Hello, dear friend, you can consult us at any time if you have any questions, add  WeChat:  zz-x2580
For a few decades Knowledge Management is a continuously growing topic. Knowledge about customers, products, processes, innovations and competitor’s secret are asset that can facilitate a firm to have a sustain a highly competitive advantage in a long run. (Anne et al,2005) Knowledge transfer is widely emphasized as a strategic issue for firm competition. (Albino et al, 1998) and many researchers already provided a few factors that affect the Level of knowledge transfer of the firm. One of the factors is called Absorptive Capacity (Tsai, 2001)

Nowadays the world is knowledge-based economy. The players the global market needs to be able to give birth to their own knowledge in order to become competitive in the market. In this scenario firms likely to generate the technological knowledge to facilitates the innovative products and manufacturing or business processes. Unfortunately firms ability to innovate are varies between the different firms and also depending on their employee ability. Companies need to recognize new external knowledge, assimilate it, and apply it to commercial use. This is called as the absorptive capacity (Cohen and Levinthal, 1990) The absorptive capacity (ACAP) of a firm plays an important role in terms of organizational learning and innovation (Tsai, 2001) as well as for firm performance in general (Lane et al., 2001).

At first many of the researchers mainly focus on the relationship of absorptive capacity and R&D perspective. And use the R&D as measurement of the absorptive capacity of the firms. (Cohen and Levinthal, 1990 ; Zahra and George, 2002) However that approach will have the implication when we want to measure the absorptive capacity of the firm that has low R&D emphasis such as the SME service provider in Thailand. Some researchers propose a new set of inner firm determinant of absorptive capacity in the firm level. (Vega-Jurado et al, 2008)

The supply chain management (SCM) and knowledge management (KM) are famous topic of the researchers in this era. They have many things in common such as the focus on knowledge and information sharing among the supply chain members. Even though the relationship of SCM and other disciplines are widely explored, the evidence of SCM practices on KM and firm performance are limited and not so conclusive. As business practices today no longer evaluate the performance of a business enterprise at a unit level, but rather from a value chain (supply chain) perspective, it is therefore important to examine the management of knowledge in the supply chain context. The same philosophy of KM at the firm level cannot be applied directly to the supply chain level. This is because, probably, the roles that knowledge plays in both levels are different and therefore, the impact of KM will differ from a firm perspective to a supply chain perspective (Wai and Kuan, 2011)

1.1 Problem Statement

The absorptive capacity is considered to be an important factor with a promising benefit for the firm innovation and competitiveness but the evidence of the effect of absorptive capacity and SCM practices interaction are very little and need to be exploring more.

1.2 Objectives of the Thesis

This research aim to gives two-dimensional contributions. First, it explored linkages between Absorptive Capacity, SCM practices and firm performance; the results should help us to understand how to better manage knowledge absorptive capacity in a supply chain context. Second, this research addresses the gap in the literature by analyzing the roles of absorptive capability and SCM practices on firm performance. This in turn will provide valuable clues on how to improve organizational effectiveness which is the goal of management practices.

1.3 Organization of the Report

This proposal consists of 3 chapters as follows:

Chapter 1 is the introduction of the research. It provides the background of the ACAP, problem statement of the research, objectives and scope of this thesis.

Chapter 2 is the literature review. The previous research works, i.e., method approaches for measuring ACAP, are discussed.

Chapter 3 is Theoretical background and conceptual framework section. It discuss about the hypothesis construction and theoretical back ground of the work.

Chapter 4 introduces the proposed methodology. The approaches, data source, variables and questionnaire are discussed.

Chapter 2.

Literature Review

This chapter provides the theoretical perspectives on which this study is founded. It is divided into three main sections.

The first section deals with the explanation of Knowledge Management framework providing details including definition, characteristics and a review of previous studies of Knowledge Management

The second section explains absorptive capacity framework, providing details such as definition and characteristics, including a review of previous studies of absorptive capacity.

