IT and Fast Growth Small-to-Medium Enterprise Performance: An Empirical Study in Australia

Abstract

Information technology (IT) is regarded as a facilitator for both small and large firms to speed up transactions between firms and their suppliers and customers, achieve real-time communication, lower transaction costs, and enhance speed and flexibility. However, understanding whether and how IT helps small-to-medium enterprises (SMEs) to create business value still remains unclear. Drawing upon resource-based view theory, we develop and test a theoretical model to explore the interrelationships between IT resources (IT expertise, IT infrastructure), IT capability (IT integration), IT-enabled inter-firm processes (activity integration, coordination, partnership enhancement), and organizational performance in the fast growth SME context. We propose that IT business value depends on how SMEs employ IT resources to develop IT capability which facilitates inter-firm partnership processes along value chains. Structural equation modelling is employed to test our theoretical conceptualization of 310 Australian fast-growth SMEs across different industrial sectors. Results show that IT contributes to fast growth SME performance through the development of IT capability and enhancement of inter-firm partnership activities. This research highlights the role of IT in business value creation and the ways in which IT is used by fast growth SMEs to foster core business competencies.

The Role of Top Management Participation and IT Capability in Developing SMEs’ Competitive Process Capabilities

“…In dynamic environments, effective process alignment can reduce information distortion, provide visibility into processes between a SME and its partners, facilitate the mutual adjustment of plans and actions, and enable the discovery of how processes can be improved. SME with high process alignment can reinforce business relationships between the firm and its partners, enabling these companies to share information in a timely manner, respond to market changes swiftly, and launch competitive actions with precision and speed, and thus enhance process flexibility (Bi, Davison, and Smyrnios ; Perols, Zimmermann, and Kortmann ). Such process flexibility positions SMEs to exploit market opportunities, react to competitors' action quickly, and launch actions with variety and surprise (Loane ; Perols, Zimmermann, and Kortmann ).…”

Resource-Based View of Information Systems: Sustainable and Transient Competitive Advantage Perspectives

“…The concept of firm performance is simple-it relates to how well the firm performs (Bi et al, 2015;Cosic et al, 2015;Someh & Shanks, 2016). However, the extent to which information systems can effectively play a role as a firm resource that drives firm performance is rather complex due to its inconsistency, as demonstrated by Wade and Hulland (2004) in their seminal review and by Liang and You (2009) in their meta-analysis of the RBV of information systems.…”

Influence of Operational Processes on the Performance of Manufacturing Firms: Empirical Evidence from SMEs in Kenya

“…First, the RBV theory views the firm as a bundle of resource and that each firm possesses heterogenous resource base which enables them to participate and compete in the market place [51]. These resources serve as inputs to the organizational processes and are typically not embedded within the organizational processes [12]. This is different in the case of the manufacturing sector, where the firm's resources are often used up in the production process, and this may confer the firm with competitive advantages with an ensuing effect on firm performance [60].…”

“…The study targeted 439 manufacturing firms under Kenya Association of Manufacturers (KAM), which are clustered into 12 A sample size of 196 was arrived at through the use of the published tables [11]. Because the target population was finite, a finite correction factor given by the equation below was used:…”