S. Miyahara; T. Bunno; M. Tsuji; H. Idota; H. Miyoshi; M. Ogawa; N. Smith
MODSIM 2005: INTERNATIONAL CONGRESS ON MODELLING AND SIMULATION: ADVANCES AND APPLICATIONS FOR MANAGEMENT AND DECISION MAKING UNIV WESTERN AUSTRALIA 1070 - 1076 2005
[Refereed] This paper attempts to extract empirically factors that promote the introduction and usage of IT by SMEs (Small-and medium-sized enterprises) through the method of mail surveys and in-depth interviews conducted in two of Japan's largest SME clusters, Higashi-Osaka and Ohta Ward, in the metropolitan area of Tokyo. We sent questionnaires to more than 6,000 SMEs in these two clusters, and received nearly 1,200 replies.
Questions sent to SMEs were related to (i) company characteristics (amount of capital, number of employees, etc); (ii) managerial orientation, which classifies SMEs as the expansion, incentive-providing, adapting, or data-using category; (iii) business environment such as the degree of competition; (iv) purposes of IT use, such as raising profit and productivity; (v) expectations for IT use; and (vi) other factors such as IT investment in the most recent fiscal year and the company's understanding of importance of the IT in business management. Regarding management orientation, a detailed explanation is called for. The questionnaires contain ten items regarding managers' daily activities. Since there is some overlap between the ten questions, an attempt was made to isolate the variables through component analysis. In this manner, four variables, which account for 70.1% of the total responses, were isolated. The first of these includes questions to determine to what extent an SME is geared toward expansion. The second category, orientation to incentives, contains questions on management's performance vis-A-vis stakeholders, and on any incentives it gives employees by relinquishing rights and responsibilities to them. The third variable includes questions on the extent to which firms learn from their mistakes, and on whether top management considers employee suggestions. Since such courses of action are indicative of management's responsiveness, this factor is referred to as "orientation to adapting." The last variable, called "orientation to data use," contains questions on how firms make use of data for decision-making. We selected the followings indexes to represent the degree of IT use by SMEs: (i) the amount of software that contributes to efficient utilization of managerial resources; and (ii) Internet usage. Based on these data, we extracted the factors by making use of regression methods such as OLS, logit and probit estimations. Thus, the result of estimations can be compared.
One of the most important factors we found in our research is " expectation from IT use," such as " restructuring of the whole business process," which is identified as a significant factor in all of our estimations. SMEs with intensive use of IT believe in its effect and actually invest lots. It follows from this that the most important way to promote IT use among SMEs is to encourage them to be forward-looking. Once they adopt such an outlook, SMEs can determine the exact ways in which they will introduce and use IT, according to their specific goals. By the probit analysis, the behaviour of COE or the top management was also found to be especially important. Since IT use is a function of a business's management and strategy, the decisions made by senior managers are crucial. Even if SMEs operated under optimal conditions, they would not be able to use new technologies to their advantage without correct decisions by their managers. Similar conclusions were reached by Tsuji and Choe (2004), who also tried to identify factors that encourage regional information policies by using the same framework. They concluded that the leadership of top local government is the most significant.
Once we correctly grasp those factors, then we can make use of them to establish to suitable policy measures to enhance SMEs. Based on rigorous researches, proper policy measures should be established.