Introduction
The advancement in information technology has created a paradigm shifts from traditional ways of doing business to more sophisticated methods that leave a business firms with many options to explore for effective competition. Therefore, in the academic field, dissertation research is extremely vital for students.
Since dissertation research varies in structure depending on which field one is writing in, the paper will in effect consider the role of information technology in enhancing business competitiveness (Apulu, 2011, p. 485). Information systems support the principal business roles for instance, returns and advertising, making and production, finance and accounting, human resources and outsourcing and off Shoring.
Small and medium-sized enterprises (SMEs) are significant for all countries’ economy in terms of job creation, nurturing industrial innovation as well as enhancing the competitiveness of an economy through the process of economic restoration by designing, eliminating and restructuring the economic sectors (Farzam, 2011, p. 60). Moreover, technology has been a critical factor in facilitating SMEs to play regenerative role in any economy.
Satya (2010) defines competitive advantage as the heart of a firm’s performance (p. 29). Therefore, it reflects a firm’s capacity to give consumers greater value in terms of reducing prices and offering maximum benefits and services, which justifies higher prices. Bassellier and Izak (2004) argue that ICT offers SMEs opportunities for competing on a global scale with improved efficiency and closer connection between customers and suppliers (p. 677). Businesses have regarded ICT as a crucial technique for them to competitive.
Moreover, Žinių (2010) emphasized that the use of ICT creates customer satisfaction by improving service quality and opening more avenues for the firms (p. 527). Apulu (2011) however, claims that ICT allows consumers to receive immediate feedbacks thereby enabling firms to react fast to customers’ demands and identify new markets (p. 490). Since ICT influences the performance of a firm in multifaceted ways, firms exploit the potentials offered by ICT to handle their innovative processes (Carmen, 2011, p. 37). Therefore, ICT can make a firm grow: make the firm more competitive and innovative.
In both different types of studies on the role of information technology in enhancing competitiveness of SMEs, the scholars have employed various research designs towards the development of the theories. The research designs adopted comprise descriptive, co relational and descriptive (Satya, 2010, p. 25).
The researchers made objective conclusions by highlighting several issues, which emerged from the findings. The study found that firms focus more in production and marketing strategies by employing technologies that support core operational activities such as production and design and those that support activities such as sales and procurement management for effective competition (Bassellier, & Izak, 2004, p. 685).
However, the study found that most firms are using simpler technologies like email, Web, and software packages such as accounting than complex ones like CRM and SCM. In addition, issues pertaining top management and customers are the most influential factors, which influence the decision of the firm to adopt a technology while factors such as vendors, media, and government have extraordinarily limited impact. Whether such decisions are subjective or objective, the implication is that firms employ information technology to enhance their competitiveness.
Statement of the Problem
Business corporations, whether small or large, now operate under total pressure to advance their performance and production to gain some competitive advantage over others. They also continue to review of their operations with the aim of addressing threats originating from various changes in the internal and external milieu. Several challenges prompt firms to use IT in enhancing their competitiveness. The issues include the need to harness more opportunities, outsourcing and off shoring, reduce operating costs and a need to modernize and advance the business practices (Žinių, 2010, p. 533).
Even though business completion creates perfection in manners in which firms handle customers and ways and how goods produced and distributed, the use of technology in business has led to the flooding of the market with many counterfeit goods. Consequently, SMEs that may not be in position of using advanced and more sophisticated technologies have been disadvantaged.
With civilization, nations have embarked on SMEs in order to improve the economy and to provide opportunities for the youths. In order to meet these demands and to match the competitive world, SMEs have adopted unsophisticated technologies resulting in a loss of business main competencies through misuse of best practices in IT competitive advantage (Carmen, 2011, p. 40). For instance, IT outsourcing has risks and information insecurity resulting to a loss of customer loyalty.
Despite the challenges, SMEs have managed to reduce their operating costs by use of IT thus enhancing their competitive advantage and performance (Bassellier, & Izak, 2004, p. 675). IT market competitiveness has opened opportunities for firms to increase the value of services provided through innovations, which make customers satisfied. As a result, customer satisfaction increases their loyalty and profitability of the firms. The objective of the study is to discuss the role of information technology in enhancing business competitiveness.
Purpose of the Study
The study is a quantitative describing the role of IT in enhancing the capacity of a firm especially SMEs to compete effectively with other multinational corporations. The study bases itself on the theories that provide a comparative framework upon which the relevance of IT in improving business performance and operations such as cost reduction and profitability are examined (Farzam, 2011, p. 71). The study seeks to investigate the advantages of IT in the business sector such as cost reduction, improving product quality, enhancing performance of the firms as well as reducing risks and creating compelling relations between the firm and their customers.
