Guidelines for the Successful Adoption of Information Technology in Small and Medium Enterprises

International Journal of Information Management, Vol. 18, No. 4, pp. 243 — 253, 1998 ( 1998 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0268—4012/98 $19.00#0.00

PII: S0268-4012(98)00013-9

Guidelines for the Successful Adoption of Information Technology in Small and Medium Enterprises D FINK

Research was conducted to establish the factors that lead to the successful adoption of Information Technology (IT) by Small and Medium Enterprises (SMEs) in today’s turbulent times. The opinions of owners and managers of Australian SMEs on 10 factors representing modern IT adoption practices were obtained. The analysis of their responses identified three major IT acquisition phases and their significance. First, SMEs should assess IT benefits, the organisational culture and IT suitable for the firm. Second, they should determine if sufficient internal resources are available and appropriate procedures exist for the successful selection and implementation of IT. Third, SMEs need to evaluate the external environment, support and resources, particularly if inhouse resources and support are lacking. At the end of each phase, the decision should be made on whether or not to continue with IT acquisition. The recommended phased approach minimises the overall risk of technology acquisition. Q 1998 Elsevier Science Ltd. All rights reserved

Dieter Fink is an Associate Professor in the School of Management Information Systems in the Faculty of Business at Edith Cowan University, Perth, Western Australia. Dr Fink’s research focuses on the management of, and strategic planning for, Information Technology in today’s turbulent times, and includes studies of the success of IT within smaller firms. His research has been published in ¸ong Range Planning, Journal of Systems Management, Information Management and Computer Security, and ¹he Australian Journal of Information Systems. The research is supported by a financial grant from the Small and Medium Enterprise Research Centre at Edith Cowan University. The assistance of Kate Loughton and Kathy Kazakoff during data collection is gratefully acknowledged. 1 Organisation for Economic Co-Operation and Development, Small and Medium-Sized Enterprises: ¹echnology and Competitiveness, 1993, Paris, p. 7. 2 McLennan, W., Small and Medium Enterprises Business Growth and Performance Survey Australia, 1994—95, Australian Bureau of Statistics, 1996. 3 Op. cit., Ref. 1, p. 7.

The Organisation for Economic Co-Operation and Development (OECD),1 of which Australia is a member, puts the case for Small and Medium Enterprises (SMEs) succinctly as follows: ‘‘In all countries including the largest ones, SMEs play a very important role. In particular, it has been recognised for some 15 years that their dynamism, related in part to the technological and economic changes which have occurred over this period, has made an important contribution to the creation of new jobs, the economic revival of certain regions and also to technological progress.’’ The importance of SMEs in Australia is reflected in the following figures. For the period 1994-95, the contribution to net employment by SMEs was 84,000 while employment in large business increased by 50,000 people.2 The OECD3 goes on to state that the competitiveness of SMEs depends on the basic role of the owner/manager (his/her drive), intangible investment (intelligence management), tangible investment in technologically suitable equipment, and strategic capability (innovation and flexibility). Of those factors, ‘‘Technology plays an increasingly important role in all aspects of competitiveness: products and production techniques, but also management methods, the organisation of the firm and the training of its staff.’’ One of the most important technological developments in recent years has been the emergence of Information Technology (IT). The potential benefits that an organisation can obtain when it utilises IT are extensive.

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Information technology in small and medium enterprises: D Fink

Benefits can take a number of forms, such as efficiency gains (e.g. the automation of clerical procedures), increased management effectiveness (e.g. in decision making), and improved business performance (e.g. by entering into strategic alliances with other firms). Experiences, however, also show that IT benefits don’t always materialise. Among the reasons for IT failure are poor IT adoption practices.4 The purpose of this study was to approach the owners and managers of SMEs to capture their opinions on factors that facilitate the adoption of IT in today’s turbulent times. Owners/managers were chosen for the study because of their dominant roles with respect to the adoption of IT in SMEs as indicated by previous research (see discussion in the following section). The research objective was to determine from their responses those factors or combination of factors that had led to the successful adoption of IT in their firms and hence could be used to provide guidelines for other SMEs to follow. These should enable SMEs to gain the benefits that modern IT offers relatively quickly and thereby improve their competitiveness. The paper commences with a background discussion of IT adoption and factors that have been shown by prior research to be important to smaller firms during the acquisition of IT.

