Investigating the relationship between human capital and organisational structural capital from a knowledge management perspective: a study of the small and medium-sized enterprises (SMEs) in Southern California, USA

Abstract

Southern California has great economic importance to the USA, with major revenue generation counties like Los Angeles, San Diego and Santa Barbara. Downtown Los Angeles is a major business hub for many industries, including small and medium enterprises (SMEs), with densely populated metropolitan areas in urban settings. From technology to media, a wide range of diversified SMEs operate within the Southern California region. Little evidence is provided in the academic literature on Southern California’s SMEs and their relation to Knowledge Management (KM) and KM strategies. This research aims to explore and examine, in depth, Southern California’s SMEs and to provide the SMEs’ decision makers with an effective strategy to implement Knowledge Management Systems (KMS) into their organisations. The overall aim of this thesis is to complement and enhance the existing KM literature by examining the relationship between Human Capital (HC) and Organisational Structural Capital (OSC) from a Knowledge Management perspective. The conceptual framework developed in this thesis draws on the strategic management perspective of KM and KMS from the existing literatures. Focusing on and analysing the two main elements, i.e. HC and OSC, to critically examine how the relationship between both elements could affect SME performance. In addition, by drawing on the resource-based view of the SME and the KMS perspective, the thesis explores the influence of KMS on both the HC and OSC elements in the SMEs of Southern California. To validate the framework, empirical research was performed, followed by the distribution of a questionnaire to 1,000 respondents within the SME sector in Southern California, and particularly to areas with high business revenue, such as Los Angeles, San Diego and Santa Barbara, of which 367 completed responses were considered valid to use in this research. This study has applied structural equation modelling (SEM) to test the proposed research framework using IBM SPSS V.22 and AMOS V21. The findings reveal that the majority of the SMEs are aware of their knowledge usage as the main competitive advantage. However, SMEs are not always aware of the best methods to capitalise their existing KMS and how to utilise it to the optimal level, especially with regard to business objectives and obligatory requirements repeatedly taking precedence. These results indicate that the implementation of an enhanced KMS strategy, i.e. the developed framework, will enhance SME performance by aiding the decision makers further in the exploration of employee awareness (HC), company goals, and being competitive through making the relevant decisions, which is a contribution of this study. The originality of this study is that it endeavours to obtain new insights on the subjects of KMS, HC, OSC and SME performance, using tactical suggestions for Southern California’s SMEs in managing knowledge, controlling knowledge gaps, and reflecting among these factors. This thesis makes a step forward and contributes to the body of knowledge, e.g. it explores and examines relevant elements and factors of both HC and OSC that enhance the decision-making process in SMEs through the conceptual and the developed frameworks (see Figures 3.6 and 4.21). In addition, this thesis makes a further contribution to the application of current theories (e.g. the Knowledge-Based theory of the Firm and Organisational Learning theory) by providing a framework to address the relationship between Human Capital (HC) and Organisational Structural Capital (OSC) from a Knowledge Management perspective, in the context of Southern California’s SMEs with a focus on service based firms. While the results cannot be generalised, they can aid others to relate their views to those reported in this thesis.