this presentation was made in Washington at the 50th World Conference of International Council of Small Business, at Washington D.C from 15-18 June 2005

1. INFORMATION SYSTEMS IN
SMALL AND MEDIUM
ENTERPRISES (SMEs) IN INDIA
Susan Sharma and Sudhir K. Jain

2. INFORMATION SYSTEMS IN SMEs IN INDIA
 Our study focuses on the knowledge
entrepreneurs of India.
 Knowledge is increasingly becoming, the
world over, the most important factor
determining our standard of life, more than
land, tools and labor.

3. INFORMATION SYSTEMS IN SMEs IN INDIA
 Peter Drucker defines a ‘knowledge worker’
as-“Someone who knows more about his or
her job than anyone else in the
organization”. Knowledge is the ability to
transform our resources to our advantage.
 Computer based information systems create,
store, analyze and distribute the knowledge
base of the entrepreneur.

4. INFORMATION SYSTEMS IN SMEs IN INDIA
 The IT expert and owner merge into one in
the SME world. Our paper addresses the
scarcity of research dealing with IS in
SMEs -especially the lack of research on
the contribution of online presence to
growth and competitive edge in SMEs.

5. INFORMATION SYSTEMS IN SMEs IN INDIA
 For the purpose of our study, SME sector is
defined as firms with less than 200
employees and whose turnover is less than
RS 250 million, a definition acceptable to
the funding agencies including banks in
India.

6. INFORMATION SYSTEMS IN SMEs IN INDIA
- sample survey done online
 31 responses from manufacturing
 29 from services
 18 from IT services
 10 from traders. A total of 88 responses
from locations widely spread, covering
major cities of India, having a population of
more than 1 million.

7. INFORMATION SYSTEMS IN SMEs IN INDIA
-Survey Findings
 80% of the respondents employed less than
50 people.
 50% of the respondents agreed to necessity
being the motivator for becoming an
entrepreneur.
 96% rated their expertise in use of
computers as average or above.

8. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Question
 Our online instrument of survey consist of
22 questions, 12 of which measure
entrepreneurial index, and ten questions on
use and adoption of IT in general.
 The broad research question we address is “
Does the use of IS motivate knowledge
entrepreneurs?”

9. INFORMATION SYSTEMS IN SMEs IN INDIA
-Hypotheses tested
Hypothesis 1
In SMEs, decisions (intentions) to use IS are a
positive linear function of external stimuli and
perceived control over adopting IS.
 Hypotheses 2
The degree of adoption of IT in SMEs is a degree
of the measure of entrepreneurship of the chief
executive.

10. INFORMATION SYSTEMS IN SMEs IN INDIA
-Hypotheses tested
 Hypotheses 3
Perception of risk/threat is a deterrent in
adopting new technology in the case of
SMEs.
 Hypotheses 4
Infrastructure bottlenecks cost and hygiene
factors are deterrents to use of IS

11. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Findings
 Those who rated the availability of funding
as least important motivator to become an
entrepreneur, rate their expertise on usage
of IT as high.
(r= -.2881, p=.006)
Hypothesis supported: IS use a function of
External stimulii.

12. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Findings
 Those who rated the availability of funding
as the least important motivator to become
an entrepreneur, rate the maximum usage
for IS in their firm.
(r=-.3860 p=.000)
Hypothes 1 supported: IS use a function of
External stimulii

13. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Findings
 Those who rated the availability of funding
as the least motivator to become an
entrepreneur, rate usefulness of website
beyond a mere ‘web presence’ as high.
(r=-.3255, p=..002)
Hypothesis 1 supported: Internet use a
function of External stimulii

14. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Findings
 Entrepreneurs who perceived innovation of
product/services high also rate dependence
on high speed internet high.
(r=.3333, p=.002)
Hypothesis 1 supported: IS use a function of
perceived control over business

15. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Findings
 Entrepreneurs who rate innovation of
product/services high also rate their expertise in IT
high.
(r=..3820, p=.000).
Their perception of website going beyond a mere
presence was also high
( r= .3144, p= .003)
Hypothesis 1 supported: Expertise in IT a function
of perceived control over business

16. INFORMATION SYSTEMS IN SMEs IN INDIA
-Research Findings
Those who rate high on entrepreneurial
index also rate
 high on expertise in IT (r=.3504, p=.001)
 increased use of IS (r=.3580 p=.001)
 allocation of more funds for IT.
(r=.3475 p=.001)
Hypothesis 2 is supported

17. INFORMATION SYSTEMS IN SMEs IN INDIA
- Hypotheses revisited
 We found support to our first two hypotheses,
namely,
1. Decisions (intentions) to use IS are a positive
linear function of
a) External stimuli b) Perceived control over
adopting that IS. c) Learning curve of the
executive who takes decisions.
2. The degree of adoption of IT in SMEs is a degree
of the measure of entrepreneurship of the chief
executive

18. INFORMATION SYSTEMS IN SMEs IN INDIA
-Hypotheses revisited
 Hypotheses 3 & 4 are not supported. In
large firms research has shown resistance to
usage of IS due perception of threat ( to
one’s role in the organization) and also due
to hygiene factors and infrastructure
bottlenecks. This does not hold true for
SMEs.

19. INFORMATION SYSTEMS IN SMEs IN INDIA
- Limitations of the study
 The questionnaire is attempted online. This
presupposes availability of good internet
access to the respondent.
 The sample size could be bigger
 The study can be enriched by getting the
figures for actual increase in SMEs over the
last, say five years in India

20. INFORMATION SYSTEMS IN SMEs IN INDIA
- Research Directions
 It will be interesting to extend the research to
impact of IT/IS on clusters of micro enterprises
and on social entrepreneurs in particular.
 Further insight can be obtained by extending the
survey to the Asia Pacific region as a whole. The
region as a whole is characterized by necessity
driven entrepreneurship.
 The role of IT/IS in realizing the full potential of
the knowledge entrepreneur needs to be examined.

21. INFORMATION SYSTEMS IN SMEs IN INDIA
-Conclusions
 Intention to use Information Systems (IS)
and perceived expertise in Information
Technology(IT) of individuals can drive
businesses in the SME world.
 In our study, IS use is examined at a micro
level, one that involves users or decision
makers - this is a context in which the
diffusion of technology is paramount.

22. INFORMATION SYSTEMS IN SMEs IN INDIA
-Further research
 Empirical evidence supporting the research
question can be extended further with the help of
Theory of Planned Behavior(TPB) to arrive at
deliverables to foster entrepreneurship in the
country.
 Understanding the distinct behaviors that
entrepreneurs practice in developing decision
processes and information systems provides a
conceptual framework for further academic
research on the SMEs.