The Rocky Road of Early-stage Entrepreneurs into Knowing what, where, who, when and how
People who start new companies do so because they feel they possess something unique that also has monetary value. It can be an idea of a new service, product or business model to customers whose needs are not fulfilled with the solutions already at the market. To do that, they need to acquire, create, manage and utilize the knowledge crucial for the success of their company
In a recent study by Saukkonen and Muhos (2021) we researched the build-up and usage of knowledge as a competitive asset as it manifests itself in actions of early-stage companies and their founder-owner-managers (FOM). We focused our exploratory qualitative study on SMEs in creative industries. What motivated us to make such a choice? Firstly, industries linked to and built on creativity and design have been described as backbones of a modern economy by the likes of Florida (2002). Simultaneously, net job creation in advanced economies has been dependent on small and medium-sized enterprises (SME) and micro-sized companies. These resource-constrained enterprises operate in the context of a knowledge economy that underlines the key role of knowledge as a source of advantage. As Moore (2000) claims, knowledge intensity creates entrepreneurial opportunities and results to offer advantage: Being able to produce, market and sell something that has “an edge” over competitors´ offering.
However, it has been also stated that SMEs are the ones who (naturally) also have loads of constraints in managing their knowledge (e.g. Strobel and Kratzer, 2017). Lack of people, time and structure tends to result into scattered, fuzzy and non-purposeful action on and for current and future knowledge: Urgent matters tend to drive out the important ones (van der Duin, 2004). Furthermore, the academic knowledge on knowledge management in SMEs is thin compared to research on larger enterprises (Twongyirwe and Lubega, 2018). Thus, we felt a need to contribute to filling the gaps in both academic and practical “knowledge on knowledge”.
The research we did is an exploratory and interpretative case study, revealing patterns of thoughts and behavior in the companies studied. A sample of seven companies whose business activity is based on design and creativity were interviewed in-depth. We applied Critical Incident Technique (CIT) in depicting the “knowledge journey” of the people and companies we met. A critical incident is a behavior that is either outstandingly effective or outstandingly ineffective in relation to the general aims of an activity (Fisher and Oulton, 1999). CIT facilitates the investigation of significant occurrences (events, incidents or issues) identified by the interviewee, the way they are managed and the outcomes perceived (Chell et al., 1998).
The research questions we posed and the answers we found were:
RQ 1: “How do early-stage entrepreneurs in creative industries conceptualise knowledge?”
Answers:
1) Knowledge is both born and it gains its value in action.
2) Exploitation and sharing overrule the concerns relating to knowledge protection.
3) In early-stage enterprises, the knowledge resides in individuals rather than in explicit and shared knowledge deposits.
Heard from an entrepreneur:
“To me, knowledge is to understand situations and to be able to act in them!”
RQ2: “How do early-stage entrepreneurs depict their development trajectory and practices in issues related to knowledge?”
Answers:
- Knowledge accumulates via company development stages of Ideation-Inception-Stability-Growth in a non-linear manner
- Companies gain knowledge via passing a series of negative and positive critical knowledge incidents
Heard from an entrepreneur:
“It was good that we tried it ourselves; now we know what to talk about and ask for when dealing with partners and suppliers.”
RQ3: “How do early-stage entrepreneurs foresee their future knowledge journey?”
Answers:
1) There is a dilemma between a) recognition of needs for and benefits of better structuring and sharing the knowledge depository and b) wish of entrepreneurs to stay in touch with most practical aspects in business.
2) The knowledge already possessed is still unused to its full potential=> the focus of the entrepreneurs is a wider and more purposeful exploitation of the knowledge
Heard from an entrepreneur:
” We needed someone to look at the future and markets with a wider and organised view, so I can stick to creativity, where I can best drive the company further.”
