Competing Through Knowledge and Information Systems Strategies: A Study of Small and Medium-Sized Firms

Abstract

In this study, we investigated strategies that small and medium-sized enterprises (SMEs) in Canada employ to create, transfer, and apply knowledge, and we evaluated the importance of supporting dynamic knowledge capabilities and information systems. To examine the empirical support for a model based on the resource-based view of the firm, we conducted a survey of SMEs operating in knowledge-intensive industries. We tested relationships among knowledge strategy, information systems strategy, dynamic knowledge capabilities, and firm performance. SME performance was measured by their physical and financial capital, as well as four intangible types of capital: structural, human, innovation, and relational. We observed that dynamic knowledge capabilities only partially mediate the link between knowledge strategy and performance in SMEs. However, dynamic knowledge capabilities fully mediate the link between information systems (IS) strategy and performance in the small and medium-sized firms studied. We observed that information systems only indirectly influence firm performance, but they directly support the knowledge and innovation capital of SMEs. Further, our results indicated that, in SMEs, knowledge strategies directly influence IS strategies, and that alignment between knowledge strategies and IS strategies positively impacts dynamic knowledge capabilities, and hence firm performance.