Information technology adoption

4 Cragg, P.B. and King, M., Small-firm computing: motivators and inhibitors. MIS Quarterly, 1993, March, 47—60. 5 Op. cit., Ref. 4, p. 57. 6 Iacovou, C.L., Benbasat, I., and Dexter, A.S., Electronic data interchange and small organizations: adoption and impact of technology. MIS Quarterly, 1995, October, p. 467. 7 Blili, S. and Raymond, L., Information technology: threats and opportunities for small and medium-sized enterprises. International Journal of Information Management, 1993, 13, 439—448. 8 Yap, C.S., Soh, C.P.P. and Raman, K.S., Information systems success factors in small business, Omega, International Journal of Management Science, 1992, 5(6), 597—609. 9 Chau, P.Y.C., Selection of packaged software in small businesses, European Journal of Information Systems, 1994, 3(4), 292—302. 10 Thong, J.Y.L. and Yap, C.S., CEO characteristics, organizational characteristics and information technology adoption in small businesses. Omega, International Journal of Management Science, 1995, 23(4), 429—442. 11 Op. cit., Ref. 4. 12 Op. cit., Ref. 8.

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IT adoption in smaller firms became an issue in the 1980s when the emergence of mini computers and personal computers provided these firms with the opportunity to introduce low-cost computer hardware and packaged systems. In contrast to large organisations, IT management in small organisations appears to be negligible. Smaller firms were reluctant to engage the services of inhouse IT managers in the manner larger firms had done. This yielded ‘‘a picture of growth and stagnation in small-firm computing. While many firms had experienced growth in the number and type of IT applications, there had been little change with respect to the management of IT in small firms’’.5 The lack of inhouse IT expertise is, however, not the only reason why ‘‘Smaller organizations have been shown to have different technology adoption patterns than large ones’’.6 There are a range of factors, brought about by particular characteristics, that have influenced the IT adoption behaviour of smaller firms. The unique characteristics of SMEs with respect to IT can be identified as environmental, organisational, decisional, and psycho-sociological.7 SMEs are usually characterised by a high level of environmental uncertainty (e.g. fluctuations in interest rates), including the IT environment. Furthermore, SMEs are regarded ‘poor’ in human, financial and material resources. This has caused them to rely more extensively than larger organisations on outside help.8 Decision making tends to be short-term and intuitive, focusing on reaction rather than anticipation. IT suitable in such situations needs to be robust and available quickly, preferably as packages.9 From a psycho-sociological perspective, the owner-manager plays a dominant role in the organisation, thereby shaping the organisational culture with respect to the use of IT. Research to date into the factors that encourage small business adoption of IT confirms the above characteristics. For example, the CEO has been shown to play a significant role in the successful adoption of IT in small businesses.10—12 As the main decision-makers, their individual characteristics, attitude to IT, innovativeness, and IT knowledge, are powerful

Information technology in small and medium enterprises: D Fink

13

Op. cit., Ref. 10. Op. cit., Ref. 4. 15 Op. cit., Ref. 9. 16 Op. cit., Ref. 1, p. 8. 17 Op. cit., Ref. 6. 18 Op. cit., Ref. 10. 19 Op. cit., Ref. 4. 20 Op. cit., Ref. 6. 21 Lin, B., Vassar, J.A. and Clark, L.S., Information technology strategies for small businesses. Journal of Applied Business Research, 9(2), 1993, Spring, p. 26. 22 Op. cit., Ref. 6. 23 Op. cit., Ref. 21, p. 27. 24 Montazemi, A.R., Factors affecting information satisfaction in the small business environment. MIS Quarterly, 1988, July, 239—256. 25 Op. cit., Ref. 8. 26 Doukidis, G.I., Smithson, S. and Lybereas, T., Trends in information technology in small businesses, Journal of End ºser Computing, 1994, 6(4), 15—25. 27 Op. cit., Ref. 4. 28 Op. cit., Ref. 10. 29 Op. cit., Ref. 6. 30 Op. cit., Ref. 4. 31 Op. cit., Ref. 8. 14

