Exploratory Study on the Adoption of Knowledge Management
Practices in Small Medium Enterprises in Resource Constrained
Areas: A Case Study of the Dairy Industry in Uganda
Theodora Mwebesa Twongyirwe
1
and Jude Lubega
2
1
Mbarara University of Science and Technology, 1410, Mbarara, Uganda
2
Uganda Technology and Management University, Kampala, Uganda
Keywords: Knowledge Management (KM), Small Medium Enterprises (SMEs).
Abstract: The aim of this paper is to shed light on Knowledge Management (KM) practices in Small Medium
enterprises (SMEs) in resource constrained areas. The Paper presents the results of an exploratory study
investigating the adoption of KM practices in 66 enterprises across the Dairy industry located in South-
western Uganda. The Methodology adopted focused on literature review to gain an in-depth understanding
KM in SMEs and insight into the Dairy industry in Uganda, a structured questionnaire was used to collect
information from the different stakeholders and an interview guide used to conduct interviews with various
stakeholders in the firms. The results show that SMEs are falling behind large companies in developing KM
practices; however all the firms showed a significant understanding of the benefits of KM. There is
significantly low skills and usage of ICT in SMEs which is essential for successful implementation of KM
within an organization. Web browsing, voice and SMS are the most commonly used ICT Services and the
least used are ICT professional services like business intelligence tools, ERPs and Dashboards, which
creates significant opportunity for development of KM tools suitable for resource constrained areas. Skills
gap, informal knowledge and technological barriers where highlighted as significant barriers to
implementation of KM. There is limited usage of Decision Support Systems and Data mining tools as KM
Tools.
1 INTRODUCTION
Over the past decades, there has been growing
interest in the potential contribution of small and
medium enterprises (SMEs) to the growth of
economies globally (Evangelista, et.al., 2010; Wong
& Aspinwall, 2005). SMEs have been a subject of
socio-economic interest with the spread of
globalization and capitalism (Acs & Kallas, 2008;
North & Smallbone, 1996). SMEs are often regarded
as the backbone of industrial development and
important source of economic growth, innovation
and technology transfer (Christine, 2011;
Evangelista et al., 2010; GoU-NPA, 2012;
Ishengoma & Kappel, 2008; Mourougane, 2012; Ng
& Kee, 2012). The contribution of the SME sector to
economic growth has been widely acknowledged
due to their impact on Gross Domestic Product
(GDP), job creation and, socio-economic
transformation (Beal, 2003; Chelliah, et.al., 2010;
Gielnik, 2010). Uganda is a member of East African
Community (EAC) with a market of over 135
million people with access to the sea (EAC, 2012).
In the vision of transforming the society from a
peasant to a modern and prosperous country within
30 years, the main focus is the development of
private sector driven economy (GoU-NPA, 2015).
SME development is a key component of Uganda’s
economic development agenda as they are also
viewed as the prime source of new jobs and hence
shall play a crucial role in income generation as well
as in industrialization processes of the economy
(GoU-NPA, 2015). According to Uganda’s vision
2040, it is Uganda’s aspiration to achieve the
following;
- 4 million operational SMEs,
- SMEs to contribute 40% towards GDP,
- SMEs provide employment to 5 million people,
- SMEs contribute 40% to the export earnings,
- 40% of the SMEs involved in manufacturing
activities,
Twongyirwe, T. and Lubega, J.
Exploratory Study on the Adoption of Knowledge Management Practices in Small Medium Enterprises in Resource Constrained Areas: A Case Study of the Dairy Industry in Uganda.
DOI: 10.5220/0006930101770185
In Proceedings of the 10th International Joint Conference on Knowledge Discovery, Knowledge Engineering and Knowledge Management (IC3K 2018) - Volume 3: KMIS, pages 177-185
ISBN: 978-989-758-330-8
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
177

- 50% of SMEs are owned by women,
- 5% of SMEs are involved in agriculture and
related services and survival rate of SMEs is at
least five years
The European Union (EU) definition for SMEs was
introduced by the European commission in April
1996 and classified into three groups including
medium, small and microenterprises as detailed
below in Table 1. Its definition is based on the
number of paid employees, turnover, balance sheet
total and independence (Loecher, 2000).
