Knowledge Management and Firm Performance in Algerian F&B SMEs: The Role of Trust as a Moderating Variable

Abstract

This study examines the influence of Knowledge Management (KM) on SMEs’ performance using data from a survey of 210 owners/managers of Algerian Small and Medium Enterprises (SMEs) operating in the Food and Beverage (F&B) industry. It highlights the moderating effect of trust as a facilitator of the potential acquisition, sharing, and application of the company’s knowledge to improve SMEs’ financial and non-financial performance. To analyze this moderating effect, we used the method of second-generation structural equations (PLS-SEM) using SmartPLS 3.2.7 statistical software. The results show a significant and positive effect of knowledge management on SMEs’ performance. On the other hand, these results indicate that the importance of the direct effect of KM on firm performance became very strong in the presence of a high level of trust. Implications of the study and future directions for research are discussed at the end of the study.

1. Introduction

The SME sector is commonly known as the driving force behind the economy, as it generates employment opportunities and plays a crucial role in global economic growth. The World Bank estimates that SMEs account for around 90% of firms and 70% of employment in OECD nations and contribute almost 50% of GDP in high-income countries worldwide and 40% of the GDP in emerging economies, and this figure increases further if informal SMEs are also considered [1]. These facts look surprising given that research has been mostly focused on large companies. However, in recent years, the global economic climate has experienced a discernible alteration, tilting towards the most dynamic, flexible, and innovative human-sized businesses, resulting in a noticeable decline in large companies’ dominance. While the proper definition of these organizations may differ among experts and decision-makers, especially in emerging economies, their vital significance and crucial value are universally accepted. The question, therefore, becomes not why they should be promoted but how best to do it.

Indeed, compared to large companies, SMEs are more flexible but at the expense of less stable working conditions and lower wages. They are less productive, but they create many additional employment opportunities as a result of their broad growth potential. They are innovative, but their innovations are mostly incremental because radical innovations need considerable investment in R&D, as is characteristic of large companies. While working conditions in SMEs are typically more onerous, they create significant social relationships through their local activities, facilitating the natural resolution of knowledge transfer and sharing challenges [2,3,4]. Therefore, managing SMEs requires a personalized approach that prioritizes their untapped potential to achieve optimal effectiveness and sustained success.

Such an approach must be based on strong knowledge management, combining techniques, procedures, and resources that allow creating, sharing, and applying the knowledge circulating within the SME while also ensuring the best use of information from outside to improve its performance [5,6]. A knowledge management logic might help the SME better understand and leverage this internal and external information and knowledge to achieve a competitive advantage and, hence, increase performance [7].

The majority of knowledge management research focuses on large-scale companies, but this does not mean that SMEs cannot take advantage of it, as well. However, SME managers may face challenges when trying to adopt the same tools and logic used by larger companies. In SMEs, efficient knowledge management requires recognizing and valuing their unique organizational style, which can be achieved by considering various features that aid in knowledge generation, sharing, and exploitation [8]. Such features include factors such as strong interpersonal relationships, a culture of collaboration, and a trustworthy climate.

Indeed, establishing a trustworthy environment is crucial for managing small and medium-sized enterprises (SMEs), as the relationships between members are similar to familial bonds. This sense of family can reduce the need for complicated formal procedures. Trust is a person’s feeling of security when relying on others to achieve a result. It plays a major role in producing knowledge and improving performance in SMEs [8]. First of all, it is considered by some authors to be the most important factor for knowledge creation as it encourages trial-and-error learning and allows employees to freely voice their initial ideas. Secondly, trust also plays a crucial role in sharing knowledge in SMEs. Many authors consider trust as the most important precondition for knowledge exchange [9]. Others confirm that trust plays a central role in knowledge sharing because it encourages team members to share their knowledge and creates emotional openness that supports listening and absorbing knowledge [10]. Teams with a high level of trust are more open, share more information, are more creative, and offer better solutions [11]. Exchanging this knowledge and ideas and sharing experiences and valuable information improve firm performance. Chou (2008) [12] emphasized that organizational trust influences employees’ motivation to share knowledge within the organization to achieve its goals. Finally, trust plays a crucial role in applying knowledge in SMEs, as it facilitates the development of effective solutions. The degree to which an individual feels inclined to engage in the problems of others is heavily influenced by the connection between consideration and involvement in a workplace. A lack of trust may cause negative consequences for SMEs’ problem-solving efforts and performance. Many authors confirmed that when there is insufficient trust in the organization, concealing behavior manifests in the form of playing dumb (claiming to have no idea about the knowledge being requested), rationalized hiding (providing a rational reason for not sharing the knowledge being requested), and evasive hiding (providing misleading information or promising to share the requested knowledge in the future) [13]. Holste and Fields (2010) [14] confirmed that, without trust, social exchange and knowledge sharing would be challenged, which consequently leads to undesirable outcomes. That means when trust is high and spreads in SMEs, employees will care about the future and success of their organization; therefore, they act to improve organizational productivity, and vice versa.

Although there is an abundance of research on the role of trust in knowledge management and performance in large companies that benefit from numerous empirical validations, they appear to overlook a crucial aspect: whether trust moderates the impact of KM on firm performance in the context of small and medium-sized enterprises (SMEs).

