In order to secure future growth, any R&D and technology-driven company has to manage its internal knowledge effectively. When companies grow the need for a Knowledge Management System (KMS) increases. It is widely recognized that one of the major challenges when implementing a KMS is how to create a culture that support the use of the system. Most companies struggle to make these cultural changes, which prolongs the implementation period, increases the costs and reduces the benefit of the system. This paper focuses on cultural development in Small and Medium-sized Enterprises (SMEs) and examines the interrelatedness of the phases for organizational growth and the timing of implementing a KMS. The research was carried out with an abductive approach using semi-structured interviews to study three SMEs with contemporary KMS problems as well as two large enterprises with previous experiences on implementation of KMSs. Our findings indicate that companies tend to focus on the costs of the KMS, and indeed overlook the even greater costs of implementing the necessary cultural changes. The culture in the organization of a SME is organic and easy to change which makes it inexpensive to implement the KMS. It is recommended that companies initiate the implementation of a KMS at an early stage instead of postponing the process till the need become urgent.
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