A synergy of knowledge management and competitive intelligence

Abstract

With competition becoming more intense and complex, the market orientation perspectives dictate that enterprises whether large or small have one choice if they are to survive the torrent and turbulent market environment in which they operate to upgrade their internal business activities and to integrate events from the external environment. This article is concerned with knowledge management (KM) and competitive intelligence (CI) as springboards for competitive advantage in small and medium enterprises (SMEs). Specifically, the study investigates how KM and CI can be a source of competitive advantage to SMEs in Mzuzu, Malawi. Based on the findings, we demonstrate the combined effect of KM and CI on the success of enterprises or competitive advantage.

Keywords

Competitive advantage competitive intelligence knowledge management

Introduction

Deed and Hill (1996) argue that enterprises that continuously acquire knowledge will be able to create and sustain a competitive advantage in the knowledge-based economy whereas, those that do not, will collapse and cease to operate. Likewise, Davis (2004) says that competitive intelligence (CI) is rapidly becoming a major technique for achieving competitive advantage. The advancements in technological innovations, which have turned the world into global village (globalization), have led to some researchers such as Taib et al. (2008: 25) to highlight that CI has become more critical and intense. A review of literature shows that the concept of CI is somewhat defined vaguely and the term is oftentimes used interchangeably with other related concepts such as business intelligence and competitor intelligence. Ghannay and Mamlouk (2012) state that practitioners and theorists have failed to agree on a common definition of CI. However, literature shows that the most common definition of CI is about the process of gathering actionable knowledge about the external business environment (Taib et al., 2008: 25) and it involves managing the entire competitive battlefield by turning external information into decisions that enable business players to effectively compete and survive in a tough and unpredictable business environment (Fleisher and Bensoussan, 2003).

Literature is also replete with various definitions of knowledge management (KM) which are arguably contextual. While Davenport (1994) defines KM as the process of capturing, distributing, and effectively using knowledge, the most frequently cited definition is provided by Duhon (1998) who sees KM as a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers (Ghannay and Mamlouk, 2012; Taib et al., 2008: 25). This study adopts the latter definition because it fits more appropriately to our study.

Governments the world over have intensified the development of the small and medium enterprises (SMEs) sector to promote economic growth (Fatoki and Odeyemi, 2011). Abor and Quartey (2010) argue that SMEs have a crucial role to play in stimulating growth, generating employment, and contributing to poverty alleviation, given their economic weight in African countries. The Malawi Government has not been spared from the appeal of SMEs. Considering that Malawi has limited and mostly underdeveloped mineral resources such as uranium, coal, heavy mineral sands, and bauxite that contribute a classified gross domestic product (United States Agency for International Development, 2012: 6), SMEs become one of the major contributors to the Malawi’s gross domestic product (GDP) in addition to provision of jobs to many Malawians.

Categorization of SMEs in Malawi

There is no universal definition of SMEs because each country has developed its own definition to fit its context and economic circumstances (Malawi Ministry of Trade and Industry, 2012: 8; Okello-Obura and Matovu, 2011). However, a preliminary review of published scholarly work in different countries informs us that somewhat similar frameworks are used to categorize SMEs. In South Africa for example, the most widely used framework for classifying SMEs according to Abor and Quartey (2010) and Nenzhelele (2012: 17) is set out in the National Small Business Act 102 of 1996, which includes number of employees per enterprise, the annual turnover, and gross assets (excluding fixed property). A similar framework is used in Malawi. Malawi’s first and only available SME policy was adopted in 1998, which uses a similar framework to classify SMEs (United States Agency for International Development, 2012). As can be seen in Table 1, the Malawi Government classifies its SMEs based on the number of employees and annual turnover. However, regardless of the variations in the ways SMEs are defined and classified, there is a unanimous agreement in the literature that SMEs are pivotal to socioeconomic transformation of a country and it is estimated that SMEs employ 22 percent of the adult population in developing countries (Daniels and Ngwira, 1993; Fisseha and McPherson, 1991; Okello-Obura and Matovu, 2011; Robson and Gallagher, 1993).

