GENERAL
INTRODUCTION
CHAPTER
ONE
1.1 BACKGROUND OF THE STUDY
It has been observed that “the pivotal role of
Small and Medium Enterprises (SMEs) in socio-economic development and poverty
reduction cannot be over-emphasised. The establishment of SMEs and their
delivery of the mandate of socio-economic development and poverty reduction can
be described as very good instrument that empower people and also improve the
economy”. Metcalfe, B. (1992)
Over the years, “technology in
business has been changing rapidly as the global environment becomes highly
competitive and innovative. The use of Information and Communication Technology
(ICT) has become very vital to businesses that intend to remain competitive in
the market”. In the words of Cravens (2000), “the drivers of change in today’s
world include, deregulation, global excess capacity, global competition,
changing customer expectations ICT, demographic shifts and changing work and
lifestyles. These changes have led organizations to embark on activities that
will provide a source of competitive advantage and embrace the usage of
ICT”. Also, “ICT is often viewed as a
necessary ingredient to most businesses in recent times. This view of ICT has
led to a rush to implement IT systems by most businesses. The view that there
exists a link between improved performances due to implementation of ICT in a
business’s operations is a presumed truism, opposing views on which opinion
offered is divisive”. To an extent, “it is often a struggle for many scholars
and academicians to properly link a firm’s ICT infrastructure to the extent to
which it defines firm performance” (Brynjolfsson, 1996). Furthermore, “IT
refers to “Information Technology” and as such refers to any investment made by
the company in the form of computer and communication technologies and
shareable technical platforms and databases (R).To redefine the term in a more
discernible way, we can refer to IT as any technology that helps to produce,
store, communicate and disseminate information”. According to Loretta (2008),
“Information and Communication Technology is changing the economy and
traditional business become more dependent on new technologies. Compared with
traditional business, new technologies facilitate an increased interactivity,
flexibility, cheap business transactions as well as improve interconnection with
business partners and customers. Information technology is having a significant
impact in sector of Small and Medium Sized Enterprises (SME), especially where
industries are in decline or when unemployment levels are high”.
It is worth of note to state that
“Small and Medium Sized Enterprises (SMEs) play an important role in economic
development of a country. Several theories elaborate on connection between
information technology, economic development and social change. Almost all
agree on the importance of information and communication technology adoption in
SME, while the importance of SME as engines to economic growth is well
acknowledged worldwide. Information technology, particularly the Internet is
having a significant impact on the operations of SME and it is claimed to be
essential for the growth of nation’s economies in general and SME in
particular” (Guba, 2010). In Nigeria, “SME development is drawing attention too
and modern trends of businesses and information technology usage are taking place”
(Alendo, 2010) thus, this research is
necessary to examine the impact of ICT on the performance of SMEs in Abuja
environs.
1.2 STATEMENT OF THE PROBLEM
As rightly observed, “the notion on
the need for a business to institute change has led to reliance on ICT as one
of the tools for aiding business growth. A failure to make changes may result
in harm to the organization through stagnation, negative growth, loss of
customers and failure to introduce new products leading to a potential closure
of business” (Churchill and Lewis, 1983).
“An increased spending on ICT has lead to questions as to whether there
is any value for money in ICT for a business as everyone seems to be pushed
towards ICT use. Most businesses place such a high premium on use of ICT that
they forego basic principles of operating a business in order to concentrate on
ICT use” (Carr, 2003). “With the increased attention and focus being put on
Small and Medium Enterprises (SMEs) investment’s survival is key and its growth
in Nigeria as the important sector that can accelerate sustainable economic
growth is necessary”. (Carr, 2003).
From a logical point of view, “it is
important that the growth of Small and Micro Enterprises be sustained. Much
effort and resources has been put on the area of formal credit and financing
without addressing other underlying factors that necessitate the Small and
Medium Enterprises (SMEs) survival and growth. Although a number of studies
have been made in the examination of the role of ICT in small businesses, key
among these studies, those by (Cragg and King, 1993, Harrison, Mykytyn and
Riemenschneider, 1997 and Igbaria, Zinatelli and Cavaye, 1997), which found out
that an increase in spending on ICT has lead to questions as to whether there
is any value for money in ICT for a business as everyone seems to be pushed
towards ICT use, management is often at the centre of the drive to have ICT
systems in place”. “The studies also found out that small businesses may find
technology difficult to implement due to resource constraints”. It is with this
insight in mind the focus now shifts to the purpose of this study which sought
to examine the impact that Information and Communication Technology (ICT) has
on performance and growth of Small and Medium Enterprises (SME) using NTEL as a
case study.
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