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As since the beginning of 1990s, after the OECD of the UN put forward the concept-"knowledge-based economy", the knowledge has become the key factor in social and economy development and the growth of companies, and very soon, the knowledge management in companies has become a hot issue, a lot of research attention has been put on it. In the knowledge-based economy, whether the company owns the capability to create, transfer and use knowledge has become the key factor to exist. For the development of the firm, management staffs should know how to manage knowledge effectively. Therefore, many organizations try to find out the countermeasure, strengthen management on knowledge and improve the capability on knowledge management. The scholars begin the research on knowledge management gradually.This paper begins from the literature review, then I bring forward the research hypothesis based on the conceptual model on knowledge management and firm performance, and then I make an empirical test on it. Finally, based on the test result, I advance some suggestions for the technology-oriented small-medium companies in China to improve their knowledge management capabilities.
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