Table 1.

Classification of SMEs.

Category	Number of employees	Annual turnover (MK)
Micro	Less than 3	Up to 120,000.00 ($200)
Medium	4–20	120,001 to 4 million ($200–$6666)
Large	21–100	Above 4 million to 10 million ($6666–$16666)
Very large	Above 100	Above 10 million ($16666)

Note: SME: small and medium enterprise.

Source: Ministry of Industry, Trade and Private Sector Development, Malawi (1998).

The Malawi Government currently only uses the employment criteria when defining SMEs as the turnover figures have been rendered meaningless due to inflation over the period. In the last quarter of 2015 financial year, the Kwacha has been trading at 565.1696 to a US dollar (Reserve Bank of Malawi, 2015) compared to the period between 1998 and 1999 when the nominal exchange value of the Kwacha ranged between K42 and K46 to a US dollar (Reserve Bank of Malawi, 2014). According to the Malawi Ministry of Trade and Industry (2012), there are 758,118 SMEs and 41 percent of them collectively employ a total of 1,050,320 Malawians on full-time basis and contribute 22 percent to the GDP through trading and retailing activities. The criterion of employees to define SMEs in the context of Malawi has been questioned by the United States Agency for International Development (2012: 20) because businesses in Malawi typically employ a lot of low waged staff because they are so low cost. However, the Malawi Ministry of Trade and Industry (2012: 17) argues that many countries have dispensed with turnover criterion and focused solely on number of employees because this permits easier data collection and is not affected by the effects of currency fluctuations and inflation on turnover. In this study, we also base our definition of SME on the criterion of number of employees.

Fombad (2015) argues that knowledge is considered as a prime input to production, innovation, and economic benefits. The Malawi Government acknowledges the role of KM as an asset for achieving a thriving environment for small business enterprises. For example, the Government intends to stimulate the growth of SMEs by:

Creating an effective communication and information strategy, to regularly provide the latest information (including national statistics, taxation and licencing regulations, details of international trade agreements and market information) to SME stakeholders. This should include an effective website and a central repository for hard copies of all relevant information. This could be done through National Enquiry Points. (Malawi Ministry of Trade and Industry, 2012: 17)

The overall objective of including an element of KM in the policy is to bridge the information and knowledge gap for SMEs and enterprise development (in Malawi) (Malawi Ministry of Trade and Industry, 2012: 26). The Government intends to achieve this through the establishment of a national database and knowledge portal to provide information to SMEs in Malawi including national statistics, latest policy documents and proposals, and export opportunities and market information (Malawi Ministry of Trade and Industry, 2012: 17).

Research problem and questions

At present, there is increasing pressure to liberalize trade and open up domestic markets to international competition, and African companies can no longer be effectively shielded from foreign competition (Du Toit and Strauss, 2010: 19). In Mzuzu city, the United Nations Human Settlements Programme (2011: 6) reports that SMEs in the city are facing various economic challenges that retard their growth and development. Indeed, an informal observation by the researchers reveals that enterprise owners in Mzuzu city especially SMS face fierce competition on the market following the flourishing of Chinese and Asian traders and other foreign enterprisers who have invaded the city, trading in various merchandises. Regardless of the seeming competition, it remains unknown as to how small and medium businesses in the city will evolve in order to survive in the future. A strong case can be made for CI as an instrument to enhance the competitiveness and innovation capability of businesses (Du Toit and Strauss, 2010: 20). For instance, it has been argued that integrating KM and CI contributes to competitive advantage by the effective use of enterprise resources and rapid response to changing business conditions (Ghannay and Mamlouk, 2012; Tej Adidam et al., 2012). This study investigated how SMEs in Mzuzu city have embraced the aspects of KM and CI in their daily operational activities as tools to achieve competitive advantage. The study answered the following research questions:

What KM and CI activities are SMEs in Mzuzu city involved in?

What do SMEs in Mzuzu city perceive as benefits of embracing KM and CI?

