Knowledge complexity and firm performance: evidence from the European SMEs

Abstract

Purpose This study aims to theoretically discuss and empirically investigate to what extent the interplay between the domains of knowledge complexity (managerial, strategic and operational) facilitates firm performance and the role of organizational resilience in this relationship. Design/methodology/approach This paper uses primary data collected from 102 European small and medium-sized firms (SMEs) in Belgium, Bulgaria, Denmark, Spain and the UK during 2012–2015 and 2010–2020. This study corrects for potential data disclosure and technology adoption bias in two survey ways. Findings First, compared to other acumens of knowledge complexity, managerial and operational acumens contribute most the most to a firm’s performance (sales and productivity). Firm resilience positively moderates managerial skills and negatively moderates inter-organizational collaborations. Taking SMEs and their inter-organizational relationships, skills and resilience in focus, considering that they are transitive organizations whose business model is based on innovation and productivity to outcompete larger counterparts it is found that resilience and agility in SMEs are important to leverage the effect of knowledge complexity on firm performance. Research limitations/implications One of the limitations of this study is that SMEs are expected to face more problems in achieving organizational ambidexterity with all three acumens, as they have restricted managerial expertise, less structured procedures and fewer resources than larger firms. In addition to regression analysis which is limited in answering “how” and “why” knowledge complexity is managed within and outside a firm, future research will consider a mixed-method approach of both interviews with high growth SMEs and online surveys. To unveil the role that firm resilience in SMEs and in the volatile environment, future research may focus specifically on firms that lack resources, skills and time, however, continue innovating, commercializing new knowledge and create new jobs. Practical implications One of the most important mechanisms which facilitate the managerial acumen was found to be information technology (IT) investment and management decision-making, exploitation of new information and communication technology trends and markets, innovating business models and driving change management, innovating new mobility and digital technologies, as well as use inter-disciplinary staff and knowledge to influence external stakeholders. The most relevant elements of the operational acumen of knowledge for performance in SMEs are various mechanisms and forms of inter-organizational collaboration such as collaboration on business and IT applications and infrastructure, administration and operations with data and information exchange, collaboration on data availability, accumulation and exchange. Social implications The findings call for innovation policy to account for the need for interactions between various elements of strategic, managerial and operational acumens of knowledge complexity in SMEs. Prime support should be focused on facilitating inter-organizational collaboration and providing “soft support” in the time of agility and adversity. This paper founds that lack of budget, skills and resources would significantly affect a firm’s resilience, potentially “locking in” within an organization. Originality/value First, it emphasizes that the returns from inter-organizational collaboration as part of the operational acumen of knowledge complexity depend upon the firm’s ability to manage infrastructure, mobility and data. The relationship is negatively moderated by firm resilience, which means that the most resilient firms may focus on the exploitation of internal resources and substitute it for inter-organizational collaboration. Second, this study demonstrates that SMEs’ growth and productivity strategy should be management skills and competencies driven, rather than strategy-driven, with strategy facilitating managerial decision-making on business and IT.