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In this paper, we explore some of the results from a survey of 378 small and medium sized enterprises (SMEs) based in the southeast of England. The objective of this survey was to build a snapshot of the state of play of the information and communications technology (ICT) use by SMEs in economically significant sectors in this region. The sectors chosen were as follows: food processing, transport and logistics, media and internet services. More specifically, the survey was intended to answer the following questions: what types of ICT are in use by SMEs in this region, what prevents and facilitates the adoption and use of ICT amongst these firms, and where do SMEs acquire information on ICT related issues. Our survey suggests that most SMEs in the southeast of England are in general positively inclined towards adoption and use of ICT. However, this adoption and use of ICT is mainly focused on operational matters with few extensions into potential strategic use of such technologies in their business environments. SME owner/managers perceive ICT to be often costly and complex and are wary of consultants and vendor organisations. We also discovered, somewhat surprisingly, that SMEs are largely unaware of existing policy instruments at the regional, national and European levels, designed to help them in their adoption and use of ICT.
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Reference this paper as:
Harindranath, G. Dyerson, R. and Barnes, D. “ICT Adoption and Use in UK SMEs: a Failure of Initiatives?.” The
Electronic Journal Information Systems Evaluation Volume 11 Issue 2, pp. 91 - 96, available online at www.ejise.com
ICT Adoption and Use in UK SMEs: a Failure of Initiatives?
G. Harindranath, R. Dyerson and D. Barnes
Royal Holloway University of London, UK
G.Harindranath@rhul.ac.uk
R.Dyerson@rhul.ac.uk
David.Barnes@rhul.ac.uk
Abstract: In this paper, we explore some of the results from a survey of 378 small and medium sized enterprises (SMEs)
based in the southeast of England. The objective of this survey was to build a snapshot of the state of play of the
information and communications technology (ICT) use by SMEs in economically significant sectors in this region. The
sectors chosen were as follows: food processing, transport and logistics, media and internet services. More specifically,
the survey was intended to answer the following questions: what types of ICT are in use by SMEs in this region, what
prevents and facilitates the adoption and use of ICT amongst these firms, and where do SMEs acquire information on
ICT related issues. Our survey suggests that most SMEs in the southeast of England are in general positively inclined
towards adoption and use of ICT. However, this adoption and use of ICT is mainly focused on operational matters with
few extensions into potential strategic use of such technologies in their business environments. SME owner/managers
perceive ICT to be often costly and complex and are wary of consultants and vendor organisations. We also discovered,
somewhat surprisingly, that SMEs are largely unaware of existing policy instruments at the regional, national and
European levels, designed to help them in their adoption and use of ICT.
Keywords: Information and communications technology (ICT), small and medium sized enterprises (SMEs), ICT
adoption, ICT use, government policy
1. Introduction
According to the Observatory of European SMEs (2003), 92% of all European enterprises employ less than
10 people. Both EU policy and UK regional development agencies have sought to actively promote small
and medium sized enterprises in the country with the aim of bolstering competitiveness and encouraging
collaboration with like-minded businesses, providing the basis for innovation and accelerated growth. For
instance, the Southeast England Development Agency (SEEDA) has called for a ‘southeast commitment to
mirror the EU's ambition of becoming the most competitive knowledge-based economy by 2010’ (SEEDA
2003). An important part of this ambition is to facilitate the competitive ability of SMEs increasingly operating
in the global market. SMEs can be viewed as the poor sibling of the business community compared to their
larger brethren. Much of the focus on ICT is predicated and driven by the needs of large businesses often
ignoring the more diverse needs of SMEs.
This paper aims to addresses some of these issues using a survey of SMEs in the southeast of England.
The paper is structured as follows: the next section provides a brief overview of the key characteristics of the
SME community and the literature on their adoption and use of ICT. This is followed by a discussion of our
research methodology. We then present some of our main findings. The paper concludes with a discussion
of the implications of these findings for both the SME community and policy providers.
2. ICT and SMEs
The most widely used definition of an SME is that of a firm with 0-250 employees (DTI 2007). SMEs have
started using ICT relatively recently and they are generally characterised by inferior technology and
management capabilities (Caldeira and Ward 2002). Also, as Pool et al. (2006) note, whilst e-commerce (i.e.
the use of Internet related ICT for business) has spread rapidly throughout large firms, its growth amongst
SMEs has been much less pervasive. Indeed the need to build ICT-related capabilities and competencies
within European SMEs was specifically identified by a recent report from the Observatory of European SMEs
(2003).