Table 1: Small and Medium Enterprises Classification.
Employee bands
N
%
Micro 0-9
3
12
Small 10-49
10
40
Medium 50-249
11
44
Large >250
1
4
Total
25
100
For the purpose of this research SMEs shall
define a small enterprise as one which employs
maximum 50 people; annual sales/revenue turnover
of maximum 360 million Uganda Shillings (UGX)
(approximately United States dollars (USD)
215,000, or Euro (€) 137,000) and total assets of
maximum 360 million UGX. A medium enterprise
employs more than 50 people with a maximum of
500 people; annual sales/revenue turnover of more
than 360 million UGX (approximately USD
215,000, or €137,000) and total assets of more than
360 million UGX (Okello-Obura, 2009; Kasekende
& Opondo, 2003;Uganda Investment Authority,
2008).
This paper attempts to present significant
opportunities for adoption of KM in SMEs in
resource constrained areas and especially Uganda. It
provides theory and literature to support the need for
knowledge management methods in SMEs in
resource constrained areas. It gives background to
the importance of industrialization of the Dairy
sector in Uganda and with specific emphasis of
decision support from a KM perspective.
This paper is organized into 6 (six) main
sections. Background to the study is presented in
section 2.0. The Materials and methods are
presented in Section 3.0, the results are presented in
section 4.0 and a detailed discussion of the results is
presented in Section 5.0. The conclusion is presented
in section 6.0.
2 BACKGROUND
2.1 ICT and Knowledge Management
Information and Communications Technology (ICT)
does play a significant and crucial role in assisting
SMEs in creating both business opportunities and
combatting competition pressures (Mutula & Van
Brakel, 2007). Literature review indicates that the
effectiveness and efficiencies of ICT are an essential
requirement in supporting KM adoption (Maguire,
Koh, & Magrys, 2007; Yew Wong & Aspinwall,
2005). By utilizing tools such as emails, groupware
and web browsers, give employees opportunity to
share invaluable knowledge thus contributing to the
growth of SMEs. SMEs tend to use their ICT
independently rather than in an integrated manner.
They are not always able to take advantage of
methodologies generally developed for large firms.
The KM definitions suggested by (Alavi &
Leidner, 2001; Bhatt, 2001; Davenport & Prusak,
1998) have been considered as the working
definition for this paper as they refer to KM as the
process that can be used to create, collect/capture,
organize, refine, disseminate and maintain
knowledge and experience generated during their
operations, activities, and processes in order to
improve organizational performance and enhance
decision making and their competitiveness.
The value and importance of knowledge as seen
by numerous organisation today, does without a
doubt play a crucial role in the current ever-
challenging and aggressive business environment
(Christine, 2011). Information Technology plus
communication Technology are enabling media of
the new economy, but its agents are Knowledge
Workers. The know-how of such workers is the most
valuable property firms have (Giddens, 2013).
Organisations should develop strategies based on
superior knowledge to obtain a sustainable
competitive advantage in today’s turbulent market
place (Evangelista et al., 2010). To obtain a
competitive advantage based on knowledge,
organisations have to identify what kind of
knowledge is needed and then set out to obtain or
create it. Once knowledge is obtained or created the
next step is to distribute it throughout the entire
organisation so everybody within the organisation
has access to the knowledge. ICT plays an important
role in the process of knowledge distribution
(Pricewaterhousecoopers, 1998).
Information and Communication Technologies
provide SMEs with opportunities for KM today
which in most cases is largely unexploited. The
managerial challenge, then, consists of creating new
KMIS 2018 - 10th International Conference on Knowledge Management and Information Sharing
178

KM configurations in terms of technological and
organizational tools, leading to organizational
models sustainable from the competitive point of
view. ICT provide SMEs with opportunities to spur
innovation and commercialization in developing
countries. According to (Corso et al., 2003), by
providing quick and easy access to external sources
of knowledge, new ICT can erase traditional
constraints on SMEs innovation ability and foster
intra/inter- organizational integration. In the area of
product innovation (PI) the use of internet based
applications, product data management, virtual
prototyping, computer aided design (CAD), is
expected to substantially reshape the overall KM
process.