What are the major barriers hindering the spread of KM and CI practices in SMEs?

Literature review

Both, small and large profit-oriented organizations invest their KM in a form of information technology (IT) or human resource management (Taib et al., 2008: 29). In a typical enterprise, KM activities are usually aligned with organizational objectives which may include improved performance, competitive advantage, and innovation, which are catalysts for the sustainability of any enterprise (Ghannay and Mamlouk, 2012: 24; Johannessen and Olsen, 2003; King and Zeithaml, 2001; Ofek and Sarvary, 2000; Taib et al., 2008: 29). KM has several benefits to the operation of any profit-oriented organization (Taib et al., 2008: 29). Rollo and Clarke (1998) report on the stipulations by Australian Standards Authority on how KM contributes to the core business of an enterprise in several ways: industries based on innovation can use KM to accelerate the process of research and development and to manage intellectual property; industries relying on relationships (such as retail) can use KM to enhance customer service and offer greater product and service depth and quality; and companies dependent on the value of brands (such as fashion) can use KM to improve their market intelligence. A synthesis of literature (Oluic-Vukovic, 2001: 57; Taib et al., 2008: 29) unfolds five major activities involved in KM in a business entity. According to Oluic-Vukovic (2001: 57) and Taib et al. (2008: 29), they include discovering existing knowledge (locating internal knowledge in an organization or enterprise), acquiring knowledge (involves obtaining knowledge from external sources), creating knowledge (combining internal sets of knowledge or with external knowledge to create new knowledge), storing knowledge (processing and capturing knowledge to become an asset of enterprise), sharing knowledge (transferring knowledge from the custodians to the stakeholders), and using and applying knowledge (making informed decisions based on the available knowledge). These activities form the conceptual framework for knowledge movement (Oluic-Vukovic, 2001: 57; Taib et al., 2008: 29).

Fahey (1999) argues that the goal of CI is to provide actionable intelligence which results from a synthesis, analysis, evaluation, and conceptualization of information. Literature reveals a number of benefits associated with CI in an enterprise. The most notable ones are highlighted by the Global Intelligence Alliance (2005): increase in quality of information; timeliness in decision-making; improved operations of an organization; decreased costs; increased organizational awareness; timely dissemination of valuable information; easy threats and opportunity identification; and time savings. To ensure that CI is effectively executed, Taib et al. (2008: 29) recommend that entrepreneurs need to embrace the new 21st-century information age model which sees business success as a product of gathering information about new ways of satisfying customer needs. An analysis of literature (Bouthillier and Shearer; 2003; Fuld & Company, 2002; Miller, 2000) shows that there are many models that conceptualize the application of CI. Although the models use different vocabularies, they cover almost similar basic steps. The steps include identification of intelligence/information that is needed to begin the process; collection or acquisition of information/knowledge; organization and storage of acquired information/knowledge (also called screening analysis of collected information according to Pirttilä (1998), information distribution, and using intelligence information for decision-making. When the final step is reached, the intelligence cycle or CI process will be activated again.

KM and CI in profit-oriented enterprises

Although KM and CI appear to be distinct fields of study, they both play a pivotal role in business environments regardless of the size and industry of an enterprise (Taib et al., 2008: 29). It is argued that KM is one of the breakthroughs in the business environment (Taib et al., 2008: 29). Researchers such as Hedlund (1994), Trussler (1998), Evans (1998), and Ghannay and Mamlouk (2012: 24) independently described KM and CI as readily available tools that individually can be used to achieve a competitive advantage in the 21st century. Shelfer (2004) provides some differences between KM and CI as shown in Table 2.

Table 2.

A comparison between KM and CI.

KM	CI
Internal (focusses on organizations, internal information, and resources)	External (concerned with gathering information from outside business environment)
Reactive	Proactive (actively monitors the movements of competitors and changes in the market)
Technology based (more concerned on technological resources or IT facilities such as groupware application, knowledge portal, database, and related hardware and software)	Source based (more concerned on the information sources such as primary sources, secondary sources, or tertiary sources in order to make strategic decisions)
Dependent on employee willingness to contribute their knowledge, expertise, or experience regardless of the technological facilities provided by the organization	Environment driven (political, economic, sociological, and technological)

Note: KM: knowledge management; CI: competitive intelligence; IT: information tecchnology.