Research into SME use of ICT within the UK context has been limited to a few studies that are now dated
(for instance, Thwaites and Wynarckzyk 1993; Naylor and William 1994; Levy, Powell and Yetton 2001;
Martin and Matlay 2001; Simpson and Docherty 2004). Whilst, the SME sector is very heterogeneous, at
least some of these studies found strong correlation between IT use and firm size, innovation, product
development and R&D in traditional sectors such as textiles in the UK, implying that SMEs are at a
disadvantage in terms of IT use. Strong regional differences were also found within the UK between SMEs
clusters in innovation rates, profitability, size and structure of ownership. It appears that significant
differences remain between SMEs. For example, a recent survey of their region by Yorkshire Forward, the
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Regional Development Agency, found that whilst 63% of SMEs were connected to the Internet, 46% had a
website and 36% traded on-line, 30 % (mostly microbusinesses of less than 10 employees) did not use
computers at all (Pritchard 2006). Whilst opting out of the digital economy may be possible for some, Brown
et al. (2005) point to the problems that some SMEs face whilst engaging in on-line trading or collaboration
with supply chain partners. They argue that the complexity of business operations as well as company size
matter in respect of ICT adoption and use in SMEs.
Synthesising the wide-ranging literature on e-commerce adoption and adoption models, Wymer and Regan
(2005), identify 26 factors affecting ICT adoption and use in SMEs. It is possible to classify these as either
technology related or business related (including external factors, internal knowledge and expertise, and
finance). Their findings (from a study of US SMEs) show that, perhaps unsurprisingly, cost was the one
consistent factor across all organisational types.
According to Levy, Powell and Yetton (2001), the vast majority of literature on ICT adoption by SMEs point to
the operational nature of investments, driven as they often are by cost and efficiency considerations.
However, the same research team has also found evidence that SMEs can also behave strategically; their
empirical study of SMEs in the UK West Midlands finding that strategic intent influences decisions to invest in
e-business (Levy, Powell and Worrall 2005)
Thus, there is something of a confused picture with regard to current practices within UK SMEs in relation to
ICT use. Given that both markets and technologies have undergone rapid change over the last few years,
the time seems ripe to revisit this issue.
3. Research methodology
The population for the survey was SMEs drawn from four economically significant sectors in one of most
productive regions in the UK, the southwest London and Thames Valley region of England. The sectors
chosen were: food, transport and logistics, media, and the Internet. See table 1 for a sector breakdown. The
survey targeted 2800 companies chosen from the Dunn and Bradstreet list. We received a total of 378
responses.
Table 1: Breakdown of firms Sector Proportion of firms (%)
Food processing 24.46
Transport and logistics 26.46
Media 23.81
Internet 23.28
We used a telephone survey method with a standardised questionnaire of 66 questions organised into 6
major sections: business specific questions, current ICT use, use of Internet and e-commerce, ICT
investments, staff skills and training for ICT use, and ICT advice. Most of the questions were of a “tick box”
format although each question also gave the respondent the option of providing additional comments. A
number of follow-up interviews were also conducted to explore issues arising from the survey findings.
The business specific questions asked for company and respondent details as well as questions on firm size,
firm history, firm’s main products and services, key customers and markets. We also asked respondents
questions concerning what they perceived to be their key business strengths (e.g., low cost, product quality,
innovation, other specialised expertise etc), main business plans (in terms of increase in sales or market
share etc), and whether the firm had any formal strategy documentation.
Questions on current ICT use focused on types of ICT used (such as email, Internet, wireless etc) and kinds
of ICT applications (stock control, sales, marketing, human resources management, enterprise resource
planning etc). This section also included questions on business benefits from ICT, key ICT problems faced
by the company and a question on whether the firm’s ICT investment represented value for money.
The section on Internet and e-commerce usage asked a series of questions on the type of Internet
connection used, whether the firm used the Internet for online sales/purchase or for information gathering
and sharing, and whether the Internet had any impact on sales (for example through increased sales). We
also asked a question on e-commerce challenges faced by the firm.
G. Harindranath, R. Dyerson and D. Barnes
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The section on ICT investment included questions on the firm’s IT strategy, how they funded and justified
their ICT investments, choice of ICT supplier, and a series of questions on ICT implementation and post-
implementation evaluation. We also asked about any implementation challenges faced by the organisation.
