Information Technology in Small Business: Issues and Challenges

Information Technology in Small Business: Issues and Challenges 1

Chapter I

Information Technology in Small Business:

Issues and Challenges

Stephen Burgess Victoria University, Australia

INTRODUCTION

Research into the use of information technology (IT) in small businesses is extremely diverse. It encompasses the many different characteristics of small businesses, including size, culture, business strategy, attitudes to IT, industry and location, to name a few. The authors in this book have contributed chapters that address many of these characteristics of small businesses. This chapter provides an introduction to many of the areas covered in the book.

A VIEW ON RESEARCH INTO IT AND SMALL BUSINESS

There is some anecdotal evidence to suggest that the use of information technology in small businesses has been the subject of an increasing amount of research over the last ten to fifteen years. The `evidence' often occurs in the form of a general comment at the commencement of a published paper, which mentions the `explosion' of recent research in the area or `increased interest' in the area. As one means of examining this, a review of the business article research reference tool, ABI/Inform1 was conducted in March 2001. ABI/

Copyright ? 2002, Idea Group Publishing.

2 Burgess

Inform is a global business database that covers areas such as marketing, advertising, economics, human resources, taxation, computers and companies. It contains a large component of mainly full text articles. A count of the number of peer review articles was made under the search topic (Computers or "Information Technology") for information technology and ("small business" or SME) for small businesses (refer Table 1). The number of peerreviewed articles listed that had the combined defined search topics (small business and information technology) listed in the citation or abstract reached its highest level in the three years 1997-1999, with the highest number of 23 articles being in 1999. Whether or not this means that there has been more research in the area is difficult to claim, as it depends upon a number of factors, including the number of journals listed in the service each year. For instance, if there had been an addition to the number of journals being referenced in the service it may look like there has been an increase in the research output of a number of topics. Perhaps a better comparison is that of the amount of articles listed in the combined research area with the peer-reviewed articles available in each separate area. The number of peer-reviewed articles related to small business and IT has hovered around two-thirds to one percent of the total number of peer-reviewed articles in the general area of IT over the last decade and a half. There has been some weak evidence of an increase in the percentage since 1993. There is no evidence presented to conclude that the number of peer-reviewed articles related to small business and IT has increased at all when compared with those listed for small business in general.

Table 1: The number of peer-reviewed articles related to small business and information technology listed in ABI/Inform 1986-1999

Year

1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

Number of Peer-Reviewed Articles in the area of Computing and Small Business

23 12 15 10 11 10 10 6 6 6 8 4 5 5

% related to PeerReviewed Articles in

the area of Information Technology

1.35 0.95 0.62 0.64 1.17 0.89 0.95 0.61 0.69 0.82 0.86 0.54 0.81 0.76

% related to PeerReviewed Articles in

the area of Small Business

4.8 2.9 2.1 2.5 3.1 3.2 3.5 2.8 3.9 7.6 7.3 4.3 4.8 6.0

Information Technology in Small Business: Issues and Challenges 3

Perhaps then, this idea of an increasing amount of research in the area is more due to interest in the separate areas of small business and information technology than the combined area.

ISSUES

One of the difficulties facing small business researchers is to generalize their research findings across the small business base so that they can be useful to a wider audience. This is (almost) impossible, as it is very difficult to generalize results for such a diverse range of businesses. Most small business researchers overcome this by selecting a particular niche of small businesses to examine, or by reporting at a very general level. This section looks at some of the issues facing researchers as they attempt to investigate the use of IT in small businesses. Many of the chapters in this book also address these issues to varying degrees.

What is Small?

When studying the use of IT in small business, the range of definitions used to describe `small business' is interesting to say the least. This range can make it extremely difficult for researchers to `match up' different small business studies.

In Australia, an annual study examining the use of computers and electronic commerce in small and medium businesses (Telstra Corporation and NOIE, 2000) defines a small business as having 1-19 employees and a medium sized business as having 20-200 employees.

A 1997 study of 174 small and medium businesses (Bridge and Peel, 1999) used the European definition of `small' being 10 to 99 employees and 'medium' as 100 to 499 employees.

In a study of 244 Canadian `small' businesses, El Louadi (1998) targeted businesses with up to 300 employees and ended up with the sample having an average of 28 employees per business.