Source: Shelfer (2004: 319).

While CI generally focusses on gathering competitive information from all conceivable sources, analyzing that data, and making informed and strategic decisions that help gain competitive advantage, KM is mainly concerned with identifying, collecting, codifying, and sharing the knowledge assets of the organization (Taib et al., 2008: 29) or according to Ghannay and Mamlouk (2012: 24) and Shelfer (2004: 319), KM is generally concerned with the management of internal knowledge processes, so that all information required for corporate decisions can be made available and efficiently used. We can therefore argue that combining KM and CI in an enterprise can lead to greater effect. When KM and CI functions are combined to provide the right mix of the right information to the right decision maker at the right time, their relationship is called KM–CI (Ghannay and Mamlouk, 2012: 24; Taib et al., 2008: 31). Figure 1 shows the relationship between KM and CI where it is clear that KM and CI complement each other. As noted already, KM focuses on internal processes and information, while CI deals with information from the environment in which the business operates. Although KM and CI have apparent differences in terms of the ways they are executed (Taib et al., 2008: 29), the common denominator is that the results of processes have to reach the desktops of those responsible for making strategic decisions that shape the focus and direction of an enterprise. According to Taib et al. (2008: 31) and Ghannay and Mamlouk (2012: 24), this is the point at which KM and CI intersect the fulcrum. Surely, these two fields are starting to blend into the same melting pot because Taib et al. (2008: 31) and Ghannay and Mamlouk (2012) declare that KM and CI are distinct by being both complementary and synergistic and have similar goals and are natural extensions of one another.

Figure 1.

The KMCI relationship. Source: Katherine Shelfer, Drexel University (2004) cited in Taib et al. (2008: 29) and Ghannay and Mamlouk (2012: 31). KMCI: knowledge management–competitive intelligence.

Specifically, Dysart (1998), Taib et al. (2008: 29), and Ghannay and Mamlouk (2012: 24) put the relationship of KM and CI in an enterprise into more perspectives. First, KM adds value to the information already held by the firm and CI scouts external information; when KM and CI information is combined, it results into competitive advantage; when KM attempts to leverage internal information and expertise, CI works to filter information and develop an understanding of the multidimensional nature of the competitive arena, spot trends, and articulate changes in advance of the market (Dysart, 1998); and essentially, the information legally collected through CI can be used to enhance the enterprise’ own competitiveness, and hence, CI can also be viewed as a subset of KM (Ghannay and Mamlouk, 2012: 24).

A summary of studies on KM and CI in SMEs

A synthesis of the literature shows further that studies that have been conducted have tended to focus on one aspect, that is, either KM in relation to medium enterprises or CI in relation to medium enterprises. In a study about how hotel entrepreneurs embrace KM in Nigeria, Agbim et al. (2014) show that the predominant internal knowledge of the firms includes individual capabilities or skills and experiences. Agbim et al. (2014) also established that knowledge acquisition which is part of the KM process contributes to competitive advantage. In another study conducted in South Africa by Ndlela and Du Toit (2001), targeting senior managers at a government-owned electricity generating company revealed that people(employees) are key to the implementation of the KM program. Studies conducted in Scotland and Italy by Egbu et al. (2005) and Cerchione et al. (2015), respectively, independently showed that embracing KM leads to many benefits such as improved ability to sustain competitive advantage of an organization; improvements in the quality of an organizations work force through capacity building and up skilling, enhanced client relations – better client interaction; improved employee retention; and enhanced and streamlined internal administrative processes. Likewise, benefits of CI according to Trim and Lee (2008), Calof and Wright (2008), Tej Adidam, Banerjee and Shukla (2012), and Du Toit and Strauss (2010) include better serve the customer needs anticipation of new business opportunities, exploitation of competitors weaknesses, improved current market standing, increased revenues and/or profits, and better decision-making in an enterprise. Prescott and Smith (1989), Trim and Lee (2008), Calof and Wright (2008), Fuld (2006), and Tej Adidam et al. (2012) have independently identified a number of objectives of CI in SMEs as follows: to understand the industry and competitors and to identify areas of competitors’ vulnerability and a firm’s actions on its competitor by identifying potential moves by competitors. Also, CI and KM’s sources of information include articles in trade press, financial reports, competitors advertising strategy, stockbrokers report, online, third-party computer databases, trade fairs and competitors exhibits, stock offering prospectuses, and competitors employee-hiring advertisement (Tej Adidam et al., 2012).