determinants of IT adoption.13 Furthermore, with little internal IT expertise, regular contact with an outside expert facilitates IT adoption.14 In acquiring prewritten packages, software characteristics, vendor’s capability and the opinions and advice given by other concerned parties are important factors considered by owners-managers of small business.15 Because of their size, SMEs are ‘‘more dependent than other companies on external sources of scientific and technological information’’.16 For this reason there is increasing support given by Governments to facilitating information transfers to SMEs. This is essentially achieved through networks, usually informal (such as those formed through membership of the Small Enterprise Association of Australia and New Zealand — SEAANZ) though sometimes formal (such as the Australian Government sponsored World Wide Web site for small business at http://www.sbdc.wa.gov.au). The role of the environment in IT adoption has not clearly been determined. Environmental pressures can cause small firms to adopt modern IT, such as Electronic Data Interchange (EDI).17 On the other hand, the competitiveness of the environment may not have any significant direct effect on whether small business adopts IT.18 Technological developments present potential adopters with the means to solve problems and create opportunities. The benefits that IT offer encourages IT growth in small firms. They can be relative19 or perceived.20 The former enables new technology to do better than the technology it supersedes, thereby creating greater operational efficiency and management effectiveness. Perceived benefits can take a number of forms, among which strategic benefits have become particularly relevant. In this respect ‘‘IT should be viewed as more than an automating force; it can fundamentally reshape the way small business is done’’.21 Small business should differentiate itself from its competitors by incorporating IT in a product or service; in this way IT is integrated into corporate strategy. Changes brought about by technology poses significant challenges to small business management. Organisational readiness is, therefore, a major influencer on IT in small firms.22 ‘‘Small business executives need both an awareness of the information technologies which are shaping the future of the firm and the courage to create the changes in organisational culture required to support IT functions.’’23 Management needs to monitor employees’ responses to technological change, and institute appropriate action programs for IT acquisition, implementation and operation. End user satisfaction with IT in small business is strongly correlated with the number of systems analysts present within the firm, the extent of analysis of information requirements, level of participation and end user computer literacy.24 Organisations with more IT experience or greater IT already in use are more likely to adopt IT.25 While staff involvement in IT development and IT training carried out had a positive effect on IT adoption,26 managerial time required to implement IT can have a negative effect on the willingness to adopt IT.27 Previous studies typically identified three to five factors each that facilitate IT adoption in smaller businesses. A cross section of studies28—31 and their findings are shown in ¹able 1. The table confirms the earlier discussion, namely that IT adoption in smaller firms is strongly influenced by the characteristics of CEOs, the external competitive and supporting environments, the available internal experiences and resources, and the benefits to be gained. Small firms are usually identified by the number of people they employ; however this number varies from study to study. For example, in

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Information technology in small and medium enterprises: D Fink Table 1 Factors facilitating IT adoption in smaller firms Thong and Yapa

Iacovou et al.b

Cragg and Kingc

Yap et al.d

Organisation size CEO attitude to IT CEO innovativeness CEO knowledge of IT

Organisational readiness Extern. pressure to adopt Perceived benefits

Relative advantage Competitive pressure Consultant support Managerial enthusiasm

Consultant effectiveness Vendor support IS experience Financial resource CEO support User participation

a

See Ref. 10. See Ref. 6. c See Ref. 4. d See Ref. 8. b

Singapore32 and Hong Kong,33 only firms with less than 50 staff were included. By contrast, a Canadian study34 included organisations with staff numbers up to 200 employees while in Greece, firms with staff of less than 100 were considered.35 Some studies in small business computing fail to define what constitutes smallness in firm size.36

