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This paper shall discuss the importance of integrating information and communication technology (ICT) tools to business operations, particularly within the small to medium enterprises sector.
According to Huang (2006), the globalization of economic activities is the most significant development in the world economy in recent history. The volume and variety of products that have been included in the global trade have increased drastically. Likewise, the patterns of consumption and production are no longer as stable as they were before.
Economic globalization refers not just to the geographic spread of economic activities but also the "functional integration of internationally dispersed economic activities" (Huang, 2006). Thus, whole countries, regions, and other transactional parties are formed into one functional global economy through highly intricate international systems of production, trade, and finance.
Developments in modern technology has paved the way for huge changes in the way society works nowadays, because it widened the arena for communication among people and bringing them together into direct or indirect contact with one another, facilitating cultural exchange and communication in the process (Sait, et al., 2007). In fact, the Internet is unrivaled by any past technological development in the way it has affected both individuals and collective groups.
The benefits of globalization also come with a price, as do every other evolutionary tool in human history. Along with the rapid changes in technology came increasing demands for quality and productivity in the business world, thus making the already cutthroat competition among firms even more difficult. At the same time, we have also witnessed problems with maintaining security over online avenues of communication. Because of the open nature of most information and communication technologies today, it is quite hard to strictly monitor online traffic and screen out harmful or false content.
Sørnes et al. (2004) noted that the current business environment is driven by the transformative power of information and communication technologies, which allow for an effortless exchange of information, goods and services across national borders. The global information society thrives and progresses thanks to the continuous breakthroughs in ICT. As a general communication tool, ICT facilitates information exchange across countries and/or local areas, Web systems for businesses, online economic activities, and even technology-assisted distance learning (Takaya, 2008). Furthermore, it also has the twin characteristics of compatibility and applicable innovations of a general purpose technology or GPT, such as the steam engine in the 18th century.
Review of related literature
The review of related literature is designed to allow the researcher to critically review and synthesize previous information necessary to have a comprehensive understanding of the scope and depth of the research topic. This paper will use the systematic review methodology as the primary tool for investigating the history, development, and current status of information and communication technologies as they are used by the SME industry. Systematic review methodology is more typically applied to the primary data on health care technologies such as drugs, devices and surgical interventions (Green and Moehr 2001), but it is also being applied to other topics in the social research and policy-making.
Before we delve into the importance of ICTs in SMEs, we must first define what SMEs are. According to Fan (2003), there is no consistent definition of what a small to medium enterprise is. The consensus seems to be that a SME firm employs a range of more than 10 to less than 300 employees, with total assets of about US$100,000 to US$15 million. Total sales for an organization belonging to the SME industry likewise ranges within the said amount.
Table 1. World internet use statistics 2009
POPULATION ESTIMATE (2009)
INTERNET USERS (DEC 2001)
INTERNET USERS (LATEST DATA)
3, 808, 070, 503
Because SMEs tend to be very small and specialized in their operations, the SME sector is one of the biggest employers in most countries, and is thus a key driver for economic growth. In addition, their strong presence within an economy makes it more flexible and competitive in terms of allowing for the restructuration of larger firms and creating a livelier market where more goods of varying qualities are made available to the consumers.
It is important to note here that the literature on SMEs also points to the fact that the infusion of ICT tools to their operations are a big help towards promoting business growth and development. Ghafoor and Iqbal (2007) said that SMEs need to grow in order to continue as a competitive player in the market, and ICTs are one of the new strategic tools available for companies to encourage growth within their firm and the industry as well.
But Sørnes et al. (2004) warned that applying ICTs across the board can actually end up as a counterproductive measure, because ICTs can only work if it is compatible with the organizational culture of the business entity in which it will be used, as well as the overall framework of the country that is going to implement the shift from manual operation to an ICT-assisted one. Cultural sensitivity to the use of ICTs is therefore an important consideration before it is embedded within a particular organization or industry.
Moreover, the practical side of the issue calls for a thorough review of the ability not only of the firm to support an ICT network that can potentially grow and become more complex in the future as the business grows. There is also the question of looking at the adequacy of the ICT infrastructure in the country where the firm operates as a factor for the success of ICT integration.
Figure 1. SME share in the labor productivity of micro and small enterprises in Indonesia, Philippines, Thailand and India in 2005 US Dollars (Key Indicators for Asia and the Pacific 2009)
Gelinas and Bigras (2004) offer a more general take on the issue of SMEs and the use of ICT tools such as information management systems. For example, they noted that while large manufacturing enterprises have been known to use information management technologies successfully, the same is not necessarily true for SMEs. Firm size is one of the more important variables that they have identified as critical in determining how an organization manages its information system and its tendency to use technology to assist in its management.
At the same time, financial limitations constrain SMEs from actually launching a fully-ICT assisted network for its business operations. If we are also to go with the notion that SMEs employ only a small number of people for its operations, using a complex ICT tool may prove to be a premature action which will only lead to a complication of its business processes without providing any real benefits for the firm.
At the heart of this paper is a need to re-examine the importance of ICT tools in the context of the SME industry. Thus, the research posits the following question as the pivotal issue guiding the present study: what is the role of ICT, specifically the use of the Internet, in improving the business performance of small to medium enterprises?
As a corollary matter, the researcher will discuss the potential impact of SMEs to the national economy, particularly in developing countries. As already noted above, the instantaneous integration of ICTs in business processes will not always give rise to positive consequences, because the truth of the matter is that there are other equally weighty considerations that have to be carefully studied before some complicated ICT networks are put into place. This discussion will also provide a context for the actual potential impact of ICTs to the SME industry in both developed and developing countries.
