Determinants of ICT adoption by small and medium enterprises in Pietermaritzburg.

Abstract

Information and Communication Technology (ICT) has been a major contributor to world economic growth. ICT plays a vital role when it comes to the growth of Small and Medium Enterprises (SMEs). In developed countries, SMEs are making use of ICTs to support their business functions although this has not been the case in most developing countries. The Global Entrepreneurship Monitor (GEM) argues that the survival rate of start-up businesses is generally poor with SMEs in developing countries performing even worse than the standard survival rates. ICT can be used as a tool to improve the performance and survival rate of SMEs in developing countries. SMEs in developing countries are lacking behind when it comes to the adoption of ICT. This study aims to investigate the determinants that influence the intention to adopt ICT by SMEs in Pietermaritzburg, South Africa. The study made use of quantitative methods as its fundamental research approach. 227 SME owners in Pietermaritzburg were surveyed using a closed-ended questionnaire. The Technology, Organisation and Environment framework was used as a lens through which to understand the study. The TOE theoretical framework is largely used as a process to study the adoption of innovation at a firm level. Structural Equation Modelling (SEM) approach was applied in order to analyse the data from the respondents. The study revealed that Technology Context and Organisation Context (-0.221) are significant determinants that influence the intention to adopt ICT amongst SMEs. Technology Context is the most influential determinant with a regression weight of 0.938, and the Environment Context is an insignificant determinant due to the lack of government support. The study contributes towards the understanding on the important determinants that influences the adoption of ICTs in Pietermaritzburg. The results of this study can assist service providers and government on how to help uplift SMEs. It further shines the light on the lack of the government support towards SMEs.