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INFLUENCE OF INFORMATION AND COMMUNICATION TECHNOLOGY ON THE PRODUCTIVITIES OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA
Uploaded on: 2020-05-04
- Author: SAMUEL AGBO
- Product Code: Proj825b10c7
- Country: Nigeria
The study sought to investigate the influence of information and communication technology on the productivities of small and medium scales enterprise in Nigeria. To this end the study had three specific purposes, three research questions which guide the investigations and the study postulate three null hypothesis. Descriptive research survey design was adopted for the study, the population of the study comprises two hundred and ninety-six (296) of which seventy (70) managers and hundred (100) staff was drawn using Taro Yamane formula. A structured twenty-seven (27) items questionnaires was used to collect data for the study. A four-point rating scale with a response category of Strongly Agreed (SA=4), Agree (A=3), Disagree (D=2) and Strongly Disagree (SD=1) was used. The instrument for data collection was validated by experts and the results of the reliability statistic yield a Cronbach Alpha of 0.92 which showed that the instrument was reliable for accessing the desired construct. The descriptive statistics of mean and standard deviation were used to answer the research questions while z-test was used to test the hypothesis at 0.05 level of significant. The findings of the study were as follows; information and communication technology influence the performance of small and medium scale enterprise in the study area, there are factors which inhabit the adoption of information and communication technology by small and medium scale enterprise in the study area, there are strategies which can help to mitigate the challenges of ICT adoption in the study area, there is no significance difference between the mean response of managers and staff on the influence of ICT on the performance of SMEs, there is no significance difference between the mean response of managers and staff on the factor affecting the adoption of ICT by SMEs, there is no significance difference between the mean response of managers and staff on the strategy that can mitigate the barrier to ICT adoption by SMEs. The study recommends that company should adopt ICT devices to enhance their performance. The expertise should be mandated to train the existing worker (especially those at the lower level) on the nitty-gritty of the job for maximum productivity and also to face the challenges of new technology. Companies should make use of available fund to accommodate latest technology. While Government should ensure prompt and adequate electricity supply, thereby reducing cost of production and thereby increasing profitability.
1.1 Background to the Study
Information and communication technology (ICT) involve the use of electronic gadget to send, receive, store and disseminate information. According to Information Technology Trends in (2019): Information technology (IT) refers to the development, maintenance, and use of computer software, systems, and networks. It includes their use for the processing and distribution of data. Data means information, facts, statistics, etc., gathered together for reference, storage, or analysis. “Information technology refers to anything related to computing technology. The Internet, for example, comes under the umbrella term IT. So does computer hardware, software, and networking.
The Small Business Administration SBA (2011), defines a small and medium scale enterprise as business that is independently owned and operated and meets employment or sales standard develop by the agency. Small and medium scale enterprises (SMEs) played a greater role in growing a nation’s economy and reducing unemployment and this made it necessary to seeks ways which are practicable for the growth and sustainability of SMEs in Nigeria. Small and medium scale enterprises (SMEs) have greatly contributed to the Nigerian development in terms of employment, growth and development, and marketing of goods and services. The Nigerian Government is turning to small and medium scale industries and entrepreneurs as a means of developing the economy and solving problems (Latinwo and Ayozie, 2010). A great percentage of all registered companies in Nigeria are constituted by small scale industries and they have been in existence for a long time.
Consoli, (2012) posit that information and communication technology’s effects on small and medium scale enterprise (SMEs) performance could be structured and analyzed via such indicators as efficiency, effectiveness and competitiveness. Undoubtedly information technology has a powerful impact on the economic performance of SMEs and could be characterized by a high degree of technological progress and productivity. For instance Liang, You and Liu, (2010) and Santos and Brito, (2012) argues that performance of small and medium enterprise has two types: Financial performance and Strategic performance (These types could be represented by competitive aspects of performance such as profitability, growth, market value, customer satisfaction, employee’s satisfaction, environmental performance and social performance).
An empirical study by Alam and Noor (2009) confirm the positive influence of information and communication technology on SMEs performance in terms of productivity, profitability, market value and market share. Otuza and Omeluzor, (2015) found in their study that there is a positive relationship between Information Technology and SMEs productivity. They stressed further, that the successful adoption/application of Information Technology in SMEs organizational processes will account for improved organizational productivity. This assertion was affirmed by (Dibrell, Davis and Craig, 2008; and Madrid-Guijarro, Garcia and Van-Auken, 2009). They both agreed that information technology contributes positively on organizational performance and productivity of SMEs as it provides infrastructure needed for appropriate type of information provision, providing SMEs with competitiveness through integration between supply chain partners and inter-organizational functions, and provision of business information. It suffices to say that the neglect of IT by SMEs will increase the chances for organizational failure Otuza and Omeluzor, (2015).