The study will in effect, consider ordinary and complex technologies used by different types of firms in terms of their sizes (Kunsoo, & Young, 2011, p. 46). Firm size has a significant impact on what technologies they are using. The research extends the relevant information to policymakers to devise an effective policy and support systems used in high-tech manufacturing sectors.
The research also brings into focus the roles government agencies and vendors in improving the SMEs in order to make them competitive. The micro and small firms do not make use of professionals and personal networks it is therefore, incumbent on public-sector agencies to give the required skills and support. SMEs contribute to both employment and GDP. As such, the study provides pragmatic approach to the key of information technology in giving the best ways of handling the entire chain distribution (Žinių, 2010, p. 530).
The research will also crystallize risks and threats of information technology as employed by the SMEs in their attempt to seek the competitive advantage. As a matter of obtaining information, the study will rely on the relevant previous research works. In undertaking the process, the study will describe each study in terms of related research problem, questions, research purpose, types and element of design used, threats to validity and how they were addressed and the implications of the findings.
Literature Review
The development and use of Information technology in the business sector represents a tremendously decisive factor in the modernization of all the nations. Globalization has facilitated the effects of IT, which has enhanced the free movement of people and goods in the world. In trade and commerce, advancement of IT has helped firms innovate and produce high-quality products that meet customer needs and demands. It has also initiated competition that has influenced the quantity and quality of goods produced (Bassellier, & Izak, 2004, p. 680).
Since business environment often changes, firms use IT to reduce operating costs and continue to exploit comparative advantages of human IT skills offered by other countries. Consequently, SMEs also imitate the operations of the leading firms and adopt relevant technologies that can help them produce competitive products (Kunsoo, & Young, 2011, p. 63). Through the help of their governments besides the use of IT, SMEs can increase their innovation and high-product quality that could positively improve customer satisfaction and, hence increase customer loyalty.
The expectations and obligations of consumers in various markets are becoming more and more complex for firms to determine with the traditional business techniques. Therefore, firms have realized the necessity of adopting IT in order to satisfy the demands of a certain market (Farzam, 2011, p. 63). This has made it even easier for firms to produce different products as per the diverse requirements of the customers leading to a greater competition to the level that any firm without proper technologies stands no chance for competitive advantage (Satya, 2010, p. 32).
Therefore, using some form of information and communication technology (ICT) such as the Internet has assisted them to meet up with their customers’ demands. Moreover, ICT has made their job easier and has increased the firm’s speed in terms of sending and receiving information, which has also improved communication with their customers and between their various departments and branches (Kunsoo, & Young, 2011, p. 39). ICT has also helped in increasing productivity and efficiency in the companies.
Moreover, researchers recommend that ICT is an immensely powerful tool for innovation in this present era. The benefits of ICT for a firm includes saving of inputs, general cost reductions, higher flexibility and improvement in product quality. Susana (2008) ascertains that ICTs play a crucial role in networking and communication as firms use these technologies to facilitate communication among employees and reduce coordination costs (p. 9).
According to Carmen (2011), the use of ICT enhances the production process as monitoring technologies reduce the number of supervisors involved in such processes (p. 43). ICT helps in information collection and dissemination as well as inventory control and quality control. Yacine and Miles (2010) argue that firms use ICTs for communication and collaboration, strategic management, data management, managerial decision-making and customers’ access (p. 559). Therefore, ICT promotes and strengthens firms’ competitiveness because it helps to provide an effective means of firms’ productivity and service delivery.
However, besides enhancing competition, SMEs are using IT for many reasons such as facilitating and perfecting business processes. No matter what the reason it may be, with globalization the rate at which firms are making use of technology is increasing tremendously (Kunsoo, & Young, 2011, p. 20). The study will in effect examine types and elements of design used and their strengths and weaknesses, methods of data analysis, justifications for the appropriateness of design and methods, contribution of data collected to the research theory and quantitative and qualitative study that contribute to the theory (Grover, 2003, p. 238).
A research design is the rational structure of any study. The research design guarantees that the data gathered during a study allows the researcher to find solutions to the research questions explicitly (Grover, 2003, p. 243). Hence enables them to be in a position of meeting the set purposes of the study. The study has adopted various research designs towards comprehending the role of information and technology in business competitiveness (Susana, 2008, p. 15). The research adopted the experimental, co relational and descriptive designs.
