A STUDY OF CHALLENGES OF ICT ADOPTION BY SMALL AND

MEDIUM SCALE ENTERPRISES (SMEs) IN IBADAN METROPOLIS,

NIGERIA.

A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE AWARD OF MSc. IN INTERNATIONAL
BUSINESS

BY

TAIWO ABDULGAPHAR ADEYEMO

x19163088

SUPERVISOR
COLETTE DARCY

NATIONAL COLLEGE OF IRELAND

AUGUST, 2021.
 Abstract

Numerous studies have been carried out on issues of ICT adoption by Small and
Medium Scale Enterprises (SMEs) in developing countries of the world. These
studies are carried out in recognition of the significant impacts of enterprises of
this scale on the social and economic growth of nations. Furthermore, the studies
have discovered that in those countries, the level of ICT adoption by SMEs is
still very low, thereby negatively impacting their capacity to compete effectively.
Consequently, it became necessary to compare the findings of such studies,
especially on the challenges affecting the adoption of ICT by SMEs in a city like
Ibadan.
From a sample size of 92, 53 SMEs from across different sectors of the economy
participated in the survey. The data collection was done online, with a
questionnaire developed to align with existing literature on the research focus.
The survey findings were analysed and presented using descriptive statistics.
The findings revealed that the SMEs in Ibadan have adopted ICT, with the
majority at the advanced stage of adoption. In addition, it was discovered that
the perceived benefits of ICT form the major drivers of ICT adoption amongst
the SMEs, while inadequate government support and issues of poor
infrastructure were found to inhibit the adoption of ICT by SME owners in the
area. Also, a Chi-Square test revealed that the level of ICT adoption in the area
is influenced by the size of the business (p = .002), thereby confirming some
earlier findings in that regard
The study has succeeded in adding to the existing body of knowledge in the topic
area, while also providing insight into ICT adoption issues in another Nigerian
city, in order to help policymakers develop a long-lasting and effective strategy
to assist small businesses in the country be more competitive.
Keywords: SMEs, ICT, ICT adoption, Challenges of ICT adoption

i
 Declaration

Submission of Thesis and Dissertation

National College of Ireland
Research Students Declaration Form
(Thesis/Author Declaration Form)

Name: Taiwo Abdulgaphar Adeyemo

Student Number: x19163088
Degree for which thesis is submitted: Master of Science in International
Business
Title of Thesis: Challenges of ICT Adoption by Small and Medium Scale Enterprises
(SMEs) In Ibadan Metropolis, Nigeria.

Date: 18th August, 2021

Material submitted for award
A. I declare that this work submitted has been composed by myself.
YES

B. I declare that all verbatim extracts contained in the thesis have been
distinguished by quotation marks and the sources of information
specifically acknowledged. YES

C. I agree to my thesis being deposited in the NCI Library online open

access repository NORMA. YES

D. I declare that no material contained in the thesis has been used in any
other submission for an academic award.

Signature of Student Researcher:

Date: 18th August, 2021.

ii
 Acknowledgements

My utmost thank you to Almighty for sparing my life giving the situation around the
globe and for the completion of this research.

A very big thank you to my supervisor, Colette Darcy, whose insight and knowledge in
research subject matter steered me through this study. Your efforts, priceless –guidance
and commitment to making sure I came out with outstanding work will not be forgotten.

My appreciation to the library team at the National College of Ireland, especially to

Keith Brittle for providing guidance and sound feedback throughout this project when
required.

From the bottom of my heart, I would like to say a big thank you to Adegoke`s Family,
for the support, prayers and encouragement settling down in Ireland was made easy.

To conclude, I cannot forget to thank my parent who set me off on the road to this MSc.
a long time ago and my Siblings for all the unconditional support.

iii
 Dedication

In memory of my beloved twin sister, Kehinde Adeyemo, she passed away before I
started my Master studies.

iv
 Table of Contents

Abstract....................................................................................................... i
Declaration ................................................................................................ii
Acknowledgements ..................................................................................iii
Dedication ................................................................................................. iv
Table of Contents ...................................................................................... v
Table of Figures ......................................................................................vii
List of Tables ..........................................................................................viii
CHAPTER ONE ....................................................................................... 1
1.0 INTRODUCTION TO STUDY .............................................................................. 1
1.1 Background to Study ........................................................................................... 1
1.2 Statement of Research Problem.......................................................................... 3
1.3 The Rationale for the Study ................................................................................ 4
1.4 Research Questions .............................................................................................. 5
1.5 Aim and Objectives of the Research .................................................................. 6
1.6 Research Hypotheses ........................................................................................... 6
1.7 Scope of Study ...................................................................................................... 6
1.8 Structure of the Dissertation ............................................................................... 7

CHAPTER TWO ...................................................................................... 8

2.0 LITERATURE REVIEW ....................................................................................... 8
2.1 Introduction .......................................................................................................... 8
2.2 Conceptual Framework ....................................................................................... 8
2.3 Theoretical Framework ..................................................................................... 11
2.5 Summary of Literature Review and Model Specification .............................. 23

CHAPTER THREE ................................................................................ 26

3.0 RESEARCH METHODOLOGY ......................................................................... 26
3.1 Research Design ................................................................................................. 26
3.2 Research Population, Sample Frame and Sampling Procedure .................... 26
3.3 Research Instrument ......................................................................................... 27
3.4 Pilot Survey and Data Reliability ..................................................................... 28
3.5 Data Collection ................................................................................................... 29
3.6 Data Analysis ...................................................................................................... 29
3.7 Ethical Consideration ........................................................................................ 30

v
 3.8 Limitation of Study ............................................................................................ 31

CHAPTER FOUR .................................................................................. 32

4.0 DATA ANALYSIS AND INTERPRETATION .................................................. 32
4.1 Introduction and Characteristics of SMEs in Ibadan Metropolis ................. 32
4.2 Analysis of Research Questions ........................................................................ 34
4.3 Hypotheses Testing ............................................................................................ 47
4.4 Conclusion .......................................................................................................... 51

CHAPTER FIVE .................................................................................... 53

5.0 DISCUSSION OF FINDINGS .............................................................................. 53
5.1 Introduction ........................................................................................................ 53
5.2 Level of ICT Adoption by SMEs in Ibadan Metropolis ................................. 53
5.3 Drivers of ICT Adoption by SMEs in Ibadan Metropolis .............................. 56
5.4 Challenges of ICT Adoption by SMEs in Ibadan Metropolis ........................ 58
5.5 Conclusion .......................................................................................................... 60

CHAPTER SIX ....................................................................................... 62

6.0 SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
62
6.1 Introduction ........................................................................................................ 62
6.2 Summary of Findings ........................................................................................ 62
6.3 Contribution to Research Area and Implications ........................................... 64
6.4 Recommendations .............................................................................................. 64
6.5 Limitations .......................................................................................................... 66
6.6 Further Research ............................................................................................... 66
6.7 Conclusion .......................................................................................................... 67
References ........................................................................................................................... 69

vi
 Table of Figures

Figure 1: Kotelnikov’s Stages of ICT Adoption .......................................................... 11

Figure 2: Level of ICT Adoption Model...................................................................... 24
Figure 3: Drivers of ICT Adoption Model................................................................... 25
Figure 4: Challenges of ICT Adoption Model ............................................................. 25
Figure 5 - Bar Chart showing SME owners' rating of Inadequate Knowledge and ICT
Skills ............................................................................................................................ 39
Figure 6 - Bar Chart showing SME owners' rating of Expensive Running and
Maintenance Cost of ICT ............................................................................................. 40
Figure 7 - Bar Chart showing SME owners' rating of Doubts about Security and
Privacy ......................................................................................................................... 41
Figure 8 - Bar Chart showing SME owners' rating of Internet Connection Failures... 42
Figure 9 - Bar Chart showing SME owners' rating of Inadequate Support from
Government.................................................................................................................. 43
Figure 10 - Bar Chart showing SME owners' rating of Inadequate Infrastructure ...... 44
Figure 11 - Bar Chart showing SME owners' rating of Cultural Factors .................... 45

vii
 List of Tables

Table 1 – World Bank Definition of SMEs ................................................................. 12

Table 2 – Nigerian Bank of Industry Definition of SMEs ........................................... 13
Table 3 – Characteristics of SMEs in Ibadan Metropolis ............................................ 32
Table 4 – Level of ICT Adoption by SMEs in Ibadan Metropolis .............................. 34
Table 5 – Drivers of ICT Adoption by SMEs in Ibadan Metropolis ........................... 36
Table 6 – Inadequate Knowledge and ICT Skills ........................................................ 39
Table 7 – Expensive Running and Maintenance Cost of ICT ..................................... 40
Table 8 – Doubts about Security and Privacy.............................................................. 41
Table 9 – Internet Connection Failures ........................................................................ 42
Table 10 – Inadequate Support from Government ...................................................... 43
Table 11 – Inadequate Infrastructure ........................................................................... 44
Table 12 – Cultural Factors.......................................................................................... 45
Table 13 – Mean Ranking of ICT Adoption Challenges in Ibadan Metropolis........... 46
Table 14 – Chi-Square Test result for Hypothesis 1 .................................................... 48
Table 15 – Multivariate Analysis result for Hypothesis 2 ........................................... 49
Table 16 – Multivariate Analysis result for Hypothesis 3 ........................................... 50

viii
 CHAPTER ONE

1.0 INTRODUCTION TO STUDY

1.1 Background to Study

The advent of information and communication technology (ICT) has brought about an

impressive rate of development to different corners of the world. It has introduced

efficiency and flexibility to different economic sectors at a rate that had never been seen

before. For example, its application in sectors such as education, medicine, and

agriculture has greatly improved service delivery, created opportunities, and facilitated

inclusiveness, to an extent that gaps in the level of development between the developed

and developing nations can be bridged (Mallika et al., 2018).

One of the economic sectors where ICT has been of great benefit is the small and

medium-income enterprise (SME). Despite a complete lack of agreement on how to

properly define SMEs, there seems to be a consensus on the variables involved in the

definition; including quantitative criteria such as the number or size of employees,

annual turnover, and total capital employed (Berisha and Pula, 2015). Accordingly,

within the Nigerian context, the Bank of Industry (BOI) recognised SMEs as business

establishments with an employee strength of less than 200, having a total asset and

annual turnover of not more than 500 million Nigeria Naira—equivalent of 1.3 million

USD (Bank of Industry, 2020).

Prior to the advent of ICT and its incorporation into businesses, it used to be that SMEs

exist only in physical space, with operations restricted to a specific geographic

boundary, while business processes such as bookkeeping and inventory were done with

actual books, and communication was a constant challenge. However, SMEs

worldwide now recognise the capability of ICT and now incorporate it in advancing

1
their businesses beyond the physical space, using computer systems to manage

paperwork, employing the use of technology to improve on production and services,

and maximising email and social media for improved communication (Mallika et al.,

2018; Sewanu, 2015; Lucchetti and Sterlacchini, 2004).

SMEs have benefitted greatly from this incorporation of ICT into day-to-day

operations. For example, such SMEs have benefitted through increased sales, improved

communication, greater efficiency, increased productivity, competitiveness, and

globalisation (Okundaye, Fan and Dwyer, 2019; Rahayu and Day, 2017).

Consequently, these SMEs are better positioned to contribute to economic growth and

development in their various countries, through job creation—accounting for up to 99%

of employers—and contribution to gross domestic product (GDP)—at over 50%

(Napitupulu et al., 2018; Zafar and Mustafa, 2017).

However, regardless of the potential for job creation and overall economic development

through SMEs with adoption and incorporation of ICT, there has been a series of

evidence of the low rate of adoption of ICT by SMEs in developing countries, with

factors limiting the adoption including the cost of operation and maintenance, attitude,

inadequate knowledge, security and privacy issues, as well as concerns about service

reliability (Napitupulu et al., 2018; Rahayu and Day, 2017; Zafar and Mustafa, 2017;

Jahanshahi, et al., 2013). This situation is equally applicable to Nigeria, with notable

challenges of adoption including inadequate knowledge and ICT skills, limited

understanding of ICT benefits, cost, lack of government policies, culture and attitude,

and inadequate infrastructure (Okundaye et al., 2019; Oyebiyi, 2019; Agwu and

Murray, 2015; Apulu, et al., 2013; Aleke, et al., 2011).

2
Conclusively, it is clear that ICT is responsible for innovations in different economic

sectors including the SME, with direct results being increased sales, competitiveness,

and a greater level of flexibility in general business operation. This has consequently

led to job creation and economic development in developed countries with a greater

ICT adoption rate, while SMEs in developing economies like Nigeria have yet to fully

adopt ICT. This situation, therefore, poses an implication on social and economic

development, and thus forms the background for this study which intends to assess the

challenges to the adoption of ICT by SMEs in Ibadan, Oyo State, Nigeria.

1.2 Statement of Research Problem

As observed by numerous studies, including that of Okundaye et al. (2019) and Tob-

Ogu, et al., (2018), there are several differences between SMEs and larger firms, some

of which put SMEs at a disadvantage. For example, larger firms are likely to possess a

deeper financial resource base, easier accessibility to long-term loans, and a larger staff

strength with an advanced level of specialisation, ensuring their competitiveness both

within and beyond national borders.