Third section contains the related literature of the Supply Chain Management Practices such as the definition and previous studies.

In the fourth section, the literature of firm performance is explained.

In the final section, the conceptual framework is defined.

Knowledge Management

In this section, the study elaborates on Knowledge Management with details such as definition, dimension and so on. Included are reviews of relevant literature on Knowledge Management. First the study takes a close look at the overview of Knowledge Management, definition and history. Then finally present the review of Knowledge Management in SME literature.

Definition

Knowledge management (KM) is an emerging, interdisciplinary business model dealing with all aspects of knowledge within the context of the firm, including knowledge creation, codification, and sharing, and using these activities to promote learning and innovation. It encompasses both technological tools and organizational routines of which there are a number of components. These include generating new knowledge; acquiring valuable knowledge from outside sources; using this knowledge in decision making; embedding knowledge in processes, products, and/or services; coding information into documents, databases, and software; facilitating knowledge growth;Â transferring knowledge to other parts of the organization; and measuring the value of knowledge assets and/or the impact of knowledge management.(Gupta et al., 2004)

Evolution of knowledge management

The history and evolution of knowledge management has not always been clear or straight forward. The field has rooted of evolved from many disciplines and domains. In 1989, the knowledge management related literature began to appearing in famous journal such as Harvard Business Review and others. A year later, the knowledge management activities are occurred in several well-known companies in U.S.m European and Japanese. In 1995, the most widely cited up till now are published, Ikujiro Nonaka’s and Hirotaka Takeuchi’s “The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation”. It was a time ware knowledge management literature are flourishing, the major km-related group and publications are established and on the internet accessing, there are an increasing in the conferences and seminars on knowledge management basis together with the growing of organizational focus on managing and leveraging explicit and tacit knowledge resources to achieve competitive advantage. Due to a publication of a result of knowledge management studies in European firms, the European Community began the funding of Knowledge Management-related projects via the ESPRIT program since 1995. Until now, knowledge management (KM) has received much more attention both in academic and practitioner community. Majority of the knowledge management research focuses on topics such as knowledge typology (Polanyi, 1962; Nonaka, 1994; Spender, 1996; Blackler, 1995; Jasimuddin, 2005), knowledge transfer (Argote and Ingram, 2000; Jasimuddin et al, 2006), knowledge creation (Nonaka and Takeuchi, 1995; Nonaka and Kanno, 1998; Jenkins and Balogun, 2003), and knowledge storage and retrieval (Walsh and Ungson, 1991; Stein and Zwass, 1995; Sherif, 2002; Jasimuddin et aL, 2005a, b). However, there are many other issues surrounding knowledge management that are yet to explore.

Knowledge Management in SME context

Knowledge management (KM), like other management practices, was invented and developed in large organizations to be applied later on in small and medium-sized enterprises (SMEs). (McAdam and Read, 2001)

Many smaller firms face resource constraints (Jarillo, 1989), and existing resources must

Be carefully used with care, as erroneous decisions will have more serious complications than would be the case in large businesses (Amelingmeyer and Amelingmeyer, 2005). For example, small firms have a flat structure and an organic, free-floating management style that encourages entrepreneurship and innovation. They tend to be informal, non-bureaucratic and there are few rules. Control tends to be based on the owner’s personal supervision and formal policies tend to be absent in SMEs (Daft, 2007). In addition, in many smaller firms the owner-managers take on a central position (Bridge et al., 2003). In such an environment it is not uncommon that the processes of business planning and decision-making are limited to only one person (Culkin and Smith, 2000). This centrality also signifies that those people in particular are responsible for recognizing the benefits of knowledge management to support the firm’s operations. However, SMEs’ day-to-day business operations specifically require close attention (Hofer and Charan, 1984). This very often results in situations where insufficient time is available for strategic issues. This in conjunction with a lack of financial resources and expertise (Bridge et al., 2003) frequently results in most knowledge being kept in the minds of the owner and some key employees rather than physically stored or shared through substitution arrangements (Wong and Aspinwall, 2004). Thus knowledge sharing in SMEs may happen in corridor conversations