In order to address the gap in the existing literature on KM, this study aims to test an empirical model that can serve as a reference for understanding the relationship between KM and firm performance. The study also aims to investigate the moderating effect of trust in this relationship in the Algerian Food & Beverage SMEs context. This can provide a better understanding of organizational performance in these companies.

We choose Algerian Food & Beverage SMEs (F&B SMEs) for many reasons. First, Algerian SMEs have existed for a long time under the system of oil income, in which they rely on state subsidies to assure their survival. This situation harms their competitiveness and causes a continuous loss of knowledge capital [15]. These state subsidies placed Algeria among the countries with the lowest knowledge and innovation capacities in Africa (it ranks 18th among the 19 economies in Northern Africa and Western Asia) [16]. Second, the growth of SMEs with a minimal experience in the field of research and development (R&D) and knowledge management constitutes a significant issue for Algeria. A lack of knowledge creation and sharing is noticed in all industrial SME activity branches and is considered the primary reason for their poor performance. This problem becomes more complicated for SMEs when relationships lack trust and, therefore, become the main obstacle to using knowledge to improve performance. Eventually, by considering this context’s differences in values, principles, business practices, and culture, we expect to provide interesting findings vis-à-vis the empirical model of this study. Based on those explanations, the research questions are:

• Does knowledge management influence F&B SMEs’ performance?
• Does trust moderate the effect of KM on F&B SMEs’ performance?

The purpose of this study is to contribute to the field of KM and performance both theoretically and practically. Firstly, the study aims to provide a broader understanding of how KM can improve performance. Secondly, it will help managers comprehend the significance of trust as a mediator in the connection between KM and performance. Lastly, it will expand the scope of KM research by examining concepts developed in SMEs in developing countries such as Algeria.

The remainder of this study is organized as follows. We first analyze prior research on knowledge management, performance, and the trust effect that permits us to articulate our research hypotheses. Secondly, we provide a complete overview of the methodologies employed. Finally, we present our findings and discuss the practical and theoretical ramifications and limitations that permit us to make recommendations for future studies.

2. Theoretical Background and Hypotheses

2.1. Algerian SMEs: A Specific Context

Until 1995, Algerian industrial SMEs were integrated into groups of state companies, living on the margins of innovation, despite state subsidies from oil revenues [15]. These subsidies have placed Algeria among the countries with the lowest levels of innovation capacity and investment in knowledge management in the African continent. Indeed, the export of knowledge-intensive products has not exceeded 1% since 2017 [16]. Ultimately, the Algerian industrial private SME is facing a deindustrialization crisis. Indeed, it accumulates a considerable delay in terms of industrial production. This cumulative industrial lag compared to SMEs in emerging economies is due to several reasons.

The first reason is related to hostile macroeconomic conditions. Indeed, if the market economy in Algeria is now part of the new common sense, the passage of the Algerian company from a simple environment that it controlled to a complex one characterized by uncertainty and rapid change has not been followed by improvements in its environment [15,16,17]. On the contrary, this transition, which occurred in a brutal way and without a real transition period, was traumatic, creating a hostile environment for the development of SMEs, despite the reforms undertaken so far. The economic environment, thus, remains marked by a low level of banking and a bureaucracy that has plagued institutions, followed by a total crisis of confidence encouraging some SMEs to resort to their own systems of rules and standards (family and community financing, with or without the declaration of employees and equipment, practice of buying and selling products without an invoice, tax evasion, etc.) [18]. Voluntary management intentions have given rise to a culture that does not encourage initiative and business spirit. It is, therefore, imperative for the development of SMEs in Algeria to start with a genuine promotion of all the institutions and organizations involved in the macroeconomic environment of companies. This cannot be achieved without changing behaviors, attitudes, and the bureaucratic culture of these organizations and replacing them with a culture that promotes innovation and productivity [19], giving a central place to the entrepreneur because of his crucial role in the development of the country.

The second reason is the unfavorable management style to the development of SMEs. It is evident that the management style practiced in a company, conditions both its capacity for learning and innovation and the quality of the social climate that prevails in the company and, therefore, the degree of employees’ engagement in the project and its development [17]. However, most SMEs opt for a directive style based on paternalistic authority and obedience. Authoritarian managers consciously promote an unfavorable organizational climate by excluding executives from the decision-making process, avoiding sharing essential information about the company’s strategic orientations, and ruling out any formalization of organizational procedures (events remain prisoners of managers’ ability to memorize). This automatically leads to a lack of initiative and low staff involvement in company management [20]. It also limits the ability to transmit knowledge and experience to other generations.

The last reason is related to the scarcity of knowledge exploitation as an immaterial asset. Similarly, for the economies of developed countries, knowledge production is becoming an issue for building a new industrial policy capable of combating the deindustrialization phenomenon [15]. In this situation, the local industrial private SME is clearly disadvantaged in the face of international competition and loses its competitive advantage in all the strategic factors. Consequently, in this context of aggressive competition, private industrial SMEs strive to find other models of strategic development based on other economic factors of production. Among the latter, we cite the economic model based on knowledge management [21].