Prior studies have revealed some of the most common ways through which SMEs disseminate their KM and CI information to their stakeholders. The techniques include oral briefings, memos, formal written reports, electronic mail, written or custom-designed reports for end users, newsletters, bulletin boards, presentation to end users, computerized databases, regular meetings, special retreats, and KM and CI training seminars (Tej Adidam et al., 2012). Cerchione et al. (2015) have identified a number of factors that punctuate the KM practices by SMEs: business culture – financial barriers, lack of shared language, lack of confidence in benefits, lack of managerial support, lack of staff skills, lack of time and resources, protection of critical information, tacit and nonformalized knowledge, and technological barriers.

Research methodology

The study was conducted in Mzuzu, Northern Region of Malawi. According to the United Nations Human Settlements Programme (2011: 2), Mzuzu city has a population of 133,968; it is one of the fastest growing cities in Malawi and it is the largest urban center after Lilongwe and Blantyre. The main economic activities in the city include trade, manufacturing, agriculture, and informal business activities. Based on the estimation of 2011, the city was growing at a rate of 5.8 percent per annum, and it had an estimated GDP of Malawi Kwacha 6,000,000.000 ($10909090) (United Nations Human Settlements Programme, 2011: 2).

Data collection

Based on the concepts that emerged from the literature, we were motivated to conduct a study to determine whether synergy of KM and CI could be a source of sustained competitive advantage to SMEs plying their trade in Mzuzu city. For the purpose of the survey, it was decided to send a questionnaire to managers of SMEs (i.e. those enterprises which have 5–20 employees) in Mzuzu city. Empirical data to test the value of KM and CI on CI was collected using a survey questionnaire, which we sent to SMEs in Mzuzu city. The questionnaire employed in this study was constructed based on various prior studies such as Prescott and Smith (1989), Ndlela and du Toit (2002), Egbu et al. (2005), Fuld (2006), Calof and Wright (2008), Trim and Lee (2008), Du Toit and Strauss (2010), Tej Adidam et al. (2012), Agbim et al. (2014), and Cerchione et al. (2015). To ensure validity and reliability of the data collected, the questionnaire content was rigorously perfected through pretesting. In line with Lin (2014), pretesting focused on instrument clarity, question wording, and validity. Experts in the fields of KM, CI, and SMEs were asked to comment on the instrument. Corrections and refinements were made based on those comments. In all, a total of 200 questionnaires were distributed to all SMEs plying their trade in Mzuzu city and we requested that the questionnaires be completed by the most senior managers or supervisors in the enterprise. The most senior managers of these SMEs were selected because according to Wong and Aspinwall (2005), they are often the most knowledgeable and reliable informants within a company to answer the survey. The collected data were put into spreadsheets, with statistical graphs for a visual representation of the results.

