Knowledge acquisition in small businesses


Capacity building goes beyond the notion of using training to build business know-how. From a small business viewpoint it is about the use of informal and formal networks to help overcome the barriers they face in adding to their understanding. For purposes of this paper that understanding is related to how best to build capacity to know how to effectively employ their information systems. This paper examines, through a series of research studies conducted by the authors, how some small businesses have tackled the task of capacity building to enhance the use of IT.

Small Import/Export businesses

A study of successful individual small and micro firms located in six Asia Pacific Economic Co-operation (APEC) member economies was commissioned in early 2002 by the Asia Pacific Economic Cooperation to provide an overview of the contribution of small and medium enterprises (SMEs) to trade in the APEC region (Breen et al, 2004). The study ‘Small Business and Trade in APEC was tendered for and conducted by the Small Business Research Unit at Victoria University and was coordinated through the Australia Department of Foreign Affairs and Trade (DFAT)\ The purpose was to promote discussion and understanding of barriers, enablers and needs of SMEs involved in intra-regional trade and investment. This was particularly in relation to technological, financial and regulatory factors.

As a general rule the smaller a business in terms of number of staff then the less likely it will have access to a broad range of skills and expertise. Frequently operators have to provide the range of skills as best they can or access the skills and expertise from a range of sources, at minimum cost. Family members can often be one source of that low-cost expertise, while in some instances governments can provide specific support.

The participants in these businesses, which were all viewed as being ‘successful’ by nature of their longevity, took advantage of a number of family members and friends for their IS advice. Others did look to other areas, such as government for support. Interestingly, each of the business owners indicated that they would benefit from IS related training, recognising a lack of such expertise within the business.

This was the case even with two businesses that felt they had IS skilled staff- they both indicated that if the ‘expert’ left or fell sick there would be problems as there was no-one with ‘backup’ skills. Thus – the capacity was there, but was not spread widely enough through the business.

One important difference that came out of this study was the entrepreneurial nature of the owners. This seemed to be linked with a real recognition of a need to build capacity within their businesses, (and not just in the IS field).


What we find in each of these (quite distinct) situations is reliance by small businesses on formal and informal networks that they have set up to support their capacity building. In the case of the bed and breakfasts much of their IS support came from consultants and friends.


The task of capacity building in small business is not an easy one. This paper has shown three research studies into the use of IS by small businesses and discussed the various ways in which they approached their capacity building. Although each of the situations involved small businesses that seemed to be entrepreneurial in nature and keen to grow, there was still quite a healthy reliance on the informal networks that had been a traditional source of knowledge (but perhaps not skilled in the use of IS) as the major source of advice for the use of IS within their businesses.

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