Emerging literature regarding ICT application in
SMEs shows a substantial lack of empirically
grounded explanatory models and emphasises SMEs
technological lag with regard to ICT tools
adoption/implementation, disregarding the role
played by contingencies (Corso et al., 2003). In
addition, the low level ICT adoption in SMEs is
ascribed both to a lack of financial resources and
skilled manpower within SMEs.
There has been exponential growth of ICT in
resource constrained areas, research reveals that
while there is considerable usage of ICT in the areas
of data and voice applications there is still a very
low level of ICTs utilization in business applications
among SMEs (Rufaro et al., 2008) and hence
presents significant opportunity for SMEs to
implement KM Practices.
2.2 SMEs and Knowledge Management
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 (Hall & Hall, 2003)
Knowledge is at the heart of much of today’s global
economy and managing knowledge has become vital
to companies’ success (Kluge, Stein, & Licht,
2001).There is tremendous growth of SME’s in
resource constrained areas and to survive in the
global economy, small and medium enterprises
(SME’s) have to improve products and processes,
exploiting their intellectual capital in a complex
network of knowledge-intensive relations inside and
outside their boundaries (Evangelista et al., 2010;
Mourougane, 2012). The future growth of
industrialization and profitability of SMEs in
resource constrained areas will greatly depend upon
the competitive quality of the knowledge and how it
is identified, shared and used to deliver value to
clients(Mchombu, 2009).
Existing literature today focuses on adoption of
KM in large companies, SMEs in advanced
economies and emerging markets however with very
little literature or research has been done in KM on
firms in resource constrained environments
(Alawneh, Abuali, & Almarabeh, 2009; Evangelista
et al., 2010; McAdam & Reid, 2001; Mourougane,
2012; Ng, Kee, & Mui, 2012; Yew Wong &
Aspinwall, 2005). In fact, the understanding of the
organizational theory and practice considerations of
KM has mainly been derived from large company
experiences (Evangelista et al., 2010).
The knowledge in SMEs is diverse and its
proportions are immense and growing. Owners,
managers and staff that work for these organizations
have problems keeping track of where this
knowledge is, where it is, and who has it. According
to (Alavi & Leidner, 2001), in SMEs 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.
Introducing knowledge management systems into an
SME is a particular challenge because of they are
known for too much implicit knowledge, limited
resources, insufficiently shared between owners,
managers and other employees. (CN Wee & YK
Chua, 2013; Desouza & Awazu, 2006) discuss five
key peculiarities that differentiate knowledge
management practices in SME’s and larger
companies (i) in SME’s there is lack of explicit
knowledge repositories. Instead, each
manager/owner acts as the knowledge repository. (ii)
Common knowledge possessed by members of the
SME’s is deep and broad. This common knowledge
helps in the organization of work by easing issues of
knowledge transfer, sense-making, and application.
(iii) SMEs by their nature and due to deliberate
mechanisms are skilled at avoiding pitfalls of
knowledge loss. The close social ties between
members of the SME act as a deterrence against
employees leaving the business. In cases where
employees do leave the business, there are plenty of
available knowledge resources that can be mobilized
to quickly fill the void. (iv) SMEs have a knack for
exploiting foreign sources of knowledge. Since they
are resource constrained, and cannot spend efforts to
Exploratory Study on the Adoption of Knowledge Management Practices in Small Medium Enterprises in Resource Constrained Areas: A
Case Study of the Dairy Industry in Uganda
179

create knowledge, they look outside the organization
for knowledge. (v) SMEs knowingly or
unknowingly, manage knowledge the right way –
the humanistic way. Technology is never made part
of the knowledge management equation. The use of
technology in an SME is mostly limited to acts of
automation (such as the use of cash registers) and at
times for informative purposes (storing of employee
contact information in databases). 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 (Alawneh et al., 2009).
KM is seen as a key factor in realizing and
sustaining organizational success for improved
efficiency, innovation and competition (Alawneh et
al., 2009). Knowledge management is a critical area
for small business managers in today’s competitive
environment (Evangelista et al., 2010).