Nevertheless, other studies have shown that ICT possesses the capability to level the

playing field between larger firms and SMEs if properly adopted and effectively

implemented (Díaz-Chao et al., 2015; Lucchetti and Sterlacchini, 2004), with benefits

including greater efficiency, increased productivity, improved communication,

increased sales, and competitiveness (Okundaye et al., 2019; Dincer and Dincer, 2017;

Rahayu and Day, 2017).

However, evidence abounds that the developing countries SMEs rate of ICT integration

into the business operations is very low (Napitupulu et al., 2018; Rahayu and Day,

2017; Zafar and Mustafa, 2017; Jahanshahi et al., 2013), citing several factors that are

3
mostly not dissimilar, including the cost of operation and maintenance, attitude,

inadequate knowledge, security and privacy issues. Also, according to a variety of

studies carried out in Nigeria, SMEs are still behind in their adoption and incorporation

of ICT due to a number of challenges inhibiting effective adoption (Okundaye et al.,

2019; Oyebiyi, 2019; Agwu and Murray, 2015; Apulu et al., 2013; Aleke et al., 2011).

The foregoing therefore poses a great risk of missing out on the numerous benefits of

ICT for SMEs in Nigeria. A situation that could be detrimental to socio-economic

development if ignored. This, therefore, provides a problem that this study intends to

solve through understanding the level of adoption and incorporation, as well as factors

that drive the use of ICT, and the militating challenges to its effective adoption by SMEs

in Ibadan, Oyo State of Nigeria, thereby contributing to the existing body of knowledge

on the topic.

1.3 The Rationale for the Study

The contribution of SMEs to socio-economic growth and development cannot be

overemphasised. In the majority of the countries of the world, they are the highest

employer of labour, with a strong contribution to national GDPs (Napitupulu et al.,

2018; Zafar and Mustafa, 2017; Agwu and Murray, 2015; Gbandi and Amissah, 2014).

However, the Nigerian situation has revealed that albeit the SMEs representing the

major employer of labour in the country, their contribution to national GDP is poor

(Gbandi and Amissah, 2014). However, studies have shown that the major determinant

is in the differing level of ICT adoption between developed and developing countries

(Agwu and Murray, 2015; Lucchetti and Sterlacchini, 2004).

Several researchers have carried out studies on ICT and SMEs in Nigeria. However,

the most recent of these studies ascertained that the adoption rate of ICT by SMEs in

4
the country is still low (Okundaye et al., 2019). As a result, it becomes necessary that

another study be carried out to determine the extent of adoption, as well as the militating

factors. Moreover, with the number of studies conducted in Nigeria, none has been

carried out in Ibadan, Oyo State—a city in the southwest region of Nigeria, and one of

the major cities in Africa—with several studies limited to Lagos State (Okundaye et al.,

2019; Agwu and Murray, 2015; Sewanu, 2015; Apulu et al., 2013; Irefin, et al., 2012).

Consequently, this study intends to find out if the SME situation regarding ICT

adoption also applies to SMEs in Ibadan.

Conclusively, if the socio-economic situation of Nigeria is to change for the better,

greater attention must be given to the development of SMEs as the highest employer of

labour, particularly in the face of the high unemployment rate and the poor financial

outlook—brought about by dwindling oil prices—in the country. This study will

contribute to the existing body of literature by providing new and original insight into

the level of adoption of ICT by SMEs in Nigeria, as well as revealing the militating

factors to effective adoption of ICT by these SMEs. This will help the government and

relevant policy makers make sustainable policies to improve the status of SMEs in

Nigeria.

1.4 Research Questions

In view of the research problems, the following are the research questions that this study

intends to answer;

a. What is the level of ICT adoption of SMEs in Ibadan?

b. What factors drive the adoption of ICT by SMEs in the study area?

c. What are the challenges militating against ICT adoption by SMEs in the study

area?

5
1.5 Aim and Objectives of the Research

This study intends to assess the level and challenges of ICT adoption by SMEs in

Ibadan, Oyo State, Nigeria. In order to answer the research questions, the specific

objectives of the study are as follows;

a. To determine the level of adoption of ICT by SMEs in Ibadan;

b. To understand what factors drive ICT adoption by SMEs in the study area; and

c. To assess challenges inhibiting the adoption of ICT by SMEs in the study area.

1.6 Research Hypotheses

The following hypotheses are formulated and tested for this study

1) H0: There is no significant relationship between the level of ICT adoption and

the size of SMEs in Ibadan Metropolis.

2) H0: There are no significant differences in the perception of ICT adoption

drivers amongst SMEs in Ibadan.

3) H0: There is no significant relationship between perception of challenges and

level of ICT adoption of SMEs in Ibadan.

1.7 Scope of Study

This study focuses on the challenges of ICT adoption by small and medium scale

businesses in Nigeria. In order to effectively do this, the study assesses the present level

of adoption of ICT by the SMEs, as well as factors driving adoption amongst the SMEs.

Finally, factors inhibiting the effective integration of ICT into their businesses are

evaluated. Moreover, in contrast to studies that focus on specific sectors within SMEs,

the study focuses on a cross-section of SME sectors available within the study area.

6
On a geographical scope, this study concentrates on small and medium businesses in

the metropolitan area of Ibadan, Nigeria. This consists of only 11 Local Government

Areas (LGAs).

1.8 Structure of the Dissertation

Subsequent to the introduction of the study, the rest of the dissertation is sub-divided

into four chapters. Chapter two focuses on a review of the extant literature on issues of

ICT adoption by small and medium scale enterprises. Such issues comprise an appraisal

of the contributions of SMEs to socio-economic development, as well as the disparity

in the level of ICT adoption by SMEs in developed and developing nations.

Furthermore, benefits of ICT as perceived by SMEs owners are identified, as well as

specific factors that drive their ICT adoption. Finally, the challenges of SMEs in

integrating ICT in their business ventures are elaborated on.

On the other hand, chapter three provides a detailed discussion on the methodology

adopted for the research. This includes discussions on the identification of the research

population and sampling procedures. Furthermore, issues of data needs and sources are

discussed, along with matters relating to data collection for the research. Finally,

discussions on data analysis and presentation methods conclude the section.

Chapter four focuses on the analysis of collected data, their presentation and

discussions. This is organised to be in line with the research objectives in order to

ensure that the research work follows a structured arrangement. Chapter five provides

a discussion of the findings, while chapter six concludes the research work by

summarising research findings and proffering possible recommendations to identified

challenges inhibiting ICT adoption by SMEs in Ibadan, Nigeria.

7
 CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

This section details the review of relevant literature, especially on issues concerning the

adoption of ICT by small and medium scale enterprises. The section is divided into two

major parts, namely; a review of conceptual framework and a review of theoretical

framework. The first part covers models on stages of ICT adoption as advanced by

Kotelnikov (2007) and Rao et al. (2003). The second part is further subdivided into four

parts. The first part covers issues of SMEs and their contribution to socio-economic

development, where matters of defining what differentiates SMEs from large

enterprises are reviewed. Furthermore, the second part touches on topics of ICT

adoption by SMEs in both developed and developing nations with a special focus on

Nigeria situation. The third part discusses factors that drive ICT adoption by SMEs in

developing countries and particularly in Nigeria, including the perceived benefits of

ICT adoption to SMEs.

Finally, the challenges of ICT adoption by SMEs specifically focuses on the Nigerian

situation according to previous studies focusing on the local environment for small and

medium scale businesses. To conclude the section, a summary of the literature review

is provided, and models are proposed for the research objectives.

2.2 Conceptual Framework

2.2.1 Stages of ICT Adoption

Existing literature have indicated that there are different levels of ICT adoption by

organisations, which is also a function of stages of ICT development. This suggests that

the adoption of ICT by firms undergoes different stages of development brought about

by different factors. To explain this phenomenon, numerous researchers have come up

8
with different models. One of such models is “Richard Nolan’s stages of growth model”

(Rahayu and Day, 2017, p. 29). According to the model, there are six stages of ICT

adoption, comprising of initiation, contagion, control, integration, data administration,

and maturity. However, instead of actual stages where organisations can advance from

one stage to the other, increasing their level of adoption, Rahayu and Day (2017)

observed the six stages all exist together. This suggests that an organisation could be in

multiple stages or levels of adoption at a time. Subsequently, this model led the way for

subsequent models on stages of adoption of ICT, a number of which identified its

shortcomings and proffered alternatives.

In another dimension, other researchers have adapted growth models of ICT adoption

to e-commerce. Based on previous works done by O’Connor and O’Keefe (1997) and

Timmers (1999), Rao et al. (2003) proposed a model of actual stages of development,

with each subsequent stage advanced than the previous one, both in terms of technology

and cost. According to the authors, there are four stages, comprising of presence,

portals, transactions integration, and enterprise integration. Although the stages appear

to be sequential, they explained that organisations can begin at any stage taking into

consideration the drivers and barriers to each stage. Other models who have followed

this line of thought include Rahayu and Day’s (2017) e-commerce stages of growth

model based on the work of Pranatao et al. (2003) who identified six stages, including

no presence, static website presence, interactive online presence, electronic commerce,

internal integration and external integration.

However, because of the general nature of SMEs considered in this research, it is

important to consider a model that explains the levels or stages of ICT adoption on a

general level. One of such models is that of Kotelnikov (2007) who proposed a

progression of ICT adoption from basic to advanced technology. The author identified

9
four stages of ICT adoption comprising of (i) basic communications (ii) basic

information technology (iii) advanced communications and (iv)advanced information

technology. As organisations advance from one stage to the other, the technology

required becomes more complex and requires increased investment.

• Basic Technology

This represents the first stage of ICT adoption involving the use of basic communication

hardware such as mobile phone or a fixed land line. The aim in this stage is basically

to facilitate communication with clients and staff members alike. The adopted

communication tool in this stage is a function of convenience and cost.

• Basic Information Technology

The next stage in the progression of ICT adoption is the basic information technology.

This stage involves the application of computers and basic software for organisation

operations. Under this stage, internet connectivity is not necessary, as organisations are

only concerned with the integration of PCs and basic software into organisational

processes for improved productivity. Here software such as the Microsoft Word

package could be used in the preparation of mails which are then printed from a

connected printer and dispatched, and the Excel package could be adopted for basic

accounting processes.

• Advanced Communications Technology

The third stage is the advanced communications technology stage. In this stage,

organisations are now beginning to explore the opportunities of internet connection.

They now exploit internet connectivity for advanced communication practices

involving the email system, website, file sharing and, video conferencing for enhanced

10
customer relations and wider market reach. Also, in this stage, some organisations may

feel the need to incorporate e-commerce capabilities within their websites.

• Advanced Information Technology

The advanced information technology stage is the most advanced stage in Kotelnikov’s

(2007) progression of the ICT adoption model. Here some organisations—depending

on their specialisation—are not effectively served with the advanced communications

technology capabilities. Consequently, they adopt even more advanced technology

involving more sophisticated tools used for resource planning, inventory management,

databases, and advanced project management tools with project planning and

management capabilities.

Figure 1: Kotelnikov’s Stages of ICT Adoption

Basic Basic Information Advanced Advanced

Communication Technology Communications Information
Technology Technology
Fixed line Computers, basic
Computers with
telephones, mobile hardware and Internet
advanced software
phones, fax, etc. software to support connection, email,
and technology
basic websites, file
such as those for
organisational sharing, video
resource planning,
processes conferencing, e-
inventory
commerce
management,
customer
relationship
management, etc.
Source: Kotelnikov (2007)

2.3 Theoretical Framework

2.3.1 SMEs and Contribution to Socio-economic Development

The importance of small and medium enterprises (SMEs) to economic growth cannot

be overemphasised. However, albeit the well-documented contributions, the lack of

consensus on how to properly define SMEs has been well documented by literature

11
(Berisha and Pula, 2015). The authors noted that there are three major sources of the

various definitions of SME, namely; international organisations, national laws, and

industry definitions. Nonetheless, they seem to agree on the adoption of quantitative

criteria to define businesses that are not considered large enterprises. These criteria as

proposed by organisations such as the European Commission and The World Bank

include the number of employees, total assets, and annual turnover. According to the

definition of these organisations, for an enterprise to fall within the classification of

SME, they must meet the criteria on employee size, and either financial criteria (Berisha

and Pula, 2015).