(Wong and Aspinwall, 2004) or at organization members´s birthday parties (Durst and Wilhelm, in press). With a view to the above, SMEs face unique KM challenges which are distinct from those of their larger business counterparts. Reviewing the literature related to small businesses suggests that scholars tend to apply approaches originally developed for larger firms rather than SMEs. This procedure involves the risk that smaller firms may lose their distinct characteristics and thus their capability to act. Previous research on KM in SMEs has shown many differences compared to larger firms. Most SMEs have no explicit policy targeted at strategic KM, and they tend to treat KM on an operational level – at the level of systems and instruments. SMEs tend to place more emphasis on management of tacit knowledge than larger firms, and communication channels in SMEs are more likely to be between firms, rather than internal to the organisation. The SME sector appears to be less advanced in terms of knowledge construction, having a more mechanistic approach to this concept and relying less on social interaction. Also, the SME sector is weaker than larger firms on formal and systematic discussion in order to share tacit knowledge, since larger firms are stronger in the implementation of formal KM strategy. Most SMEs adopt short-term unstructured ways towards organisational learning, and managers in smaller firms tend to prevent the outflow of knowledge from the company and thereby block knowledge sharing (Beijerse, 2000; Matlay, 2000; McAdam and Reid, 2001; Corso et al., 2003; Bozbura, 2007; Hutchinson and Quintas, 2008).

Activities related to knowledge management, such as knowledge sharing, are time-consuming and require a certain level of trust. Slow staff turnover, as found in many SMEs (Durst and Wilhelm, 2011), can positively contribute to those efforts.

What is often overlooked when researching SMEs is the issue of heterogeneity (Curran and Blackburn, 2001). SMEs are difficult to compare, making the notion of one single knowledge management approach almost impossible.

In this paper it is asserted, as others have (e.g. Wiig, 1997; McAdam and Reid, 2001; Wong and Aspinwall, 2004), that approaches to knowledge identification, knowledge creation, knowledge storage, knowledge dissemination, and knowledge application have a profound impact on the firm´s ability to address current and future business challenges and therefore its survival. Figure 1 depicts this situation in relation to SME characteristics.

Figure 1. Size and KM process factors influencing SME survival

Knowledge identification focuses on activities that help to identify the knowledge necessary for the company, as well as sources to acquire this knowledge. This activity also comprises the identification of already existing knowledge (Egbu et al., 2005). Knowledge creation refers to ways which focus on the construction of new knowledge. Knowledge creation in companies can be supported by, for instance, giving organizational members time to experiment (Gupta and Govindarajan, 2000). Knowledge is not only internally produced, external knowledge sources need to be considered as well. Given their natural limitations, SMEs are often forced to make use of the latter (Egbu et al., 2005). Knowledge storage / retention embraces processes such as the documentation and codification of knowledge to build up an organizational knowledge base and to reduce any forms of knowledge loss due to retirement, departures of organization members and so forth. This KM task might pose a real challenge for SMEs, as most knowledge is kept in the minds of the owner and some key employees rather than physically stored or shared through substitution arrangements (Wong and Aspinwall 2004).

Knowledge transfer comprises measures relating to knowledge transfer and knowledge sharing (Egbu et al., 2005). The distinction between tacit and explicit knowledge (Nonaka and Takeuchi, 1995) is useful regarding this KM process, as the nature of the two types of knowledge is likely to influence the ease of the transfer process. Lack of absorptive capacity and low quality relationships between the individuals concerned represent other possible hindrances of knowledge transfer (Szulanski, 1996) that need to be considered. Finally, the usage or application of knowledge (knowledge utilisation) has to follow, as it is the only way to create value within the company (Comité Européen de Normalisation, 2004).