Information Technology Usage in SMEs in a Developing Economy

• Published date: 01 September 2015
• Author: Ademola Afolayan,Gareth R.T. White,Paul Jones,Paul Beynon‐Davies,Eoin Plant
• DOI: http://doi.org/10.1002/jsc.2023
• Date: 01 September 2015

RESEARCH ARTICLE

Strat. Change 24: 483–498 (2015)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2023

Copyright © 2015 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2023

Information Technology Usage in SMEs

in a Developing Economy1

Ademola Afolayan

e University of South Wales, UK

Eoin Plant

e University of South Wales, UK

Gareth R.T. White

e University of South Wales, UK

Paul Jones

e University of Plymouth, UK

Paul Beynon‐Davies

Cardi Business School, UK

Information communication technology adoption is well advanced in Nigerian

SMEs, but further development is hampered by poor infrastructure and corruption.

Information technologies are widely regarded as being capable of providing con-

siderable strategic and operational value to organizations. eir implementation

and development has been explored in a wide range of contexts. Studies have been

made of large and small‐scale organizations, in the public and private sectors, and

in dierent regions of the world. Much of this research has identied the consider-

able challenges associated with successful technology deployment. What has

received comparatively minimal attention to date is the adoption of information

technology businesses in developing economies. Arguably, these businesses are in

greater need of such technologies in order to capitalize upon the benets they may

bring. However, organizations in these regions are faced with potentially unique

diculties and constraints.

is study reports the use of information technologies among small and

medium‐sized enterprises (SMEs) in a developing economy. A survey of 161

companies was undertaken in Lagos, Nigeria. It found that a variety of informa-

tion technologies had been employed and that they had delivered considerable

operational improvements. However, a lack of training and awareness is inhibiting

their further use and development. Furthermore, a lack of infrastructure to supply

1 JEL classication codes: M15, M38.

SMEs are known to be the

backbone of the economy in

developed and developing

countries, and Nigeria has

advanced immensely through

thenumerous benets that

ICTprovides.

There is a need for both managers

and employees to undergo

continual training in order to be

aware of the changing nature of

ICTs and to nd the most suitable

solution for their organizations.

ICT adoption in developing

economies appears to present

additional challenges to those

that are experienced in the

majority of system

implementations and

developments.

484 Ademola Afolayan, Eoin Plant, Gareth R.T. White, Paul Jones, and Paul Beynon-Davies

Copyright © 2015 John Wiley & Sons, Ltd. Strategic Change

DOI: 10.1002/jsc

consistent power and Internet services also inhibits their

eectiveness. e issue of corruption was also identied

as a considerable problem that aects user condence.

While this is a perennial problem that surrounds the use

of information technologies in many countries, it appears

markedly important in this economy. Consequently, it

threatens to be a signicant inhibitor to the uptake of

technologies.

e role of SMEs in developing countries is an impor-

tant one, contributing to economic growth and thereby

job creation and poverty alleviation (Adekunle and Tella,

2008; Paul et al., 2008; Jones et al., 2014). SMEs are of

particular signicance to the economic development of

Nigeria since they account for around 97% of privately

owned businesses (Ihua, 2009). ey have been recog-

nized as the backbone of the economy, employing approx-

imately 50% of the work force and providing more than

50% of Nigeria’s industrial output (Adekunle and Tella,

2008). ey play a signicant role in enhancing the

quality of human resources, generating employment,

building a culture of entrepreneurship, supporting large‐

scale industries, and encouraging the creation of new

business opportunities (Harindranath et al., 2008).

SMEs serve many dierent roles within supply chains,

as suppliers, distributors, producers, and customers (Hong

and Jeong, 2006; Koh et al., 2007). e inuence of

globalization on SMEs has compelled many of them to

adopt information communication technology (ICT)

solutions in order to survive among increasingly competi-

tive supply networks (Hsin and Anastasia, 2008; Ongori

and Migiro, 2010; Stavrulaki and Davis, 2010; Olise

et al., 2014). ere has been a vast increase in the applica-

tion and adoption of ICT in organizations for the storing,

processing, distributing, and information exchange within

the rm and along their supply chains (Apulu et al., 2011;

Olise et al., 2014; Agboh, 2015). Firms utilize ICT for

many purposes, including enhancing eciency and cost

reduction, and providing an enhanced service to their

customers (Ashra and Murtaza, 2008; Apulu et al., 2011;

Harrison and van Hoek, 2011).

is article is structured as follows: the rst section

introduces the importance of ICT in SMEs for the man-

agement of supply chain activities. Following that, the

article explores the role of ICT in SMEs, along with the

benets and barriers of ICT adoption. Next, the research

hypotheses are presented, along with the methodology

adopted for the study. Finally, analysis and discussions are

presented, before conclusions and recommendations for

future research are stated.

The role of ICT in SME supply chains

Supply chain management (SCM) comprises a set of

approaches and practices to eciently incorporate manu-

facturers, distributors, customers, and suppliers, to

improve the long‐term performance of the individual

rms and the supply chain as a whole (Koh et al., 2007).

e main objective of eective SCM is to generate a

source of competitive advantage for organizations to dis-

tinguish themselves from competitors by operating at a

lower cost, thus at greater prot, and this can be aided by

the adoption of ICT (Christopher, 2011).

Today’s ICT solutions are broadly seen to encompass

a wide range of ‘software, hardware, telecommunication

and information management techniques and applications

that are used to create, produce, analyse, process, package,

distribute, receive, retrieve, store and interpret information’

(Barba‐Sanchez et al., 2007, p. 105). e emergence of

ICT has helped organizations achieve greater coordina-

tion and collaboration among supply chain partners and

automate the supply chain process (Hsin and Anastasia,

2008). With advances in, and increasing availability of,

ICT, manufacturers, their suppliers, and their distribu-

tors can be linked together into a seamlessly integrated

organization (Stavrulaki and Davis, 2010; Ajayi and Ola-

yungbo, 2014). e ability of SMEs to oer products

and assemble goods at low prices within the quality stan-

dards stipulated by larger enterprises has helped increase

the overall competition of the supply chain (akkar

et al., 2009).