SMEs in the F&B industry are also experiencing immense challenges. Indeed, the F&B industry, in general, represents a major challenge for the Algerian economy and has played an important part in the various government policies initiated since independence to ensure food security. It is considered the second industry in the country after hydrocarbons and the first manufacturing industry, (±)38% in 2018 of the overall value added of the non-hydrocarbon industry [22]. The F&B industry continues to gain weight in the economic landscape, favored by the size of the population, the prices supported by the state, the food share in the household budget, and changes in consumer habits where processed food products occupy a prominent place. It represents at least 17,000 companies and generates more than 150,000 jobs. Private SMEs, which represent more than 80% of businesses in the sector, now contribute 50 to 55% to the non-hydrocarbon industrial GDP. They are the leading employer in the industrial sector. However, this sector exports very little, despite the potential for specific products. The imported value of 19.7% was higher compared to the exported value of 0.6% [22]. These import values show the importance of F&B SMEs in the Algerian economic landscape, where an immense local demand for industrial products is guaranteed by hydrocarbon revenues.

This context confirms not only the weak capacities to conceive added values in production and exploitation of knowledge but also the weak content of knowledge in the fields of activity in which the F&B SMEs currently operate.

2.2. SMEs’ Performance

Researchers who are interested in studying the functioning and performance of organizations often do so in the context of large firms, which generally have many resources to develop and apply management concepts likely to improve management and performance [23,24]. Thanks to many writings and research work on large firms, we can claim a better understanding of how it works in several areas related to management, information system, strategy, structure, control, etc. [25].

Smaller enterprises have not attracted the interest of management researchers as much as large firms. Over the past few decades, several studies have made it possible to learn more about the characteristics and functioning of SMEs in areas such as strategy, entrepreneurship, technologies, etc. [3]. However, several areas of management still need to be explored, particularly in terms of performance indicators in the context of the production of accounting and non-accounting data. The study of performance in SMEs is a subject on which little is known since the research is almost divergent.

In fact, the survival and prosperity of SMEs depend, in part, on the quality of their controlled management tools. From a literature review, Bulak and Turkyilmaz (2014) [26] explained that traditional financial tools, such as financial statements, budgets, and costing systems, are widely present in SMEs, often to meet the requirements of donors of funds. Thus, despite the plurality of information available to SMEs concerning their environment and their activities, studies show that many SMEs use accounting and financial information in planning and decision-making. These authors also note that among the reasons linked to the failures of SMEs, the primary cause of weaknesses is in financial management. In this context, it becomes essential to understand how SMEs can improve their chances of survival and/or growth using more extensive management tools and performance indicators. In addition, as demonstrated above, management by numbers is no longer enough. The production and use of financial data must be enriched with data of various kinds, non-financial, qualitative, external, forecast, etc. [26].

Several performance indicators can be taken into consideration in order to assess the financial and non-financial performance of SMEs properly. Many authors show that the size of the company has an influence on its ability to react, adapt to change, and solve problems [27]. Others suggest taking the age of the business into consideration [20]. Moreover, HRM’s specificity is often singled out as a specific element of SMEs [28]. Finally, when we talk about SMEs, we also talk about their managers. Some studies show that there is a link between the performance of these companies and the manager’s characteristics and skills [29]. Indeed, studies show that the personal values of the manager, his strategic vision, his ability to make decisions, and the family or non-family structure of the company, are all determining factors for evaluating SME performance. In addition, the way in which the manager conceives performance can also be mobilized as one of the explanatory factors of the growth trajectory and the development strategies implemented within SMEs [3]. Therefore, it is a question of integrating this diversity of objectives pursued by the managers of SMEs in measuring performance.

2.3. Knowledge Management Challenges in SMEs

Knowledge management has long been seen as crucial for large corporations, but it is becoming increasingly important for small and medium-sized enterprises (SMEs). To remain competitive, such enterprises must invest resources in implementing a rigorous knowledge management approach to create value.

According to Holsapple and Joshi (2002) [30], managing knowledge is an entity’s systematic and deliberate efforts to expand, cultivate, and apply available knowledge to accomplish its objective. Fortunately, after several decades of research, it is now possible to follow a simple and effective method to capitalize on the knowledge available to the organization. This is a three-stage process: knowledge application, knowledge sharing, and knowledge acquisition. By following this process and deploying the appropriate tools, managers will be able to simplify the use of data, information, and knowledge while enhancing the value they obtain from them [31].

Knowledge application consists of the organization’s activities that use knowledge to increase product/service quality and enhance organizational performance [7]. Knowledge acquisition, in turn, focuses on the process by which knowledge is obtained. It is embodied in the firm’s capability to identify, acquire, and accumulate knowledge that is important to its operations [32]. Finally, knowledge sharing is the spread of personal knowledge within an organization so that all employees can implement and utilize it, either from employees to their peers, individuals to groups, or from one organization to another [33].

However, this interest in knowledge management has not been matched by a rigorous examination of its operationalization, particularly in SMEs. Therefore, it is important to recognize that SMEs have specific characteristics and do not manage knowledge in the same manner that larger firms do. Knowledge management in SMEs appears to be a specific challenge and tends to take many forms [33]. According to Sparrow (2001) [34], the development of knowledge management should be built on an understanding of its role and core concepts. He emphasized that the knowledge management approach in SMEs must respect the SMEs’ foundations, which are connected to the holistic and tacit character of management in SMEs. This author contended that knowledge management in SMEs requires (1) methods that recognize and incorporate knowledge and (2) consideration of business practices. He then highlighted the strategic and transversal nature of knowledge management creation within the many operations of the SMEs’ organization. In our opinion, this incorporation of knowledge management practice into business, technological, and organizational operations gives it a vital role in SMEs. Sparrow’s (2001) [34] approach to embedding knowledge management might allude to works describing this SME management as implicit [35], but it differs significantly from these due to the relevance of the embedding knowledge management practice in the SMEs’ activity and structure. Indeed, he stated that in SMEs, there is a continuum between the SMEs’ activity and the organization, and that knowledge management must be incorporated into this continuum to respect the nature of SME management.

