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Over the last decade many SME organizations have understood the strategic importance of managing and leveraging a wide variety of intellectual assets that are usually found scattered across individuals, departments, documents, and databases. While various researchers and vendors have developed and implemented specialist Knowledge Management Frameworks (KMF) for large organization, many small and medium enterprise (SME) organizations still face the challenge of selecting affordable frameworks including strategies, tools, and methods, which fit their objectives and needs as SMEs and then successfully implementing such frameworks. This paper presents an empirically validated I-KMF to establish a solid foundation for evolving KM into sustained SME organizational best practices over time. The newly created knowledge contributes to the necessary diversity for organizational growth and renewal, while the application of knowledge leads to performance improvement or value creation. In the first section of this paper, we are discussing the problems of the current KM practices in SME compared with large organizations. In the second section, we are presenting the need and advantages of developing an integrated, affordable, and Innovation-driven knowledge Management Framework for SME. The third section is a detailed description of the framework. Section four represents the framework best practices approaches and validation. Section five represents the conclusion.