It is important that we look at the issue of ICT use in the corporate environment not simply as an isolated matter or an effort to close the so-called digital divide between rich and poor nations, as well as the rich and poor classes within particular countries (Asian Development Bank Executive Summary Series 2001). In this manner, we are assured that we have a holistic grasp of the implications of integrating ICTs to the current business frameworks of SMEs, in order to be prepared for any possible drawbacks in the future.
SME SECTOR DEVELOPMENT
Using the information gathered from the literature review, we can graphically interpret the present problem in this manner:
From the figure we can glean that ICT tools are not utilized in a one way manner by corporate organizations, because the consumer market does have regular access to tools like the Internet, email, social networking sites and others. The consumer is therefore also empowered through using the available ICT tools to determine the quality and suitability of a particular product or service being offered in the market.
To illustrate, Molawa (2009) wrote that our subsequent shift to an information society has made it necessary for people to be able to "access information and knowledge in any format that it is available in." This is because knowledge ultimately affects the economic and social life of society, thus making wider participation in the information all the more important.
If properly utilized, ICT tools promise to be a potential boost to the organizational success of SME companies and allow it to be the top player in its particular market. However, the positive effects of ICT tools are important not only for the operations of specific industries, but can also redound to the benefit of the whole industry as well.
How can ICT be important for the whole industry? Organizations that are not able to recognize the gravity of their need to easy access information sources, such as the Internet, will not be able to cope with today's rapid technology development. As an entire industry, the SME sector cannot afford to lag behind bigger players in the competition in terms of utilizing ICT developments in their business operations.
This part of the paper shall deal with the methods for data collection, analysis and interpretation. A precise description of the methodology is designed to enable the researcher to present in a clear and logical fashion the procedures followed for gathering the data that was used for this study.
At the same time, it provides signposts for future researchers to know how the study was designed and carried out in case they wish to delve on the same subject matter using a different kind of theoretical and methodological approach. Finally, by detailing the steps taken for collecting and interpreting the data used for this study, the researcher is aided in determining the inherent weaknesses and strengths in the chosen methodology that have affected the nature, quality and quantity of the information gathered.
The case study method is the most suitable method for the research. Shanks (2002) notes that case studies "case studies can be undertaken within a positivist or interpretivist paradigm, may be deductive or inductive, may involve single or multiple cases using literal or theoretical replication and may use qualitative and quantitative data."
Moreover, a case study is defined as an empirical inquiry that looks at a contemporary phenomenon within its natural context, most especially when the difference between the phenomenon being study and the context in which it is embedded are not apparent. Case studies are reliant on multiple sources of information. It does not involve manipulation of variables, for instead of looking at the causality, case study is more focused on an in-depth analysis of the phenomenon under study and the its specific context.
The study will be highly qualitative in nature, primarily because the case study approach is designed to elicit highly specific and in-depth answers to the research question at hand. In this case, the researcher shall choose a particular SME company. Qualitative research is valuable in that it gives rise to complex textual descriptions of how people understand and experience the research issue at hand (Myers 1997; Mack et al. 2005). As we have already stated in the first subsection, both primary and secondary data will be obtained and analyzed for the purposes of the study. Thus, we cannot rely on either quantitative or qualitative research methods only because of the nature and the complexity of the research problem at hand.
Rank and file employees as well as representatives of the management (a total of 30 respondents) will be randomly selected from the company and given self-administered questionnaires sent via email. From this group, a smaller number of respondents (ideally 15-20) will be chosen based on their level of ICT activity, and they will be asked to join a focus group discussion personally attended by the researcher.
This two-tiered data collection method is structured in order to gain both a general and a specific idea of how ICT is used throughout the company. The self-administered survey will be an indicator of ICT use among the employees regardless of job description, level of seniority or educational background.
On the other hand, the focus group discussion is an important step in determining the level of ICT proficiency among the employees, as well as their personal/professional thoughts on the use of ICT tools to boost the organizational performance of their company. Keeping the number of respondents at an optimum number will help the researcher to manage the results gathered and ensure that the results will be as accurate and highly specific as possible.
The questionnaire that will be designed for this paper shall be close-ended in nature and answerable using a Likert scale. The Likert scale is a type of rating scale that is used to evaluate an individual against a particular competency (Moyer 2001). It is characterized by a numerical scale accompanied by a short description of each number's specific meaning. Likert scales range from low to high, bad to good, less to more across a spectrum of choices. This kind of questionnaire was employed by the researcher to maintain uniformity of answers and allow for more convenience during the coding process. However, questions for the FGD will be more open ended to allow the participants to elaborate on their ICT use and give examples of their experience with using these tools to accomplish workplace tasks.
In order to understand and analyze the data, descriptive research method will be used to organize the findings. According to Key (1997), descriptive research is utilized if a researcher wants to obtain data about the current status of particular phenomenon in order to describe "what exists" with respect to the variables or conditions that it involves.
The descriptive research is analytical in nature, with a view to test (and not generate) hypotheses that are already existing. As with positivist research, descriptive research does not aim to control the variables in the study; therefore it is non-intrusive and deals with naturally occurring phenomena. In other words, the data will be treated with basic statistical analyses such as taking the percentage of ICT use among the respondents, but the bulk of the data (especially from the FGD) will be narrated as is.