Table 1 – World Bank Definition of SMEs

Category of Number of Total Assets Annual Turnover

Enterprise Employee

Micro <10 ≤ $100,000 ≤ $100,000

Small >10 - ≤50 >$100,000 - ≤$3,000,000 >$100,000 - ≤$3,000,000

Medium >10 - ≤300 >$3,000,000 - ≤$15,000, >$3,000,000 - ≤$15,000,

000 000
Source: Berisha and Pula, 2015, p. 19

Furthermore, the definition of SMEs as advanced by the international organisations

presented three classifications of SMEs namely; (i) micro enterprises, (ii) small

enterprises and (iii) medium enterprises. Also, the international criteria for defining

SMEs have formed the basis for national and industry-specific definitions, and as such

been adapted to fit different economies and/or industries. For example, according to the

Organisation for Economic Cooperation and Development (cited in Berisha and Pula,

2015), countries in Europe adopt the European Commission’s definition of SMEs, with

the employee strength criterion of less than 250 employees, while other countries define

SMEs as having a number of employees different to the European Commission and The

12
World Bank. For example, in New Zealand, the figure is less than 100 and less than

200 in Australia. In contrast, in the United States and Canada, any organisation with a

number of employees of fewer than 500 are categorised into an SME. In the same vein,

the Bank of Industry (BOI) defined SMEs as limited to a number of employees fewer

than 200 and a total asset of not more than N500 million, equivalent to about $1 million.

The basis of the amount of attention that SMEs has garnered thus suggests their

importance.

Table 2 – Nigerian Bank of Industry Definition of SMEs

Category of Number of Total Assets Annual

Enterprise Employee Turnover

Micro ≤10 ≤ N5,000,000 ≤ N20,000,000

Small >11 - ≤50 > N5,000,000 - ≤ ≤ N100,000,000

Medium >51 - ≤200 N100

> 000 000
N100,000,000 - ≤ ≤ N500,000,000

N500 000 000

Source: Bank of Industry (2020)

The importance of SMEs to socio-economic development has been repeatedly

emphasised by various literature over time. In a lot of countries, SMEs make up the

majority of employers, providing employment to a large percentage of the populace.

For example, in developed countries such as the United Kingdom, Canada and the

United States of America, SMEs account for over 99% of total enterprises. Similarly,

in Switzerland, SMEs are responsible for over 70% of the total employment, while

SMEs in Canada employ over 60%. In the United States of America and the United

Kingdom, SMEs are responsible for over half of the total employment (OECD, 2010).

However, SMEs in developing countries have been noted to play an equally major role

in employment. In Indonesia for instance, SMEs account for virtually all (99%) of the

total establishments (OECD, 2018). This is not dissimilar to the situation in Thailand

13
where SMEs make up 99.7% of establishments, accounting for close to 80% of total

employment (OECD, 2011). In Nigeria, Apulu et al. (2013) stated that SMEs account

for about 97% of the total establishments across different economic sectors in the

country.

Conclusively, despite varying ideas on defining what categories of businesses make up

the SME class, the consensus is on using employee size, annual turnover and/or total

assets as criteria. Similarly, regardless of slightly varying figures, it has been proven

that SMEs represent the majority of establishments and in the same vein contribute

massively to employment both in developed and developing nations. This, therefore,

underlines the importance of SMEs as a potential catalyst for socio-economic growth

and development, particularly in developing nations, and highlights the need for their

effective adoption of ICT to drive their businesses and improve their contribution to

socio-economic growth and development.

2.3.2 The Levels of ICT Adoption by SMEs in Developed Countries and

Developing Countries

Information and communication technology or simply ICT has been proven to be a

catalyst of growth across different economic sectors. According to Modimogale and

Kroeze (2011), ICT covers a wide array of technological hardware such as telephone,

point-of-sale system, computers, internet and, credit card facilities. However, Tob-Ogu

et al. (2018), proposed a comprehensive conceptualisation of ICT as comprising of

hardware, software and configurations that enable interactions and relevant processes,

including information acquisition, processing and exchange as required by the user.

This study, therefore, adopts this definition of ICT as a system comprising of hardware,

software and configurations, all of which function in an integrated manner to serve the

needs of the user—which in this case is SMEs.

14
Furthermore, Lucchetti and Sterlacchini (2004), analysed different categories of ICT

adopted by SMEs in Europe and classified these into three broad categories, comprising

of general-use, production-integrating, and market-oriented. According to the

researchers, general-use ICT include the adoption of basic ICT capabilities such as e-

mail and basic internet access. In contrast, the production-oriented category involves

the incorporation of hardware, software and configurations into the production process

and general functionality of SMEs. This category is more advanced than the general-

use category and consequently requires more sophisticated ICT components and

installations, as well as better technological skills. Finally, the market-oriented category

involves exploiting ICT to improve visibility and target a wider market reach for

products and services offered by SMEs.

However, analysis of ICT adoption by SMEs in developing nations has shown different

levels of adoption, suggesting that the rate of adoption is still far behind what is required

to position them to benefit on a large scale. For example, Rahayu and Day (2017), in

their study of ICT adoption in Indonesia revealed that the majority of the SMEs have

adopted the market-oriented ICT tools. Furthermore, they categorised the level of ICT

adoption into six stages and found that some SMEs are yet to adopt ICT while more

than 20% of them have only adopted basic ICT capabilities. Similarly, Ashrafi et al.

(2014) in their study of SMEs in Oman found that only a few of the SMEs sampled

have adopted advanced ICT capabilities relative to the basic ICT use.

This situation is not different in Nigeria. For instance, the study of Tob-Ogu et al.

(2018) on how the road freight transport sector in Nigeria have adopted ICT in their

operations revealed that ICT tools are used by the firms to conduct monitoring of

operations, to ensure accountability and improve on visibility. However, the authors

observed that large enterprises incorporate relatively advanced ICT tools into their

15
operations compared to SMEs. In the same vein, Apulu et al. (2013) identified different

ICT tools employed by SMEs in Nigeria to range from the basic telephone with no

internet connection, through PC with Microsoft packages and CAD-enabled software.

However, they also found that over one-third of SMEs are non-users of ICT. This is

also not dissimilar to the findings of Uweigbe and Olatunji (2009) who found a low

level of ICT adoption amongst a cross-section of SMEs measured through the number

of computer systems available and connected to the internet. These researchers and

others that have conducted similar studies in Nigeria have found a number of challenges

resulting in the low level of adoption of ICT by the various SMEs.

Conclusively, the review of literature under this section has revealed that although

SMEs in developing countries have made efforts in adopting ICT for their businesses

with varied applications in different sectors, their level of adoption is still relatively

basic, with a host of challenges militating against their effective adoption. This,

therefore, suggests that more is still required to be done in understanding the factors

that drive ICT adoption by SMEs, as well as those that inhibit effective adoption in

developing countries.

2.3.3 Factors Influencing ICT Adoption by SMEs in Developing Countries

Several extant literature have captured factors that drive ICT adoption by SMEs in

developing countries. According to these studies, the adoption of ICT by small and

medium scale enterprises is a function of several factors. These include technology type

(Nafiu et al., 2020; Okundaye et al., 2019; Ashrafi et al., 2014), size of business (Nafiu

et al., 2020; Lu et al., 2019; Irefin et al., 2012), social networks (Aleke et al., 2011)

and perceived benefits accruable from ICT adoption (Lu et al., 2019; Okundaye et al.,

2019; Tob-Ogu et al., 2018; Rahayu and Day, 2017; Jahanshahi et al., 2013).

16
• Technology type

According to Nafiu et al. (2020), Okundaye et al. (2019) and Ashrafi et al. (2014), type

of technology is one of the considerations of SME owners in adopting ICT for their

businesses. On the one hand, SME owners tend to adopt ICT for their businesses based

on the type of technology that is readily available to them, a factor which has the

undertones of infrastructure, ICT skills, and finance. On the other hand, this could be

on the basis of needs. This way, smaller organisations are likely to have no use for

complex types of ICT technology, thus adopting basic ICT types such as mobile phones,

email and static websites, which are easiest for them to come by and require less

investment. (Okundaye et al., 2019).

• Size of business

The size of SMEs is another factor that influences ICT adoption amongst SMEs. For

example, the study of Nafiu et al. (2020) who investigated the relationship between

some key factors and ICT adoption found that size is a major determinant. The authors

investigated how technology type, technical strategy, perceived benefits, perceived ease

of use and other factors influence ICT adoption and found that size is one variable

influencing the results. For example, owners of small businesses perceived less benefit

and less ease of use of ICT relative to larger businesses. Similarly, Irefin et al. (2012)

found that larger businesses with considerable financial resources, personnel and

operation size are more inclined to adopt ICT relative to smaller enterprises. This also

correlates with the findings of Lu et al. (2019) and Afolayan et al. (2015).

• Social networks

The social network is one of the lesser factors influencing ICT adoption. A discovered

by Aleke et al. (2011) who studied ICT adoption by agribusinesses in Nigeria, strong

17
social ties amongst SMEs in similar sectors could drive ICT adoption by the SMEs.

Adoption of certain ICT tools by one or some within these networks could influence

the diffusion across boards.

• Competition

Lu et al. (2019) found that competition could drive ICT adoption by SMEs. This means

that SME owners tend to adopt a particular type of technology if they perceive that

similar businesses have adopted the same. The authors in employing inferential

statistics found that this moderately influences ICT adoption.

• Perceived benefits of ICT adoption

The perception of SMEs on the benefits accruable from ICT adoption is another major

factor influencing the adoption. (Lu et al., 2019; Okundaye et al., 2019; Tob-Ogu et al.,

2018; Rahayu and Day, 2017; Jahanshahi et al., 2013). SME owners as investigated by

these studies were of the view that ICT could help them achieve a number of benefits

broadly grouped by Lu et al. (2019) into value and strategic benefits. These include

benefits such as increased competitiveness, increased sales, extended market reach,

improved accountability, enhanced productivity and effectiveness, and reduced cost.

In the study of Tob-Ogu et al. (2018), it was revealed that SMEs involved in the freight

transport sector identified ICT as improving their level of competitiveness. The SME

owners declared that the use of ICT increases their efficiency by reducing the time of

service delivery, at the same time increasing accuracy. In the same vein, Okundaye et

al. (2019) found that SME owners believe that adopting ICT can help them achieve

competitiveness both locally and globally. Finally, the studies of Tarute and Gatautis

(2018) and Rahayu and Day (2017) also supports the view that competitiveness is a

benefit of ICT adoption amongst SMEs, driving their ICT adoption.

18
Additionally, extended market reach and increased sales are other perceived benefits of

ICT adoption which influence the decisions of SME owners to integrate ICT into their

businesses. For example, as revealed from the study by Rahayu and Day (2017) these

are the top two benefits perceived by SME owners in Indonesia. ICT adoption provides

means to increase sales through extended market reach. This means that online presence

increases visibility for businesses and enables them to reach relatively far more

customers compared to their physical location, and this consequently improves their

capacity to compete. Similarly, Lu et al. (2019) and Jahanshashi et al. (2013) found

increased market share, enhanced productivity and work effectiveness, enhanced

company brand and corporate image, reduced labour and operation costs, and enhanced

competitive advantage are other perceived benefits influencing the adoption of ICT by

SME owners.

Conclusively, this section has been able to show specific factors that are integral to the

decision of SME owners to adopt ICT for their businesses. Additionally, it shows that

the benefits of ICT as perceived by SME owners are important factors. Therefore, if

SME owners are not adequately aware of or perceive the benefits of integrating ICT in

their businesses, they are not likely to do so, while on the other hand, SMEs will adopt

ICT if they perceive that it could drive their businesses positively (Lu et al., 2019;

Okundaye et al., 2019; Agwu and Murray, 2015; Jahanshahi et al., 2013).

2.3.4 Challenges of ICT Adoption by SMEs in Nigeria

The ICT adoption rate in developing nations has been found to be at the early stage

relative to countries in the developed world. The situation in Nigeria is not very

dissimilar to what obtains in other developing countries such as Indonesia, Iran, Ghana,

and South Africa (Nafiu et al. 2020; Okundaye et al., 2019; Oyebiyi, 2016; Apulu et

al., 2013; Uweigbe and Olatunji, 2009). According to the existing literature on the

19
challenges of ICT adoption by SMEs in Nigeria, numerous but similar factors are

observed. These factors are broadly grouped into internal and external environmental

factors, perceptions, and attitudes (Agwu and Murray, 2015).

Internal environmental factors limiting ICT adoption are those that are within the

control of organisations, including the size of business, ICT skills, and availability of

relevant resources. External environmental factors on the other hand are those that are

right beyond the control of SMEs, such as inadequate infrastructure to support ICT

adoption, unfavourable government policies are some of the factors identified.

Perception factors include risks associated with ICT adoption, and perceived cost of

ICT adoption and operation, while factors of attitude encompass cultural factors and

personal attitude towards ICT adoption. Some of these factors are discussed as follows:

• Inadequate infrastructure

Perhaps the biggest challenge of ICT adoption in Nigeria is that of infrastructure for

enabling the business environment. This was repeatedly cited as a major challenge in

studies such as Okundaye et al. (2019), Agwu and Murray (2015), Apulu et al. (2013),

Irefin et al. (2012) and Uweigbe and Olatunji (2009). These researchers discovered that

erratic power supply, poor internet connection, poor mobile telecommunication

connection and expensive internet service are factors inhibiting ICT adoption by SMEs

in the country. According to Agwu and Murray (2015), most of the areas surveyed had

outdated and unreliable telephone connections with erratic internet services. Also, the

authors found that the necessary infrastructure for widespread ICT usage is lacking.