Research study

32

Op. cit., Ref. 8. Op. cit., Ref. 9. 34 Op. cit., Ref. 6. 35 Op. cit., Ref. 26. 36 Op. cit., Ref. 24. 37 Zegveld, W., Technology policy for small and medium enterprises in the Netherlands. In Small and Medium Enterprises, ed. A.S. Bhalla. Greenwood Press, New York, 1991, p. IX. 38 Op. cit., Ref. 2. 33

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Having gained insight into research carried out previously we proceeded to design and conduct our study. First, we decided to include small as well as medium sized business in our study for the following reason. We wanted to use research material (see later section) that consisted of a wide range of factors of which some may be regarded as more appropriate for the ‘small-medium’ rather than the smaller enterprise. In determining what constitutes an SME we took into account the number of people employed. In selecting a cutoff number, we were guided by previous research which indicated that ‘‘In most countries, a firm with fewer than five hundred employees is considered an SME’’.37 We therefore excluded organisations with over 500 employees and regarded them as large organisations. Furthermore, we excluded very small firms, also referred to as micro businesses,38 with 10 or less employees. We restricted our study to Western Australia. This state of Australia is remote from the rest of the country (the nearest city Adelaide is 2000 kilometres away) and has its population centred in the capital city of Perth. The high concentration of economic activity enabled us to contact study participants by telephone, thereby ensuring that they were still in business, that they were willing to take part in the study, and, if so, that their mailing address was correct. Prior contact was deemed desirable because in Australia, small businesses tend to get oversurveyed and we believed that owners/managers may not be responsive to questionnaires arriving unannounced. A questionnaire was developed in which we stated the purpose of the study as ‘‘to gauge the opinions of managers of Small and Medium Enterprises (SMEs) regarding the use of Information Technology (IT). In particular, the study will identify the key factors that cause SMEs to adopt IT for the improvement of business performance.’’ The questionnaire defined IT as activities of input, processing and output of data and information within an organisation, taking into account its internal and

Information technology in small and medium enterprises: D Fink

39 Kompass Data Base, Peter Isaacson Publications, Pty. Ltd., Version 4.0, 1996, May. 40 Kerlinger, F.N., Foundations of Behavioral Research, 3rd edn, Holt, Rinehart and Winston, New York, 1986, p. 380. 41 Op. cit., Ref. 2. 42 Nunally, J., Psychometric ¹heory. McGraw-Hill, New York, 1978.

external environments. For the purpose of the study the term IT included Information Systems (IS). The participating organisations were selected from the ‘Kompass’39 database. It classified organisations according to the number of employees and by Australian State. The database listed 1013 organisations in Western Australia with 11 or more but no more than 500 employees. Every one-third organisation was selected from the database, resulting in 330 organisations being identified as the study’s sample. They were telephonically contacted to ascertain their willingness or otherwise to complete the questionnaire and to confirm their mailing address. Fifty organisations were dropped from the list on the grounds that they either declined to participate in the study or were found to be no longer in business. Consequently, 280 questionnaires were mailed of which 79 had been returned after 3 weeks. A follow-up mailout resulted in an additional 14 returns being received, giving an overall response of 93 returned questionnaires. The 93 responses received from the 280 firms approached represents a response rate of 33 percent. This level of response was expected since ‘‘Responses to mail questionnaires are generally poor. Returns of less than 40 or 50% are common. Higher percentages are rare’’.40 Among the returns received, 4 were inadequately completed and 2 were from organisations with more than 500 employees. They were discarded leaving valid returns to number 87 (31% response rate). We accepted 13 returns which indicated that the number of employees were below 10 for the reason that this reduction must have occurred recently and would, therefore, not affect opinions on IT adoption. ¹able 2 shows important characteristics of the sample. As seen from the table, most participating firms were engaged either in sales and service or in manufacturing, had an annual turnover of over $A 1 million, and had been using IT for 3—10 yrs. For 97% of the firms, employment was below 200 which is the upper limit used by the Australian Bureau of Statistics to classify an organisation of medium size.41 The research material was compiled from the review of previous IT adoption studies as outlined in an earlier section. Ten research variables were included in our study. To maintain symmetry, and not to make the questionnaire so lengthy that it would cause a lack of response, each variable contained 4 items. The research variables, and their operationalisation as items (although shown in abbreviated form), are presented later in ¹able 4. Respondents were asked to indicate, on a 7point scale, the extent to which 40 items (10 factors) decreased or increased the adoption of IT. On the scale, 1 indicated the item would ‘‘strongly decrease’’ and 7 indicated the item would ‘‘strongly increase’’ the adoption of IT. The responses were subjected to reliability and validity tests as follows. Internal reliability was examined in terms of internal consistency of the questionnaire responses, i.e. the extent to which all of the subparts of an instrument or scale measure the same characteristics. This was established through the Cronbach-Alpha technique; a technique where the mean reliability coefficient estimates for all possible ways of splitting a set of items in half are computed. ¹able 3 shows the alpha value for each category in the questionnaire. All the reliability coefficients met Nunally’s guideline of 0.60 and above for newly developed research variables suggesting that the research variables were reliable.42