The section on staff skills focused on existing IT skills, skills shortages, how training was provided and any
barriers to the provision of such training. The final section on ICT advice sought replies on where the firm
obtained ICT advice, and if they had sought help or advice from government agencies.
In this paper, we will mainly focus on the key findings from the four sectors covered in the survey.
4. Results from the survey
In this section, we present some of our main findings from the survey of the food, logistics and transport,
media, and Internet sectors. We found some interesting differences between what we could characterise as
‘traditional’ sectors (food, transport and logistics) and ‘new’ sectors (media, and Internet).
4.1 Commonly used ICT applications and reasons for investing in ICT
Table 2 provides details of the commonly used ICT applications in our survey, split according to sector. As
can be seen most firms in our survey concentrated primarily on operational and functional applications such
as sales and marketing and document management systems. Interestingly, ‘older’ sectors of logistics and
food processing recorded higher levels of computerisation in their human resources management function.
This may be related to the higher levels of government regulation of these sectors. Compliance requirements
in these sectors seemed to be driving much of the more recent investment in new ICT applications in both
these sectors.
As we would expect, there was near universal adoption of email and Internet facilities. However, there was a
very low take up of allied adoptions of a more strategic nature such as enterprise resource planning (ERP)
systems. As table 2 highlights, the sectors displaying the highest levels of ERP adoption were the ‘new’
sectors of media and Internet services. By contrast, there was a very low level of adoption of such
technologies in the ‘older’ logistics and transport and food processing sectors.
Table 2: Commonly used ICT applications
Computerised Systems Used (number of replies)
stock
control sales or
marketing design market
research document
management production planning
& control systems HRM ERP
Media 35 61 69 36 70 56 39 28
Logistics 29 67 17 28 91 44 54 21
Internet
services 17 80 77 56 79 47 48 35
Food
processing 77 74 41 40 94 57 56 19
The lack of strategic intent in the adoption of ICT is shown more clearly in table 3. Here, we detail the SMEs’
responses and motivations for investing in ICT. Once again, we can highlight the mostly operational nature
of these ICT investments, driven as they are by the need to increase operational efficiency. This is not
surprising given the often highly competitive, low margin, business environment in which many SMEs
operate and the consequent need to continually bear down on costs.
Having said this, it is again worth emphasising that some of the more sophisticated use of technology was
found in the ‘older’ sectors of food processing and logistics and transport. In subsequent follow-up
interviews, a motivation for this more sophisticated use was attributed to the need for compliance with
government and European legislation in both sectors. More specifically, in food processing sector, new
regulations require SMEs to be able to demonstrate the traceability of their food products in terms of the
supply of ingredients used in their products. In the case of the logistics and transport sector, new European
directives required firms to be able to log transportation drivers’ total driving time on a daily basis so as not to
exceed legislated maximum driving time.
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Table 3: Reasons for investing in ICT
Main Reasons For ICT Investments Made Recently (%)
increase
operational
efficiency
improve
communications
with suppliers
improve
enhance
customer
service keep up with
competitors
enhance joint
working in
collaborative
ventures
increase
staff
satisfaction
because
customers
demanded it
83 25 45 34 23 33 19
4.2 Barriers to ICT adoption
The majority of the SMEs surveyed identified costs as the single biggest factor threatening future investment
in ICT. This perception can be explained with reference to the funding sources open to the SMEs in our
survey. We found that most SMEs sourced their ICT capital expenditure through retained profits. In very few
cases were alternative sources of funding such as venture capital and commercial loans used by SMEs. This
can be explained by the very cautious approach that SME owner/managers often adopt with respect to ICT
investments, particularly when they have difficulty quantifying or envisaging the business benefits that might
arise from such investments.
We found that owner/managers by and large were not ICT trained or skilled and were often reliant on the
advice of external consultants or vendor organisations. This tended to affect the confidence with which they
approach investment decisions concerning ICT. Part of this cautious attitude to ICT can also be explained by
the lack of internal ICT expertise in these firms. We also found that while staff in many SMEs were often
keen to train in ICT, the lack of resources and uncertainty over business benefits from the perspective of the
owner/manager hampered the development of internal capabilities in this area.
Interestingly, we found that barriers to ICT adoption were mostly related to costs and skills rather than to do
with problems with the technology per se. Only a minority (about 25%) of firms reported technical problems
sufficient to act as a barrier to future investments.
