Knowledge Management Strategy, Innovation, and Performance in Small Business Enterprise in Indonesia

Abstract

A business should be able to achieve competitive advantage due to technology development in industry 4.0. The digital industry could be relied on to sustain economic growth and encourage equity for small business enterprise to reach more markets and profit, especially during the COVID-19 pandemic, while at the same time to accomplish competitive advantage by having strong infrastructure, creating and sharing knowledge, and formulating strategic decision making, and innovation. The research aimed to provide view about the knowledge management strategies that specifically testing both codification and personalization, and their consequences on innovation and performance in small business enterprise. Data were collected from 46 small business enterprises in Indonesia through online questionnaires, and were analysed using structural equation modelling. The results reveal that knowledge management strategies—codification and personalization—have impacts on innovation and performances directly and indirectly through the increase on innovation capability. It is considered that the research will help small business enterprises to establish a good knowledge management strategy to obtain better profit on a specific condition and environment.