Pollard and Hayne (1998) have identified a number of studies that set the upper limit of employees for a business to be classed as small as 50, 100, 200, 250 or 500! They themselves have decided that any business with up to 200 employees can be classed as small.

Despite a number of requests from the authors of this book to provide guidelines in relation to a definition of `small business', I have asked them to use their own definitions for `small business'. This is for the purpose of making the book a reflection of research in the area as it is currently being

4 Burgess

carried out. When pressed, I did tell them that my preferred definition (a rather parochial, `Australianized' definition) was that a small business was any business with one to twenty employees. A micro business has up to five employees (refer next section). Medium businesses? I don't really care! Actually, I would be prepared to accept any number up to 50, 100 or 200. But that is only so I can compare them with small businesses! I do not use any other method for measuring business size (such as annual turnover) because I have found that it is much easier to get a small business to tell you how many employees that they have than to ask them any financial information.

Medium and Micro

A `micro' business is a special type of small business?one that is, very small. Bridge and Peel (1999) have defined a micro business as having up to nine employees. As mentioned in the previous section, I prefer to define a micro business as one with up to five employees.

A somewhat wider grouping (that includes small businesses) comes in the form of `SME.' SME is a general acronym that stands for Small and Medium Enterprises. It is commonly used to describe research that is carried out into a combination of small and medium sized businesses. The problem occurs when the different definitions of the size of the businesses are taken into account. Although I personally do not like it, `SME' is here to stay. It is part of the vocabulary, certainly of much of the small business research community. I have encouraged authors in this to book to use it where they are comfortable with it.

So?what is classed as `small' in one study (say 120 employees) may be `medium' in another study and `large' in yet another study?depending upon the chosen method of classification! My advice to anybody attempting to interpret research that is carried out in the small business area (and in this book) is to make sure that you look at the definition that the researchers have used for `small' and take that into account in your interpretation of the results.

Size Is Important!

Why is it so important to consider the size of the business? A number of studies suggest that there is a relationship between the size of a business and its level of adoption of IT (McDonagh and Prothero, 2000). A 2000 study of Australian small businesses revealed that 79% of businesses with 1-2 employees used computers, with this percentage increasing as the size of the businesses increased: 3-9 employees (90%), 10-19 employees (93%) and more than 20 employees (100%). Similar business size trends were evident in levels of Internet usage and adoption of Web sites (Telstra Corporation

Information Technology in Small Business: Issues and Challenges 5

and NOIE, 2000). There is also a relationship between the size of a business and the

different characteristics it will have that can lead to the successful use of IT (Igbaria et al, 1997; Pollard and Hayne, 1998). As such, research findings based upon traditional `MIS' in larger businesses are not necessarily directly applicable to small businesses. Some of these are investigated in this book.

Barriers and Opportunities

The literature around the area of small business and information technology is rife with what is now a fairly accepted list of `barriers' to the successful implementation of IT in small businesses. These barriers typically include (Management Services, 1997; Igbaria et al, 1997; Pollard and Hayne, 1998; McDonagh and Prothero, 2000): ? The cost of IT ? Lack of time to devote to the implementation and maintenance of IT ? A lack of IT knowledge combined with difficulty in finding useful,

impartial advice ? Lack of use of external consultants and vendors ? Short-range management perspectives ? A lack of understanding of the benefits that IT can provide, and how to

measure those benefits ? A lack of formal planning or control procedures.

One advantage that small businesses (especially innovative ones) have is that they are flexible. They are able to preserve labor relationships, bring a `personal touch' to operations, cater to niche markets and they have small capital requirements. The fact that they are under constant pressure can also spur them to be inventive and innovative in their business operations (International Trade Forum, 1999). These are all factors that can help them to overcome the barriers mentioned earlier in this section.

Success Factors

Having identified some of the barriers to the successful use of IT, there is also a fairly common list of factors that are listed in the literature that appear to indicate a greater chance of successful implementation of IT in small businesses.

Some of these factors are (Swartz and Walsh, 1996; Naylor and Williams, 1994; Zinatelli et al, 1996; Yap and Thong, 1997): ? The involvement of Owner/Managers in the implementation of IT ? The involvement of users (employees) in development and installation ? Thetrainingofusers

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download