247

Information technology in small and medium enterprises: D Fink Table 2 Characteristics of sample organisations (n\87)

Industry sector Sales & service Engineering Mining IT Manufacturing Construction Transport Other Number of employees 1—10 11—20 21—50 51—100 101—200 201—500 Annual turnover ($A) (100,000 100,000—200,000 200,001—500,000 0.5—1 m 1—5 m '5 m No response Years IT in use (3 3—5 6—10 '10 No response

n

%

24 14 4 4 22 5 4 10

27 16 5 5 25 6 5 11

13 24 25 12 10 3

15 28 29 14 11 3

1 1 6 9 36 33 1

1 1 7 10 42 38 1

15 28 31 7 6

17 32 36 8 7

Internal consistency requires homogeneity of the questionnaire. As a measure of internal consistency, the inter-item Pearson correlation coefficients of the ten multiple-item factors were calculated. They are also shown in ¹able 3. The inter-item correlations for each of the factors were Table 3 Reliability and consistency measures

248

Factors

Mean

Cronbach’s Alpha

Pearson correlation

Internal resources Benefits of IT Outside support External resources External environment Inhouse IT expertise Organisational culture Availability of IT IT selection IT implementation

5.24 5.67 4.61 4.24 4.96 5.33 5.39 5.55 5.18 5.20

0.62 0.70 0.82 0.68 0.81 0.75 0.84 0.62 0.79 0.74

0.29 0.37 0.54 0.34 0.51 0.43 0.57 0.29 0.49 0.41

Information technology in small and medium enterprises: D Fink

significant at the p(0.000 level. Content validity of the questionnaire was assumed on the basis that, as reported above, an exhaustive search of the literature for items to be included in the questionnaire had been conducted. An instrument must also provide an accurate representation of an abstract concept. Construct validity is the extent to which a particular measure relates to other measures that are consistent with theoretically derived hypotheses concerning the concept (or construct) being measured. Construct validity was achieved by involving six SME operators in the pilot testing of the questionnaire.

Data analysis After satisfying ourselves with the reliability and validity of the data collected we proceeded with data analyses. First, we determined the mean responses and standard deviations of the 40 IT adoption items and present them in ¹able 4. The mean ratings of the 10 adoption factors are shown graphically in Figure 1. Next, statistical cluster analysis was performed on the 10 IT adoption factors. This multivariate procedure detects natural groupings in data and produces a hierarchical tree structure where every branch is lined up so that similar objects are closest to each other in the ordering. The results are shown in Figure 2. The diagram shows normalised Euclidean distances between objects and uses a single linkage method (nearest neighbour). To determine effects of firm size on IT adoption factors, analysis of variance procedures were carried out. Firm size was measured in terms of number of employees and turnover. The analysis indicated that firm size only affected the way ‘IT availability’ was rated. Further examination of the data showed a negative correlation between these variables. In other words, firms with a high number of employees and turnover regarded ‘IT availability’ not as important to the successful adoption of IT as did firms with few employees and a low turnover.