2.4. Influence of Knowledge Management on SMEs’ Performance

The Resource-Based View is one of the most important approaches, offering an interesting analytical framework for bridging the gap between knowledge management and performance through the mediation of several variables, the most important of which are companies’ adaptation to their environment, resource organization, and opportunity exploitation [36]. From this perspective, the company might be defined as a bundle of commitments to technology, human resources, and processes, all blanketed by firm-specific knowledge [36]. The heterogeneity of SMEs is recognized in this approach by the varied ways in which SMEs gather resources, create knowledge, develop skills, and manage them to make them distinctive and inimitable [35]. Thus, SME performance is achieved through developing and using the company’s resources, knowledge, and abilities to meet strategic objectives using specialized organizational procedures [37]. As a result, advantages such as unrivaled customer service, enhanced production flexibility, fast-cycle product development, and an excellent reputation assure superior performance.

Many studies have demonstrated the positive effect of KM on performance. Kalling (2003) [38] explained that KM positively affects organizational performance, and this effect is contingent upon various firm-level and organizational-level contingencies. A similar argument is given by Mohrman et al. (2003) [39], who suggested that firm performance is improved when the organization creates and uses knowledge. Likewise, Rasula et al. (2012) [40] showed that organizational elements (culture, climate, and collaboration) have a positive impact on the knowledge elements within the framework of KM. They also confirmed the positive effect of KM practices on organizational performance. In addition, Gholami et al. (2013) [41] showed that KM practices in SMEs positively and significantly influence their organizational performance. Burke (2011) [42] noted that although performance depends on various factors, success rests on two important issues: the way in which knowledge is managed throughout the organization and the kind of leadership prevalent in that organization.

However, limited studies in the literature have investigated this effect by involving moderators. We cite, for example, the research of AL-Hayaly and Alnajjar (2016) [43] and Mustapa and Mahmood (2016) [44], which included quality standards and organizational commitment as moderators to the relationship between KM and performance. Only two studies addressed trust as a moderator in such an effect: the research of Afzal and Afzal (2014) [45] and that of Ngah, Hoo, and Ibrahim (2009) [46]. However, no studies have been conducted on Arab companies, particularly Algerian SMEs. A further empirical investigation is required in Algeria to examine the relationship between knowledge management and firm performance.

In line with the above discussion, Hypothesis 1 is stated below.

Hypothesis 1 (H1).

Knowledge management positively influences SMEs’ performance.

2.5. Trust as a Moderator in the Relationship between KM and SMEs’ Performance

If the definition of organizational trust is an employee’s feeling of confidence in the organizational processes, the belief that the organization will perform actions that are rewarding and beneficial, or at least not detrimental to him or her [47], constitutes a relatively good synthesis of the main definitions of organizational trust used in management. This conception of trust is also regularly adopted in this research. It reflects the global evaluation of an organization’s trustworthiness as perceived by the employee.

As confirmed in many studies, organizational trust influences, on the one hand, the capacity to increase the performance of the company and, on the other hand, facilitates information exchange and knowledge sharing among employees [48].

Regarding its relationship to firm performance, accumulated evidence has consistently confirmed a positive relationship between trust and performance. According to a 2015 study by Interaction Associates, high-trust corporations are more than 2.5 times more likely than low-trust companies to be high-performing revenue organizations. As a result, the capacity to develop trust has a significant impact on business outcomes since trust influences two quantitative outcomes: speed and cost [11]. Abdallah et al. (2017) [49] and Salam (2017) [50] investigated the direct link between trust and performance and found it to be substantial. Several more studies corroborated the substantial beneficial relationship between trust and performance.

Many researchers have confirmed the positive relationship between organizational trust and KM. Organizational trust is considered an infrastructure for any human interaction due to its ability to achieve high performance from a KM perspective [51]. Yli-Renko et al. (2001) [48] claimed that trust facilitates the sharing of confidential information among employees because it diminishes the perceived risk of opportunism and the need to veil or hide sensitive information. Similarly, Holste and Fields (2010) [14] indicated that trust facilitates the processes of KM through sharing, transferring, and obtaining information. Low perceptions of opportunism make employees more likely to exchange knowledge not only about each other’s prior successes but also about their failures. To this end, trust reduces fears of criticism, enhances the willingness of employees to share knowledge, and increases the scope of ideas about how to apply this knowledge in order to enhance performance [12].

However, a lack of trust within the organization can lead team members to choose to work in isolation and hide knowledge rather than collaborate with other team members [13]. Andrews and Delahaye (2000) [52] stated that formal knowledge management practices are insufficient when there is a lack of trust. As a result, employees would not create, share, and use knowledge. It may be taken for granted that people tend to be suspicious of accepting and sharing knowledge with others. It motivates them to share and use knowledge in the firm to achieve its goals and mission effectively [12].