As summative findings, we propagate firstly that both entrepreneurs and their support networks should understand the inherent non-linear nature of SME development. A company and its knowledge (that at early stages largely builds on the knowledge possessed by the FOM) proceed as a trial and error –process, where negative knowledge incidents are followed by positive ones, if and when the company can utilize all incidents as an opportunity to learn. Whatever theoretical model we run our data on, the non-linearity and iterations occurred. Secondly, our findings supports the view by Nonaka, Toyama and Konno (2000): The dynamism of knowledge also means the reach over the boundaries of individuals and organizations, as it emerges from interactions amongst individuals and organizations. A successful knowledge management for SMEs means connections, tapping into knowledge of others in parallel with developing one´s own knowledge.
We did our study in Finland and targeted specifically creative industry SMEs, and the ones in early stage of their development. Repeating the research in another contextual setting would shed light on whether the findings are specific to the context or have a wider generalisability. Additional research could focus on dynamics of KM, namely the dynamics over time within the company and entrepreneur trajectory and the dynamics between entrepreneurs and other knowledge actors internal and external to the company, following the framework proposed for dynamic KM in SME-companies (Saukkonen, 2020).
Knowledge is vital for all – let alone to growth-seeking entrepreneurs. Zack (1999) stated that “to know” contains a) Knowing what (possession of knowledge artefacts: Data, patents etc.) b) Knowing how (processual competence) c) Knowing why (recognizing goals and paths to them) d) Knowing who (having in place the needed relationships) e) Knowing where (understanding the potential sources of added knowledge and application areas for the knowledge possessed). With that in mind, it is easy to conclude by saying that as individuals, entrepreneurs and companies we are never ready. Knowledge is journey rather a thing. So was this research and its results to us as researchers.
Author: Juha Saukkonen, D.Sc. (Econ.), Senior lecturer of management, JAMK University of Applied Sciences, School of Business
References:
Chell, E. (2004). Critical incident technique, In Cassell, C and Symon, G. (Eds.), Essential guide to qualitative methods in organisational research, 1st ed. SAGE Publications, London, pp.45–60.
Fisher, S and Oulton, T. (1999). The critical incident technique in library and information management research. Education for Information, 17(2), pp.113–125.
Florida, R. (2002). The Rise of the Creative Class. Basic Books, New York.
Moore, G. A. (2000). Living on the Fault Line: Managing for Shareholder Value in the Age of the Internet. Harper-Collins, New York.
Nonaka, I., Toyama, R., & Konno, N. (2000). SECI, Ba and leadership: a unified model of dynamic knowledge creation. Long Range Planning, 33(1), pp. 5-34.
Saukkonen, J. (2020). Towards dynamic knowledge management in technology-based SMEs. JYU dissertations. University of Jyväskylä. Accesible at: https://jyx.jyu.fi/handle/123456789/71621 Retrieved 23rd September, 2021.
Saukkonen, J. and Muhos, M. (2021). Knowledge as a competitive entrepreneurial asset – concepts and practices by early-stage entrepreneurs in creative industries. In Proceedings of the 16th European Conference on Innovation and Entrepreneurship ECIE 2021, Vol. 2. Academic Conferences International Ltd., Reading UK. pp. 856-864
Strobel N. amd Kratzer J. (2017). Obstacles to Innovation for SMEs: Evidence from Germany. International Journal of innovation Management, 21(3), pp 1-28.
Twongyirwe T. M and Lubega, J. (2018). Trends in Knowledge Management Methods in Small Medium-Sized Enterprises (SMEs): Review article. In Proceedings of the 19th European Conference on Knowledge Management ECKM 2018, Vol. 2. Academic Conferences International, Reading, UK. pp. 1108-1114.
van der Duin, P. A. (2004). Qualitative methods of futures research in innovation processes at commercial companies. In Proceedings of the EU-US Scienific Conference on New Horizons and Challenges for Future-oriented Technology Analysis. Institute for Prospective Technological Studies, Seville. pp. 91-96.
Zack, M. H. (1999). Managing codified knowledge. Sloan Management Review, 40(4), pp. 45-58.