Discussion Figures 1 and 2 provide an indication of the relative importance of IT adoption factors to SMEs. There appear to be three major groupings of factors. The first grouping contains the most significant factors and includes IT benefits, organisational culture, IT availability and inhouse IT expertise. Second in importance is the grouping of internal resources, IT selection and IT implementation. The third grouping consists of external environment, outside support and external resources. The groupings and their component factors are discussed below. Within the first grouping, I¹ benefits of greatest importance were of an operational nature, followed by those of management effectiveness and competitive advantage. It is interesting to note that, although respondents ranked the need for a feasibility study to establish IT benefits highly overall, they seemed to disagree with each other on its importance as indicated by the high standard deviation. A positive attitude to the use of IT appears to be the dominant factor in shaping organisational culture. Within this factor, the ability of the SME to manage change is highlighted. The cost of IT hardware and software were the items considered most relevant to I¹ availability, followed by new IT features and the availability

249

Information technology in small and medium enterprises: D Fink Table 4 Mean Responses and Standard Deviations (n\87) Factors

Operationalisation

Mean

SD

Internal resources

Financial resources Top management support IT experience IT in use Feasibility study Operational efficiency Management effectiveness Competitive advantage Outside consultants Consultants’ knowledge Consultants’ affordability IT vendor support Information on IT Cost of information on IT Government grants Industry association Stay competitive Use of IT by competitors Use of IT by trading partners Organisation’s image IT knowledge by top management IT expertise among employees IT expertise among supervisors IT training carried out Flexible decision making Positive attitude to IT use Ability to manage change Strategic planning Cost of hardware Cost of software New IT features Internet connection Product evaluation Acquisition criteria Selection according to criteria Justification of IT adoption Previous successful projects Integration of new IT Training for IT adoption Support for IT introduction

5.10 5.60 5.21 5.05 5.35 5.87 5.78 5.65 4.46 4.67 4.57 4.73 4.91 4.17 3.87 4.02 5.76 4.65 4.67 4.83 5.37 5.39 5.63 4.92 5.23 5.76 5.51 5.06 5.80 5.71 5.67 5.02 5.00 5.08 5.15 5.48 5.14 5.37 5.16 5.13

1.55 1.34 1.17 1.25 1.34 0.89 0.91 1.33 1.33 1.45 1.51 1.45 1.07 1.26 1.62 1.51 1.14 1.44 1.45 1.51 1.25 1.03 1.05 1.25 1.13 0.90 1.07 1.20 0.99 1.08 1.04 1.34 1.21 1.07 1.14 1.09 1.27 1.23 1.07 1.21

Benefits of IT

Outside support

External resources

External environ’t

Inh’se IT expertise

Organisat’l culture

Availability of IT

IT Selection

IT Implem’tation

43

Op. cit., Ref. 10.

250

of ‘Internet’ connection. To harness the potential of IT requires inhouse I¹ expertise. Expertise in IT among employees, supervisors and that of top management were found to be powerful determinants of IT adoption and confirmed previous research.43 The second grouping, consisting of internal resources, I¹ implementation and I¹ selection, followed in the ranking of importance. Changes brought about by technology poses significant challenges to small business management. The study indicated that new IT requires top management support and IT experience. To ensure a successful IT selection process, adequate justification procedures need to be carried out. According to the

Information technology in small and medium enterprises: D Fink

Figure 1 Mean responses for IT adoption factors

Figure 2 Cluster analysis of IT adoption factors

44

Op. cit., Ref. 10.

findings, most important for successful implementation is the integration of new with existing IT. The final grouping of factors consisted of external environment, outside support and external resources. In respect of the first mentioned, the need to stay competitive appears to be a major requirement for successful IT adoption. For outside support, the services provided by the IT vendor and consultant’s knowledge were highly rated. SMEs appear to value information about IT provided by external resources highly but somewhat surprisingly did not find the cost to obtaining the information a strong inhibitor. Government grants did not appear to be among the key factors supporting IT adoption. Business size has in the past been a significant discriminator between adopters and non-adopters of IT among small businesses.44 In our study, size as measured by the number of employees and by turnover, had a significant effect on the factor ‘availability of IT’ only. This factor was regarded as more important by smaller firms than by larger ones in our

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Information technology in small and medium enterprises: D Fink

sample. Smaller firms, therefore, appear to consider the elements of IT cost and features closely during IT adoption.