Even though all these theoretical and empirical foundations confirm the positive effect of trust on knowledge management and performance, there is less attention paid in the management literature to the moderating role of organizational trust in the relationship between KM and firm performance. One interesting exception is Alaarj et al. (2016) [53], who investigated the moderating role of trust between KM and organizational performance. It is expected that a high level of trust will enhance the effect of KM on organizational performance. Furthermore, a recent contribution by Al Rashdi, M. et al. (2022) [8] focused on the moderating role of organizational trust and support on the effect of KM on organizational performance and concluded that high levels of trust amongst employees serve to enhance the effect of KM on performance. This paper seeks to fill this gap in the existing literature. Based on the above discussion, the following hypothesis is formulated.

Hypothesis 2 (H2).

Organizational trust moderates the effect of knowledge management on SMEs’ performance, such that this relationship is stronger when trust is high than when it is low.

Consequently, our conceptual model is shown in (Figure 1).

3. Materials and Methods

3.1. Sample and Data Collection

A quantitative approach was used in this research. Data collection was conducted through a survey. The unit of analysis in this study is Algeria’s F&B SMEs. The population of this study consists of SMEs operating in the Algiers region. SMEs are defined as firms with less than 250 employees [17]. Firms in the category of having 1 to 250 employees and operating in the F&B sector are the unit of analysis of this study. These SMEs are commonly recognized for their contribution to the economic activity, employment, innovation, and wealth creation of the country. Nevertheless, despite the crucial contributions of the F&B industry, the Algerian government is still struggling to fulfill food sovereignty because of its heavy dependence on importation and raw material acquisition [54]. In this context, Algeria’s F&B industry has not yet achieved food security; it is still unable to cover the food needs of citizens. Algeria is considered one of the top ten countries in the world for food imports, the first in the African continent, and the third in importing milk and dairy products in the world. Compared to other countries (such as Tunisia and Morocco), the Algerian SMEs operating in the F&B industry are less competitive [54]. For instance, lack of competition, poor performance, lack of knowledge and competence management, lack of local production, reliance on the foreign market, and tremendously increasing food bills reflect severe problems in this sector.

The sampling method is non-probability sampling with a convenience sampling method. The sample size was 210 SME owners/managers. The main reason for choosing non-probability sampling is the difficulties in convincing managers to participate in the study. Those numbers fulfill the requirements of the minimum sample to be analyzed with SEM (Structural Equation Modeling). We used prime sources directly from research resources. Data were obtained from a survey in the form of a questionnaire distributed to owners/managers of SMEs in the Algiers region, as they constitute the soul of SMEs. We adopted a survey questionnaire (a self-administered questionnaire), a 5-point Likert scale was used for evaluation, 210 questionnaires were distributed, and all were obtained. The fieldwork took place between July and December 2022.

3.2. Measures

This study selected knowledge management (KM) as the independent variable measured through 12 items. The adopted measurement scales are congruent with their operational definition. Knowledge management is operationalized as the employment and development of an organization’s knowledge assets to achieve its organizational goals [37]. Concerning organizational trust (OT), Tan and Tan (2000) [47] (p. 243) defined it as an employee’s feeling of confidence that the organization will perform beneficial actions, or at least not actions detrimental to him or her. Organizational trust is the moderator variable of this study, measured by nine items [55,56]. Six items were used to measure firm performance (SMEP) [57]. As mentioned in

Table 1. Variables Sources.

Variables	Items	Source
SME performance (SMEP)	6	[57]
Knowledge Management (KM)	12	[37]
Organizational trust (OT)	9	[55,56]

, we chose a subjective approach to performance due to the difficulties in evaluating the performance of SMEs. Small business owners are generally unwilling to disclose company information to others. Additionally, they may provide a biased assessment of their company’s performance. This is why we tried to measure the perception of owners who responded to the survey through six items on probable criteria of profitability and market share over the past two years. This variable was also collected using items from the 5-point Likert scale. The following (Table 1) displays the variables sources.

In Table 1, we display the sources of variables measured in this study.

The scale validity was pretested and evaluated by experts for context adaptation, and a pilot study was performed to test the instruments’ reliability. Thirty SMEs are a reasonable sample size recommended for the pilot study, while only owners/managers were involved in this study. The following (

Table 2. Reliability test.

Constructs	Cronbach’s Alpha Coefficient
KM	0.84
OT	0.82
SMEP	0.72

) illustrates the constructs’ reliability.

4. Analysis and Results

The data collected for this study were quantitatively analyzed with SmartPLS. The study tested two-step approaches that were adopted for evaluation and reporting PLS-SEM results. These two-step approaches are (1) assessment of the measurement model (Outer model) and (2) assessment of the structural model (Inner model), as recommended by Henseler et al. (2009) [58]. For the assessment model, two types of validity were tested to obtain construct validity. First, factor loading (item reliability), composite reliability (CR), Cronbach’s alpha, and average variance extracted (AVE). Second, discriminant validity was employed.

Table 3. Convergent and Reliability Analysis.