• Lack of ICT skills

Inadequate or complete lack of ICT skills is identified as an internal environmental

factor observed to be militating against effective ICT adoption in Nigeria. For example,

20
Okundaye et al. (2019) found a lack of ICT competence as a challenge of ICT adoption.

This is similar to the findings of Agwu and Murray (2015) who discovered that some

SME owners lack requisite ICT competency. Finally, according to the study of Apulu

et al. (2012), lack of ICT skill forms the second biggest challenge of ICT adoption in

Nigeria, with their study revealing that close to half of SME owners have a deficiency

of ICT skills limiting their integration of ICT.

• The perceived cost of operation and maintenance of ICT tools

The issue of the financial implication of adopting ICT came up in numerous studies as

one of the factors that inhibit effective adoption by SMEs in Nigeria (Okundaye et al.,

2019; Oyebiyi, 2019; Jahanshashi et al., 2013; Apulu et al., 2012). This is often

attributed to the prohibitive cost of ICT hardware, software and peripheral components,

including the computer system, relevant software, internet modems and subscription.

As observed by Okundaye et al. (2019) the cost of investing in the necessary technology

and skill for ICT adoption is usually beyond the financial capability of small businesses,

thus either limiting their level of adoption or generally resulting in their having to

completely forgo ICT adoption. This is not far apart from the findings of Apulu et al.

(2013) that perceived cost is one of the top five factors limiting the adoption of ICT by

SMEs.

• Insecurity and related risks

From the review of literature, insecurity and perception of risks appear to be a major

inhibitor of ICT adoption amongst SME owners in Nigeria. (Okundaye et al., 2019;

Agwu and Murray, 2015; Apulu et al., 2013). These studies revealed that some SME

owners aired concerns on the security of their business and client information if they

adopt ICT. According to Agwu and Murray (2015), some SME owners lack confidence

in the ability of ICT to protect their business information based on reports circulating

21
the airwaves. Some other concerns identified include the possibilities of hacking,

identity theft, and losing their money to fraudsters, which is something organisations

of their size cannot afford.

• Inadequate government support

Another challenge that has been found to be peculiar to Nigeria on ICT adoption by

SMEs is inadequate support by the government. As found by Okundaye et al. (2019),

Oyebiyi (2016) and Irefin et al. (2012) government support impacts rate and level of

ICT adoption by SMEs in the country. As noted in the studies, inadequate

infrastructure, unfavourable business environment, inadequate ICT skill and limited

financial capabilities are some of the militating challenges of ICT adoption that can be

alleviated by government support. However, what obtains in the country is a lack of

support in facilitating ICT adoption, through favourable policy and regulation

development, installation of ICT infrastructure, technical training on ICT skills, and

financial support for SMEs.

• Culture and attitude

Culture has also been identified as a factor militating against ICT adoption in Nigeria.

According to Agwu and Murray (2015), some SME owners are wary of the acceptance

of clients and customers with e-transactions, especially involving exchange of money

for services. The authors noted that some of the SME owners interviewed declared that

while it might be beneficial to adopt ICT for some business processes, but it is the

Nigerian way to sell products or offer services and receive money with your hands. This

is also similar to the findings of Osubor and Chiemeke (2015), while Aleke et al. (2011)

had earlier found that SMEs in the agricultural sector are wary of the possible disruption

that ICT may introduce in their groups. However, Okundaye et al. (2019) found that

culture is a minimal challenge of ICT adoption amongst SMEs in Nigeria.

22
2.5 Summary of Literature Review and Model Specification

From the numerous studies reviewed for this research, it is clear that the identification

of which businesses fall within the small and medium scale is a function of quantitative

variables including employee size and financial factors, all of which are further adapted

to the socio-economic contexts of different regions. Additionally, it has been proven

that SMEs are drivers of social and economic growth and development in many nations

of both the developed and developing world.

However, studies have shown different categories of adoption and revealed that the rate

of adoption between the developed and developing nations differs significantly, and

this poses a challenge. It has been observed that the adoption of ICT by SMEs in most

developing countries including Nigeria is major of the basic ICT tools, a situation which

has been ascribed to numerous factors.

Furthermore, extant literature has shown that adoption of ICT by SMEs is a function of

numerous factors, some of which drive adoption and some of which inhibits adoption.

These range from factors of infrastructure for ICT adoption and sustainability, financial

factors, limited awareness of benefits, perceptions of insecurity, limited ICT skills,

social networks, to perceptions of benefits accruable from ICT adoption.

Finally, several benefits have been noted by adopters of ICT amongst SMEs. These

benefits are well captured to include the capacity to drive businesses and improve their

competitiveness, achieve extended market reach and increase sales, improve

accountability, and improve customer relationships. Therefore, based on the review of

conceptual and theoretical literature, this research adopts the following variables as

shown in fig 2, 3 and 4. In order to determine the level of ICT adoption by SMEs in the

study area, the variables considered are basic technology, basic information technology,

23
advanced communications technology, and advanced information technology. Also, on

factors driving ICT adoption by SMEs, the research considered variables such as

technology type, business size, social networks, competition, and perceived benefits

(increased competitiveness, increased sales, extended market reach, improved

efficiency, enhanced productivity, enhanced company brand and corporate image,

reduced labour and operation costs, and enhanced competitive advantage). Finally, on

the challenges of ICT adoption, the research considers how internal and external

environmental factors, perceptions, and attitudes affect ICT adoption amongst SMEs in

Ibadan, Nigeria.

Figure 2: Level of ICT Adoption Model

Basic Basic Information Advanced Advanced

Communication Technology Communications Information
Technology Technology Technology
Computers, basic
Computers with
Fixed line hardware and Internet
advanced software
telephones, mobile software to support connection, email,
and technology
phones, fax, etc. basic websites, file
such as those for
organisational sharing, video
resource planning,
processes conferencing, e-
inventory
commerce
management,
customer
relationship
management, etc.

24
 Figure 3: Drivers of ICT Adoption Model

Technology type
Business size
ICT ADOPTION
Social networks
Competition
Perceived benefits.

Figure 4: Challenges of ICT Adoption Model

ICT Adoption Challenges

Internal Factors External Factors Perception Attitude

ICT skills Infrastructure Perceived risks Culture
Financial resources Government support Perceived cost Personal attitude to ICT
Business size

25
 CHAPTER THREE

3.0 RESEARCH METHODOLOGY

This section details the methods adopted for this research. It entails the research design

and other information including the research population and sample frame, sample size

and selection procedure, data types and sources, data collection instruments and

methods, and method of data analysis.

3.1 Research Design

This study employs a combination of descriptive and inferential research design

approaches involving quantitative and qualitative methods of data collection and

analysis. This approach is suitable for the research due to the identified research

problem and the subsequent research questions that the study intends to answer. It

involves data collection through a structured research instrument to a predetermined

sample population, in order to generate a better understanding of research variables.

Nonetheless, the proposed method is popular within studies in the same topic area.

Some of these include studies conducted by Oyebiyi (2019); Apulu et al. (2013); Irefin

et al. (2012) in Nigeria, Napitupulu et al. (2018), and Rahayu and Day (2017) in

Indonesia, and Jahanshahi et al., (2013) in India, Malaysia, and Iran.

3.2 Research Population, Sample Frame and Sampling Procedure

The research population encompasses businesses that fall within the category of SMEs

as defined by the Bank of Industry (2020). This means business organisations with an

employee strength of less than 200, and a total asset and annual turnover of not more

than N500 million. However, the unavailability of a database of SMEs in Nigeria is

well documented (Oyebiyi, 2019; Irefin et al., 2012). Consequent to this, determining

26
a sample frame within which SMEs were selected for the research proved a little

problematic.

However, the researcher was able to obtain a list of businesses in the study area from

the Corporate Affairs Commission (CAC)—a national agency responsible for the

regulation and management of business registration. From the list of businesses in

Ibadan, 116 were identified in the SME category. However, a directory of address and

contact information was available for only 92 of the businesses, with the rest marked

as inactive.

For the sampling technique, the convenience sampling method was used. Although this

method is a non-probabilistic sampling technique, it is suited to the study because it

enabled the selection of respondents based on their ease of availability and willingness

to participate. This became necessary as it was envisaged that some SMEs will decline

to participate in the survey (Oyebiyi, 2019; Irefin et al., 2012).

3.3 Research Instrument

A structured questionnaire is employed as the research instrument (see Appendix 1).

The questionnaire is close-ended and designed to have four sections covering the

research questions. The first section entails the profile of the participating SMEs, with

limited but structured response choices provided based on previous studies. Questions

included in this section concerns the characteristics of each SME, such as nature of the

organisation, the business sector, age of the organisation, number of employees and

revenue base. These are what are applicable to similar studies conducted in Nigeria on

the nature of SMEs (Oyebiyi, 2019; Agwu and Murray, 2015; Irefin et al., 2012).

Furthermore, the second section covers the level of ICT adoption. Four levels of ICT

adoption are provided for SMEs to choose from. These levels are basic communication

27
(level 1), basic information technology (level 2), advanced communications technology

(level 3), and advanced information technology (level 4). For this section, SMEs are

expected to select a single option representing the stage of ICT adoption that they are,

based on technologies they use on a day-to-day basis.

Moreover, the third section of the questionnaire focuses on factors that drive ICT

adoption by SMEs. Factors that are considered in this section include the type of

technology, business size, competition, social networks, and perceived benefits such as

improved competitiveness, improved efficiency, extended market reach, increased

sales, enhanced productivity and work effectiveness, enhanced company brand and

corporate image, and reduced labour and operation costs. For this section, a 5-point

Likert scale method was employed ranking each variable from “strongly disagree,” to

“strongly agree.”

Finally, the last section of the questionnaire queried SME owners on their perception

of challenges inhibiting ICT adoption. Factors queried comprises of internal, external,

perception, and attitude factors, all of which are ranked on a 5-point Likert scale from

“strongly disagree,” to “strongly agree.”

3.4 Pilot Survey and Data Reliability

A pilot survey was carried out with the research instrument prior to the actual data

collection, and a reliability test was conducted on the results. This was done to ensure

that the questions measure what they are intended to measure and that there is some

level of internal consistency within the data. In order to do this, Cronbach’s alpha (α)

is used, as this was especially useful for the Likert scale components of the survey. The

result of the reliability tests generated a Cronbach’s alpha of .966 (α = .966) which

indicates a high level of internal consistency.

28
Reliability Statistics

Cronbach's Cronbach's N of Items

.966 .969 21

3.5 Data Collection

A review of existing literature revealed two major types of data collection methods,

namely; electronic (online) collection and physical (in-person) collection, both with

varying degrees of limitation and benefits. For this study, the online method of data

collection is employed. This is made possible due to the availability of the contact

information of the SMEs in Ibadan, namely their email address.

An electronic copy of the research questionnaire was developed and hosted on the

Google Forms platform. A link to the online survey was generated and sent via email

to the SME owners.

3.6 Data Analysis

The descriptive-analytical method is employed for this study. The results are

summarized using basic statistical methods such as frequency tables, percentages,

means, as well as charts. For accurate data collation and efficient data analysis, IBM

Statistical Package for the Social Sciences (SPSS v. 25) software was employed by the

researcher.

Furthermore, in order to test the research hypotheses towards answering the research

question, some inferential statistical methods are employed. For example, to test the

first research hypothesis, a Chi-square test for the association is considered as most

appropriate. This allows for a comparison between the predictive variable (SMEs based

on size) and the outcome variable (level of ICT adoption). In addition, a multivariate

29
analysis of variance (one-way MANOVA) is used for the second research hypothesis.

This allows for the comparison of mean differences between the outcome variable

(drivers of ICT adoption) and the predictive variable (SMEs on the basis of size).

Similarly, a multivariate analysis of variance was employed to test the last hypothesis,

in order to measure the relationship between perceived challenges of ICT adoption and

the actual level of ICT adoption by SMEs in the study area.

3.7 Ethical Consideration

Although the basis for ethical consideration in research majorly concerns medical

research involving human subjects, the principles are often applied to research in other

fields as long as human subjects are involved. There are two major documents within

which the principles of ethics in research are enshrined in. These are The Declaration

of Helsinki (1964), and the Belmont Report (1979).

One of the fundamental principles of ethics in both documents is that people should

have the right to make informed decisions about participating in research. Consequent

to this, informed consent is used to ensure that potential participants have every

information about the research to inform their participation or otherwise. Therefore, for

this research, the research instrument provided clear and adequate information about

the research purpose and objectives to SME owners in order to inform their decision to

participate.

Furthermore, justice and fairness are other principles of ethics in research. Although

the unavailability of a cohesive database of SMEs is a major challenge to this, the

research ensured inclusiveness in the survey as much as possible. This was done by

ensuring that cross-sections of SME owners are involved, and that participation is not

restricted to anyone on the basis of any social construct.

30
Finally, the principles of confidentiality and privacy were completely upheld, as the

data collection process ensured that the data provided by the respondents cannot be

linked back to any specific individual or party. One of the ways this was achieved is

that SME owners were not required to submit their email or any other contact

information when responding to the online questionnaire. Finally, the data obtained was

only used for the purpose with which the participants’ consent was given.

