Information communication technologies and SME competitiveness: a literature review

ICT SME

ICT Utilization in SMEs

The underutilization of information and communication technology (ICT) in small to medium sized enterprises (SMEs) is well documented. In this segment of the economy companies are slow to integrate ICT technologies into operation for a variety of reasons. One recent study found that SME exporters in Latin America who were surveyed found that nearly a third of these firms had not taken sufficient advantage of ICT technologies; less than half used any sort of customer relationship management (CRM) software and of these most were email based, more than half did not use social networks, less than fifteen percent had an automated sales website, and seventeen percent used international distributers to assist them in promoting their products (Rogers, 2012).

Countless other examples can be found all over the world that point to the inability for SMEs to fully embrace some of the most valuable ICT developments to help drive their business. The successful development and deployment of ICT systems can face challenges the stem from three basic categories of limitations; environmental, technical, and human factors (Matthews, 2007). Each of these limitations can prevent ICT integration alone however it is commonly a mix of factors that prevent ICT from driving growth and the development of competitive advantages. Some environments are more suited to ICT development than others and trying to force an ICT project on an organization that is not prepared for this integration can have a range of negative consequences. Examples of such failure projects also foster some hesitation from organizations who are fully equipped to expand their ICT use.

However, despite the slow adoption of more advanced ICT functionality, it should be noted that basic technologies such as email, online purchasing, and online research are widespread and are even used by farmers in the SME agricultural sector (Burke, 2010). These basic functions have revolutionized that way business interacts on many levels and the prevalence and growth of the usage of basic technologies could potentially represent the beginning of a learning curve in which more advanced technologies are integrated even more quickly. However, the slope of the curve is not well defined nor does it adhere to locations, industries, or even ethic groups. There seems to be a wide variance in regards to SMEs having the potential to successfully integrate ICT systems to support their business.

An example of this can be provided by a study that considered the influence of Hispanic ethnicity on the adoption and use of information and communication technology (ICT) tools by small- and medium-sized enterprises (SMEs) in a southwestern renewal community (Middleton & Byus, 2011). The study indicates that there is a digital divide among Hispanic and non-Hispanic SME owners. Non-Hispanic SME owners who were included in the survey were found to be significantly more likely to adopt a wider range of ICTs and to use them for both administrative and analytical purposes. However, Hispanic SME owners not only failed to adopt a full range of ICTs but also they were less likely to use ICTs for long-term strategic analyses. Therefore, such evidence seems to indicate that not only are different industries and different regional environments more suited for ICT implementation but there can also be a cultural component that can even be based on the SME owners ethnicity.

In other business environments, ICT seems to have more of an impact; even in some developing countries. Another study attempted to identify how SMEs in the Western Cape of South Africa are currently using ICT as well as their expected levels of use into the future. The factors that were considered included the currently employed ICT, person to computer ratios, spending and acquisition of ICT, and adoption of new ICT. The results of the study indicate that SMEs in the Western Cape are using a wide range of ICT, with 88% using networks, and 70% using some form of customer relationship management software; furthermore the person to computer ratio was computed and 78% of SMEs in the Western Cape showed a 1:1 (person:computer) ratio (Johnston, 2008). These rates are higher than many of integration levels in some SMEs in various segments in the developed world.

The research also indicated that spending habits with regards to three ICT sectors (hardware, software and services) were increasing in a large segment of the sample as well. Many of the SMEs included in the survey were planning to adopt more ICT projects in the near future due to the fact that many companies have associated significant amounts of value from the use of ICT. Even in the developed world it appears that many SMEs are strategically positioning themselves to use ICT to create a strategic advantage and create organizational efficiencies. However, despite the heavy uses of ICT in some regions of the developing world, most of the functionality is still limited to emails and online research. Most of the CRM support is also limited to emails. Therefore, this is large amounts of potential uses for different ICT capabilities beyond these relatively basic uses.

Other regions of the world have entirely different challenges regarding ICT development. The European Union (EU) for example has one of the highest concentrations of SMEs in the world and SMEs in the EU make up to over 99 per cent of non-primary private enterprises and employs almost twice as many people as large firms. Furthermore, the European Union SMEs are not only the main source of employment in this region, but they are also considered an asset in regards to innovation, economic dynamism and social equation according to a Bulgarian Country report (Averill & Hall, 2005). As a result of the importance of the SME format in the EU, researchers are aggressively studying different training formats to increase the ICT skills in the EU employees. Many of the EU SMEs have already integrated high levels of ICT technologies, however many SMEs are finding a skill shortage in qualified employees to operate these advanced systems.