	Items	Loadings	Cronbach’s Alpha	Composite Reliability (CR)	Average Variance Extracted (AVE)
KM	KM1	0.793	0.937	0.946	0.593
	KM2	0.787
	KM3	0.793
	KM4	0.747
	KM5	0.749
	KM6	0.889
	KM7	0.858
	KM8	0.852
	KM9	0.862
	KM10	0.858
	KM11	0.883
	KM12	0.807
OT	OT1	0.651	0.917	0.932	0.604
	OT2	0.833
	OT3	0.773
	OT4	0.851
	OT5	0.846
	OT6	0.740
	OT7	0.795
	OT8	0.783
	OT9	0.739
SMEP	SMEP1	0.761	0.906	0.927	0.681
	SMEP2	0.857
	SMEP3	0.769
	SMEP4	0.842
	SMEP5	0.794
	SMEP6	0.830

Composite Reliability (CR) = (Σ factor loading)²/{(Σ factor loading)²) + Σ (variance of error)}; Average Variance Extracted (AVE) = Σ (factor loading)²/(Σ (factor loading)² + Σ (variance of error)}.

displays the composite reliability coefficients for each of the latent variables of this study.

As indicated in Table 3, the composite reliability coefficient for each of the latent variables ranged from 0.927 to 0.946; this suggests the adequate internal consistency reliability of the measures. Moreover, Hair et al. (2021) [59] suggested that factor loadings, composite reliability (CR), and average variance extracted (AVE) are the three critical assessors of convergence validity. All of them fit the required measures, as illustrated in the following table.

Discriminant validity was tested, as shown in the following (

Table 4. Discriminant Validity—Fornell and Larcker.

	KM	OT	SMEP
KM	0.770
OT	0.647	0.777
SMEP	0.659	0.741	0.825

). The results reveal discriminant validity for the constructs in this study. Overall, the measurement model illustrates adequate convergent validity and discriminant validity, as well.

Nevertheless, Cohen (1988) [60] claimed that the R-square value for the endogenous latent variable is considered weak if it is lower than 0.02, moderate in 0.13, and substantial in 0.26. However, according to Falk & Miller (1992) [61], an R-square value of 0.10 is acceptable. Consequently, Chin (1998) [62] suggested that the R-squared value of 0.60 can be considered substantial, 0.33 moderate, and 0.19 weak. The R-squared value for the present study is reported in the following

Table 5. Variance Explained in the Endogenous Latent Variable (R²).

Variable	R2	Result
SMEP	0.835	Substantial

.

Table 6. Assessment of Effect Size (F2).

Exogenous Latent Variables	f-Squared	Effect Size
KM	0.097	Small

illustrates that the effect size of knowledge management was 0.097. The guidance of F2 assessment of the exogenous latent constructs of the present study on SME performance can be considered small for knowledge management.

The Q2, however, is a criterion to measure how well a model predicts. The Q2 value is obtained by using the blindfolding procedure for a specified omission distance. In other words, Q2 is a criterion to measure how well a model predicts the data of omitted cases. Hair et al. (2021) [59] claimed that the blindfolding procedure is usually applied to endogenous constructs with a reflective measurement model. As the endogenous latent variable of the present study is reflective, a blindfolding procedure was applied to the endogenous latent variable. Henseler et al. (2009) [58] stated that in a research model where the Q2 value is larger than zero, the model has a predictive relevance, as shown in

Table 7. Construct Cross-Validated Redundancy (Q2).

Total	SSO	SSE	1-SSE/SSO
SMEP	1230.000	582.163	0.527

.

The study also tested the direct path by applying a bootstrapping procedure with 5000 re-samples to test the significance of the regression coefficients (

Table 8. Structural Model Assessment with Moderator Variable.

	Hypotheses	Beta Value	T Statistics	p Values	Decision
H1	KM->SMEP	0.173	3.685	0.000	Accepted
H2	OT-KM->SMEP	0.103	6.734	0.000	Accepted

). Knowledge management is significant in SME performance (β = 0.173. t = 3.685. p < 0.00). Therefore, the first hypothesis is accepted. Similarly, the study illustrated a moderating influence of organizational trust between knowledge management and firm performance (β = 0.103. t = 6.734. p < 0.000). Thus, the second hypothesis is fulfilled.

5. Discussion

The first research question pointed out whether knowledge management positively influences SMEs’ performance. Based on our results, knowledge management is a good predictor of an SME firm’s performance. In fact, once knowledge is properly capitalized (categorized, protected), continuously enriched (acquisition and creation), and properly valued (applied/reused, shared, and transferred), its impact results in a significant minimization of errors and disruptions throughout the SME’s operating process. As a result, SMEs must prioritize KM by managing their intellectual resources to achieve optimal overall performance, ensuring that the firm stays efficient and competitive in the face of market fluctuations.

Furthermore, because performance is a contextual concept in the context of SMEs, the influence of knowledge management is dual. On the one hand, it has an impact on financial performance by rationalizing managerial decisions and ensuring that these decisions are implemented by members of the company. Knowledge management, on the other hand, influences non-financial performance by providing up-to-date production information and addressing issues creatively and in record time, as well as by enhancing and renovating products.

The findings are in line with the results obtained by prior research by Lee and Choi (2003) [63] and Ghalomi et al. (2013) [41], which dealt with the positive impact of the knowledge management process on SMEs’ performance. They considered knowledge management as a resource considered the most valuable asset and an essential competitive factor in organizations. Likewise, Masa’deh et al. (2017) [64] maintained that knowledge management has strategic importance in developing unique organizations’ capacities and providing them with a sustainable competitive advantage. Cerchione et al. (2017) [2] investigated the impact of knowledge management on SMEs’ performance, and the results showed a positive and significant relationship between these constructs. These results are consistent with the findings of Mohrman et al. (2003) [39], who extended the concept of organizational effectiveness to financial measures and discovered a weak positive relationship between the extent to which organizations created and used knowledge and overall organizational performance, including financial measures. However, by combining a wide range of financial and non-financial indicators, the strength of the association may have been diminished. Mehrez et al. (2021) [65] and Rezaei et al. (2021) [66], for their part, confirmed the positive impact of KM and performance, and determined the factors affecting this relationship, such organization learning, intellectual capital, human capital, information technology, soft total quality management, strategy, and structure.