Implications for SME management As discussed above, the study provided a pattern of the factors that facilitate IT adoption within SMEs. This knowledge can be used to structure IT adoption policies and procedures to replace largely ad hoc ones currently being followed. Based on our findings, it is recommended that management approach IT adoption as follows: f Carry out IT adoption procedures in phases thereby minimising the overall risk of technology acquisition. At the end of each phase, the decision should be made on whether or not to continue with acquisition. Three phases have been identified which should be carried out sequentially as follows: First, management should determine if sufficient IT benefits exist and if the organisational culture is supportive of adopting IT. Furthermore, an assessment should be made of IT available to the firm (e.g. by considering features and costs) and whether or not the necessary inhouse IT expertise exists to integrate new with existing technology. Second, management should determine if there are sufficient internal resources available and appropriate procedures exist for the successful selection and implementation of IT. Third, the external environment, support and resources need to be evaluated, particularly if inhouse resources and support are lacking. f Give management attention to those tasks and activities regarded most important to the successful adoption of IT. The study indicated that management must focus on the following areas: The benefits to be gained from the use of IT for operational efficiency, management effectiveness and competitive advantage. The availability of IT in terms of the new features that they offer, and the cost of the hardware and software. The use of IT to stay competitive in the external environment, the existence of a positive attitude within the firm to the use of IT, and top management support.

Conclusion and study limitations The study provided an indication of factors important to SMEs when adopting IT. Internal factors (IT benefits, organisational culture, inhouse IT expertise and resources, IT implementation and selection) were judged to be relatively more significant than external factors (external environment, outside support, external resources). This finding appears to contradict previous studies which indicated that small businesses largely rely on external expertise and resources when computerising because of the lack of internal IT management and skill. Since firm size, expressed in our study as the number of employees and turnover, had no significant effect on IT adoption factors (with the exception of IT availability), the above finding cannot be explained by our inclusion of both small and medium-sized organisations. Our study may,

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Information technology in small and medium enterprises: D Fink

45

Op. Op. 47 Op. 48 Op. 49 Op. 46

cit., cit., cit., cit., cit.,

Ref. Ref. Ref. Ref. Ref.

26, p. 23. 26. 9. 24. 8.

therefore, indicate a trend within smaller firms and medium-sized ones towards accepting greater responsibility themselves for the acquisition of IT. This finding seems to support the conclusion drawn by Doukidis et al.45 Compared to a 1984 survey, they found that ‘‘in general, there was an increased experience and awareness of IT among SBs.’’ (p. 23) There are some limitations in our research that need to be acknowledged. First, the inconsistent definitions of what is a small and medium firm between studies makes research findings difficult to compare and generalise. The concern for generalisability is also brought about by the relatively small sample sizes of IT adoption studies in the small business domain. The 87 valid responses obtained in this study are comparable with the sample sizes of 50,46 68,47 83,48 and 9649 reported in previous studies. Second, the choice of IT adoption variables is problematic. The reason for this is that over time research variables have to evolve to reflect changes in IT and differing expectations of the role of IT within organisations. An example of a recent IT change is to use IT for competitive purposes, brought about by developments in communications technology, rather than purely for efficiency improvements. Like previous research, we have to acknowledge that there may be other potential determinants of IT adoption by SMEs which the study may have failed to include. Our study took place at a particular point in time. Further research could be conducted to capture opinions before and after the adoption of IT. Alternatively, our study could be replicated in a few years time. Our findings appear to indicate a change from previous studies in that SMEs now regard internal factors as more important than external factors. A subsequent study would establish whether or not this trend continues and whether or not new IT adoption factors emerge over time.

253