Employee Capability and Knowledge As Driving Forces For SMEs Competitive Advantages

Small and medium-sized enterprises (SMEs) play an imperative role in economic development, increasing global employment and accelerating innovation. Employees, who also play a role as innovative entrepreneurs, affect much of SMEs’ business performance and success. Employees’ capability, knowledge sharing and management, teamwork, entrepreneurship and networking capability help SMEs gain competitive advantages that affect their performance and success. Drawing upon interview findings with over 30 SME owners, CEOs, and managers in the UK, this study explores how SMEs strive to utilise their employees’ knowledge and networks to build businesses and drive innovation. Results show that SMEs are highly dependent on employees’ capabilities. Additionally, teamwork, interactions, and a positive employer-employee relationship further proliferate knowledge sharing and ideas for innovation. SMEs are, therefore, encouraged to build up their dynamic capability and adaptive capability in motivating individuals to identify and solve problems collectively and effectively. They are also encouraged to give their employees more autonomy in applying their knowledge and capacity to solve problems. Overall, this chapter seeks to unveil SMEs’ strategies in applying employees’ diverse capabilities and developing employees’ initiatives for knowledge sharing within the SMEs, incubating innovative ideas and achieving better SMEs performance