Demographics

As already stated, data for this study was collected by the means of a survey conducted in Mzuzu, Malawi, in 2015. The questionnaire was self-distributed to 200 SMEs; 180 respondents returned the questionnaire (90 percent response rate). Of 180 (90 percent) questionnaires that were received, our analysis showed that 154 (85.5 percent) were usable. Thus, data discussed in this section is based on the 154 (85.5 percent) usable data. Data about the demographics of respondents (gender, nationality, form of business, number of employees, qualification, and form of enterprise) is depicted in Table 3. According to the findings, it turned out that the gender of the respondents was dominated by male (67.5 percent), and 55.5 percent were Malawians by nationality followed by Chinese (18 percent). Interestingly, however, a cross-tabulation of the results showed that almost all respondents who fell in the band of 3–5 employees were Malawian nationals whereas the band of 11–20 was dominated by Chinese and Indian traders. The results suggest that the foreign band of investors employs more Malawians in their businesses. These results also give substance to observations by Lin (2014: 1415) that in most countries, the majority of firms are SMEs and they have a critical role in driving economic growth, employment, and wealth creation.

Table 3.

Profiles of participants (n = 184).

Demographics	Frequency	%
Gender
Male	104	67.5
Females	50	32.5
Nationality
Malawian	86	55.8
Chinese	29	18.8
Indian	17
Nigerian	18	11.7
Other	4	2.6
Form of ownership
Sole proprietorship	89	57.8
Partnership	30	19.5
Company	23	14.9
Number of employees
3–5	71	46.1
11–20	62	40.3
6–10	21	13.6
Qualification
Certificate	88	57.1
Diploma	43	27.9
Bachelor’s degree	23	14.9
Form of enterprise
Retail (assorted goods)	79	51.3
Wholesale	71	46.1
Catering	37	24.0
Transport	8	5.2
Finance	5	3.2
Legal	5	3.2
Other	17	11.0

Industry representation

Most SMEs are involved in selling assorted items (51.3 percent) followed by wholesale (46.1 percent). A cross-tabulation of the results revealed that most of Malawians dominated the category of retail while nearly all foreign traders were involved in wholesale.

Sources of KM and CI information

The dominant sources of information for KM and CI according to the findings depicted in Figure 2 include suppliers, customers, and colleagues and subordinates with scores of 72.7, 61, and 50 percent, respectively. Although Fuld & Company (2000) differentiates the collection of KM and CI information in two parts, secondary/published and primary sources, it has been proven in this study that primary sources are the most commonly used sources. It appears that in Africa, most SMEs use customers to solicit CI and KM information because similar findings were reported by Nenzhelele (2012) in South Africa who found that 100 and 88 percent of the SMEs sourced their CI information from customers and suppliers, respectively.

Figure 2.

Sources of KM and CI information by SMEs. KM: knowledge management; CI: competitive intelligence; SME: small and medium enterprise.

Competition situation

Generally, 56 (36.4 percent) respondents said that the competition is very intense, 55 (35.7 percent) said it is high, 41 (26.6 percent) said it is low, and only 2 (1.3 percent) indicated it is very low. The majority of Malawians are the most hit traders by competition because on average, of 62.3 respondents (very intense and high combined; 60 percent) were Malawians. The results suggest that the business environment is not friendly for most Malawian traders in Mzuzu city.

KM activities

SMEs in Mzuzu are involved in three major KM activities. According to the findings presented in Table 4, it is clear that the dominant activities include making informed decisions based on the available knowledge (79.9 percent) followed by acquiring knowledge (obtaining knowledge from external environment) and sharing knowledge (35 percent and 1 percent).

Table 4.

Profiles of participants (n = 184).

Activity	Frequency	%
KM activities
Using and applying knowledge (making informed decisions based on the available knowledge)	123	79.9
Acquiring knowledge (involves obtaining knowledge from external)	97	63.0
Sharing knowledge (transferring knowledge from the custodians to the stakeholders)	54	35.1
Creating knowledge (combining internal sets of knowledge or with external knowledge to create new knowledge)	28	18.2
Storing knowledge (processing and capturing knowledge to become an asset of enterprise)	11	7.1
CI activities
Making decisions based on the gathered intelligence	132	85.7
Collecting or acquiring information/ knowledge	106	68.8
Identifying intelligence/information that is needed to begin the process of CI	60	39.0
Distributing information to stakeholders/my employees and bosses	59	38.3
Organizing and storing acquired information/ knowledge	45	29.2
Analyzing acquired information/knowledge	36	23.4

Note: KM: knowledge management; CI: competitive intelligence.