Consequently, in SMEs that face severe competition and accrue significant delays in industrial production, knowledge creation and exchange is a critical competitive advantage and an effective solution to their strategic and operational difficulties. The hypothesis of the impact of knowledge management on SMEs’ performance was accepted. This shows the importance of knowledge in improving the performance and promotion of the organization.

Hypothesis two states that organizational trust moderates the effect of knowledge management on SMEs’ performance. In fact, from the perspective of knowledge management, the creation process of collective representation and learning needs more human “trust” than analytical skills. The hierarchical organizations that prevailed in a production system (procedures, control) have no legitimate power over the flow of knowledge. Based on these considerations, the organization does not manage knowledge in the same way that it manages an object; rather, it manages conditions under which knowledge can be formed, codified, exchanged, validated, and so on. Trust is one of the critical conditions that facilitates the sharing of confidential information among employees because it diminishes the perceived risk of opportunism and the need to hide sensitive information.

The result confirms the moderating role of organizational trust in the knowledge management and firm performance relationship. This result is supported by Verma and Sinha (2016) [67], Afzal and Afzal (2014) [45], and Oh (2019) [9], who found that trust moderated knowledge sharing and team performance relationships. The development of interpersonal trust among employees can lead to the effective implementation of KM, which increases the firm’s performance. These findings are in accordance with RBV theory, mentioned in Hypothesis Two. Organizational trust is, therefore, a crucial factor in this relationship; it is the glue that strengthens the employees’ relationship and motivates them to apply effective knowledge management in the firm to achieve its goals [12] and enhances its performance [51].

Table 9. Compared overview with various findings of earlier research.

Article	Nature of Study	Method of Study	Key Finding(s)
Our first research result: The positive impact of the knowledge management process on SMEs’ performance
Kalling (2003) [38]	Empirical	Case Study	The effect of KM on organizational performance is contingent upon various firm-level and organizational-level contingencies. KM is divided into three processes—knowledge development, knowledge utilization, and knowledge capitalization. Each process has its own contingency factors and performance outcomes.
Lee & Choi, (2003) [63]	Empirical	Survey	The study shows that KM enablers affect KM processes, which in turn affect organizational performance through intermediate impacts.
Mohrman et al. (2003) [39]	Empirical	Survey	They extended the notion of organizational effectiveness to include financial measures. They established a weak positive relationship between the extent to which the organizations created and exploited knowledge and overall organizational performance, including financial metrics. However, by aggregating a broad set of financial and non-financial metrics, the strength of the relationship may have been reduced.
Liu et al. (2004) [68]	Empirical	Survey	They examine the contribution of knowledge management capability to performance and find a strong relationship between knowledge management capability and competitiveness, measured using a broad set of non-financial outcomes.
Zack et al. (2009) [69]	Empirical	Survey	A gap exists between the KM practices that firms believe to be important and those that are directly related to organizational performance.
Mills & Smith (2011) [70]	Empirical	Survey	The results show that some knowledge resources (e.g., organizational structure, knowledge application) are directly related to organizational performance, while others (e.g., technology, knowledge conversion), although important preconditions for knowledge management, are not directly related to organizational performance.
Pérez-López & Alegre (2012) [71]	Empirical	Survey	They found that KM processes were directly related to market performance and indirectly related to financial performance in Spain. Two KM strategies, codification and personalization, directly affected corporate financial and internal performance and indirectly through innovation.
Gholami et al. (2013) [41]	Empirical	Survey	They examined 282 senior managers of SMEs using SEM analysis. Their findings disclosed that knowledge acquisition, storage, creation, sharing, and implementation are positively related to organizational performance. Hence, they suggested that KM adoption directly impacts the performance of SMEs.
Masa’deh et al. (2017) [64]	Empirical	Survey	They confirmed the relationships between KM and Performance (KM represented by seven surrogate measures, namely, knowledge identification, knowledge creation, knowledge collection, knowledge organizing, knowledge storage, knowledge dissemination, and knowledge application).
Mehrez et al. (2021) [65]	Systematic Review	N/A	The main finding in this research is that knowledge management is positively related to firm performance. Many factors affect this relationship, such as organizational learning, intellectual capital, human resources management, information technology, soft total quality management, knowledge management practice, strategy, and structure.
Rezaei et al. (2021) [66]	Empirical	Survey	The findings showed the positive effects of variables of structure, culture, leadership, and trust on knowledge management in an organization. Knowledge management also influences organizational performance, both directly and through the mediating variable of human capital.
Albassami et al. (2019) [72]	Empirical	Survey	The findings showed that knowledge management is one of the vital elements in enhancing SMEs’ performance through organizational innovations.
Afzal & Afzal (2014) [45]	Empirical	Survey	The finding shows that interpersonal trust as a moderator changes the direction or strength of the relationship between KM and firm performance. Thus, developing interpersonal trust among employees can lead to the effective implementation of KM, which increases the firm’s performance.
Verma & Sinha (2016) [67]	Empirical	Survey	Results suggest that high emotional intelligence increases the extent of knowledge sharing and, hence, has a positive impact on team performance among cross-functional team members. Moreover, mutual trust among team members moderates knowledge-sharing behavior and team performance.
Oh, S.-Y. (2019) [9]	Empirical	Survey	This study found that feedback learning flows (dynamic process amplifying or reifying the meaning of knowledge by sharing and assessing it) are strongly mediated between learning stocks (a form of knowledge—explicit or implicit—accumulated by learners through their interaction within a distinct context) and organizational performance. It also found that organizational justice moderates the effect of learning stocks on organizational performance through feed-forward learning flows, while trust in management moderates the effect of learning stocks on organizational performance through feedback learning flows.

