Readiness factors for information technology adoption in SMEs: testing an exploratory model in an Indian context
| Published date | 07 October 2019 |
| DOI | https://doi.org/10.1108/JABS-09-2018-0254 |
| Date | 07 October 2019 |
| Pages | 694-718 |
| Author | Jessy Nair,Aarthy Chellasamy,B.N. Balaji Singh |
| Subject Matter | Strategy,International business |
Readiness factors for information
technology adoption in SMEs: testing an
exploratory model in an Indian context
Jessy Nair, Aarthy Chellasamy and B.N. Balaji Singh
Abstract
Purpose –Extant literature regarding factors essential for successful information technologies (IT)
implementationin small and medium enterprises(SMEs) does not significantlyaddress readiness factors
for IT implementation in an Indiancontext. This exploratory research develops and tests a frameworkto
analysethe antecedents to organisational preparednessfor adoption of IT infrastructure in SMEs.
Design/methodology/approach –This exploratory researchadopts a mixed-method approach to test
the technology,organization and environment(TOE) framework. In-depth interviewswith SME owners are
conducted to developthe case study, and the measures obtained are testedthrough a survey at a small
and mediumbusiness industrial cluster in SouthernIndia in SMEs.
Findings –The case study indicates SME owners’ drive to initiate technology preparedness for
organisationalsustainability is a key factor, a measure notseen during the literature review. An empirical
study tests the measures.Pressure from customers, owner’s age, salesof SME, owner’s attitude towards
IT and owner’s knowledgeof IT was confirmed, which indicates organisationalfactors have more impact
comparedto technological and environmental factors.
Research limitations/implications –The academic scope of thisresearch paper can be extended to
contextssuch as readiness in IT infrastructurefor digital transformation.
Practical implications –The validated research framework can be used by organisation stakeholders
and SME ITpractitioners for successful IT adoption.
Social implications –SMEs contribute significantly to gross domestic product (GDP) and provide
employment opportunities. Hence, this research provides a tested model that SMEs owners/managers
can adopt as a frameworkto augment competitiveness to implementIT.
Originality/value –The study adopts a mixed-method research design and is, perhaps, a first in the
Indian context to explore variables through case study and validate identified measures through an
empirical study. The model can be used by SME owners and practitioners to ascertain factors for
organisationalpreparedness for IT adoption.
Keywords Small and medium enterprises, Organizational preparedness,
Technology organization environment framework, IT readiness, Mixed-methodresearch,
Digital transformation
Paper type Research paper
1. Introduction
Information technologies (IT) such as enterprise resource planning (ERP) applications
automate and support a range of administrative and operational business processes across
multiple industries (Shehab et al.,2004), enabling organisations to manage resources and
improve productivity. Large and small organisations encounter a multitude of changes.
El Sawy (1985) points to the pace of business getting “turbulent” because of changing
technology and speedy communicationresulting in a reduced “time span” for organisational
changes as highly critical. Small and medium enterprises (SMEs) are suppliers to large
Jessy Nair is Associate
Professor at PES University,
Bangalore, India.
Aarthy Chellasamy is
Assistant Professor at
Christ University,
Bangalore, India.
B.N. Balaji Singh is
Consultant at Tata
Education and
Development Trust,
Mumbai, India.
Received 26 October 2018
Revised 26 October 2018
Accepted 17 June 2019
The authors would like to
personally thank the three
owners of SMEs who were key
respondents for the case study.
Their involvement with the
research by providing insights
and valuable time during
in-depth interviews has been
selfless.
PAGE 694 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 13 NO. 4 2019, pp. 694-718, ©Emerald Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-09-2018-0254
organisations. To keep pace with their requirements, it is important that SMEs upgrade their
technology infrastructure to choose high-quality information superior to that of their
competitors(Kale et al.,2010;Pollard,2006;Sadagopan, 1999).
Current trends in business include compelling digital transformation in SMEs through IT.
Hence, studies in this sector are gaining increased attention (Sanjay and Pravada, 2013;
Kaibori, 2001;Matthews, 2007;Ranganathan and Kannabiran, 2004). Though SMEs
depend on rigid, low-cost IT applications, they realise the significance of consistent IT
infrastructure such as ERP systems that suits their business (Munjal, 2006). The SME
segment has been an agent of change and growth in many countries and is a major source
of employment (Goswami and Sarangdev, 2010). Although the ERP market is booming, it
still has challenges and issues in adoption in the SME segment. SMEs must recognise that
the implementation of IT applications like ERP is a technological intervention of the core
endogenous dimensions of the organisation that causes organisational change. If
the contextual dimensions thatrepresent an endogenous organisation can be identified and
are within stakeholders’ control, corrective actions can be undertaken for ERP project
success in small businesses.
SMEs in India has grown tremendously. India’s flagship Digital India initiative (PwC, 2017)
was introduced to develop an eco-system to leverage resources such as infrastructure,
skilled workforce, and policies toenable manufacturing and electronics sectors to compete
with organisations around theworld. The Indian SME sector contributed 17 per cent of GDP
in 2014 (Goyal, 2013) and is expected to rise to 22 per cent in 2020 (Rowe et al.,2012). A
report by the Ministry of SME states that thereare more than 48 million SMEs, contributing to
more than 45 per cent of India’s industrial output, 40 per cent of the country’s total exports
and producing 1.3 million jobs every year (Firstbiz and Greyhound Knowledge Group,
2014). Yet, these SMEs struggle in multiple aspects (Goyal, 2013;Narayan, 2014;Lunt and
Barclay, 1988) such as economic downturns, increased lead time, frequent change in
customer demand and unpredictable financial markets (Kale et al.,2010). Keeping global
competition in mind and to overcome domestic rivalry, many companies are implementing
ERP systems to enhance coordination among organisational units, allow better decision
making processes and improve effectiveness among internal and external customers
(Caruso and Marchiori, 2003).
Indian SMEs, the backbone of the Indian economy (Singh et al.,2010), has a strong
technology base, international business outlook and spirit of competition. Their willingness
to undergo change can overcome the challenges of adopting powerful IT tools [Boston
Consulting Group (BCG) Report, 2013;Lal, 2005]. A survey conducted by BCG in 2013
reveals that 90 per cent of SMEs in India have internet access, compared to 22 per cent of
SMEs in China and 5 per cent of SMEs in USA (Manyika and Roxburgh, 2011). The Indian
Government’s impetus has been towards implementing policies favourable for the
manufacturing sector. However, in an analysis of issues related to SMEs, 65 per cent of
SME’s lag in effective usage of information systems (ISs) (Chawan and Vasudevan, 2014).
While there is extensive literature listing factors essential for SMEs to implement an IT
architecture, there is a lack of empirical studies on factors for SMEs’ readiness for IT
adoption in India.
Section 2 discusses issues regarding IT adoption in SMEs. It reviews the literature
regarding IT adoption in SME sectors in Indian and global contexts to identify vital
preparedness factors. Factors recurrent in Indian and global context are considered to
develop the measurement tool. The succeeding Section 3 elaborates the motivation for the
study and states the research objectives. Section 4 deliberates on the process of
hypotheses development. First, through literature review, IT adoption factors in SMEs are
identified. Second, a case study method is adopted to validate factors obtained through
literature and explore novel factors that may emerge and were overlookedduring the review
of literature. Section 5 elaborates the instrument development process and data collection.
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