This paper evaluates the alignment between firm’s knowledge and knowledge management tools and practices adopted and provides a decision-making tool for both SMEs and policy makers. A field analysis was conducted in a sample of sixty-one small and medium enterprises (SMEs) operating in high tech industries. The results identify a taxonomy of different typologies of SME behaviour in relation to the alignment of the enterprise’s knowledge with knowledge management tools and practices. Four typologies of behaviour are identified: Guidepost SMEs, Practice Laggard SMEs, Tool Laggard SMEs and Latecomer SMEs. From the enterprise point of view, the proposed taxonomy supports the decision-making aimed to suggest appropriate changes to improve the degree of alignment. From the policy maker point of view, the proposed taxonomy allows SMEs to improve the processes of management and circulation of knowledge among enterprises.