3.8 Limitation of Study

There are a few limitations to this research brought about by some specific constraints.

Firstly, the lack of a formal database of SMEs in Nigeria is a challenge to this research.

The consequence of this is that some level of resourcefulness would have to be

deployed in identifying the research population, and this in most cases does not translate

to the ideal. In addition, previous studies have shown that some of the potential

respondents would likely decline participation in the research (Oyebiyi, 2019; Irefin et

al., 2012). Thus, the sample frame will be further depleted, limiting available SMEs to

be selected for the survey. For example, because of the unavailability of a purpose-built

and comprehensive SME database, the sample frame that will be adopted is not

exhaustive. It is also not inclusive of businesses that are not registered with the CAC,

thereby introducing some level of bias into the sample selection process.

In addition, Covid-19 restrictions and quarantine guidelines scuppered the plans to

travel and conduct a physical (in-person) data collection, which is most ideal

considering the high level of completion and return rate attributed to this method.

Consequently, the study settled for the online method of data collection with its

attendant challenges.

31
 CHAPTER FOUR

4.0 DATA ANALYSIS AND INTERPRETATION

4.1 Introduction and Characteristics of SMEs in Ibadan Metropolis

This section covers the findings of the survey conducted to answer the questions that

this study set out to answer. These questions are on the level of ICT adoption in Ibadan

Metropolis, drivers and challenges of ICT adoption by the SMEs in the study area. From

the 92 businesses that were chosen for the survey and contacted to fill the online form,

only 53 responded, which amounts to a 58% response rate. However, due to time

constraints, the response rate was deemed to be adequate. In addition, the sample size

was found to be relatively higher than that of Rahayu and Day (2017), Agwu and

Murray (2015) and Irefin et al. (2012).

The results of the survey are analysed with both descriptive and inferential statistical

methods. The descriptive method includes the use of frequency and percentage tables,

as well as mean and standard deviation. On the other hand, inferential statistics that was

employed was used to test the hypotheses developed for the research questions. These

comprise the Chi-Square test and the Multivariate analysis of variance (MANOVA).

The findings are presented thematically in the sections that follow, starting with the

characteristics of SMEs in the study area. Each section is accompanied by a frequency

table, and an explanation of the findings as presented in the table. The hypotheses are

also presented in a similar fashion. Consequent to this, Table 3 shows the findings of

the survey on the characteristics of the SMEs in the study area.

32
Table 3 – Characteristics of SMEs in Ibadan Metropolis

Nature of Business Frequency Percentage

Family business 3 5.7
Partnership 10 18.9
Private limited company 8 15.1
Public limited company 1 1.9
Sole proprietorship 31 58.5
Industrial Sector Frequency Percentage
Agro-allied 11 20.8
Building and construction 9 17.0
Events and entertainment 4 7.5
Manufacturing 7 13.2
Pharmaceuticals 3 5.7
Printing and Advertising 1 1.9
Trading 9 17.0
Others 9 17.0
Staff Strength Frequency Percentage
0-10 37 69.8
11-49 13 24.5
50-200 3 5.7
Business Age Frequency Percentage
0-5 years 24 45.3
6-10 years 24 45.3
> 10 years 5 9.4
Annual Turnover Frequency Percentage
< N20m 25 47.17
N20m-N99m 23 43.40
N100m and above 5 9.43
Total 53 100.00

Source: Author’s field survey, 2021

Table 3 shows the background data obtained on SMEs in Ibadan. As shown in the table,

it can be seen that the majority of the businesses are owned by a single person,

accounting for 58% of the total. This is followed by partnerships (18%) and private

33
limited companies (15%). However, it is noteworthy that the survey captured a cross-

section of business types. Similarly, a variety of industrial sectors are represented,

including agro-allied, manufacturing, building and construction, pharmaceuticals, and

trading.

However, as revealed by the staff strength of the SMEs, the majority (70%) are in the

micro category, with only a few (6%) in the medium category as defined by the Nigerian

Bank of Industry. This is also corroborated by the rate of the annual turnover of the

businesses, with close to half of them earning less than N20 million annually. The size

of a business is one of the factors that have been identified to influence the adoption of

ICT by businesses in Nigeria (Nafiu et al., 2020). Finally, it is revealed that only few

of the businesses have been in existence for longer than 10 years, indicating that

majority of the businesses are relatively new. This is a worrying indicator that may

suggest that the business environment in the country is not sustainable, therefore

requiring innovative solutions in ensuring the sustainability of SMEs in the study area.

With ICT adoption having been observed as one of such ways to make SMEs

competitive, it thus becomes even more important to understand what factors drive its

adoption, as well as those which currently hinders adoption in Ibadan Metropolis.

4.2 Analysis of Research Questions

4.2.1 Data Analysis and Findings on Level of ICT Adoption by SMEs in Ibadan
Metropolis

Research Question 1
What is the level of ICT adoption of SMEs in Ibadan?
Table 4 – Level of ICT Adoption by SMEs in Ibadan Metropolis

Level of ICT Adoption Frequency Percentage

Level 1 – Basic communication technology 1 1.89
Level 2 – Basic information technology 6 11.32

34
 Level 3 – Advanced communication technology 29 54.72
Level 4 – Advanced information technology 17 32.08
Total 53 100.00
Source: Author’s field survey, 2021

Level of ICT Adoption by SMEs in Ibadan Metropolis

100.0% Level 1 – Basic communication technology
90.0% Level 2 – Basic information technology

80.0% Level 3 – Advanced communication technology

Level 4 – Advanced information technology
70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%

From the survey data presented in Table 4, 54.7% of the SMEs in Ibadan Metropolis

are presently at the third level of ICT adoption, which is the advanced communication

technology level, involving the use of internet connection for email access, website, file

sharing, and e-commerce. This is followed by 32% of them who stated that they are at

level 4, which is the advanced information technology stage involving the use of

sophisticated business software for activities like inventory planning and management,

project planning and management, and financial planning and budget management.

Furthermore, 11.3% of the SME owners have only adopted the basic information

technology and 1.89% are only at the most basic level of ICT adoption, which is the

use of mobile phones.

It can therefore be inferred from this information that the majority of the SMEs in

Ibadan Metropolis have integrated ICT into the day-to-day activities of their

35
enterprises, although their level of adoption still varies. However, what is most notable

is that there are presently non-adopters of ICT amongst the SMEs surveyed.

4.2.2 Data Analysis and Findings on Drivers of ICT Adoption by SMEs in

Ibadan Metropolis

Research Question 2

What factors drive the adoption of ICT by SMEs in the study area?

Table 5 – Drivers of ICT Adoption by SMEs in Ibadan Metropolis

Factors of ICT Adoption Mean Std. Deviation N Rank

Type of Technology 4.04 1.037 53 8
Business Size 3.98 .909 53
Competition 3.91 .925 53
Social Networks 3.04 1.109 53
Improved Competitiveness 4.09 .966 53 5
Improved Efficiency 4.09 .925 53 5
Extended Market Reach 4.51 .993 53 2
Increased Sales 4.42 1.027 53 3
Enhanced Productivity 4.06 .989 53 7
Work Effectiveness 3.91 .904 53
Enhanced Company Brand and Corporate Image 4.55 .992 53 1
Reduced Labour and Operation Costs 3.17 1.139 53
Reduced Marketing & Advertising Cost 3.11 1.219 53
Improved Customer/Client Relationship 4.36 1.021 53 4
Benchmark
= 4.0
Source: Author’s computations, 2021

Factors that drive the adoption and type of ICT adopted by SMEs range from the size

of the business, type of technology available, to the perception of benefits accruable

from ICT adoption by SME owners. In order to identify these factors as are applicable

to businesses in Ibadan Metropolis, the SME owners were requested to rank 14 items

36
obtained from the review of existing literature using a 5-point Likert scaling system.

Subsequently, the mean rank of each option is calculated and presented in Table 5.

As shown in the table, only eight of the 14 items provided achieved the benchmark

score of 4.0. These represent the factors that drive ICT adoption by SMEs in Ibadan

Metropolis as ranked by the SME owners. For example, “enhanced company brand and

corporate image” with a mean score of 4.55 is the top-ranked driver of ICT adoption in

the study area. This implies that the SME owners believe that adopting ICT will put

their brands in a new light, thereby making them attractive to potential customers.

Online presence as reflected by a corporate email address, website and social media

presence will improve their corporate image and make them more competitive in their

sector. This finding is similar to that of Jahanshahi et al., (2013) in their study of SMEs

in India, Malaysia, and Iran.

Furthermore, “extended market reach” and “increased sales,” are ranked 2nd and 3rd

with mean scores of 4.51 and 4.42 respectively. These direct economic benefits are

interrelated and very important to all businesses. ICT adoption through online presence

by the way of website and social media, as well as target marketing also using email

and the social media are great ways for a business to have a reach beyond their physical

environment. It can therefore be inferred from this information that these possibilities

of ICT are one of the major drivers of ICT adoption in Ibadan Metropolis.

In addition, “improved customer/client relationship (4.36),” “improved

competitiveness (4.09),” and “improved efficiency (4.09)” make up the top 5 of biggest

drivers of ICT adoption by SMEs in Ibadan Metropolis. Ideally, these are important

objectives of businesses: to have a long-lasting rewarding relationship with their

customers, to be able to compete effectively in their market and, to be efficient in their

37
daily business activities. However, the possibility of attaining these objectives from

using ICT makes it attractive to SME owners. These factors were also found to

significantly influence ICT adoption by SME owners in studies by Rahayu and Day

(2017) in Indonesia and Lal (2007) in Nigeria. Other factors influencing ICT adoption

by SMEs as ranked by SME owners in the study area are enhanced productivity (4.06)

and type of technology (4.04).

However, “business size” (3.98), “work effectiveness” (3.91), “competition” (3.85),

“reduced marketing and advertising cost” (3.11), “enhanced productivity” (3.06) and

“social networks” (2.47) are the least ranked factors influencing ICT adoption by SMEs

owners in Ibadan Metropolis. Although ICT adoption improves the competitiveness of

businesses, the high cost of ICT infrastructure and internet access in Nigeria may be

expensive for small business owners. The cost of advertising on different online

platforms in order to reach a wider audience especially increases the cost of ICT

adoption. As found by Okundaye et al. (2019) cost of implementing ICT is a major

determinant of ICT adoption. This may therefore be a justification for the low rating

for “reduced marketing and advertising cost” as a driver of ICT adoption.

Similarly, the type of ICT in use by SMEs in the study area may influence their opinion

of “enhanced productivity” as a lesser factor of ICT adoption. The finding of this study

on enhanced productivity as a factor of ICT adoption contradicts that of Rahayu and

Day (2017) and Jahanshahi et al. (2013). Also, the finding on social networks is in

disagreement with that of Aleke et al. (2011) in Nigeria.

4.2.3 Data Analysis and Findings on Challenges of ICT Adoption by SMEs in

Ibadan Metropolis

Research Question 3

What are the challenges militating against ICT adoption by SMEs in the study area?

38
In order to determine which factors inhibit the adoption of ICT by SMEs in Ibadan

Metropolis, the SME owners were requested to rank the factors according to their

perception. They were presented with a 5-point Likert scaling system ranging from

“strongly disagree” to “strongly agree.” The result of the survey is presented in Table

6 as follows:

Table 6 – Inadequate Knowledge and ICT Skills

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 12 22.6 22.6 22.6

Agree 38 71.7 71.7 94.3

Valid
Strongly disagree 3 5.7 5.7 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 5 - Bar Chart showing SME owners' rating of Inadequate Knowledge and ICT Skills

Source: Chart generated from SPSS v. 25

As represented in Table 6, close to one-third (22.6%) of the SME owners strongly

agreed with “inadequate knowledge and ICT skills” as a challenge of ICT adoption by

SMEs in the study area. Similarly, the majority of them (71.7%) agreed with the factor

as a challenge in the area. However, a few of them (5.7%) disagreed. It can thus be

39
inferred from this information that the adoption of ICT by SME owners in Ibadan

Metropolis is inhibited by their inadequate knowledge and skills of ICT. This is also

clearly illustrated in figure 5 above.

Table 7 – Expensive Running and Maintenance Cost of ICT

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 15 28.3 28.3 28.3

Agree 33 62.3 62.3 90.6

Valid Uncertain 2 3.8 3.8 94.3

Strongly disagree 3 5.7 5.7 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 6 - Bar Chart showing SME owners' rating of Expensive Running and Maintenance
Cost of ICT

Source: Chart generated from SPSS v. 25

Table 7 shows how SME owners in Ibadan Metropolis rated “expensive running and

maintenance cost of ICT” as a challenge of ICT adoption. From the table, it is shown

that 28.3% of them strongly agreed, while 62.3% agreed with the factor as a challenge.

