Knowledge management (KM) is a core competency that determines the success of SMEs in this knowledge-based economy. Instead of competing on the basis of physical and financial capital, the success of SMEs is influenced by the knowledge, experience and skills of the owners and its employees. Unfortunately, many SMEs are still struggling with KM implementation because of lacking an understandable and applicable concept of knowledge and KM implementation framework. This study aims to redefine the knowledge concept, identify enablers for KM success, and build up a framework for KM implementation in service and product oriented SMEs. By using multiple research methods, this study collects data from SMEs in Taiwan. The elaborated KM framework mandates every employee’s participation in knowledge activities, not just some elite knowledge workers. It also promotes a concerted effort of human and IT, not just the interaction between technical staff and the KM systems to ensure well-rounded and effective KM and produce the best outcome. Most importantly, the synergy of Knowledge as action activities and Knowledge as object activities will ensure well-rounded and effective KM and produce the best outcome. This elaborated KM framework highlights organizational support for KM, KM support for employees’ knowledge activities, and knowledge activities for business processes. The findings provide useful implications for researchers and practitioners.