IMPACT OF ICT ON SMES

C. Kottai Kesavan, III B.Com

H. Karthick Raja, III B.Com.
Government Arts and Science College, Aruppukottai

Abstract
Most commonly African SMEs lack appropriate driving resources including the collective
knowledge, skills, and other necessary resources that enable business to grow and add value to their
goods and services in order to meet the competitive demands of their customers. A further intricacy which
is restricting African SMEs to perform economically better and or have higher international commitment
is that they are often labelled to have reputation of low quality products and that there are technological
requirements both in regional and developed markets as well as difficulties in joining international
supply-chain networks. In addition to the problems noted, there is a poor inter-firm linkage between small
firms and large ones. Cooperation between small and large firms permits small enterprises in particular to
reap the benefits of scale and scope economies. The skills small firms develop and knowledge they
acquire in inter-firm linkage can lead to competitive advantage in the global marketplace. Although,
SMEs in developed countries continue to face an array of similar challenges, the solution has been found
from the effective utilization of Information and Communication Technologies (ICT).

Introduction

The world’s top ten fastest growing economies are from Africa however the cost of doing business
in Africa is still in general high as a result of policy uncertainty, inadequate physical infrastructure, poor
access to investment funds and banking services, to point some. Most commonly African SMEs lack
appropriate driving resources including the collective knowledge, skills, and other necessary resources
that enable business to grow and add value to their goods and services in order to meet the competitive
demands of their customers. A further intricacy which is restricting African SMEs to perform
economically better and or have higher international commitment is that they are often labeled to have
reputation of low quality products and that there are technological requirements both in regional and
developed markets as well as difficulties in joining international supply-chain networks. In addition to the
problems noted, there is a poor inter-firm linkage between small firms and large ones. Cooperation
between small and large firms permits small enterprises in particular to reap the benefits of scale and
scope economies. The skills small firms develop and knowledge they acquire in inter-firm linkage can
lead to competitive advantage in the global marketplace. Although, SMEs in developed countries
continue to face an array of similar challenges, the solution has been found from the effective utilization
of Information and Communication Technologies (ICT).
EVOLUTION OF ICT

The realization and evolution of Information, Communication and Technology (ICT) has arguably
begun in the late 1970s and early 1980s, following the emergence of, first the minicomputer and, later the
microcomputer (culminating in the personal computer). At early stages, the Information Technology was
the single most dominant notion in terms of economic development and growth. However, despite the fact
that IT expansion created significant economic opportunities, keeping it as discrete sector was not in
economic terms wise and as such, emerged the significance of increasing communication technologies as
well as information processing technologies – a shift from IT to ICT. Following was the intense
placement of large volumes of investment to entice and stimulate all possible means of ICT infrastructure
and development.

Challenges and barriers of e-commerce

The concept of e-commerce is still pretty new an as such needs to be explicitly understood in its
real sense. This is where the challenge arises. To some ecommerce sounds just a technology but in reality
e-commerce is simply more than technology it is in fact a whole new modern business strategy in which
if small or large firms integrate into their existing strategies can gain more in productivity, market share
or even bottom-line profitability. Today SMEs in both developed and developing countries continue to
fail due to either poor implementation or understanding of e-commerce strategies and technology. It has
been revealed that regardless of the business environment, the biggest challenge most SMEs managers or
entrepreneurs face is one of transformation – how to basically transform their brick and mortar companies
into one of click and mortar company in order to be competitive in this inevitable digital economy. These
challenges are predominantly enormous in developing countries particularly in Africa where the digital
age is still taking its roots gradually. The challenges primarily include lack of proper commercial and
legal system for conducting the business and commerce through the electronic commerce. Added to this
are hindrances such as security, poor telecommunication infrastructure, lack of skilled labour and trust,
privacy and psychological barriers, digital divide as well as poor e-commerce planning and strategy.

ICT role on firm competitiveness and performance

The concept of competitiveness can be conceptualized as vague one in that much of its mistiness
stems from the fact that the term means different for different organizations however, at a firm level,
competitiveness resides in the ability of firms to consistently and profitably produce products that meet
the requirements of an open market in terms of price and quality. According to Barney (1991, 99-120), a
firm is said to have a sustained competitive advantage when it is implementing a value creating strategy
not simultaneously being implemented by any or potential players. Porter (1990) defines competitive
advantage as the heart of a company’s performance. It reflects a company’s ability to offer consumers
greater value either by means of lowering prices or by providing greater benefits and services that
justifies higher prices. When it comes to ICT’s role in connection with company competitiveness, authors
Alam and Noor (2009, 112-125) argue that ICT offers enterprises avenues to compete on a global scale
with improved efficiency and closer customer and supplier relationships.

Conclusion

It was found that even if very small, a firm has the opportunity to attain competitiveness and
outmanoeuvre its rivals if it constructs a culture that fully utilizes the opportunities that come with ICTs
be it the internet, electronic commerce, e-business and communication technologies, knowledge-based
innovation management. Furthermore, it was found that ICT can simply help firms to quickly locate more
customers, outsource best suppliers, and most importantly reach suitable business partners worldwide.
Enthusiastic respondents expressed that they have found ICTs as very effective in terms of decreasing the
time between the outlay of capital and the receipt of products and services.ICT adoption is highly
strategic in that it is firstly potential for the immediate survival and growth of any business whether small
or large and secondly it is inescapable necessity for the future success of any business. Some of the
strategic benefits respondents indicated include expanding geographical reach as well as increasing brand
awareness, increasing revenue, improving customer services and interaction as well as competing with
bigger rivals. Even though the concept of ICT uptake is still pretty new in Africa generally and as such
continues to face an array of challenges including poor telecommunication infrastructure, lack of skilled
labor and trust, privacy and psychological barriers, digital divide as well as poor ICT adoption planning
and strategy and an overall culture of reluctance among general population and more importantly among
SMEs owners or managers in adjusting their businesses with the revolution of ICT applications simply
with the assumption that such participation involves complete re-design of their business strategy; it
seems despite all these challenges, SMEs do explicitly understand the real potential of ICT.

Reference

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112-125.
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