40
On the other hand, 5.7% of agreed with the factor, while 3.8% are uncertain as to how

the factor inhibits adoption of ICT by SMEs in the area. It is therefore deduced from

this information that the adoption of ICT by SME owners in Ibadan Metropolis is

inhibited by the expensive running and maintenance cost of ICT. This trend is also

clearly shown in figure 6 above.

Table 8 – Doubts about Security and Privacy

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 5 9.4 9.4 9.4

Agree 36 67.9 67.9 77.4

Uncertain 5 9.4 9.4 86.8

Valid
Disagree 4 7.5 7.5 94.3

Strongly disagree 3 5.7 5.7 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 7 - Bar Chart showing SME owners' rating of Doubts about Security and Privacy

Source: Chart generated from SPSS v. 25

41
As shown in Table 8, 9.4% of the SME owners in Ibadan Metropolis strongly agreed

that “doubts about security and privacy” is a challenge of ICT adoption. This is also

corroborated by the majority (67.9%) who agreed with the factor as a challenge.

However, 7.5% disagreed, while 5.7% strongly disagree with the factor inhibiting the

adoption of ICT in the area. This information, therefore, suggests that the adoption of

ICT by the majority of the SME owners in Ibadan Metropolis is limited by doubts about

security and privacy. Figure 7 above also illustrates this information.

Table 9 – Internet Connection Failures

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 18 34.0 34.0 34.0

Agree 28 52.8 52.8 86.8

Uncertain 2 3.8 3.8 90.6

Valid
Disagree 1 1.9 1.9 92.5

Strongly disagree 4 7.5 7.5 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 8 - Bar Chart showing SME owners' rating of Internet Connection Failures

Source: Chart generated from SPSS v. 25

42
As shown in Table 9, more than one-third (34%) of the SME owners in Ibadan

Metropolis strongly agreed that “internet connection failures” is a challenge of ICT

adoption. Also, more than half (52.8%) agreed with the factor as a challenge. However,

very few 1.9% disagreed, while 7.5% strongly disagree with the factor as hindering the

adoption of ICT in the area. With this information, it can be construed that internet

connection failure is a challenge to the adoption of ICT by SMEs in Ibadan Metropolis.

This information is also supported by Figure 8 above.

Table 10 – Inadequate Support from Government

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 25 47.2 47.2 47.2

Agree 24 45.3 45.3 92.5

Valid
Disagree 3 5.7 5.7 98.1

Strongly disagree 1 1.9 1.9 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 9 - Bar Chart showing SME owners' rating of Inadequate Support from Government

Source: Chart generated from SPSS v. 25

43
Table 10 shows that close to half (47.2%) of the SME owners in Ibadan Metropolis

strongly agreed that “inadequate support from the government” is a challenge of ICT

adoption in the area. In addition, 45.3% agreed that the factor is a challenge. However,

a few (5.7%) of them disagree, and 1.9% strongly disagree with the factor as a challenge

to the adoption of ICT in the area. As a result, it can be inferred from this information

that inadequate support from the government is a challenge to the adoption of ICT by

SMEs in Ibadan Metropolis. This information is also supported by Figure 9 above.

Table 11 – Inadequate Infrastructure

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 16 30.2 30.2 30.2

Agree 28 52.8 52.8 83.0

Uncertain 5 9.4 9.4 92.5

Valid
Disagree 1 1.9 1.9 94.3

Strongly disagree 3 5.7 5.7 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 10 - Bar Chart showing SME owners' rating of Inadequate Infrastructure

Source: Chart generated from SPSS v. 25

44
From Table 11, it can be seen that 30.2% of the SME owners in Ibadan Metropolis

strongly agreed with “inadequate infrastructure” as a challenge of ICT adoption in the

area. Additionally, over half of them (52.8%) corroborates this factor as a challenge.

On contrary, 1.9% disagree, and 5.7% strongly disagree with the factor as a challenge

to the adoption of ICT in the area. As a result, it can be inferred from this information

that inadequate infrastructure is a challenge to the adoption of ICT by SMEs in Ibadan

Metropolis. This information is also supported by Figure 10 above.

Table 12 – Cultural Factors

Frequency Percent Valid Percent Cumulative Percent

Strongly agree 3 5.7 5.7 5.7

Agree 10 18.9 18.9 24.5

Uncertain 9 17.0 17.0 41.5

Valid
Disagree 25 47.2 47.2 88.7

Strongly disagree 6 11.3 11.3 100.0

Total 53 100.0 100.0

Source: Author’s computations, 2021

Figure 11 - Bar Chart showing SME owners' rating of Cultural Factors

Source: Chart generated from SPSS v. 25

45
As shown in Table 12, only very few (5.7%) of the SME owners in Ibadan Metropolis

strongly agree with “cultural factors” as a challenge of ICT adoption in the area.

Additionally, 18.9% agree that the factor is a challenge. On contrary, a quarter (25%)

of the SME owners disagree, and 11.3% strongly disagree that the factor is a challenge

to the adoption of ICT in the area. Consequent to this information, it can be deduced

from this information that cultural factors do not inhibit the adoption of ICT by SMEs

in Ibadan Metropolis. Figure 11 above also clearly illustrates this information.

After the analysis of individual factors, the results were subsequently analysed to

generate a mean rank of each factor. Also, a benchmark score of 4.0 was chosen in

order to understand which factors actually inhibit the adoption of ICT as rated by the

SME owners in the study area. The results are presented in Table 13 below:

Table 13 – Mean Ranking of ICT Adoption Challenges in Ibadan Metropolis

Challenges of ICT Adoption Mean Std. Deviation N Rank

Inadequate Knowledge and ICT Skills 4.06 0.864 53 3
Expensive Running and Maintenance Cost of ICT 4.08 0.917 53 2
Doubts about Security and Privacy 3.68 0.956 53
Internet Connection Failures 4.04 1.073 53 4
Inadequate Support from Government 4.30 0.890 53 1
Inadequate Infrastructure 4.00 1.000 53 5
Cultural Factors 2.60 1.098 53
Benchmark = 4.0
Source: Author’s computations, 2021

From the table, it is seen that inadequate support from the government with a mean

score of 4.3 is rated as the biggest challenge to their ICT adoption. This is followed by

the expensive running and maintenance cost of ICT, ranked with a mean score of 4.08.

The cost of running and maintaining ICT for SMEs can comprise the cost of investing

46
in ICT tools like computers and other paraphernalia, setting up and maintaining the

connection to the internet, setting up a website to serve as an online catalogue or

showroom for the business, running online advertisements to improve visibility,

engaging social media experts and copywriters to drive online marketing campaigns,

subscribing to industry-specific and purpose-built tools, and more. However, all of

these may be overwhelming for small businesses to finance, even if they are familiar

with the potential benefits of ICT integration. This supports initial findings by Agwu

and Murray (2015) who found that the cost of investing in ICT far outweighs the profits

of some of the businesses in Nigeria.

Inadequate knowledge of ICT and skill is another top challenge militating against

effective ICT adoption in Ibadan Metropolis, with a mean score of 4.06 and ranking 3rd

on the list. This is followed by internet connection failure (4.04) and inadequate

infrastructure (4.0) as 4th and 5th respectively. Doubts about security and privacy and

cultural factors are the two least-ranked factors, with mean scores of 3.68 and 2.6

respectively. This infers that SMEs in Ibadan Metropolis does not consider these two

factors as critical challenges to their adoption of ICT for their businesses.

4.3 Hypotheses Testing

Three hypotheses have been stated for this research. In this section, appropriate

statistical methods are deployed to either confirm or reject the statements. In order to

accept the null hypothesis, the p-value obtained from a statistical test will have to be

greater than 0.05, which would represent a 95% confidence level. Otherwise, if the p-

value is lower than 0.05, the null hypothesis will be rejected. All statistical tests are

conducted with the IBM SPSS Statistics software version 25.

47
4.3.1 Hypothesis 1

* H0: There is no significant relationship between the level of ICT adoption and

size of SMEs in Ibadan Metropolis.

Table 14 – Chi-Square Test result for Hypothesis 1

Chi-Square Tests

Value df Asymptotic Significance (2-sided)

Pearson Chi-Square 20.621a 6 .002

Likelihood Ratio 21.572 6 .001

N of Valid Cases 53

a. 9 cells (75.0%) have expected count less than 5. The minimum expected count
is .06.

For hypothesis 1, a Chi-square test of association is used to compare the level of ICT

adoption (the outcome variable) across different categories of SMEs (on the basis of

size) in the study area. The result of the Chi-Square test is shown in table 14 above.

From the Chi-Square test results displayed in Table 14, we can see that χ (1) = 20.625,

p = .002.

This thus means that the null hypothesis can be rejected, and as a result, we can deduce

that there is a statistically significant relationship between the level of ICT adoption

and the size of SMEs in Ibadan Metropolis. This means that the adoption of ICT by

SMEs in the study area is influenced by the size of SMEs. This confirms earlier findings

by Nafiu et al. (2020) and Lu et al. (2019)

4.3.2 Hypothesis 2

* H0: There are no significant differences in the perception of ICT adoption

drivers amongst SMEs in Ibadan.

48
 Table 15 – Multivariate Analysis result for Hypothesis 2

Multivariate Testsa

Partial Eta
Effect Value F Hypothesis df Error df Sig.
Squared

Pillai's Trace .926 32.907b 14.000 37.000 .000 .926

Wilks' Lambda .074 32.907b 14.000 37.000 .000 .926

Intercept
Hotelling's Trace 12.451 32.907b 14.000 37.000 .000 .926

Roy's Largest Root 12.451 32.907b 14.000 37.000 .000 .926

Pillai's Trace .512 .933 28.000 76.000 .568 .256

Wilks' Lambda .536 .966b 28.000 74.000 .525 .268

SMEs
Hotelling's Trace .775 .996 28.000 72.000 .486 .279

Roy's Largest Root .634 1.721c 14.000 38.000 .092 .388

a. Design: Intercept + SMEs
b. Exact statistic
c. The statistic is an upper bound on F that yields a lower bound on the significance level.

In order to test the hypothesis, a multivariate analysis of variance is used. This helps to

compare the means of multiple outcome variables (perceptions of ICT adoption drivers)

against a predictor variable (SMEs categorised by size). The result of the multivariate

analysis is shown in Table 15.

In order to interpret the result of the multivariate analysis of variance, the Wilks’

Lambda row is considered. In multivariate analysis of variance, the Wilks’ Lambda

statistic (Λ) is used to test whether there are differences between the means of a group

of subjects on a combination of outcome variables. It measures the proportion of

variance in the outcome variables (drivers of ICT adoption) that is not as a result of the

predictor variable (SMEs).

49
 A value of 0 (i.e. Wilks’ Λ = 0) means that there is no variance unaccounted for by the

predictor variable, and the closest the value is to 0, the more likely it will be to reject

the null hypothesis. Additionally, the Partial eta squared (η2) shows how much variance

in the outcome variable is explained by the predictor variable. The value ranges

between 0 and 1, where values closer to 0 indicate a small effect.

From the result of the test in Table 15, it can be seen that there is no statistically

significant difference in the perception of SME owners on the factors that influence

ICT adoption in the study area F (28, 74) = .97, p = .525; Wilk's Λ = .536, partial η2 =

.27). Consequently, the null hypothesis is accepted, with this further reinforcing that

the drivers of ICT adoption by SMEs in Ibadan Metropolis as rated by the SME owners

are consistent across the different categories.

4.3.3 Hypothesis 3

* H0: There is no significant relationship between perception of challenges and

level of ICT adoption of SMEs in Ibadan.

A multivariate analysis of variance was used to test the hypothesis. The result is

presented in Table 16.

Table 16 – Multivariate Analysis result for Hypothesis 3

Multivariate Testsa

Partial Eta
Effect Value F Hypothesis df Error df Sig.
Squared

Pillai's Trace .883 46.276b 7.000 43.000 .000 .883

Wilks' Lambda .117 46.276b 7.000 43.000 .000 .883

Intercept
Hotelling's Trace 7.533 46.276b 7.000 43.000 .000 .883

Roy's Largest Root 7.533 46.276b 7.000 43.000 .000 .883

SMEs Pillai's Trace .520 1.348 21.000 135.000 .156 .173

50
 Wilks' Lambda .542 1.405 21.000 124.023 .129 .185

Hotelling's Trace .733 1.454 21.000 125.000 .106 .196

Roy's Largest Root .531 3.413c 7.000 45.000 .005 .347

a. Design: Intercept + ICT_Adoption_Level
b. Exact statistic
c. The statistic is an upper bound on F that yields a lower bound on the significance level.
From the result of the test in the table above, it can be seen that there is no statistically

significant difference in the perception of SME owners on the challenges of ICT

adoption and level of ICT adoption in the study area (F(21, 124) = 1.4, p = .129; Wilk's

Λ = .542, partial η2 = .185). Consequently, the null hypothesis is accepted. It can thus

be inferred from this information that there is no relationship between perceived

challenges of ICT and level of ICT adoption in the study area.