CI activities

The most important CI activity practiced by most SMEs is using gathered intelligence to make business-related decisions. As can be seen in Table 4, SMEs make use of CI information to make decisions (85.7 percent), are involved in gathering CI information (68.8 percent), and to identify information that they use to begin the process of CI. An analysis of the results shows that activities which are common in KM also dominate CI activities. For instance, SMEs gather both KM and CI information to make informed decisions about their businesses. Likewise, the other dominant activity in both KM and CI involves acquiring information from the business environment. Interestingly, the results suggest that there is a lack of information sharing culture among SMEs in Mzuzu city. This is evidenced by a rather smaller number of respondents who indicated that they share their information (35.1 percent for KM and 38.3 percent for CI) with stakeholders.

Benefits of embracing KM and CI

KM and CI activities come along with some benefits according to the study. Results depicted in Figure 3(a) and (b) show that there are two main benefits that SMEs in Mzuzu city reap from KM and CI activities: They enable them identify potential moves by their competitors (87.7 percent) and they help them understand the industry in which they operate (97.2 percent).

Figure 3.

(a) Benefits of CI. (b) Benefits of KM. CI: competitive intelligence; KM: knowledge management.

From these findings, it is plausible to conclude that conducting KM and CI activities enables enterprise owners to effectively compete and succeed on the market, thus, achieving a competitive advantage. This is regardless of the fact that the two systems are designed to target different positions of an enterprise. Figure 4 shows some tangible differences between KM and CI. Our analysis proves Shelfer’s (2004) analysis that CI is influenced by external factors whereas KM is largely driven by internal factors. In our study, we find that mainly KM involves the improvement of internal operations and knowledge. Most respondents focused on the needs of customers, employees, innovation, and knowledge organization. With technological advancements, some SMEs in Mzuzu city have taken advantage of this innovation to improve their KM activities. By sourcing IT equipment such as point of sale and money counting machines, the SMEs hope to make their operations more efficient in terms of serving their customers timely and making their internal operations quicker. This is perhaps a number of authors have argued that KM is more ICT (ICT in this context entails the use of technologies such as Internet, computers, Internet and mobile technologies to enhance operations of businesses.) based. On the other hand, the results show that to execute CI activities, respondents were more interested in identifying competitors’ weaknesses and strengths, customer behavior, new market opportunities, and early business warnings. Such activities give credence to claims by Ghannay and Mamlouk (2012: 24) that CI is about gathering usable information about the external environment, so that an enterprise can be on the lookout for possible dangers/threats in the environment. Much as it is possible to outperform other business players by focusing on either CI or KM singularly, engaging in both has a greater impact. For example, it could be disastrous for the enterprise to focus on KM without realizing how turbulent the industry it operates in has become. Likewise, in addition to keeping an eye about the changes in the industry, an enterprise needs to improve its internal operations. Thus, striking a balance of the two aspects leads to more benefits which eventually result into competitive advantage. Competitive advantage in this scenario is seen as an enterprise capability to outperform its competitors as a result of its informed decisions which are arrived at after carefully, effectively and cautiously, and strategically examination of CI and KM knowledge activities. Therefore, there is no doubt that KM and CI “are starting to blend into the same melting pot” (Ghannay and Mamlouk, 2012: 24) and certainly, they drive each other. Going by Porter (1985) assertions, KM and CI are just some of the competitive strategies that translate into competitive advantage. Although it is not straight forward to simplify the relationship between KM and CI (Johnson, 1999), we attempt to demonstrate that KM and CI are the parts of the same whole because, as shown in Figure 4, both are equally designed to apply enterprise knowledge of the internal and external environment for long-term competitive advantage. Our findings equate with observations by Parker and Nitse (2011) on the synergy of KM and CI.

Figure 4.

Impact of CI and KM on competitive advantage. CI: competitive intelligence; KM: knowledge management.