Theorists have observed that adoption of information and communication technology in SMEs could account for improved performance, especially in a ‘knowledge economy’ (Berisha- Namani, 2009). Undoubtedly, the transformation brought about by information technology in sectors such as the banking institution, academic/educational sector, entertainment, governance, insurance, among others, has been widely agreed to be practicable for SMEs growth (Ashrafi and Murtaza, 2008; Akande, 2013; Akande and Yinus, 2013). Information and communication technologies (ICT) enables flexibility of operations, reduces cost of transactions, enhances interactivity, improved interconnection among customers and business colleagues as compared to the traditional business processes. However, Irefin, Abdul-Azeez and Tijani, (2012) observed that despite the opportunities information technology could offer in business organizations, SMEs in Nigeria are yet to fully avail themselves of such opportunities, perhaps, due to a seemingly contextual or environmental peculiarity which in turn places their performance and productivity at lower ebb Otuza and Omeluzor, (2015).
Modern information and communication technology include Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), Enterprise Resource Planning (ERP), Electronic Commerce (EC), Electronic Fund Transfer (EFT), Internet, Extranet, Collaborative Planning, Forecasting and Replacement Application (CPFR), Supply Chain Communications Systems (SCCS), Electronic Supply Chain Management Systems (ESCMS), among others. This information technology tools are highly effective in improving organizational productivity. It suffices then to say that ICTs has great contribution on business operations in as much as small and medium scale enterprises can avail themselves of its appropriate adoption. (Fong, 2011; Oladejo and Adereti, 2010) argue that where its adoption is successful, the high mortality rate associated with insufficient productivity, competitiveness, business and management skills, financing and access to proper advice and information, lost export and business development opportunities will naturally be taken care of.
Otuza and Omeluzor, (2015) find out that there are some factors that militate against the productivity of SMEs such as cost of purchasing and maintaining equipment, poor maintenance culture, issue relating to poor power supply, cost of transporting products and raw materials, poor information infrastructure, unskilled workforce and poor remuneration Oyelaran-Oyeyinka (n.d.); Oladejo and Adereti (2010) buttressed this findings by observing that skilled workforce and lack of credit facilities are some challenges confronting SME. Similarly, Akande and Yinus (2013) and Popoola (2010) identified financial constraint, poor physical infrastructure, poor IT strategies and poor information infrastructure as constituting major setback to achieving organizational productivity and the adoption of IT in Nigeria SMEs. This implies that SMEs in Nigeria are to proactively confront these challenges if they must succeed. Some of these challenges are best tackled with combined efforts of SMEs; perhaps, the role of the regulatory bodies cannot be sidelined at this point.
1.2 Statement of the Problem
It is no longer news that information and communication technology has revolutionized business processes, ICT has changed the traditional method of doing business and this has results into improved performance by business who has adopted ICT, their profitability levels have improved and ICT helps them to stay competitive. But it sad to note that many small and medium scale enterprise in Nigeria are not aware of the myriad benefit information technology stands to offer and as such the skeptical in adopting the said technology.
According to James and Charles, (2011) The recent increase in technological advancement has had strong impact on SMEs in other parts of the world including China and Brazil. They came by as a result of conscious government efforts through the implementation of policies to make ICT available to SMEs. The degree to which the Nigeria government is doing to encourage the adoption of this technology is unknown another problem facing the SMEs in using information technology to improve their productivity is the cost of implementation and these can be defined as the total amount that will cost business organisations to implement a new technology (Akande, 2013). Many Nigerian SMEs struggle with the high cost of ICT implementation hence they sometimes ignore the adoption of ICT and rather use their resources for other purposes that would bring about fast profits (Akande, 2013). Lack of funding and non-utilization of ICT is another factor that affects the development of Nigerian SMEs. Akande and Yinus (2013) stated that there was a need for SMEs to embrace change and utilize ICT to aid the growth of their businesses. Access to funding, proper utilization of information technology and ability to embrace change in the business environment would stimulate the growth of SMEs in the country but unfortunately all this are not available to SMEs which often leads to under-performance, this called for need of a centralized agency like Small and Medium Enterprise Development Agency to coordinate the collation of information, whereby SMEs could obtain relevant information on the sector. It is based on this that this study therefore, sought to determine the influence of information and communication technology on the productivity of small and medium scale enterprise in Nigeria.
