31-05-2013, 02:05 PM
Information and communication technologies within small and medium enterprises in developing economies
ABSTRACT
With the realization of the benefits associated with the adoption of information and communication
technologies (ICTs), many small and medium enterprises (SMEs) in developing economies are
beginning to embrace the use of ICT. This process has, however, been marred with numerous
challenges, characterizing the process as slow paced adoption and use of poor quality ICTs that are
outdated, ineffective and inefficient. This is partly attributed to the fact that most developing economies
are not well positioned to provide conducive environments for their SMEs to thrive, even in their efforts
to embrace ICT. Notwithstanding the many challenges, SMEs in developing economies are slowly but
steadily starting to embrace the use of ICTs. Therefore, the objective in this article is to review literature
on ICT usage within SMEs in developing economies. The authors concluded that by strategically
positioning their ICT, SMEs can tap into the enormous potential advantages offered by ICT to gain a
competitive advantage. The authors further submit that SMEs can make use of their flexibility and
relatively small size to their advantage, because these are perfect conditions for the diffusion and
application of ICT.
INTRODUCTION
The use of information and communication technologies
(ICTs) within small and medium enterprises (SMEs) has
been a popular research area for quite some time now
(Burges, 2002). This has been buoyed by the growing
realization that firms who invest in ICTs are more productive
and that ICT adoption is important for economic
growth (Morrell and Ezingeard, 2002; Acs, 1992; Boddy
et al., 2002; Agbeibor, 2006). From this perspective, ICT
is, and increasingly will be, an integral component of
organizations.
Many big firms have successfully been able to invest in
ICT and reap the benefits that accrue from such an
investment (D'Atri and Sacca, 2009; Sircar and Choi,
2009). SMEs, however, have had a completely different
story (Dhillon et al., 2009), particularly those in the
developing economies (Puppim de Oliveira, 2008).
THE ROLE OF ICT IN SMEs COMPETITIVENESS
There have been an increasing amount of new opportunities
as well as increased competition on the markets
due to market and business globalization (Burges, 2002;
D'Atri and Sacca, 2009). The market and business
globalization factors have a major impact on SMEs and
their operations (Bannock, 2005). SMEs need to look at
their internal processes and seek solutions to be able to
sustain their growth and improve their competitiveness.
SMEs are faced with several challenges in trying to
remain relevant and competitive, and the situation is even
more deplorable for SMEs in developing economies
(Puppim de Oliveira, 2008).
A number of studies have shown that firms that invest
in ICTs are more productive (Bannock, 2005; Katz and
Green, 2010; Dhillon et al., 2009; D'Atri and Sacca,
2009). SMEs need to determine how they can “take best
advantage of IT in order to support its operations, add
value to its products and services, and gain competitive
edge in the market place” (Stylianou and Kumar, 2000:
99). Delivering quality products or services is a strategic
necessity and is linked to an organization’s ICT resources
and capabilities (Ray et al., 2005).
EVOLUTION OF ICT USAGE WITHIN SMEs
SMEs have scarce resources at their disposal (Katz and
Green, 2010) and because of this, they cautiously
venture into ICT investment. Many SMEs initially use
ICTs primarily to automate their simple and single
existing processes (Dhillon et al., 2009). This can be
attributed to the fact that automation requires less
financial resources and less restructuring. In this phase of
ICT usage, matters relating to ICT within the enterprise
are left to specialists, and managers are hardly involved
(Ayyagari et al., 2007; Dhillon et al., 2009).
With positive benefits trickling to them after initial venture
into the use of ICT, most SMEs owners/ managers start
gaining more confidence in the technology and are more
willing to further invest in it (Bannock, 2005; Duncombe
and Molla, 2009). As a result, the SMEs management
begins to explore other possibilities that can be offered by
ICTs (Caruso and Marchiori, 2003; Dhillon et al., 2009). It
is at this stage that ICT roles of information and
transformation are explored (Caruso and Marchiori, 2003;
Dhillon et al., 2009), the strategic significance of ICT
begins to be more appreciated, and the use of ICT to
upgrade quality, improve customer service, and also
enhance integration with suppliers becomes the order of
the day (Laudon and Laudon, 2009; Duncombe and
Molla, 2009; Dhillon et al., 2009). These roles in ICT
usage have further leveraged the competitiveness of
SMEs who have deployed the use of ICT.
CONCLUSION
SMEs in developing economies are faced with numerous
challenges that make a fair competition between them
and their counterparts in developed economies challenging.
It is widely accepted that SMEs do play a pivotal
role in the economic growth of any country, notwithstanding
the numerous challenges that they have to contend with.
It is, therefore, only fair that considerable attention be
accorded to these SMEs with a view to finding ways to
help them improve their competitiveness.