Therefore, the research can contribute to theory through descriptive studies, empirical methods, and co relational. In empirical and descriptive methods, the study observed the natural phenomena and used questionnaires and interviews to collect raw data that formed the basis of the analysis and conclusion (Satya, 2010, p. 27). However, the study used a qualitative approach in which it processed, analyzed the recorded observations and further categorized and explained the interpretations theatrically on completion of the research.
However, in experimental design, the study employed the use of experimentation and empirical methods. Its approach included manipulations and the use of different designs and experiments that assisted in achieving an objective conclusion (Carmen, 2011, p. 39).
Otherwise, the design is unique in the sense that quantifiable data is always required because numbers are of immense significance in the determination of the experimental treatment (Grover, 2003, p. 240). A co relational study provides researches with various techniques, which can also contribute to theory. However, in this design, the researchers should analyze and comprehend the dimensions and characteristics of the events and occurrences being studied (Bharati, & Abhijit, 2006, p. 91).
A descriptive study method is significant in assessing the relationship between at least two events. Therefore, descriptive research design was vital in studying the stated problem of information technology in business competitiveness. Since treating the study of hypothesis requires some level of significance, the design fitted into the whole process of research, from the research questions, through the final analysis, and data presentation (Shirish, & Teo, 2009, p. 271).
Though the study perceived descriptive design as a mere description, a rational description has vast benefits for SMEs because it adds tremendously to the facts and skills of IT to the business entities (Farzam, 2011, p. 67). Moreover, accurate descriptive study is the foundation for the progress of the plan that is an ultimate approach for business entities in the current, competitive market economy. The study design also addresses several variables used during data collection. The design employed structured questionnaires administered to business entities besides applications through which data was retrieved for analysis and presentation (Somers, 2007, p. 229).
The study population for the research includes SMEs firm from the previous works of scholars. Through careful examination, the studies used a sample of 30 firms selected through stratified sampling technique. Stratified sampling method was suitable for the sample selection because it enabled the researchers to attain proportions, which are even and fair from each stratum (Bassellier, & Izak, 2004, p. 683). In addition, the studies exploited both secondary and primary data.
Secondary data involved the published and unpublished information related to the role of IT in enhancing SMEs competitiveness. In the primary method, the studies collected the data used surveys where the researchers designed questionnaires. Otherwise, a pilot study conducted prior to the actual study assisted in determining the efficacy of the questionnaires that consisted of closed ended questions.
All the studies examined collected data using experimental, co relational and descriptive. However, statistical analyses as well as data comparison provided fundamental ways of developing a theory from the data and observations recorded (Somers, 2007, p. 237). The studies used the sample data that served in the making of theoretical associations making it possible for researchers to come to some objective interpretation (Susana, 2008, p. 20).
The study translated human phenomena precisely into statistical figures. Therefore, the study considered the significant of IT to improved performance and business processes of a firm. In addition, the researchers incorporated a Likert scale to aid in the interpretation of the data collected and coded for ease of analysis. Coding the responses made it easier for researchers to incorporate computer software such as Excel (Somers, 2007, p.225).
The study examines the usefulness of IT in improving business processes and lowering the operating costs based on the adoption theory as a foundation for the research (Shirish, & Teo, 2009, p. 285). The adoption theory therefore, present frameworks upon which the study aims to explore the relative advantages for IT in terms cost reduction, performance, improvement of customer relationship, and the risks involved when firms attempt to adopt IT in enhancing their competitiveness.
However, the theory According to Satya (2010), fails to offer an adequate explanation for patterns in which firms acquire ICT services, as it does not give cost implications in such acquisitions (p. 37). Otherwise, other scholars and theorists suppose that it is the best theoretical approach to explain the patterns through which firms acquire technologies. This makes it difficult to believe that the theory can explain and support what it endorses. Rate of adoption theory takes place over time with novelties going “through a slow, gradual growth period, followed by dramatic and rapid growth’’ (Carmen, 2011, p. 55).
Researchers determine the accuracy and effectiveness of any study tool in terms of consistency, soundness, and sensitivity besides specificity. The researchers employed the tools to establish the reliability of the research (Pilinkus, & Vytautas, 2007, p. 815). Consistency is the ability a research to generate results, which are reliable and firm over a given period comparable states of affairs. Validity is the measure of a specified device (Susana, 2008, p. 11).