4.3 Perceived benefits from ICT
Most of the SMEs surveyed were generally satisfied with their ICT investments. In fact over 90% of the firms
in all four sectors surveyed perceived their ICT investments as offering good value for money. In the case of
the Internet services firms, this figure rose to almost 98%. How then does ICT affect these SMEs?
Table 4 highlights some of the key perceived benefits from ICT adoption. As can be seen, most of the
benefits relate to operational matters. In particular, all four sectors see ICT as helpful in improving the
response time to customers. In three out of four sectors, ICT was also helpful in improving productivity. The
exception to this was the logistics and transport sector, which reported lower levels of perceived benefit in
this respect. All four sectors also perceived ICT as important and helpful in keeping up with their competitors.
In this sense ICT could be deemed to be having a strategic impact. However, when seen in the context of
the overall survey results, we were unable to find clear evidence of strategic impacts. For example, in the
development of electronic commerce, firms in our survey restricted themselves to providing information
portals rather than using ICT to extend their business environment into the electronic domain.
Table 4: Perceived benefits from ICT
Perceived ICT Benefits (number of replies)
improved
productivity improved
product/
service
quality
faster
response to
customers
improved
customer
satisfaction
improved working
on joint projects
with other firms keep up with
competitors
Media 77 75 79 71 54 81
Logistics 56 77 75 62 34 72
Internet
services 78 79 79 76 66 77
Food
processing 71 60 78 67 45 83
Having said this, the impact of online sales, where evident, differed between the old and new sectors. In the
media and Internet services sectors, we found comparatively greater use of online sales than in the ‘older’
logistics and food processing sectors. In the ‘older’ sectors, the vast majority of SMEs made very little or no
G. Harindranath, R. Dyerson and D. Barnes
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95
use of online sales than in the ‘newer’ sectors. Unsurprisingly, the highest impact of online sales was felt in
the Internet services sector with just under 50% of the firms reporting that half or more of their sales stem
from online sources.
4.4 Information sources on ICT use
The single most important information source for SME owner/managers in our survey was ICT consultants.
Almost 50% of firms irrespective of the sector used external consultants in ICT matters. The second most
important source of ICT advice and support was friends and family (37% of firms surveyed), followed by ICT
vendors (35% of firms). Professional independent sources such as trade associations (8% of firms) or
government agencies (4% of firms) seemed to have very little influence on our SMEs. Indeed the media had
more of an impact as a source of advice (10% of firms) for our SMEs than these other independent sources.
This finding surprised us given the range of policy mechanisms aimed at SMEs as shown in table 5. Most of
the SMEs surveyed had very little or no knowledge of these mechanisms designed to help them. Indeed,
those that had used some of these mechanisms did not report a happy experience. In follow-up interviews,
respondents pointed to the often bureaucratic and cumbersome processes that they had to engage in order
to receive advice that was often not tailored to their business environment.
Table 5: Awareness of government policy mechanisms
Government Agencies Used (number of replies)
business
link
e skills into
Business
(sector
development
agency ESIB)
central
government
DTI trade
partners UK
regional
development
agencies (SEEDA)
local government
agencies borough
or county council
learn direct
IT courses None used
73 1 11 7 5 4 268
5. Discussion and conclusions
From the survey, we identified a number of other key problems faced by SMEs with regard to ICT adoption
and use. These can be grouped into two categories: technology related and business related.
In terms of technology, the most important concern was a fear of technology obsolescence requiring frequent
updates. In the cash-poor, highly competitive context in which SMEs operate, the need to find funding for
updates was a real concern. Firms also frequently encountered operational problems with their ICT
exacerbating their dependence on external consultants or vendors. This dependency on consultants and
vendors was often cited as a major problem by SME owner/managers who are more focused on making the
best use of limited resources in terms of time and money. ICT often competes with more pressing business
concerns. Owner/managers typically do not view ICT as offering them long term solutions to business
sustainability.
Turning to business issues, our survey suggests that SMEs are often driven by the pressures of cost and
efficiency. There is a need to retain competitiveness by driving down costs rather than increasing value-
added. The SMEs in our survey had very little strategic flexibility and their ICT investments reflected this
narrow perspective. Where sophisticated ICT applications were found, these were often driven by the need
to comply with government regulations rather than through any considered attempt at using ICT strategically.
We found this effect was most prevalent in the ‘older’ sectors of transport and logistics and food processing
as opposed to the ‘newer’ media and Internet services sectors.
