The Adoption and Impact of ICT in South African SMEs

• Author: Gül Berna Özcan,G. Harindranath,Sinfree Gono
• Date: 01 November 2016
• Published date: 01 November 2016
• DOI: http://doi.org/10.1002/jsc.2103

RESEARCH ARTICLE

Strategic Change 25: 717–734 (2016)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2103

Copyright © 2016 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2103

The Adoption and Impact of ICT in South African

SMEs1

Sinfree Gono

School of Management, Royal Holloway, University of London, UK

G. Harindranath

School of Management, Royal Holloway, University of London, UK

Gül Berna Özcan

School of Management, Royal Holloway, University of London, UK

Using the technology–organization–environment model, this study investigates

theadoption and impact of information and communications technology by

small and medium‐sized enterprises in South Africa.

Increasing use of information and communications technology (ICT) by busi-

nesses makes it imperative that we develop an enhanced understanding of the

impact of ICT adoption by small and medium‐sized enterprises (SMEs). Despite

a growing repertoire of SME studies, there is a need to create a more targeted

body of research on ICT adoption by SMEs in the context of developing and

emerging economies. is article extends the work presented at the Institute for

Small Business and Entrepreneurship (ISBE) conference by using the technology–

organization–environment (TOE) framework to understand the adoption and

impact of ICT by SMEs in post‐apartheid South Africa (Gono et al., 2013, 2014).

Specically, the article answers the following research question: What are the

factors and processes that aect the adoption and impact of ICT by SMEs in the

South African manufacturing and logistics sectors? To achieve this objective, the

article examines the perceptions of owner‐managers in relation to technological,

organizational, and environmental factors that aect the adoption and impact of

ICT in their rms.

During the apartheid era, government policies caused South African industry

to be dominated by large rms that relied on subsidies and suppressed SMEs and

this, along with high import taris and economic sanctions, created a challenging

environment for rms to improve productivity (Joe et al., 1995). A key issue

facing the South African government in the transition from a centrally planned

1 JEL classication codes: L25, L60, L91, L98, M15.

Governments around the world

are increasingly encouraging small

and medium‐sized enterprises

(SMEs) to adopt information and

communication technology (ICT),

and post‐apartheid South Africa

has seen an increasing emphasis

on the adoption and use of ICT

by SMEs.

Many South African SMEs are

condent, mature users of ICT,

with owner‐managers engaged

in ICT decision making alongside

other senior managers.

There is also evidence of a skills

decit in many SMEs, especially

in the black‐dominated logistics

sector.

Government’s ICT support and

SME policies should better address

critical areas such as capacity

building, skill upgrading, and

norm setting at the level of

regional economies and industries.

718 Sinfree Gono, G. Harindranath, and Gül Berna Özcan

Copyright © 2016 John Wiley & Sons, Ltd. Strategic Change

DOI: 10.1002/jsc

apartheid regime to an open‐market economy is the

urgency to develop the SME sector as part of a wider

social and economic restructuring. SMEs are estimated to

account for 90% of South Africa’s business establishments

(Smit and Watkins, 2012), contributing 52–57% of the

country’s gross domestic product and 61% of employ-

ment (see also Goldstuck, 2012). Similar to the size

dimensions used in the UK (Clear et al., 2013), the

Department of Trade and Industry of South Africa (DTI,

2008) indicates that micro‐enterprises (≤ 5 employees)

provide employment for 17% of the workforce, small

enterprises (≤ 50 employees) for 21%, and medium‐sized

enterprises (≤ 200 employees) for 18%. Large enterprises

make up the balance (44%).

SMEs are a source of employment, new business

ideas, and poverty alleviation (Wolf, 2001; UNDP, 2011).

ese rms arguably carry more importance in today’s

global economy, earmarked by relationships, networks,

and information intensity (Tse and Soufani, 2003). Prior

research on SMEs has examined a variety of outcomes as

a result of ICT adoption and use in both developing and

developed economies. Studies show that resource con-

straints often hamper investments in information technol-

ogy (Beck and Demirgüç‐Kunt, 2006). e literature also

suggests that ICT adoption decisions in SMEs are the sole

provenance of owner‐managers (Caldeira and Ward,

2002; Beckinsale et al., 2006), however, there exists evi-

dence showing that external factors such as suppliers

(Beckinsale et al., 2006) and ICT consultants (Bathgate,

2013) also strongly inuence ICT adoption and mediate

their impact (Jones et al., 2014).

e article will proceed with a brief discussion on

approaches used in the SME/ICT literature and the theore-

tical foundations of the TOE framework used in this study.

e methodology section will provide information on the

methods used, including the data set and statistical analyses,

as well as interviews conducted. is is followed by a discus-

sion of the three themes that form the framework: techno-

logical, organizational, and environmental constructs. In

the nal section, the results and conclusions are presented.

Theoretical background

e range of approaches and theoretical foci used in the

SME/ICT literature is diverse: the diusion of innovations

approach (DOI) (Rogers, 1995; Parker and Castleman,

2009), technology acceptance model (TAM) (Davis et al.,

1989; Venkatesh, 2000; Devos et al., 2012), resource‐

based theory (RBT) (Caldeira and Ward, 2002; Barney,

2012), and technology–organization–environment (TOE)

framework (Tornatzky and Fleischer, 1990; Baker, 2012)

are among some of the most widely used theories in infor-

mation systems (IS) research on SMEs. Although these

theoretical approaches provide a lens for examining the use

of ICT by SMEs and their contributions, most of this

research is set in the context of developed economies. In

addition, the literature also demonstrates a tendency to

selectively test factors aecting ICT adoption and use

(Ramdani et al., 2013). is study utilizes the TOE frame-

work to investigate this adoption and impact of ICT by

South African SMEs, since it provides a stronger contex-

tual model to analyze the rm‐level aspects along with

environmental considerations of ICT deployment.

Technology–organization–environment

framework

Tornatzky and Fleischer’s (1990) TOE is an integrative

framework providing a holistic theoretical basis for

research on ICT issues in SMEs by exploring technologi-

cal, organizational, and environmental factors that aect

the use of ICT (Ramdani et al., 2013). Owing to its wide

applicability (Zhu et al., 2003) and broad coverage of

themes, it is a suitable framework for exploring ICT issues

at the rm level. e literature suggests that SMEs are

poor at exploiting ICT (Levy et al., 2003). In the develop-

ing country context, especially in the unique post‐

apartheid setting, it is important to understand the factors

that inuence the adoption and impact of ICT in SMEs.

Figure 1 presents an adapted model based on

the TOE framework that brings together a range of

technological, organizational, and environmental factors,