Effectiveness of Information Technology in Small Medium Enterprise

Small and medium businesses (SMEs) operate in the same environment as their larger counterparts, but
without the advantages of substantial capital and human resources. Globalisation, legislation, and the
removal of trade barriers are putting increasing pressure on SMEs, as is an increase in market expansion
due to emerging technology innovation. Small and medium businesses thrive on their adaptability and
agility, such as proximity to clients, openness to new ways of working, and risk-taking attitude, however
many micro, small, and medium businesses are vulnerable to severe external shocks (Berry, 2002; Laforet
and Tann, 2006). In terms of turnover and employment, SMEs have played a critical role in the economy
of both developed and developing countries. SME's are frequently considered as the seeds of a vibrant
entrepreneurial economy; they employ the bulk of Ghana's workforce. They have established themselves
as a major source of innovation and growth r ecent study has emphasized (Bravnerhjelm, 2008).
According to research, companies that are able to successfully use information and communication
technology (ICT) can give small businesses a strategic edge that can boost their competitiveness.

ICT adoption can give SMEs with considerable benefits information, enhanced performance, improved
relationships with consumers and suppliers, increased productivity, and reduced manufacturing costs, to
name a few. and overcoming these problems, they must develop the ability to deal with the organization's
ever-increasing issues, or risks (Leopoulos, 2006). Small business owners and managers must emphasize
the importance of risk identification and mitigation in their businesses, or they risk suffering catastrophic
repercussions if they are unprepared for the conclusion of a potential risk. This means that SMEs'
entrepreneurs must be familiar with risk identification and analysis in order to manage risks from a
variety of sources (Schultz, 2001). SMEs are better positioned to use their resources by incorporating risk
management into their operations, allowing them to change an expenditure activity into one that generates
a positive return (Kirytopoulos et al., 2001; Banham, 2004). Unlike small and medium firms, large
corporations have used ICT to gain an advantage over their competitors. There is significant evidence that
information and communication technology (ICT) is a driver of economic growth, and governments
around the world are encouraging SMEs to adopt ICT.

According to the World Development Report (1999), the balance between knowledge and resources has
changed so far in favor of the former that knowledge, rather than land, tools, or labor, has become the
most essential element determining one's standard of life. Knowledge is at the heart of today's most
technologically advanced economies. Countries around the world are transitioning from an industrial
economy to a knowledge economy, in which a country's ability to develop, accumulate, and transmit
knowledge determines its economic progress. Computers and the internet accelerated the expansion of the
knowledge economy by allowing people to convert their knowledge into a digital format that could be
sent anywhere in the world. ICT has accelerated globalization while also increasing its complexity. To
compete in the information economy, governments must have a strong ICT-literate workforce that can
innovate and adapt to change swiftly. Knowledge workers are valued more than ever before, and the
knowledge economy is strongly reliant on ICT. ICT sectors are rapidly expanding. India, the Republic of
Korea, Taiwan, and China, for example, have developed enabling circumstances. SMEs must be well-
positioned to take advantage of these new business prospects. India, for example, provided import duty
exemptions for IT hardware, tax deductions for software export earnings, and tax holidays, as well as
developing infrastructure in software technology parks. India's growing ICT sector has moved the country
forward the country's economic development So it is with world events. Wolf, S. Small and medium
enterprises (SME) make for a considerable percentage of output and employment in most African
countries, according to (2001), and are thus closely linked to poverty alleviation. SMEs, particularly in
developing nations, are confronted by globalization of production and a shift in the role of marketing
multiple competitiveness determinants ICTs can boost efficiency and productivity in a variety of ways,
including resource allocation efficiency, transaction cost reduction, and technical improvement, resulting
in the outer moving of the production function. Despite the fact that South Africa is far more developed
and its ICT infrastructure is far more advanced, Wolf discovered that SMEs in South Africa experience
similar difficulties to those in other African nations in terms of weak management practices, inadequate
resources, and limited access to capital. The difficulty is to get SMEs to do more than these first few basic
steps and eventually integrate ICTs into more sophisticated commercial applications.

