Comparative analysis of knowledge management practices and challenges: an observational study of two small and medium enterprises (SMEs)

Knowledge management (KM) is inevitably a strategic capability for innovation and competitiveness in Small and Medium Enterprises (SMEs). However, it lacks recognition of its importance and practical application. Many SMEs face persistent challenges in formalizing KM due to limited resources, informal work structures, and a lack of understanding of how knowledge processes unfold in daily operations. Consequently, KM in SMEs often suffers from fragmented handling of unstructured data, limiting the efficiency of knowledge acquisition, information retrieval, and storage processes. This study examines how two SMEs manage these foundational KM components through structured non-participant observation, addressing the lack of behavior-based research in this domain. Guided by the Knowledge-Based View (KBV) and Practice-Based View (PBV), a comparative multiple-case design was applied over eight weeks, focusing on daily data-handling practices, documentation routines, and retrieval activities. Findings reveal that both SMEs rely on unstructured data sources, yet differ in their organizational approach to handling both explicit and tacit knowledge. In both cases, inconsistent storage and retrieval hindered knowledge accessibility and limited structured sharing. The study contributes theoretically by linking observable data practices to KM capability and methodologically by validating observation as a rigorous qualitative tool. Practical implications emphasize the need for standardized digital storage and retrieval systems at SMEs to enhance knowledge flow and organizational learning.