Development of Knowledge Management Model in Establishing Innovation and Company Performance in UMKM/SME in Indonesia

Abstract

Knowledge management is defined as formalization and access to experience, knowledge and expertise that creates new skills that enables prime performance, as well as stimulate innovation and increases the value of SMEs. The sample data used in this study are thirty SMEs in Surabaya that are part of HIPMI (Association of Young Entrepreneurs in Indonesia), with turnover of not more than IDR fifty billion per year. The sampling technique used is simple random sampling. The hypothesis testing used is done using Structural Equation Modelling-- PLS (Partial Least Square) and the methodology used is causal research analysis which resulted in the finding that knowledge management affects innovation, knowledge management affects company performance and that innovation affects company performance for UKM4 in Surabaya.