However, there is a general consensus in relation
to the fact that the benefits of KM have not been
fully exploited (Evangelista et al., 2010). In
particular, the management of knowledge assets may
provide small firms new tools, for survival, growth
and maintaining a sustainable competitive advantage
(Evangelista et al., 2010). Consequently, the
potential of KM seems not fully exploited by small
firms and this is reflected in a literature void where
little research contributions on this topic have been
published (Evangelista et al., 2010).
2.3 Overview of the Dairy Sector in
Uganda
Agriculture has been and remains central to
Uganda’s economic growth, food security and
poverty reduction (Balikowa, 2011; Mbowa,
Shinyekwa, & Lwanga, 2012). It is a major source
of raw materials for the manufacturing sector, a
market for non-agricultural output and a source of
surplus for investment (GoU-NPA, 2015).
Dairy industry is an integral part of the
agricultural system of most parts of Uganda. Dairy
development has received the greatest attention in
the development of the animal industry in Uganda
(MTTI, 2007). Over the last ten years, Uganda’s
dairy industry has witnessed tremendous
improvement as a result of the numerous public and
private sector led development interventions,
including implementation of reforms aimed at
improving the quality of milk and enhancing market
access (Balikowa, 2011). The evidence of the above
is based on statistics of annual milk production in
Uganda which is estimated at 1,504 Million Litres
(UBOS, 2014) and shows a steady increment as seen
in the figure 1.
Figure 1: Milk production in Uganda. Source is the
Uganda Bureau of Statistics - Statistical Abstract of 2014
Census.
The largest and probably the most important
category of Dairy industry players are the farmers.
The private sector is currently the key player in
development of Uganda’s Dairy industry. It is
responsible for development of infrastructure for
milk transport, bulking and processing. In addition,
it employs many people who are engaged in various
economic activities along the Dairy value chain,
particularly in milk production, collection, bulking
and transportation, processing, distribution and
marketing as well as provision of advisory and
business development services particularly animal
health, breeding, farmer training and financial
support services (Balikowa, 2011). The Small
medium enterprises in the Dairy Sector which
include Medium and large-scale Dairy Farmers,
Milk Collection Centres (Vendors), Cooperatives
and small-scale processing plants are currently the
key players with potential to influence the growth of
industrial development of Uganda’s Dairy industry
and account for 92% of the actors in the Dairy Value
Chain.
3 MATERIALS AND METHODS
Based on the discussion so far, we can state that the
motivation to carry out the research is because the
above theoretical research represents significant
opportunity for knowledge management support for
decision making in the areas of productivity
improvement, continued expansion, industrialization
and innovation of market-oriented smallholder Dairy
production which will eventually give rise to small
medium enterprises. An exploratory research was
conducted using a questionnaire survey. The aim of
the study was to investigate the status of adoption of
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Knowledge Management Practices as a Strategy for
growth and overall business competitiveness in
SMEs in resource constrained areas. Investigating
the adoption of KM practices in 66 enterprises
across the Dairy Industry located in the same
geographic area in South-western Uganda. Uganda
is divided into six milk sheds based on the
differences in geographical agro ecological
characteristics, market dynamics and cattle
population as shown in Figure 2.
Figure 2: Uganda’s Milk Sheds.
3.1 Study Design and Setting
3.1.1 Data Collection
We conducted a population-based cross-sectional
survey at 66 enterprises across the dairy industry in
South-western Uganda between March and April
2018 using a semi-structured questionnaire
developed in English. For comparison and contrast,
7 (Seven) of the enterprises investigated where large
scale dairy processing plants in South Western
Uganda. The questionnaire was administered by
trained research assistants. The questionnaire
captured data on respondent’s demographic
information, organization’s demographic
information, respondent knowledge on KM practices
in the enterprise, tools for KM implementation,
benefits of KM in the enterprise and KM
implementation barriers.
3.1.2 Sample Size
Sample size was calculated using Kish Leslie
formula (Kish, 1965). The prevalence of knowledge
about KM practices, tools, benefits and barriers was
estimated at 50%. The calculated sample size of 178
was based on the estimated 50% prevalence,
standard deviation of 1.94 at 95% confidence
interval and a relative precision of 20% and a 15%
nonresponse rate.
