19th annual research workshop mobile phones and micro and small enterprises (mse) performance and transformation in dodoma, tanzania by Dr. V. Venkatakrishnan

SECTION II: LITERATURE ON ICT USE BY SMEs

Consoli (2012) made a review of literature on determinant factors and the impact of ICTs on SMEs. It was identified that the adoption and use of ICT could bring benefits to SMEs in terms of efficiency, effectiveness, innovation, growth and competitive advantage. The factors which inhibit and do not stimulate investments in ICT were identified such as (a) financial: high initial investment and difficulty in the access to credit (b) infrastructural: power, bandwidth and reliable internet connection (c) organizational: lack of skilled staff and coherent strategy and (d) technological: evolution of technology not very ‘user friendly’ without adequate training. Similarly various determinant factors for ICT adoption such as top management commitment, personal traits (education, age…), culture on information system, high-skills, learning by doing processes (all related with the individuals), enterprise sizes, human capital, organizational culture, workers participation (all concerned with the organization), competitive pressure, customers’ innovation requirements and public policies (all linked to environment), existing technology (technological) and macroeconomic costs (economic) were identified (Consoli, 2012:93-94). Similarly, the impacts of ICT on organizations were also listed out: efficiency, effectiveness and competitiveness, innovative business and intangible benefits (all associated with the performance), productivity growth, strategic growth and sales increase (all contributing to growth), organization expansion, supply chain improvements and international communication (all connected to expansion) and new products/services, product quality and customer satisfaction (all linked to new products) (Consoli, 2012:95).

A study by Skopo et al (2006) on ICT adoption of Australian and Croatian SMEs concluded that for adopting higher levels of IT/ICT like intranets, Australian SMEs would need a combination of causal conditions in the order: technological support present, government support absent but individualistic factors present. Further, it mentioned that the IT/ICT in Croatia was not politically supported and is left to individuals with their knowledge and IT skills. Other higher forms of IT/ICT were adopted under the influence of technological factors with an obvious absence of all other factors. With regard to Australian SMEs, ICTs were adopted mainly under the influence of technological factors and factors of support by the government policy (Skopo et al, 2006:39).
Skope, Ceric and Huang (2008) developed a model of ICT adoption by Chinese SMEs. They concluded that adopting basic forms of IT/ICT by Chinese SMEs were conducted under presence of technological and individualistic factors. It was confirmed that for adopting IT/ICT in Chinese SMEs, there was no well developed infrastructure and political support. That process was left for individualists and their knowledge and IT skills to do it on their own. As to adopting other higher forms of IT/ICT, they were introduced by the influence of technological factors with obvious absence of all other factors.
Esselaar et al (2007b) undertook a study on the profitability of SMEs due to ICT use in eight African countries including Tanzania. They found out that ‘within the SME sector, ICTs played a role in reducing transaction costs (thereby increasing efficiency) and increasing market access’. They cited the examples of new financial products increasingly based on mobile or Internet platforms. Further, they mentioned that finding new products, increasing customer awareness of the products available and sourcing new markets were considerably easier using ICTs. They concluded that ‘a combination of sector turnover production functions and the correlation between profitability and value of ICT assets relative to the value of total fixed assets suggested that use of ICTs might be more likely a cause of SME profitability’ (p.68).
Ismail, Jeffery and Belle (2011) researched about the use of ICTs by SMEs in South Africa. This research confirmed that ICT use in an enterprise definitely added value to the SME, with the highest rated value added being those of ICT helping the SMEs to improve their customer satisfaction levels, as well as improving their levels of service, which also affect the customer. Nevertheless, the study also found out that many SME owners also thought of ICT as a greater expense to the enterprise as compared to its added the value. These authors concluded that an overall lack of understanding as to the benefits of ICT was evident amongst the SMEs sampled in this research (p, 11).
Kiveu and Ofafa (2013) studied about the Kenyan SMEs’ use of ICTs for marketing. They concluded that ‘the use of ICT for marketing by SMEs still remained low despite SMEs having access to these tools. Majority of SMEs used ICT for communication, social networking and general information acquisition’. They also felt that there seems to be lack of awareness of the range of opportunities that ICT offered for increased market access. According to them, limited use of ICT for marketing can also be attributed to perceived high costs of appropriate applications, security issues and limited knowledge and skills on some ICT applications e.g. e-commerce (p.42).
Lal and Peedoy (2006) focused on the ICT adoption by SMEs in Mauritius. They contended that despite the claim of being a cyber-island, the adoption of ICTs in SMEs is far from being an integral feature of Mauritian SMEs. Cost of communication and the lack of learning opportunities have been found as the major impediments in the adoption of ICTs.

The experience of many African and other developing countries’ SMEs in use of ICTs is mixed. Lack of steady electricity supply, poor and expensive internet services, lack of ICT skills in case of Nigeria (Apulu, Latham and Moreton, 2013), high investment costs, bad connections, limited human resources, current economic situation, business partners not having any form of ICT and lack of legislative and government support in case of Croatia (Skoko et al, 2006 :36-7), the high cost of communications inflating the input cost to the business in many African countries (Gilwald and Stork, 2008: ii) and high cost of devices and services in many African countries (Wolf, 2001: 21) were cited as the reasons for low use of ICTs by SMEs.