Localizing Knowledge in Networks of SMEs —

Implication of Proximities on the IT Support

Aristyo Ridwan Rais

Arindy
Fairuz Nawfal Hamid
Naily I.
Olivia Bunga P.
INTRODUCTION
High level of knowledge
development
concentration tends to Island of excellence
increase knowledge
inequalities

small big

Organizations have to assimilate external knowledge from more

places, for more complex outputs (Malecki, 2010)
Shorter innovation
cycles  Knowledge
become more
dynamic, short-
cycled, ephemeral
(Salovaara
Tuunainen, 2015)
The most promising way to support knowledge acquisition is the
adaptation of knowledge, taking the contextual requirements of the
members into account (Thalmann 2014).

Hence, subgroups with high proximities are an important pre-

condition for knowledge sharing, knowledge transfer, and
technology acquisition (Gertler 1995).

The important question for networks in this regard is: Which

proximities are relevant for the localization of knowledge?
Thus, the concept of proximity is seen as crucial to cope with the dynamics of knowledge
(Torre and Rallet 2005).
The concept of proximities has become a popular and powerful theoretical basis for
approaching mechanisms behind networks’ emergence, evolution, and structural changes
(Cantner and Graf 2006; Balland 2012).
Networks, therefore, need support for (1) offering the right capabilities to localize knowledge
and (2) building groups of members with high proximities.
Within our study, we investigate the process of localizing knowledge in networks of SMEs.
We are particularly investigating the role of proximities during the localization as well as the
potential for supportive IT.
• We identified that the process of localizing external knowledge is crucial in networks of SMEs to
ensure the absorption of external knowledge of the member SMEs. Research so far discussed the great
importance of networks for the knowledge absorption of SMEs. However, the crucial process of localizing
external knowledge for the member SMEs received less attention so far. The major contribution of
this paper is describing this crucial process, considering the perspectives of proximities based on
interviews in eleven networks of SMEs.
• Further, we discussed how networks could use the proximity perspective to support their members’
absorption process. We discovered that the increasing importance of ephemeral knowledge will
further raise the need to localize this knowledge and particularly to perform this localization quickly
and with a high-quality output.
• Our interviewees reported about the need for communication with some people having high and other people
having low proximities. They need a group of people with high proximities for effective knowledge sharing
and development, but they also need to ensure the collaboration along the supply chain as well.
• We identified that people are more likely to listen to and share with people that are similar in terms of
the proximities. Thus, we consider the concept of the dimensions of proximity to be useful to support
workers, by recommending people for particular tasks or situations, and, therefore, to localize
knowledge. Network managers should consider the different proximities while defining target groups for
external knowledge and building subgroups. As SMEs are facing limited resources, offering
infrastructures and IT services tends to be in the responsibility of networks to drive this process
forward.
• In terms of generalizability, we do not claim generalization due to our small sample. Nevertheless, we
selected eleven networks with overlapping perspectives between them, showing the broad relevance. Our
findings offer an initial glance at challenges for localizing external knowledge in SME networks as
well as the rising opportunities for IT support provided by the network. In future research, we plan to
focus on the requirements of ephemeral knowledge more explicitly. Further, we plan to investigate
how IT can facilitate localization by designing supportive IT systems in a particular network.
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