3.1.3 Study Sample
Data was collected from 66 Dairy firms across the
Dairy Industry located in South-western Uganda,
which included Large Scale Farmers (LSF), Milk
Bulk Collection Centres (MBCC), Secondary
Cooperatives (SC) and Small Scale Processors
(SSP). For comparison and contrast, 7(Seven) of the
firms in the same Industry and same area,
investigated where Medium Scale Processors (MSP)
and Large Scale Dairy processing plants (LSP) as
shown in Table 2 which are all categories of Small
Medium Enterprises (SMEs). Only firms that were
registered with DDA were included in the study.
Table 2: Study survey participants (LSF-Large Scale
Farmers, MBCC-Milk Bulk Collection Centres, SC-
Secondary Cooperatives, SSP-Small Scale Processors,
MSP-Medium Scale Processors, LSP-Large Scale
Processors.
Firm
Category
No.
Firms
No. of
Respondents
Total No. Of
Respondents
LSF
20
2
40
MBCC
6
3
18
SC
14
3
42
SSP
19
3
57
MSP
3
3
9
LSP
4
3
12
Total
66
17
178
3.1.4 Data Analysis
Data from the questionnaires was coded and entered
into SPSS and analysed using STATA version 13.0
(Stata Corp, Texas, USA) statistical software. The
outcome variables are knowledge creation,
knowledge transfer, knowledge sharing, knowledge
utilization, ICT, organization culture, organization
leadership, organizational structure and human
resource. The independent variables included the
respondents’ demographic factors. Descriptive
statistics and correlation coefficient tests were
carried out to investigate the correlation between
each of the different independent variables and the
outcome variable.
3.1.5 Ethical Consideration
The study was conducted according to the principles
of Mbarara University Research Ethics Committee
(MUREC) and Uganda National Council for Science
and Technology (UNCST) which all approved the
study.
Exploratory Study on the Adoption of Knowledge Management Practices in Small Medium Enterprises in Resource Constrained Areas: A
Case Study of the Dairy Industry in Uganda
181

4 RESULTS
4.1 ICT Usage Skills
The survey indicated that the vast majority of the
sample respondents (38.2%) were moderate in ICT
usage skills, 32.3 % were good, 27.8% were low and
15.6 % were proficient as shown in Figure 3. The
highest level of ICT usage skills was in large scale
processors where 83.3% of the respondents were
proficient. ICT Infrastructure and skills are critical
to KM Implementation.
Figure 3: ICT usage skills among the different categories
of SMEs.
Results from the comparative study in two
different settings showed that the usage skills among
the different categories of SMEs are in agreement as
shown in Table 3.
Table 3: ICT usage skills among the different categories of
SMEs between two settings.
Group
Setting 1
Setting 2
Mean
4.700
4.600
Standard Deviation
0.2102
0.2092
The two-tailed P value equals 0.4814. By
conventional criteria, this difference is considered to
be not statistically significant.
4.2 ICT Services
It was also noted that most of the firms (95.7%) use
a number of ICT services like Email, Web
Browsing, VOICE, SMS and ICT professional
services with VOICE (91.7%), SMS (91.7%) and
browsing (53.8) being the mostly used services by
all firms. This creates an opportunity for designing
methods based on SMs, browsers and reporting. The
least used services are the ICT professional services
like business intelligence tools, ERPs, Dashboards,
online support and chats are only used by large scale
processors as shown in Figure 4.
Figure 4: ICT Services among the different categories of
SMEs.
4.3 KM Implementation Tools
The study indicated that all the 66 firms adopted KM
practices to some extent with the highest adoption of
KM practices by Large Scale Processors and least
adopted by Large Scale Farmers. All the large scale
processors (100%) use the KM tools which include
Work team, ERPs, Internet Site, Mailing and
Newsletter, however with limited use of Decision
Support Systems, Data Mining and Document
Management Systems as shown in Figure 5. The
importance of KM tools support enterprises to
acquire valuable information and support them in
decision making in order to improve business
performance. None of the Large Scale Firms, Milk
Bulk Collection Centres, Secondary Cooperatives
and Small Scale Processors use KM for data mining
and document management. There is need to
Figure 5: KM Implementation tools among the different
categories of SMEs.
