Drawing on a comprehensive analysis of gathered quantitative data, this researchtudy identifies how the implementation and application of knowledge management in a company can result in overall improvements in business performance, which is in agreement with previous research by Cardoni ^[1][2].

In Serbia, where the socio-economic and cultural context uniquely shapes business practices, the adoption of effective KM practices becomes paramount, as previously analyzed in ^[2][3]. This researchtudy responds to the evolving needs of SMEs by exploring how KM can help navigate business processes, enhance business owners and management’s ability to make data-driven decisions, and create more opportunities for innovation.

Externally, this researchtudy investigates the influence of knowledge sharing on customer relations, market responsiveness, and overall adaptability, providing a nuanced understanding of KM’s impact on the sustainable growth of SMEs ^[3][4][4,5]. Within the realm of knowledge management, sustainability in small- and medium-sized enterprises (SMEs) involves the responsible utilization and preservation of intellectual resources. SMEs can foster sustainability by implementing efficient knowledge sharing mechanisms, ensuring that expertise is disseminated across the organization. Therefore, this topic could be a novel approach for understanding the dynamics of SMEs ^[5][6][6,7].

As companies are facing an increasingly interconnected world, the novel examination of KM in Serbian SMEs provides valuable insights into the factors shaping knowledge acquisition, dissemination, and application. In this context, this respapearchr not only contributes to the academic understanding of KM but also provides practical guidance for SMEs, seeking to enhance their competitive edge and sustainability in a rapidly changing Serbian business ecosystem ^[7][8].

The authors identified key challenges before the execution of this research. Firstly, it is essential to establish the level of complexity when determining the current adoption stage of a knowledge management framework in an SME.

Moreover, it is important to note that the influence of key factors on the application of KM in companies is unknown and defines the resolution of this challenge as one of the preconditions for conducting a successful research analysis.

Lastly, business performance indicators, as such, have a low correlation with all knowledge management dimensions and their applications in a company, making it harder to determine the level of influence of those dimensions on business outputs.

2. Process Capability for Knowledge Management Adoption

The prevailing culture within an organization significantly influences the acceptance and effectiveness of KM. A culture that values collaboration, information sharing, and continuous learning is essential for successful KM implementation ^[8][25]. It must be stated that strong leadership commitment is crucial for driving the adoption of KM practices. Leaders should actively support and promote a knowledge-sharing culture, allocate resources, and set an example for others to follow ^[9][10][26,27]. Process capability is crucial for successful knowledge management adoption within organizations such as SMEs ^[11][28]. It involves aligning workflows, technologies, and human resources to seamlessly integrate knowledge processes into daily operations. A robust process capability ensures the efficient creation, sharing, and application of knowledge across teams. By establishing clear protocols for information flow, organizations enhance their ability to capture and leverage intellectual capital ^[12][29]. This capability not only accelerates the adoption of knowledge management practices but also fosters a culture of continuous improvement. In essence, well-developed process capability is the foundation for unlocking the full potential of knowledge management, driving organizational innovation and competitiveness, as previously analyzed in ^[13][14][30,31]. Process capability in knowledge management extends to knowledge formation and acquisition, encompassing the creation and gathering of information ^[9][26]. Knowledge formation involves the systematic organization of raw data into meaningful insights. This process includes transforming tacit knowledge held by individuals into explicit, documented formats that can be shared and utilized across the organization ^[15][16][32,33]. Simultaneously, process capability addresses knowledge acquisition by defining methods for systematically gathering information from various sources. This involves recognizing internal expertise, leveraging external resources, and utilizing technological tools to capture insights. Krajnovic ^[17][34] examined this topic in a similar market (Croatia) and found that establishing protocols for validating the relevance and reliability of acquired knowledge enhances the overall quality of the organizational knowledge base. This directly affects the level of company competitiveness, as discovered by Kiptalam ^[18][35]. Well-structured process capability ensures that these knowledge formation and acquisition processes are integrated seamlessly into the organizational workflow ^[19][36]. It provides guidelines for continual update of knowledge repositories, fostering a dynamic environment where information remains current and relevant, as concluded in ^[20][37].

3. Infrastructure Capability for Knowledge Management Exploitation

Adequate technological support is essential for the effective implementation of KM. This includes having robust information systems, collaboration tools, and knowledge-sharing platforms that facilitate the storage, retrieval, and dissemination of information ^[21][38]. Rafi ^[22][39] concludes that having organizational agility in exploiting technology is essential for business performance. Given the sensitive nature of organizational knowledge, ensuring data security and privacy is paramount, especially while having the direction of current digitalization efforts in mind ^[23][40]. Companies must implement measures to protect intellectual assets and sensitive information from unauthorized access. Technology capability is paramount for exploiting knowledge management’s full potential and influencing internal business performance ^[24][41]. Advanced information systems and data warehousing technologies facilitate the efficient storage, retrieval, and analysis of vast knowledge repositories. Seamless integration of these tools ensures that relevant insights are readily available, enhancing decision-making processes. Furthermore, technology capability enables the application of knowledge across various business functions, promoting innovation and operational excellence ^[25][26][27][42,43,44]. A well-implemented technological infrastructure not only accelerates knowledge exploitation but also serves as a catalyst for internal business performance, fostering agility, competitiveness, and sustained growth within the organization ^[28][45]. Innovative information systems enable the seamless storage, retrieval, and dissemination of knowledge across organizational units, fostering collaboration and reducing information silos, and this has been thoroughly analyzed in ^[29][30][46,47]. Collaboration tools, such as intranets or project management platforms, facilitate real-time communication, enhancing teamwork and collective knowledge creation. Knowledge-sharing platforms, ranging from wikis to dedicated databases, provide centralized repositories that contribute to the accessibility and longevity of organizational knowledge ^[14][31][31,48]. Moreover, technology capability empowers real-time collaboration, breaking down silos and promoting cross-functional knowledge utilization. The strategic application of technology in knowledge management supports proactive problem-solving and agile adaptation to market dynamics ^[32][33][49,50]. Efficient data warehousing enhances accessibility, ensuring that relevant insights are available when needed ^[9][34][26,51]. This technological synergy does not just streamline operations but also propels internal business performance by optimizing resource allocation, reducing decision-making cycles, and ultimately positioning the organization for sustained success in today’s fast-paced business landscape ^[35][52]. In the context of small and medium-sized enterprises (SMEs), a robust knowledge warehousing strategy is pivotal. It centralizes information, fostering a collaborative environment conducive to innovation. The efficient application of knowledge, facilitated by technology, fuels SMEs’ agility. Timely access to insights and streamlined knowledge application became catalysts for heightened internal business performance, allowing SMEs to navigate challenges, seize opportunities, and carve a niche in competitive markets ^[36][37][53,54].