1.3 Purpose of the Study
The purpose of the study is to determine the influence of information and communication technology on the productivity of small and medium scale enterprise in Nigeria. Specifically, the study seeks to;
2. Determine the factor affecting the adoption of information and communication technology in the study area.
3. Determine the strategy that can reduce the barrier to ICT adoption in the study area
1.4 Research Questions
Based on the specific purpose of the study the following research questions were formulated to guide the study
2 What are the factors affecting the adoption of information and communication technology in the study area?
3 What are the strategies that can reduce the barrier to ICT adoption in the study area?
1.5 Research Hypothesis
The following null hypothesis was formulated to be tested at 0.05% level of confidence
Ho1 There is no significance difference in the mean responses of managers and staff on the influence of ICT on the performance of SMEs.
Ho2 There is no significance difference in the mean respondents of managers and staff on the factor affecting the adoption of ICT by SMEs.
Ho3 There is no significance difference in the mean responses of managers and staff on the strategy that can mitigate the barrier to ICT adoption by SMEs.
1.6 Significance of the Study
The finding of this study will be helpful to: Small and Medium Scale Enterprise Owners, Government Agencies and the body of knowledge.
Small and Medium Enterprises enterprise owners: the finding of the study will help small and medium scale enterprise to have a deeper understanding on the importance of Information Technology adoption as it can affect the development of their firm. Also, it will trigger the new ideas on how to use Information technology to improve their firm productivity.
Government agencies: the finding of this study will enable government agencies to help Small and Medium scale Enterprises owners by providing funds for them to improve their productivity. For example, agencies can also provide more training, system upgrades, acquisition of technology, consultation fees and electronic trading activities that related to Information Technology learning skills and knowledge.
The body of knowledge: the finding of the study will also help in the creation of general contribution for all area of study and in the creation of a new knowledge for academic areas of study as well. The study will inform the people out there about, the importance of Information Technology adoption in SMEs performance.
1.7 Scope of the Study
This study will be delimited to influence of information and communication technology on the productivities of small and medium scale enterprise in Nigeria, specifically the study will be limited to the following objectives; Determination of the influence of information and communication technology on the performance of small and medium scale enterprise in the study area. Determination of the factor affecting the adoption of information and communication technology in the study area and Determination of the strategy that can reduce the barrier to ICT adoption in the study area.
TABLES OF CONTENTS
Table of contents i-ii
Lists of tables iii
Lists of appendices iv
CHAPTER ONE: INTRODUCTI 1
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Purpose of the Study 4
.4 Research Questions 4
1.5 Research Hypothesis 5
1.6 Significance of the Study 5
1.7 Scope of the Study 5
CHAPTER TWO: REVIEW OF RELATED LITERATURE 6
2.1 Theoretical Framework of the Study 6
2.2 Review of Literature 6
2.2.1 Concept of Information and Communication Technology 6
2.2.2 Concept of Small and Medium Scale Enterprise 8
2.2.3 Concept of Performance 10
2.2.4 Influence of ICTs on SMEs Productivities 11
2.2.5 Factors Affecting the Adoption of ICT 23
2.2.6 Strategy to Reduce the Challenges of ICT Adoption 33
3.3 Review of Related Empirical 35
3.4 Summary of Literature Reviewed 40
CHAPTER THREE: METHODOLOGY 42
3.1 Research Design 42
3.2 Area of the study 42
3.3 Population of the Study 43
3.4 Sample and Sampling Techniques 43
3.5 Instrument for Data Collection 43
3.6 Validation of the Instrument 44
3.7 Reliability of the Instrument 44
3.8 Method of Data Collection 44
3.9 Method of Data Analysis 44
CHAPTER FOUR: RESULTS AND DISCUSSION 46
4.1 Analysis of Respondent’s Personal Data 46
4.2 Answers to Research Questions 47
4.3 Finding of the Study 52
4.4 Discussion of the Finding 53
CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS
5.1 Summary 56
5.2 Conclusion 57
5.3 Recommendations 58