KMIS 2018 - 10th International Conference on Knowledge Management and Information Sharing
182

develop effective Methods that can support the
decision enhancement process.
4.4 Barriers to KM
Skills Gap, informal knowledge and technological
barriers where highlighted as significant barriers to
implementation of knowledge management as
shown in Figure 6.
Figure 6: Barriers to KM Implementation in SMEs.
5 DISCUSSION
Despite increased access to ICT infrastructure in the
country, the usage of KM Tools is still low and
unclear in SMEs especially in small scale firms as
shown in Figure 3. ICT Infrastructure and skills are
critical to KM implementation, hence significantly
low ICT skills account for the low levels of
implementation of KM Methods in SMEs in
resource constrained areas.
Based on this exploratory study, the results show
that KM ranks as one of the five critical factors that
are affecting the growth of SMEs in addition to,
access to finance, access to technology, low levels of
productivity, and skills levels within the workforce
Knowledge in SMEs in resource constrained
areas is largely implicit and is stored in people’s
memories, activities and is expressed and
communicated orally and this pauses a serious threat
to its preservation and hence global competitiveness
and survival (Walugembe, 2010). This is also shown
in figure 4 where ICT services are not well adopted
in small medium firms. The future growth of
industrialization and profitability of SMEs in
resource constrained areas will greatly depend upon
the competitive quality of the knowledge and how it
is identified, shared and used to deliver value to
clients (Holsapple, 2001). Knowledge about key
functions in the SMEs business and organisational
structures specifically relating to Finance, Sales and
Production Function is essential, because they can
indicate important trends and alert on to anomalies
and dangers (Korczak, Dudycz, & Dyczkowski,
2013). Effectively and proactively capturing the
dynamic customer demands and reorganizing its
production processes and structure to meet these
demands are key attributes of successful
manufacturing enterprises. Such performance
metrics reflect the overall productivity of an
organization. In addition, innovation in product
development and customer service entails an
enhanced emphasis on the management of
knowledge. Literature shows that decision makers in
SMEs often don’t have a solid knowledge base of
business processes and more so for production
management and operation efficiency monitoring,
and largely because the technology and human
resource expertise is either not available or too
expensive and most SMEs cannot afford these types
of facilities (Wong, 2005). This is also shown in
figure 6 as barriers to KM implemntation. In these
conditions, SMEs decision makers often act
intuitively and as a result, there rationality of their
decisions is decidedly smaller. The implementation
of a KM dashboard can facilitate monitoring of
business process performance metrics and in
addition as a valuable insight for companies through
exchanging information among different parties.
6 CONCLUSION
The aim of this paper is to shed light on KM
practices in SMEs in resource constrained areas and
hence the results of this would help SMEs Managers
better understand KM as a discipline and champion
its implementation in the companies
The conclusion is that this represents significant
opportunity for knowledge management to enhance
decision making in SMEs in resource constrained
areas. Technology should not only be seen as
absolute answer to KM since it’s just a tool the long-
term competitiveness of SME’s in the Dairy Sector
in Uganda as a resource constrained areas is also
affected by Low Levels of Productivity, Quality
Control and technological gaps and skills levels
within the workforce.
The findings may be used as a recommendation
to SMEs in resources constrained areas that are keen
in accepting and adopting KM in their daily
operations. Furthermore, this study may also serve
as a basis for gathering requirements and support
Exploratory Study on the Adoption of Knowledge Management Practices in Small Medium Enterprises in Resource Constrained Areas: A
Case Study of the Dairy Industry in Uganda
183

academics and practitioners to build models for KM
that would enhance decision support.
ACKNOWLEDGEMENTS
Great Thanks to Professor Jude Lubega for his
expertise and guidance during this Research. In
addition I wish to acknowledge the Support of
Ministry of Education and Sports, the Government
of Uganda that has provided Research Scholarship
Funds under the African Development Bank (ADB-
HEIST V) Project. In addition, I wish to thank Mr.
Stephen Aikiriza who has given me a great
understanding of the Dairy industry and its
stakeholders.
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