Social media supports the creative economy through its involvement in the adoption and appropriation of new innovation and accelerates economic growth. The current paper expands on this notion by identifying and analyzing the interaction between social media-based communities and small and medium enterprises (SMEs), as it examines how social media contributes to the knowledge co-creation and supports the adoption, use and appropriation of smartphones in South Asian countries, which are inhabited by approximately 1.6 billion people. The findings obtained through virtual ethnography (VE) provide insights into the dynamics and kinetics of knowledge co-creation and how that benefits large multinationals, small local businesses and consumers in developing societies. As such, we advance the knowledge management scholarship by presenting a holistic model of co-creation of knowledge involving multiple stakeholders.