Methods used to share KM and CI information

The study explored the methods that SMEs in Mzuzu city use to share their KM and CI activities to the stakeholders. Figure 5 reveals that, mainly, respondents use oral briefings (97.4 percent), regular meetings (79.2 percent), and presentations (61 percent). These procedures are almost similar because their common denominator is that they are all orally communicated to staff and stakeholders. All methods that require KM and CI printed (e-mails, reports, and newsletters) scored poorly implying that perhaps, traders are afraid of their KM and CI activities landing in the hands of their competitors. The study has shown that most employers have between three to five employees. This might account for the reason oral communication for sharing KM and CI information is preferred. Practically, it may be a waste of time and resources to print CI and KM information in newsletters, for example, when the information is intended to be shared internally to three or five employees. Structurally, SMEs are typically informal with flatter organizational structures (Egbu et al., 2005), hence, informal ways of sharing KM and CI information. While e-mails have been found to be effective ways for sharing KM and CI information to stakeholders in large companies and enterprises in South Africa (see Sewdass and Du Toit, 2014: 189), this study found that only foreign traders (e.g. Chinese and Indians) used this facility for this purpose.

Figure 5.

Methods used to share KM and CI information. KM: knowledge management; CI: competitive intelligence.

Barriers hindering the spread of KM and CI practices in SMEs

SMEs in Mzuzu city face several challenges that affect their zeal to engage in both KM and CI activities. As can be seen in Table 5, there are three main challenges: protection of critical information, tacit and nonformalized knowledge (61.7 percent), lack of time and resources (58.4 percent), and ethics to do with gathering of KM and CI information (55.8 percent). As already noted in some previous sections, most SMEs in Mzuzu city source their KM and CI information from their customers and suppliers. This information is in totality the form of tacit knowledge; it is not formalized or codified. The fact that most respondents (61.7 percent) find it difficult to get this information may suggest that indeed, accessing CI and KM information remains a key challenge. Egbu et al. (2005: 20) also note that the vast amount of knowledge generated in SMEs is tacit in nature and is lost due to various reasons. Malawi is one of the economically developing countries, and SMEs are mostly hit by the economic downturn. This is the reason a good number of respondents indicated that they do not have enough time and resources to enable them effectively and efficiently carry out KM and CI activities. After all, Lin (2014) and Egbu et al. (2005) have previously found that SMEs might be constrained by insufficient financial and human resources capacity which incapacitate their operations. For example, SMEs may need a stable financial stamina to embark on sourcing and implementing modern IT in their enterprises. Egbu et al. (2005) add that SMEs are often weak in terms of financing, planning, training, and the use and exploitation of advanced IT, due to lack of resources.

Table 5.

Barriers hindering KM and CI activities in SMEs.

Barrier	Frequency	%
Protection of critical information and tacit and nonformalized knowledge	95	61.7
Lack of time and resources	90	58.4
CI ethics discourage us	86	55.8
It is difficult to create a participatory environment and awareness of CI and KM	58	37.7
Financial barriers	42	15.6
Lack of staff skills	37	24.0
Lack of shared language	24	27.3
It is difficult to identify critical information needs	18	11.7

Note: KM: knowledge management; CI: competitive intelligence; SME: small and medium enterprise.

Limitations of the study

The study was confined to SMEs in Mzuzu city. Since the SMEs are available in most parts of Malawi, confining the study to Mzuzu city implies that the findings may not adequately be generalized to other SMEs located in other parts of the country. Future studies should consider targeting other SMEs in other parts of the country.

Conclusion

The study has proven that KM and CI are distinct by being both complementary and synergistic. What came out in the study is that KM involves the continuous reconfigurations and reorganization of enterprise-based assets to achieve organizational renewal and innovation. They are both aimed at realizing competitive advantage in an enterprise. However, lack of time for business owners to conduct both KM and CI remains a key challenge.

Practical implication of the study

Government needs to create a friendly or appealing market environment for indigenous SMEs because according to the findings, most of them indicated that the competition is very competitive. One way the Government might achieve this is by empowering SMEs with knowledge about their business and funding to boost their businesses.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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