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TEAMFLY
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Managing Information
Technology in Small Business:
Challenges and Solutions
Stephen Burgess
Victoria University, Australia
Hershey • London • Melbourne • Singapore • Beijing
Idea Group
Publishing
Information Science
Publishing
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Copyright © 2002 by Idea Group Publishing. All rights reserved. No part of this book may be
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Library of Congress Cataloging-in-Publication Data
Burgess, Stephen, 1958-
Managing information technology in small business : challenges and solutions /
Stephen Burgess.
p. cm.
Includes bibliographical references and index.
ISBN 1-930708-35-1 (cloth)
1. Small business--Electronic information resources--Management. 2. Information
technology--Management. 3. Small business--Management. I. Title.
HD62.7 .B835 2002
658--dc21 2001051713
British Cataloguing in Publication Data
A Cataloguing in Publication record for this book is available from the British Library.
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• Data Mining: A Heuristic Approach
Hussein Aly Abbass, Ruhul Amin Sarker and Charles S. Newton/1-930708-25-4
• Managing Information Technology in Small Business: Challenges and Solutions
Stephen Burgess/1-930708-35-1
• Managing Web Usage in the Workplace: A Social, Ethical and Legal Perspective
Murugan Anandarajan and Claire Simmers/1-930708-18-1
• Challenges of Information Technology Education in the 21st Century
Eli Cohen/1-930708-34-3
• Social Responsibility in the Information Age: Issues and Controversies
Gurpreet Dhillon/1-930708-11-4
• Database Integrity: Challenges and Solutions
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• Managing Virtual Web Organizations in the 21st Century: Issues and Challenges
Ulrich Franke/1-930708-24-6
• Managing Business with Electronic Commerce: Issues and Trends
Aryya Gangopadhyay/ 1-930708-12-2
• Electronic Government: Design, Applications and Management
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• Knowledge Media in Healthcare: Opportunities and Challenges
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• Internet Management Issues: A Global Perspective
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• Enterprise Resource Planning: Global Opportunities and Challenges
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• The Design and Management of Effective Distance Learning Programs
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• Multirate Systems: Design and Applications
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• Managing IT/Community Partnerships in the 21st Century
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• Multimedia Networking: Technology, Management and Applications
Syed Mahbubur Rahman/ 1-930708-14-9
• Cases on Worldwide E-Commerce: Theory in Action
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• Designing Instruction for Technology-Enhanced Learning
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• Heuristic and Optimization for Knowledge Discovery
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• Distributed Multimedia Databases: Techniques and Applications
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• Neural Networks in Business: Techniques and Applications
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• Managing the Human Side of Information Technology: Challenges and Solutions
Edward Szewczak and Coral Snodgrass/1-930708-32-7
• Cases on Global IT Applications and Management: Successes and Pitfalls
Felix B. Tan/1-930708-16-5
• Enterprise Networking: Multilayer Switching and Applications
Vasilis Theoharakis and Dimitrios Serpanos/1-930708-17-3
• Measuring the Value of Information Technology
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• Business to Business Electronic Commerce: Challenges and Solutions
Merrill Warkentin/1-930708-09-2
Managing Information Technology
in Small Business:
Challenges and Solutions
Table of Contents
Preface ............................................................................................................ vii
Stephen Burgess, Victoria University, Australia
Chapter I
Information Technology in Small Business: Issues and
Challenges ........................................................................................................1
Stephen Burgess, Victoria University, Australia
Part I: Small Business and Information Technology
Chapter II
Adoption and Use of Computer Technology in Canadian
Small Businesses: A Comparative Study .................................................. 19
Linda Duxbury, Carleton University, Canada
Yves Decady, Statistics Canada, Canada
Angel Tse, Carleton University, Canada
Chapter III
Information Systems Development Outcomes: The Case
of Song Book Music ..................................................................................... 48
M. Gordon Hunter, University of Lethbridge, Canada
Chapter IV
Information System Check-Up as a Leverage for