summarizes what was discussed and provides a brief overview of the various findings of earlier research compared to our findings.

6. Contributions, Implications, and Limitations

6.1. Theoretical Contributions

The current study attempted to fill a theoretical gap by incorporating organizational trust to enhance the understanding of knowledge management’s influence on SMEs’ performance. Organizational trust is an essential factor in enhancing the ability of small firms to achieve high performance [51]. However, in terms of knowledge management, firms without trust can make employees reluctant to share and manage knowledge [14]. On the other hand, trust facilitates the exchange of confidential information among managers because it diminishes the perceived risk of opportunism and the need to hide sensitive information [48].

Another significant contribution of this study is addressing the scarcity of prior studies applying organizational trust as a moderator. Many previous studies used trust as a mediator [73,74]. However, minimal studies conducted used trust as a moderator with performance [45,75]. Therefore, one of the crucial contributions of this study in incorporating organizational trust as a moderator is filling the gap in the literature and responding to scholars’ recommendations [76].

Another crucial contribution of this study is that most of the knowledge management literature has been conducted in Western countries [77]. Such studies include Martinez-Conesa et al. (2017) [78] in Spain, O’Connor and Kelly (2017) [4] in the United Kingdom, and Downes and Marchant (2016) [79] in Australia. Thus, the present study is among the first on emerging economies and developing countries. Moreover, several other studies were conducted in sectors such as textiles, manufacturing, telecommunication, software, information technology, and banking sectors [37,64]. The current study, therefore, is among only a few studies that contribute to the F&B industry body of knowledge and respond to the lack of studies that introduce organizational trust as a moderator.

6.2. Practical Implications

The findings of this study could help policymakers in Algeria to enhance the F&B industry through a policy that improves and pushes organizational performance forward. The policymakers can provide training centers to reinforce the owners’/managers’ notions and principles of managerial knowledge and organizational trust. Consequently, this will lead to better performance and competitiveness in the Algerian F&B industry. Moreover, the findings are equally relevant to communes, states, and governments through the rights to acquire information on SMEs’ performance in order to develop policy initiatives that enhance their performance.

Furthermore, the Algerian Ministry of Industry and Mines should pay more attention to these strategic factors with a vision to enhance SMEs’ performance in this sector. The relevant ministries should facilitate all programs and types of equipment that enable SME owners/managers to enhance their firm performance. Moreover, all F&B firms should adopt organizational trust notions to facilitate knowledge circulation within the firms and develop a robust and vibrant organizational culture to encourage inclusive behaviors, engagement values, and communication between employees at all levels.

These findings also could serve as a framework for a future reference for students, academia, and other stakeholders by using the findings and future recommendations to pursue more studies and enrich the Algerian and Arabic libraries. The institution’s website should be enriched with facilities to make the findings and information about the F&B industry more effective and easily accessible. This could serve as an attractive source for national and international students and scholars.

6.3. Research Limitations

Although the study provides theoretical, practical contributions and valuable outcomes, it is subject to a few limitations. First, the study is limited to the perceptions of knowledge management and organizational trust based on data collected in Algeria. To overcome this limitation, other factors that might contribute to SMEs’ performance in this context should also be examined. Such factors that might enhance the performance of SMEs in the F&B industry could be strategic factors and control variables (size, age, location). Second, a cross-sectional research design is used in this study, and different results may arise if future studies conduct a longitudinal design. This study, therefore, provides a base for future longitudinal studies on SMEs’ performance. Third, the scope of this study was limited to the Algerian F&B industry. Applying the same model in different contexts is recommended in order to obtain an in-depth understanding of the influence of knowledge management and organizational trust on SMEs’ performance.

7. Conclusions

As a developing country, Algeria confronts many challenges, including a high unemployment rate, high costs of food importation, a high rate of SME bankruptcy, and economic instability. Based on this, SMEs are considered a magic wand and an excellent source for the growth and elimination of these challenges. However, due to the studied factors, SMEs in Algeria are still underperforming. The current study was undertaken to examine the internal intangible resources of knowledge management and organizational trust as predictors to enhance the low performance of SMEs.

The first research objective was to investigate the relationship between knowledge management and firm performance. The results showed a positive relationship, indicating that knowledge management is a good predictor of success in SMEs’ performance in Algeria. Thus, the owners/managers should emphasize issues related to knowledge acquisition, knowledge sharing, and knowledge application. The second research objective was to determine the moderating influence of organizational trust in knowledge management and firm performance. Based on the results, organizational trust resulted as a moderator for the knowledge management–firm performance relationship.