As often highlighted in the literature on SMEs, owner/managers often determined the nature and extent of
ICT investments. Indeed in most cases owner/managers did not have a strong ICT background or the skills
necessary to judge the potential of ICT investments. Many of them are also uninformed about the variety of
support mechanisms available through regional and national agencies targeting SMEs. This information and
capability gap is further entrenched by the lack of internal ICT champions in SMEs themselves.
In summary, our survey findings suggest that SMEs need to think more strategically in relation to the use of
ICT. In this respect, SMEs are falling behind best practices adopted by their larger counterparts in the global
economy. Agencies charged with the development of SME capabilities also need to reorient their delivery
mechanisms to address the ICT capability and information gaps identified in this survey.
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Acknowledgements
We gratefully acknowledge the support of the WestFocus initiative (http://www.westfocus.org.uk) in funding
this research. An earlier version of this paper was presented at the European Conference on Information
Management and Evaluation, Conservatoire National des Arts et Metiers (CNAM), Montpellier, France,
September 2007. A report titled, ‘Abandoned Heroes’ summarising our findings from the full survey as well
as selected interviews can be found at http://www.westfocus.org.uk/SiteManager/UserFiles/downloads/.
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“The entrepreneurial mystique? It’s not magic, it’s not mysterious, and it has nothing to do with the genes. It’s a discipline. And, like any discipline, it can be learned” (Drucker, 1985). It is an established concept today that the behaviour of entrepreneurship is a learned phenomenon. Substantiated by enough literatures, this study advocates that a well-designed education system can generate effctive and desired entrepreneurship behaviour. There is a pressing need to pay due attention to the teaching-learning methodologies adopted for imparting lessons on the subject. On the backdrop of the existing imbalance in demand and supply of entrepreneurs in developing economies like India, the study primarily focuses on examining the role of higher education in creation of entrepreneurs. Being the supreme authority of education, the Universities need to usher the fundamental role of developing an entrepreneurial economy where the individuals possess an entrepreneurial state of mind. The paper extensively discusses about entrepreneurship pedagogy as to a check on the gap that exists between what should be taught and what is being taught to the prospective entrepreneurs. Taking cue from several studies on global entrepreneurship programs and courses, the study also throws light upon the expected outcomes from an entrepreneurship educational curriculum. After a clear review of the outcomes and the teaching mechanisms globally pursued for entrepreneurship courses and programs, the paper shifts the focus to the existing approaches of deliberating entrepreneurship education in Assam, a state in the North-eastern part of India. The study attempts to provide a critical outlook on the current course contents and methods employed for teaching entrepreneurship courses in three premier Universities of Assam viz., Gauhati University, Dibrugarh University and Tezpur University. For this purpose, an in-depth review of entrepreneurship syllabi of these three institutes has been carried out. Moreover, personal interviews have been conducted of the teachers who are engaged in imparting lessons on entrepreneurship courses in the aforesaid educational institutes in order to gain insight into their respective teaching approaches for the subject. The prime observation made in this regard is that the curricula are mostly based on texts and theories, without a pragmatic approach to it. They are basically engaged in what Linan (2007) regarded as ‘Entrepreneurial Awareness Education’, rather than creation of entrepreneurs. Identifying this lacuna in the existing teaching-learning practices, this paper, thus, puts forward a model which is suggestive of the idea that a well-designed and balanced entrepreneurship program must be a convergence between textual learning and off-the-classroom practice-based learning. The ultimate aim of proposing such a blended and heuristic approach to entrepreneurship education is generation of noticeable entrepreneurship behaviour among the participants of such programs. Keywords Teaching-learning methodologies, higher education, entrepreneurship pedagogy, entrepreneurship education, off-the-classroom, heuristic approach
... Some of the findings from the study resonate with similar studies in other markets. For instance, challenges such as financial constraints are universally found in countries such as in the United States (Beatty et al., 2001), Italy (Lucchetti & Sterlacchini, 2004), Malaysia (Tan et al., 2009), United Kingdom (Harindranath & Dyerson, 2008), etc. There are region-specific factors too (Arendt, 2008;Rouibah et al., 2009). ...
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... (Harindranath et al., 2008) to health (Chetley et al., 2006), communication (Condie & Munro, 2007) and education (Muilenburg & Berge, 2005;Andrade & Bunker, 2009).In recent times, advances in e-learning have made education easily accessible, convenient, and student-centred (Ozkan & Koseler, 2009). Further, it has allowed busier people to pursue higher education (Gulati, 2008). ...
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