The validity of a research fluctuates if the study employs dissimilar illustrations. For instance, in one situation, an investigation can be convincing, whereas in another, it may not be realistic. In any study, the researcher calculates the validity of a research by what it alleges to assess and the accessibility of logical errors in the conclusions derived from the investigation.
Validity can be either internal or external. Internal validity relates to the connection between objects when evaluated on a range. Otherwise, the study alleges the result to be consequential when an investigation suggests equivalent results after the use of two diverse measures. Carmen (2011) argues that internal validity is the capacity of making feasible self-regulating orientations from the conclusion of a study especially when independent variable controls the dependent variable (p. 49).
Therefore, measuring variables in this study is doable because the role of IT in enhancing the firm’s competitiveness is the dependent variable controlled by other variables such as the government support, availability of finances and the size of the firm (Shirish, & Teo, 2009, p. 269). External validity is however, the general treatment of the outcomes in other situations. The findings of the studies examined were vital to the enhancement of performances of the SMEs to meet the competitive advantage.
The study is realistic and consistent for application by several individuals for related purposes due to the above validity and reliability. Therefore, the ideas are useful in both quantitative and qualitative studies because it is necessary for the researcher to ascertain the reliability of the study (Pilinkus, & Vytautas, 2007, p. 823).
Quantitative study presents the opportunity and expediency of using statistical tools such as ‘‘standard deviation, mean, mode, percentages, probability, statistical tables, tests and correlation analysis’’ that allows the study to establish the correlation existing between the variables under consideration as to the role IT in business improvement (Bharati, & Abhijit, 2006, p. 89). The tools are crucial in testing the level of significance, which is vital in treating the study hypothesis.
However, the focus of qualitative research method is on holistic conception of complicated truths and processes. As such, the unstructured research questions and hypothesis come up cumulatively during the research. Consequently, both qualitative and observational research methods are inappropriate for the research because they have a predetermined hypothesis and research questions.
In this dissertation, adoption theory simply serves as a model for studying the role of information technology in enhancing business competitiveness. The study has contributed a lot of information and ideas on adoption theory that emerged due to a need for competitive forms of business (Grover, 2003, p. 250).
Considering the views presented, it is evident that various scholars and researchers have different analysis of the same issue depending on their beliefs and nature of the research. Therefore, theory is different from hypothesis and concepts. Hypothesis is a guide to a research study in proving the concepts theoretically while a concept is a generalized idea derived from observations. Whereas a concept may not be globally accepted, theory is acceptable and helps in the study of a given phenomena. Research is therefore, significant for testing and developing a theory.
Conclusion
The study has investigated the comparative advantage for IT firms in terms cost, performance, improvement of customer relationship, and the risks IT firms are exposed to when making decisions to adopt IT services based on the adoption theory (Shirish, & Teo, 2009, p. 277). The firms seeking to adopt information technology in their functions and services need to realize the challenges, as well as merits associated with such a move.
Satya (2010) asserts that ICT assumes a crucial function in curbing “crucial operational inefficiency and improving decision-making in many firms” (p. 35). Bharati and Abhijit (2006) emphasized that the use of ICT in the business sector is associated with an increased amount of information becoming available (p. 92).
Furthermore, Apulu (2011) affirms that ICT enables firms to decrease costs and increase its capabilities (p. 487). Therefore, the use of ICT can help to lower coordination cost and increase competition among firms. Similarly, Susana (2008) indicated in a report that firms stand to gain from ICT as it reduces transaction costs (p. 19). Therefore, the use of ICT assists both SMEs and other corporations to access large markets at low cost. In addition, the use of ICT does not only offer practical benefits for general management, but also enables companies to overcome the disadvantages of place and space (Pilinkus, & Vytautas, 2007, p. 820).
The paper has highlighted the positive and negative effects of using IT. Comprehending the risks and challenges involved such as mechanical problems and insufficient finance interferes with the manner in which firms especially SMEs are making decisions. Even though, the pros of adopting IT might seem obvious, careless and haste decisions-without considering the best type of the system needed by a particular firm may affect the operation and the processes of the firm. As such, several SMEs maximize the gains, which are associated with various losses a rising from unrealistic use of IT services (Susana, 2008. P. 13).
Moreover, based on the case studies and literature review, the study concluded that there is a massive impact associated with the use of ICT as it brings about competitive advantage in firms (Pilinkus, & Vytautas, 2007, p. 824). Since the use of IT poses more benefit than loss, the study recommends that every SME should adopt and implement ICT in their business operations if they are to compete effectively. However, they should consider its factors and limitations before making the decision to outsource.
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