4.4 Conclusion

This chapter has shown the results of the survey conducted in order to answer the

research questions. The findings on the level of ICT adoption in the study area have

shown that the majority of the SMEs have adopted an advanced level of ICT for their

businesses. These included the use of advanced communications and information

technology such as the internet connection, email, website, file sharing, as well as other

advanced business software relevant to their business areas. The findings however

revealed that the level of ICT adoption in the area depends significantly on the size of

business in the area.

Furthermore, on the factors that influence the decisions of the SMEs to adopt and use

ICT for their businesses, it was revealed that the benefits of ICT as perceived by SME

owners are the major driver of their ICT adoption in the study area. Some of these

factors include enhancement of company image and corporate brand, increased sales,

improved customer relationship, and improved efficiency. In contrast, the SME owners

51
disagreed with options such as reduced marketing cost, type of technology, and

business size as influencing their decision to adopt ICT. The findings of the research in

this section were also found to be in alliance with several existing literature.

Finally, on the challenges of ICT adoption, as perceived by SME owners in the study

area, it was discovered that inadequate support from the government is the biggest

challenge inhibiting their level of ICT adoption. Other factors that are identified by the

research include expensive running and maintenance cost of ICT, inadequate

knowledge of ICT and skill, internet connection failure and inadequate infrastructure.

On the other hand, it was revealed that doubts about security and privacy, as well as

cultural factors, do not have an influence on ICT adoption by the SMEs in the study

area.

52
 CHAPTER FIVE

5.0 DISCUSSION OF FINDINGS

5.1 Introduction

Understanding the positive effects that Small and Medium Scale Enterprises (SMEs)

have on the social and economic growth of countries of the world over, it has become

highly imperative to give utmost attention to their growth and sustainability.

Additionally, with the advent of ICT, SMEs globally have been integrating different

technological tools and capabilities to enable their small businesses to be competitive

and stand the test of time. However, as shown by the review of literature in the early

parts of this research, SMEs in the developing world generally and Nigeria specifically

have been slow to follow the trend. Several issues have been found by various

researchers in their areas of study as affecting the rate and level of adoption of ICT by

SMEs.

This foregoing formed the basis for this study, which set out to understand issues around

the adoption of ICT for SMEs in Ibadan, Nigeria. Specifically, the study investigated

the level of ICT adoption by the SMEs in the area, the factors that drive their adoption,

as well as the challenges inhibiting the adoption of ICT by the SMEs. Consequently,

this section presents a discussion of the findings of this study on each research question

in the wider scope of relevant extant literature. It provides deeper insight into what the

findings actually mean in comparison to previous studies in the topic area, as well as

how they fit with established theories on the subject matter.

5.2 Level of ICT Adoption by SMEs in Ibadan Metropolis

A review of the literature revealed four stages of ICT adoption through which SMEs

progress from the basic level to the advanced level of adoption (Kotelnikov, 2007).

53
These are basic communications technology, basic information technology, advanced

communications technology, and advanced information technology. Progression from

a basic stage to an advanced stage requires advanced technology and increased

investment.

According to the feedback from the survey respondents of this study, it was discovered

that the majority of the SMEs in Ibadan Metropolis are presently at an advanced level

of ICT adoption. Some of them stated that they use the internet regularly for email

communication, website, file sharing, and also e-commerce. In the same vein, others

stated that they use some sophisticated and business-specific software for activities like

inventory planning and management, project planning and management, and financial

planning and budget management. In this regard, the findings revealed a disagreement

with popular notions that SMEs in developing countries are still at an early stage in

their adoption of ICT. This could however be as a result of the online method of data

collection employed for the survey, as it meant that only those who are already familiar

with technology were investigated for the research.

On the other hand, the survey also found out that few of the SMEs are still at the basic

level of ICT adoption. Some of these only use computers without an internet connection

for documents that are printed out on paper and distributed manually, while others only

use mobile phones to keep in touch with clients and suppliers. This is similar to the

previous findings in other cities in Nigeria (Nafiu et al., 2020; Oyebiyi, 2019 and

Afolabi et al., 2015).

Furthermore, the hypotheses developed on ICT adoption by the SMEs in the study are

intended to confirm previous assertions of the role played by the size of business as a

factor of ICT adoption. A Chi-square test of association is used to compare the level of

54
ICT adoption (the outcome variable) across different categories of SMEs (on the basis

of size) in the study area. Subsequently, the result revealed that ICT adoption in the

study area is significantly affected by the size of the SMEs as measured with staff

strength. This could imply that the level at which SMEs in the study area adopts ICT

for their businesses is closely related to how much personnel the organisation has,

which when higher is indicative of growth, which in itself signifies the level of

influence, production rate and capacity, as well as the customer base that an

organisation has. Consequently, an organisation with a large production rate and

customer base might feel the need to improve on internal efficiency level, sustain its

influence, and maintain a smooth relationship with the customer base.

This finding is consistent with earlier findings conducted by different researchers in

Nigeria and China. For example, the findings of Nafiu et al (2020) in Kogi State,

Nigeria had revealed that small businesses do not feel the need for adopting ICT as

much as medium businesses. Also, the researchers found that medium businesses found

it easier to use ICT than small businesses. Similarly, Lu et al. (2019) in their study

conducted in China found that ICT adoption levels varied amongst micro, small and

medium businesses. They observed that the level of ICT adoption was much higher

amongst medium enterprises than the micro and small businesses in the study area.

The implication of this finding is multidimensional. On the one hand, ICT skill and

technological know-how may be limited amongst owners of micro and small

businesses, with this influencing the ease of use of ICT. On the other hand, due to their

relatively small influence and customer base, they may also have the less financial

capability to drive their ICT adoption. The limited financial resources can hinder their

adoption level because they would be unable to afford the expensive cost of relevant

hardware, software and internet connection, and outsourcing their ICT needs may also

55
prove difficult. This, therefore, indicates that these small businesses need to be the focus

of interventions by relevant policymakers and government agencies.

Conclusively, the investigation on the level of ICT adoption by SMEs in Ibadan have

revealed that the majority of the business owners in the area are up-to-date on the

importance of ICT to the competitiveness of their businesses, and are willing to adopt

it if not inhibited by challenges. However, it was also discovered that a few of the SMEs

are still at the basic adoption stage, and that size is a major factor of ICT adoption in

the area. Nevertheless, if the rate and level of ICT adoption by the SMEs in Ibadan

Metropolis is to improve so as to effectively contribute to the development of the

country at large, utmost attention is required, with a focus on the micro and small

businesses in the area.

5.3 Drivers of ICT Adoption by SMEs in Ibadan Metropolis

The factors that affect ICT adoption can be subdivided into two, comprising those that

support ICT adoption and those that inhibit adoption. It is imperative to understand

these factors for a lot of reasons. One of such reasons is to catalyse those positive factors

in other to improve the rate and level of adoption by SMEs. However, because those

factors themselves may be influenced by demography, geography and economy, it is

important to identify which ones are relevant to SMEs in Ibadan Metropolis.

In determining the factors that drive ICT adoption amongst SMEs in Ibadan Metropolis,

it was discovered that the perceived benefits of ICT adoption are the top-ranked factors

by the SME owners. For instance, “enhanced company brand and corporate image” is

the top-ranked driver of ICT adoption in the study area. This implies that the SME

owners believe that adopting ICT will put their brands in a new light, thereby making

them attractive to potential customers. Online presence as reflected by a corporate email

56
address, website and social media presence will improve their corporate image and

make them more competitive in their sector. Additionally, “extended market reach” and

“increased sales,” make up the top-three-ranked drivers of ICT adoption. These direct

economic benefits are interrelated and very important to all businesses. ICT adoption

through online presence by the way of website and social media, as well as target

marketing also using email and the social media are great ways for businesses to have

a reach beyond their physical environment. It can therefore be inferred from this

information that these possibilities of ICT are the major drivers of ICT adoption by

SMEs in Ibadan Metropolis. This finding is similar to that of Jahanshahi et al., (2013)

in their study of SMEs in India, Malaysia, and Iran.

Furthermore, improved customer/client relationship, improved competitiveness, and

improved efficiency complete the most significant drivers of ICT adoption as rated by

the SME owners in Ibadan Metropolis. According to the SME owners, these are

important benefits accruable from ICT adoption as they closely align with the

objectives of most businesses. This finding supports previous findings by Rahayu and

Day (2017) in Indonesia and Lal (2007) in Nigeria. Similarly, the findings of Tob-Ogu,

et al (2018) revealed that the most important drivers of ICT adoption by business

owners include various benefits that they perceive from the use of ICT.

Furthermore, competition and reduced marketing and advertising cost are some of the

least-ranked factors by the SME owners. This may be affected by the high cost of ICT

infrastructure and internet access in Nigeria, which is too expensive for small business

owners. As a result, even if competition could be a likely motivation to adopt ICT, the

prohibitive financial implication may be a demotivator. Similarly, the cost of

advertising on different online platforms in order to reach a wider audience especially

increases the cost of ICT adoption. As found by Okundaye et al. (2019) the cost of

57
implementing ICT is a major determinant of ICT adoption, which may therefore be a

justification for the low rating of the two factors as influencers of ICT adoption in the

study area.

Finally, the SME owners strongly disagreed with social networks as a driver of ICT

adoption in the study area. Earlier, Aleke et al (2011) had found that a strong social

relationship amongst entrepreneurs in Southern Nigeria contributed to their use of ICT.

However, the finding of this study disagrees with that finding, suggesting that there is

no such relationship amongst the SME owners in the study area.

The hypothesis tested for the research question further emphasises the response of the

SME owners in Ibadan Metropolis on factors that influence their adoption of ICT. A

multivariate analysis of variance test revealed that the perceptions of the SME owners

are the same across the different categories of SME by size. This means that there are

no differences in the findings of the survey amongst the micro, small and medium

businesses in the area. It is therefore concluded that the benefits that are visible from

ICT adoption are the major reasons why SMEs in Ibadan use ICT for their businesses.

5.4 Challenges of ICT Adoption by SMEs in Ibadan Metropolis

On the aspect of challenges militating against the adoption of ICT by businesses in

Ibadan, it was discovered that inadequate support from the government is the biggest

challenge inhibiting ICT adoption by the SME owners in the area. Lack of support from

the government to SMEs is a significant challenge to the growth and development of

small businesses in Nigeria. For these small businesses to compete with larger

enterprises, they often require support in terms of financing, infrastructure, training,

and enabling policies. However, this has usually not been the case, as it supports

previous findings by Okundaye et al. (2019) and Irefin et al. (2012).

58
Other challenges of ICT adoption as perceived by SME owners in Ibadan includes

expensive running and maintenance cost of ICT, inadequate knowledge of ICT and

skill, internet connection failure and inadequate infrastructure. The cost of investing in

ICT in Nigeria has been established to be beyond the reach of most businesses, and this

can eventually break them if they cannot compete with larger businesses (Oyebiyi,

2019; Agwu and Murray, 2015). Similarly, several business owners do not have the

requisite skill to appropriately adopt ICT. As a result, those who understand the benefit

accruable from the adoption will either seek to establish an ICT unit and employ skilled

staff or engage freelance personnel. Most small businesses will find this beyond their

means and would rather remain at a basic adoption level which they can manage by

themselves. Also, poor and erratic internet connection in Nigeria poses a challenge to

ICT adoption by SMEs. Frequent unexpected internet downtime can frustrate the ability

of businesses that require being online in real-time to stay competitive. Finally, the poor

state of infrastructure in the country is highly notable as a significant inhibitor to

business growth. However, those that seem to affect ICT adoption are epileptic power

supply and poor communications infrastructure. These findings corroborate previous

findings by Afolayan et al. (2015), Agwu and Murray (2015), Apulu et al. (2013), and

Irefin et al. (2012).

However, the findings of this study revealed that doubts about security and privacy and

cultural factors do not inhibit ICT adoption by SMEs in the study area. The findings on

security and privacy as a challenge of ICT adoption contradicts that of Afolayan et al.

(2015), while that on cultural factors not affecting ICT adoption by SMEs supports the

findings of Okundaye et al. (2019).

59
5.5 Conclusion

The study had set out to understand ICT adoption issues in Ibadan Metropolis in order

to ascertain the application to established findings in the extant literature on the subject

matter. One of these findings is that SMEs in developed nations are slow to adopt ICT

in comparison to their counterparts in the developed world. Some of these findings were

established in countries such as Oman, Indonesia, Malaysia, and different cities in

Nigeria. It was to this end that the first research question this study was set out to answer

centred on the level and rate of ICT adoption in the study area. This study however

found a slightly divergent result, showing that a significant proportion of the SMEs has

adopted advanced types of ICT for their businesses. On the other hand, it was also

revealed that ICT adoption is significantly dependent on the size of the enterprises,

thereby corroborating several existing findings in that regard.

Furthermore, the study set out to identify the factors that influence the decisions of

SMEs to adopt and use ICT for their businesses. In this regard, the survey revealed that

the benefits of ICT as perceived by SME owners are the major factor of influence in

their decision to use ICT. Some of these benefits as chosen by the SME owners include

enhancement of company image and corporate brand, increased sales, improved

customer relationship, and improved efficiency. In contrast, the SME owners disagreed

with options such as reduced marketing cost, type of technology, and business size as

influencing their decision to adopt ICT. The findings of the research in this section were

also found to be in alliance with several existing literature.