This is a significant step for SMEs, particularly in poor countries, because it will demand management
and technical skills, as well as investments (and organizational changes) that they may not be able to pay
or access. Only in the 1990s was empirical evidence discovered that computers had a significant impact
on corporate productivity. Brynjolfsson and Hitt (1995) found that, in addition to firm effects, ICT capital
contributes positively and considerably to output and productivity for big US enterprises in their research
of the influence of information technology on productivity. When looking at the effects of other ICTs on
productivity, similar results are discovered. These findings were reinforced in a more recent study
(Brynjolfsson and Hitt 2000), which emphasized the relevance of complementing factors such as firm
restructuring and staff skill improvement in achieving productivity gain as a result of ICT investment.
Because of data issues, there are few studies that look at the impact of ICTs on small businesses in
developing nations. Müller-Falke (2001) discovered that firms that use more modern types of ICT have
higher labor productivity and a faster growth rate in Indian manufacturing SMEs. Lal (1996) found that
enterprises adopting IT had greater profit margins, skill intensity, and export and import intensities in a
survey of 59 electric and electronic manufacturing Indian SMEs, most of which employed less than 50
people. There is further evidence that SMEs' export performance is linked to their use of ICT (Lal 1999,
Nassimbeni 2001). However, it is the coupling of technology with other technologies, particularly
applicable skills, that makes the difference. In comparison to larger businesses, SMEs believe flexibility
to be a primary source of competitiveness. On the one hand, ICT can help SMEs become more
competitive by allowing them to create more flexible ties with commercial partners through faster and
more reliable communication channels. ICTs, on the other hand, may be able to assist larger businesses in
increasing their flexibility through organizational reorganization, allowing them to respond more quickly
to changing conditions. As a result, SMEs' competitive edge may deteriorate. (Susanna Wolf,2001) Small
businesses must rethink their business operations in order to use DT to ensure business continuity.
Scholars will need to be aware of the effects of DT deployment on work, organization, and performance.
The socio-technical systems approach (Mumford, 2003; Trist, 1963) has previously been successful in
designing industrial and service organization procedures to aid with this thinking. Such an approach I
views systems (and, in our case, DT) as interdependent subsystems that interact with the external context
through their interdependent subsystems, the social and technical; and (ii) bridges the gap between the
two schools of thought previously mentioned, one focusing on the relationships between people who deal
with business continuity challenges (social) and the other focusing on the technical. The sociomateriality
turn in DT uncovers the perception of DT, work, and organizations as separate by accepting that the
social and material should not be separated (Orlikowski & Scott, 2008) or (ii) arguing for the imbrication
of the social and technical, which may be distinct but should be perceived as mutually interlocked in the
deployment of DTs (Leonardi et al., 2012, Leonardi, 2013; Cecez-Kecmanovic, Galliers, Henfridsson,
Newell, & Vidgen, 2014; Anagnostopoulos, Papadopoulos, Stamati, & Balta, 2018). These lenses could
aid academics in comprehending the significance of DT in creating an ecosystem that promotes
entrepreneurial thinking, turning COVID-19's obstacles into possibilities for improved performance.
Another study route is to align DT with the SME's business plan to deal with COVID-19's repercussions.
In the United Kingdom, 51% of SMEs believe that digital transformation is important to secure their
future competitiveness, and 25% of management regard digital transformation to be their top priority.
Strategic IT alignment is an important topic in IT management study that has been addressed for more
than four decades (King, 1978; Sabherwal, Sabherwal, Havakhor, & Steelman, 2019; Wu, Straub, &
Liang, 2015). However, there is disagreement about the value of strategic IT alignment (Sabherwal et al.,
2019): on the one hand, scholars argue that strategic IT (and, in our case, DT) alignment has a positive
impact on firm performance (Gerow, Grover, Thatcher, & Roth, 2014); on the other hand, scholars argue
that alignment can lead to stagnation (Sabherwal et al., 2019).
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