Key factors that hinder SMEs in succeeding in today's knowledge-based economy

The new economy is built on information technology and the sharing of knowledge and intellectual capital. In such a knowledge-based economy, competitive advantage will be with those countries that have the capacity to deliver fast and have innovative forms of work organisations that raise productivity. In such an environment, small and medium-sized enterprises (SMEs) have tremendous opportunities. Implicit promises include access to world markets, low-cost entry into new markets and the ability to gain efficiencies in business processes. However, these promises may be illusory for most SMEs. The virtual marketplace is rapidly fostering the growth of new business models that require restructuring of their value chains for current businesses. To be a player in this competitive arena, a large investment in personnel and infrastructure is required. Technological, organisational and marketing hurdles are also making it more difficult for SMEs to succeed in knowledge-based economies. The following discussion describes many of the primary factors that are hindering the success of SMEs in today's knowledge-based economy.