Finally, on the challenges of ICT adoption, as perceived by SME owners in the study

area, it was discovered that inadequate support from the government is the biggest

challenge inhibiting their level of ICT adoption. Other factors that are identified by the

research include expensive running and maintenance cost of ICT, inadequate

60
knowledge of ICT and skill, internet connection failure and inadequate infrastructure.

On the other hand, it was revealed that doubts about security and privacy, as well as

cultural factors, do not have an influence on ICT adoption by the SMEs in the study

area.

This research has been able to contribute to the existing body of literature on issues of

ICT adoption by SMEs in developing countries, providing additional insight into the

issues of ICT adoption by SMEs in a developing country like Nigeria. It is believed that

the findings of this research work will provide guidance to the appropriate entities in

helping achieve a higher ICT diffusion rate and sustainability in the study area

specifically and the country in general.

61
 CHAPTER SIX

6.0 SUMMARY OF FINDINGS, RECOMMENDATIONS AND

CONCLUSION
6.1 Introduction

The contributions of SMEs to social and economic growth cannot be overemphasised.

In most countries, they are the highest employers of labour, employing over 90% of the

total workforce. Also, they are responsible for a diverse range of products and services

and are a major source of creativity and innovation. However, oftentimes, these SMEs

are at risk of collapse, due to their inability to effectively compete with large firms in

their sector. The advent of ICT and its incorporation into daily workflows have however

strengthened the capacity of most SMEs in developed countries to be competitive. On

contrary, SMEs in developing countries like Nigeria still struggle to compete, with

research revealing that these SMEs are lagging in adopting ICT for their businesses.

Therefore, this research set out to understand issues of ICT adoption by SMEs in Ibadan

Metropolis — one of the important economic cities of Nigeria. In order to do this, the

study selected 92 enterprises in the small and medium scale category to investigate their

level of ICT adoption, as well as gauge their perception of factors that influence and

inhibit the adoption of ICT for their businesses. However, although only 53 of these

businesses responded to the survey, the study has provided a useful insight into the ICT

adoption situation of SMEs in the study area. Having also detailed this in the previous

section, a summary of the research findings is presented in the next section.

6.2 Summary of Findings

On the level of ICT adoption by SMEs in Ibadan Metropolis, it was found that although

the level of adoption varies, the SMEs in the study area are in one level of adoption or

the other. Specifically, it has been discovered that most SMEs are in the ICT adoption

62
stage where they use email, website, e-commerce and file-sharing capabilities for their

businesses. However, it was also discovered that a few of the SMEs are still at a basic

level of ICT adoption, with some who are yet to take their businesses online besides the

use of mobile phones, computers without internet connection, printers and

photocopiers. The findings in the study area corroborate previous findings such as that

of Nafiu et al. (2020), Oyebiyi (2019), and Afolabi et al. (2015) in other cities in

Nigeria.

The research has revealed that the benefits of ICT as perceived by SME owners largely

influence their decision to use ICT. Some of these benefits as chosen by the SME

owners include enhancement of company image and corporate brand, increased sales,

improved customer relationship, and improved efficiency. In contrast, the SME owners

disagreed with options such as reduced marketing cost, type of technology, and

business size as factors influencing their decision to adopt ICT. The findings of the

research in this section were found to be in alliance with that by Rahayu and Day

(2017), Jahanshahi et al., (2013), and Lal (2007).

On challenges of ICT adoption as perceived by SME owners in the study area, it was

discovered that inadequate support from the government is the biggest challenge

inhibiting their level of ICT adoption. Other factors that are identified by the research

include expensive running and maintenance cost of ICT, inadequate knowledge of ICT

and skill, internet connection failure and inadequate infrastructure. On the other hand,

it was revealed that doubts about security and privacy, as well as cultural factors, do

not have an influence on ICT adoption by the SMEs in the study area.

63
6.3 Contribution to Research Area and Implications

This research has been able to contribute to the existing body of literature on issues of

ICT adoption by SMEs in developing countries. Due to the important role played by

SMEs in the growth and development of countries all over the world, SMEs have

become a strong topical issue of discussion amongst several researchers all over the

world. This is most notable amongst researchers in developing countries with the aim

of providing an empirical insight into the SME situation in their respective countries.

Toeing this same line, this study has now contributed to a growing body of literature in

that regard. Consequently, the implication of this is that the study provides additional

insight into ICT adoption by SMEs in developing countries.

In another dimension, this research has now provided a reliable up-to-date insight into

the situation of SMEs in Nigeria, specifically around their rate and level of ICT

adoption. This becomes even more important considering that a large body of existing

research on SMEs and their adoption of ICT has been in other cities like Lagos and

Abuja. This study, therefore, contributes to the body of knowledge available in the

country for relevant entities to use in designing a more robust and effective policy for

the growth of SMEs and ensure the socio-economic sustainability of the country as a

whole.

6.4 Recommendations

The level of ICT adoption by SMEs in the study area is indicative of the level of

attention that still needs to be given to SMEs in Nigeria if their contribution to national

development is to be upscaled. Although the study showed a relatively impressive rate

of adoption, it should be noted that some aspects of the sample selection and data

collection may be responsible for this, which would mean that the result in this regard

may not be completely suggestive of a high rate of adoption of ICT by SMEs in the

64
area. Regardless, the research still revealed that some SMEs are still slow in adopting

ICT.

Furthermore, challenges identified as militating against smooth ICT adoption by the

SMEs suggest that the government of Nigeria still needs to recognise the significance

of SMEs to economic growth and as a result, commit to empowering them by creating

a conducive environment for businesses to thrive. For example, the issue of

infrastructure needs to be addressed. When infrastructure like power and

communications is in place and, in good condition, then innovation is encouraged in

young Nigerians to establish enterprises that can compete effectively while existing

businesses continue to thrive. Similarly, the government may need to clamp down on

internet service providers to improve on their service delivery as a simultaneous effort

to their infrastructure delivery commitment.

Furthermore, the government may need to request the assistance of external entities

such as international development partners to assist in areas of providing support to

small businesses in the country. This support can include building the capacity of small

business owners on present digital skills, and awareness on emerging and possible

future direction of ICT for businesses.

In addition to this, national bodies established to provide oversight to SMEs like the

Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the

Bank of Industry (BOI) can create awareness campaigns on print and social media to

improve the knowledge of small business owners on the benefits of adopting ICT for

their businesses. Similarly, incentives can be provided to encourage ICT adoption by

businesses across the country.

65
6.5 Limitations

Even though the study has provided an interesting insight into issues of ICT adoption

by SMEs in Ibadan, Nigeria, there are few limitations that may affect the findings one

way or the other. The first of these is the difficulty in reaching a wider scale of

businesses. One contributor to this is the unavailability of a directory of SMEs in the

country. This, therefore, meant that only 92 businesses could be contacted for the

survey. Additionally, the inability to conduct an in-person data collection meant that

only about a 58% response rate could be achieved. As a result, this is likely to affect

generalising the findings of the research.

Another consequence of the online data collection method is that there is always a high

tendency of the respondents to be ICT users. This is possibly why the survey captured

a high rate of ICT adopters and no non-adopter of ICT amongst the SMEs in the study

area. The email address of the SMEs as obtained from the Corporate Affairs

Commission provided the basis of communication with the SMEs. At the minimum,

this meant that the survey would capture a high rate of SMEs who are email users,

which is the eventual reality of the research. Therefore, it is important to generalise the

results of the study with caution.

6.6 Further Research

With the limitations of this research, the researcher will suggest that similar research is

carried out in the study area but with a different method of sample selection, as well as

the in-person method of data collection. This will provide a comparison with the

findings of this research and will improve the generalisability of the research.

Nevertheless, the following are other areas that future studies could consider:

1. Analysis of business performance and ICT adoption amongst SMEs in Ibadan,

Nigeria.

66
2. Factors of ICT adoption amongst SMEs in the manufacturing sector of Ibadan,
Nigeria.
3. A comparative analysis of rate and level of ICT adoption amongst SMEs in
Lagos and Ibadan, Nigeria.

6.7 Conclusion

Evidence from extant literature has shown that SMEs play a vital role in the social and

economic development of different countries of the world, thereby signifying their

importance to social and economic stability as the highest employers of labour and a

major contributor to GDP. However, evidence has also shown that the SMEs in

developing countries are lagging, a situation that has been linked majorly to their ICT

adoption level. The integration of ICT into business processes has shown that small

businesses can begin to bridge the gap between themselves and large enterprises and

become highly competitive both locally and internationally. However, findings have

shown that SMEs in developing countries are lagging in adopting ICT, militated by

several challenges.

It was the foregoing that informed this research work, which was conducted in Ibadan

Metropolis, a city in Nigeria. This study found that a significant proportion of the SMEs

are in the advanced stage of ICT adoption, with this significantly influenced by the size

of the enterprises, thereby corroborating several existing findings in that regard.

Additionally, it was discovered that the benefits of ICT as perceived by the SME owners

are the major factor of influence in their decision to use ICT, while inadequate support

from the government is the biggest challenge inhibiting their level of ICT adoption.

Besides the government factor, the research identified the prohibitive cost of ICT

adoption and maintenance, inadequate knowledge of ICT and skill, internet connection

failure and inadequate infrastructure as other challenges in the study area.

67
Consequent to the findings, the study recommended that the government of Nigeria

considers the importance of SMEs to economic development and pay attention to the

needs of sustaining small businesses in the country. Most importantly, it was

recommended that the government seeks to provide a conducive environment for

businesses to thrive by the way of developing critical infrastructures such as power and

communications technology. Also, it was recommended that the regulation of internet

service providers be improved upon in order to improve their service delivery.

Finally, the research has been able to contribute to the existing body of literature on

issues of ICT adoption by SMEs in developing countries, providing additional insight

into the issues of ICT adoption by SMEs in Nigeria. It is believed that the findings of

this research work will provide guidance to the appropriate entities in helping achieve

an even higher ICT diffusion rate and sustainability in the study area specifically, and

the country in general.

68
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 APPENDIX 1
• Research Survey administered to the business owner
Section 1: Profile of SMEs in Ibadan Metropolis
Instruction: tick a single appropriate response

1) Which of the following categories does your organisation fall in? (a) family
business [ ] (b) sole proprietorship [ ] (c) partnership [ ] (d) public limited
company [ ] (e) private limited company [ ]
2) Which of the following is your company specialised in? (a) manufacturing [ ]
(b) building and construction [ ] (c) trading [ ] (d) agro-allied [ ] (e) events
and entertainment [ ] (f) printing [ ] (g) pharmaceuticals [ ] (h) others (please
specify _______________
3) How long has your organisation been in existence? (a) 0-5 years [ ] (b) 6-10
years [ ] (c) > 10 years [ ]
4) What is your organisation staff strength? (a) 0-10 [ ] (b) 11-49 [ ] (c) 50-200
[ ] (d) > 200 [ ]
5) What is the range of your annual turnover? (a) < N20m [ ] (b) N20m-N99m [
] (c) N100m and above [ ]

Section 2: Levels of ICT Adoption by SMEs in Ibadan Metropolis

Instruction: please, select a single response based on the most advanced technology
your business uses

A. Level 1 – land lines/mobiles phones

B. Level 2 – computers, printers, photocopiers
C. Level 3 – internet connection, email, website, file sharing, and e-commerce
D. Level 4 – advanced software for ease of organisation processes such as
enterprise resource planning, inventory management, project planning and
management, customer engagement, financial planning and budget
management system, etc.
Section 3: Drivers of ICT Adoption by SMEs in Ibadan Metropolis
Instruction: please, rank based on your perception

Which factors drive your desire to adopt the type of ICT your company uses?

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 S/N Drivers of ICT Strongly Disagree Uncertain Agree Strongly
Adoption disagree (2) (3) (4) agree
(1) (5)
1 type of technology
2 business size
3 competition
4 social networks
5 improved
competitiveness
6 improved efficiency
7 extended market reach
8 increased sales
9 enhanced productivity
10 work effectiveness
11 enhanced company
12 brand and corporate
image
13 reduced labour and
operation costs
14 Reduced marketing &
advertising cost
15 Improved
customer/client
relationship

Section 4: Perceived Challenges of ICT Adoption by SMEs in Ibadan Metropolis

Instruction: please, rank based on your perception

In your opinion, which of the following factors affect the effective adoption of ICT by
businesses in Ibadan?

S/N Challenges of ICT Strongly Disagree Uncertain Agree Strongly

Adoption disagree agree
(2) (3) (4)
(1) (5)
1 Inadequate knowledge and
ICT skills
2 Expensive running and
maintenance cost of ICT

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3 Doubts about security and
privacy
4 Internet connection failures
5 Inadequate support from
government
6 Inadequate infrastructure
7 Cultural factors

Reliability Statistics
Cronbach's
Alpha Based on
Cronbach's Standardized
Alpha Items N of Items
.961 .964 14

78