The key objective of this empirical research paper is to comprehend and evaluate the impact of Technological, Organizational, and Environmental (TOE) contextual factors on the Knowledge Management (KM) Diffusion among the auto ancillary small enterprises.An in-depth survey was performed among the small enterprises of the auto ancillary industry. The data thus collected from the survey using the survey instrument, questionnaire, was analyzed through the Partial Least Squares (PLS) approach to evaluate the relationships among the constructs of the conceptual research framework.The current research paper’s major findings disclose that the Organizational Context has the strongest effect on KM Adoption, followed by Technological Context, and Environmental Context. The Environmental Context has the strongest effect on KM Implementation, followed by Organizational Context and Technological Context.Thehypothesized path relationships between TOE Contextual factors and KM Diffusion (KM Adoption & KM Implementation) have been found statistically significant among the small enterprises of the auto ancillary industry through the empirical results of the current research paper. The auto ancillary small enterprises have to organize a series of formal programs in terms of cloud computing services, employee training facilities, team nurturing and development programs, business intelligence systems, and knowledge sharing platforms. © 2017, Institute of Advanced Scientific Research, Inc. All rights reserved.