In recent years, the balance between knowledge and resources has changed so dramatically in the developed economies that, the former has become the most decisive factor in relation to standard of living. Knowledge has become even more important than traditional resources such as land, machinery and work. However, at both a European level and at a national level in Spain, the existence of economic systems based on Small and Medium-Sized Enterprises(SMEs) represents an important barrier for transition to take place from traditional economies to those based on knowledge. This paper highlights the necessity for establishing relationships with other companies and external agents in order to empower the creation and diffusion of knowledge, through factors such as innovation. Likewise, the influence of geographical and territorial factors will be studied in the context of this economy. SMEs normally work and are immersed in particular geographical regions. This paper analyzes the particular case of the textile cluster of Valencia (Spain).

In recent years knowledge has become even more important than traditional resources. However, at both a European and at a national level in Spain, the existence of economic systems based on Small and Medium-Sized Enterprises(SMEs) represent a prominent barrier for the transition from traditional economies to those based on knowledge.

In the specific case of SMEs, one must keep in mind the inherent difficulties of their size, the difficulty of gaining access to the same sources of external financing as large companies, or access to the appropriate sources of information, in order to make appropriate decisions. For these companies, cooperation with others of their same size or larger is a strategic alternative that would allow them to take advantage of the competitive advantages of the companies with which they have decided to associate. If these agreements are carried out among a large number of companies, they could knit a lattice of relationships that create compact networks through the links established.

Knowledge Management in SMEs Clusters: The Case of a Spanish Textile Cluster, developed economies, land, machinery, economic systems, large companies, information, cooperation, global competition, product specialization, markets, collaboration, product lifecycles, technological development, Communication Technologies, consumers demands, human assets, Businesses.