How Knowledge Management and Intellectual Capital Improve SMEs Planning Effectiveness

Nowadays knowledge represents an important strategic factor for business success. In fact, intangible resources often have a greater value than tangible ones and firms have to manage them adequately in order to reach their goals and gain competitive advantage. At the same time, knowledge management and intellectual capital are two strictly related concepts, meaning that the first is the “motor” of growth and of the latter. This is particularly true in the case of SMEs, considering that, due to a lack of physical and financial resources, their capability to reach their goals and be successful depends on the knowledge, experience and skills of the owner and his employees. However, SMEs seem to be disregarded, especially if the topics of knowledge management, intellectual capital and planning are linked. Therefore, this paper tries to answer the following two research questions: (RQ1) Does knowledge management practices impact on SMEs’ intellectual capital? and (RQ2) Does intellectual capital impact on SMEs’ planning effectiveness? To answer these questions we have created and empirically tested a conceptual model on a sample of 295 Italian SMEs using Consistent Partial Least Squares. Results clearly show that knowledge management practices have a positive direct impact on each component of intellectual capital. At the same time human, structural and relational capital have a significative direct impact on planning effectiveness. The main limitation of this study concerns the fact that it focuses only on Italian SMEs and thus, results cannot be generalized.