The Role of Knowledge Management in Enhancing the Competitiveness of Small and Medium-Sized Enterprises (SMEs) Communications of the IBIMA Volume 10, 2009 ISSN: 1943-7765 98 The Role of Knowledge Management in Enhancing the Competitiveness of Small and Medium-Sized Enterprises (SMEs) Ali A. Alawneh, Philadelphia University, Amman, Jordan, alawneh2001@yahoo.com Amer Abuali, Philadelphia University, Amman, Jordan, drabuali@yahoo.com Tamara Y. Almarabeh, Philadelphia University, Amman, Jordan, tmarabeh@Philadelphia.edu.jo Abstract Knowledge is one of the enterprise’s most important assets that influence its competitiveness. One way to capture an enterprise’s knowledge and make it available to all its members is through the use of knowledge management practices. This paper discusses the importance of knowledge management (KM) in Small and medium-sized enterprises (SMEs) and presents a framework to deal with knowledge management in order to enhance their competitiveness. Small and medium-sized enterprises (SMEs) are known for too much implicit knowledge, limited resources, insufficiently shared between managers and other employees. So, in the context of SMEs, KM can be used to capture knowledge and experience generated during their operations, activities, and processes. This research paper addresses a new way of thinking about the role of KM in SMEs through developing a framework that combines five phases of the KM lifecycle (capture, creation, codification, communication, and capitalization). This framework is called “A Five C’s Knowledge Management Framework”. The application of this framework will improve the success rate and competitiveness of SMEs. Keywords: Small and medium-sized enterprises (SMEs), knowledge (K), knowledge management (KM), organizational memory (OM). 1. Introduction The environment in which businesses operate today can be summarized in terms of five key trends: globalization and the increasing intensity of competition; changing organizational structures; new worker profiles, preferences and predispositions; advances in information and communication technology; and the rise of knowledge management KM (Hall, 2003). The basic assumption of KM is that organizations that manage organizational and individual knowledge better will deal more successfully with the challenges of the new business environment. KM is seen as a key factor in realizing and sustaining organizational success for improved efficiency, innovation and competition. In SMEs (small and medium enetrprises) individual competences usually represent the cornerstone of a firm's knowledge and a key determinant of organizational performance. The increasingly fierce competition deriving from globalization and ICT has challenged this approach calling for new ways to develop, diffuse and retain knowledge in SMEs. Starting from the assumption that SMEs' core capabilities and intellectual capital are deeply rooted in personal knowledge, this paper identifies a knowledge management model for managers working in SMEs in order to best utilize and harness the knowledge of their workers. In the context of SMEs, KM can be used to capture the knowledge and experience generated during the operations and processes. Reusing knowledge can prevent the repetition of past failures and guide the solution of recurrent problems. Also, we must not forget that collaboration is one of the most important knowledge sources for SMEs. The current focus and study of knowledge management is not for the sake of academics only, but a realization that knowing about knowledge is critical to business growth and business survival. Knowledge, if properly utilized and leveraged, can drive organisations to become more competitive, innovative and sustainable, KM is an emerging discipline that promises to capitalize on enterprises’ intellectual capital. The concept of knowledge is far from new and phrases containing the word knowledge, such as “knowledge bases” and “knowledge engineering”, have been around for a while. With reference to KM in SMEs, Davenport and Prusak describe knowledge as “a fluid mix of framed experience, values, contextual information, and expert insights and grounded intuitions that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of the knower. In SMEs, knowledge often becomes embedded not only in documents or repositories, but also in organizational routines, processes, practices, and norms (Davenport and Prusak, 1998). Knowledge is increasingly recognized as a key organizational asset and its creation, dissemination, and application as a critical source of competitive