemination of internally generated information, was important to the SMEs interviewed. The attendance of conferences, forums and seminars created a platform where staff could network and collaborate with peers and other experts in the field. At these platforms, people from diverse business backgrounds were able to meet, make initial contact and extend their own networks. External information was also gained from conferences arranged by major manufacturers. Attendees were then exposed to the latest market trends in engineering and this could lead to further collaboration with manufacturers. It was found that the senior staff members, especially, would arrange not only formal but also informal meetings or workshops to provide feedback (knowledge sharing) of what they acquired at these conferences. The findings also highlighted the importance of networking in a competitive market. If these networks, which consisted of people with specialised skills and expertise, could be nurtured, it could facilitate the dissemination of tacit, as well as explicit, knowledge and ultimately could enhance or support CA for a particular small or medium enterprise.

To summarise:

From the findings, it can be deduced that the implementation of KM processes could lead to CA and, in the case of the SMEs that were interviewed, we found that their expert knowledge and skills gave them a competitive edge. Because of the diverse backgrounds of owners and directors of the companies, not only in the field of business, but also in terms of academia, they often possessed expert knowledge and other consulting companies would consult with them or tap into their expertise. Owing to the fact that the consulting engineering field is small and they were well known amongst their peers for their expertise, they were often preferred service providers. This is important for their survival in this highly competitive field. They had also established themselves as preferred providers in the industry and this was owing to the fact that they had established strategies to achieve and maintain their CA. This could be further enhanced through effective marketing, which was lacking in SMEs.

In terms of CA, therefore:

In order to remain competitive, it is important for companies to know what their competitors are doing. Owing to a lack of marketing activities in almost all of the companies that were interviewed, few of them knew, in detail, what their competitors do to stay ahead in the field. Companies E and J were involved in joint ventures with their competitors and, to this extent, they had some knowledge of what others in the industry were doing. The consulting civil engineering field is close-knit and because they compete amongst themselves and not with large companies, the only knowledge they had about one another concerned tender prices. In other words, they were able to estimate which company had tendered at what price. Even so, this information was often obtained through the ‘grapevine’ or via notices in the local newspaper, which could be attributed to the fact that not much research was undertaken regarding their competitors’ operations.

The above findings show that although it is important for companies to know how their competitors operate in order for them to improve their services, their efforts to stay abreast of this information were not that impressive. Improvements in this regard could be achieved through effective marketing or by, for example, appointing a dedicated staff member to browse or scan news sources for competitor achievements. The civil engineering field is fairly small in the Western Cape and it is important for companies to have that special feature that sets them apart from their competitors and which ultimately ensures them a competitive advantage in the field. When questioned about this, respondents mentioned the following features or strong points, which ‘set them apart from their competitors’:

The research also indicated that competitive advantage stems from a company’s unique knowledge warehouse. The management of such a unique knowledge base, therefore, has the potential to make enterprises more competitive and profitable. The combination of competitiveness and profitability can lead to high-margin niche markets. However, in order to achieve and maintain CA, companies should distinguish themselves not only in terms of the service that they offer, but also in terms of the type of information at their disposal. In order to achieve this they should have a distinct information and knowledge policy in place.

Further research is necessary to establish how modern knowledge sharing approaches and technologies can best be implemented in the typical small and/or medium enterprise. The availability of the Internet will have a profound impact on the way in which these enterprises can share their tacit and explicit knowledge.