Innovation in information technology is well established in developed nations; newly industrializing and developing nations have been creating governmental interventions to accelerate IT innovation within their borders. The lack of coherent policy advice for creating government policy for IT innovation signals a shortfall in research understanding of the role of government institutions, and institutions more broadly, in IT innovation. This paper makes three points. First, long-established intellectual perspectives on innovation from neoclassical economics and organization theory are inadequate to explain the dynamics of actual innovative change in the IT domain. A broader view adopted from economic history and the new institutionalism in sociology provides a stronger base for understanding the role of institutions in IT innovation. Second, institutional intervention in IT innovation can be constructed at the intersection of the influence and regulatory powers of institutions and the ideologies of supply-push and demand-pull models of innovation. Examples of such analysis are provided. Third, institutional policy formation regarding IT innovation is facilitated by an understanding of the multifaceted role of institutions in the innovative process, and on the contingencies governing any given institution/innovation mix.

Top management support is a key recurrent factor critical for effective information systems (IS) implementation. However, the role of top management support may not be as critical as external IS expertise, in the form of consultants and vendors, in small business IS implementation due to the unique characteristics of small businesses. This paper describes an empirical study of the relative importance of top management support and external IS expertise on IS effectiveness in 114 small businesses. Partial least squares (PLS) was used for statistical testing. The results show that top management support is not as important as effective external IS expertise in small business IS implementation. While top management support is essential for IS effectiveness, high quality external IS expertise is even more critical for small businesses operating in an environment of resource poverty. These findings call for more research efforts to be directed at selecting and engaging high quality external IS expertise for IS implementation in small businesses.

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