Small and medium industries (IKM) in Indonesia have not been able to compete and maintain competitive advantage over foreign products. Utilization of tacit knowledge and explicit knowledge is not maximized, even though these factors are a source of competitive advantage and the ability of the industry to innovate. Meanwhile, the growth of SMI production has not reached the expected target because the performance of SMIs is still low, thus affecting its productivity. The root of the problem of this research lies in the optimization of tacit knowledge and explicit knowledge not yet maximized on improving organizational performance in SMIs. This study aims to test and develop a model by integrating factors related to tacit knowledge and explicit knowledge in improving organizational performance. The method of collecting data through questionnaires with IKM city of Bandung as research respondents. Data processing uses partial least square path modeling (PLS-PM) method.
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