SME Development ....................................................................................... 63
Aurelio Ravarini, Cattaneo University, Italy
Marco Tagliavini, Cattaneo University, Italy
Giacomo Buonanno, Cattaneo University, Italy
Donatella Sciuto, Politecnico di Milano, Italy
Chapter V
Modeling Technological Change in Small Business: Two
Approaches to Theorizing Innovation ....................................................... 83
Arthur Tatnall, Victoria University, Australia
Chapter VI
Unique Challenges for Small Business Adoption of
Information Technology: The Case of the Nova Scotia Ten ................. 98
M. Gordon Hunter, University of Lethbridge, Canada
Monica Diochon, St. Francis Xavier University, Canada
David Pugsley, St. Francis Xavier University, Canada
Barry Wright, St. Francis Xavier University, Canada
Chapter VII
Franchising and Information Technology: A Framework .................... 118
Ye-Sho Chen, Louisiana State University, USA
Robert Justis, Louisiana State University, USA
P. Pete Chong, Gonzaga University, USA
Chapter VIII
Use of Decision Support Systems in Small Businesses ........................ 140
Yanqing Duan, University of Luton, UK
Russell Kinman, University of Luton, UK
Mark Xu, University of Portsmouth, UK
Chapter IX
Computer Security in Small Businesses–An Example
from Slovenia ............................................................................................... 156
Borut Werber, University of Maribor, Slovenia
Part II: Small Business, the Internet and Electronic Commerce
Chapter X
Factors Inhibiting the Collaborative Adoption of
Electronic Commerce Among Australian SMEs ................................... 178
Kristy Lawrence, University of Tasmania, Australia
Chapter XI
Web Initiatives & E-Commerce Strategy: How Do
Canadian Manufacturing SMEs Compare? ............................................ 193
Ron Craig, Wilfrid Laurier University, Canada
Chapter XII
The Role of SMEs in Promoting Electronic Commerce
in Communities ........................................................................................... 209
Celia Romm, Central Queensland University, Australia
Wal Taylor, Central Queensland University, Australia
Chapter XIII
Strategies for Consultancy Engagement for E-Business
Development–A Case Analysis of Australian SMEs ............................ 227
Shirley Bode, Edith Cowan University, Australia
Janice Burn, Edith Cowan University, Australia
Chapter XIV
Building the Professional Services E-Practice ...................................... 246
Dieter Fink, Edith Cowan University, Australia
Chapter XV
How a Procedural Framework Would Assist SMEs in
Developing Their E-Business Strategy .................................................. 261
Anthony Stiller, University of the Sunshine Coast, Australia
Chapter XVI
Management’s Contribution to Internet Commerce
Benefit–Experiences of Online Small Businesses................................ 279
Simpson Poon, Charles Sturt University, Australia, and
The University of Hong Kong, Hong Kong
Chapter XVII
Options for Business-to-Consumer E-Commerce in
Developing Countries: An Online Store Prototype .............................. 299
Robert Klepper, Southern Illinois University–Edwardsville, USA
Andrew Carrington, Southern Illinois University–Edwardsville, USA
Chapter XVIII
Electronic Commerce Opportunities, Challenges
and Organizational Issues for Australian SMEs .................................... 316
Mohini Singh, RMIT University, Australia
Chapter XIX
Training for E-Commerce Success in SMEs .......................................... 334
Yanqing Duan, University of Luton, UK
Roisin Mullins, University of Luton, UK
David Hamblin, University of Luton, UK
About the Authors ...................................................................................... 349
Index .......................................................................................................... 358
Preface
vii
In many countries, small businesses comprise over 95% of the proportion of
private businesses and approximately half of the private workforce, with information
technology (IT) being used in a majority of these businesses. Governments around
the world are placing increasing importance upon the success of small business
entrepreneurs and are providing increased resources to support their success. There
are a number of key differences in the use of IT between small and larger businesses.
These include: small businesses generally have fewer resources available to devote
to IT, they have very little control over forces that are external to the organisation,
they generally do not have their own separate IT department and small businesses
generally have less formalised planning and control procedures for the adoption and
use of IT. Small business entrepreneurs are thus often placed in the situation of
knowing that IT can support their business in some way, but they lack the expertise
and resources to know how it can be effectively applied.
Up until a few years ago, research into the use of IT in small businesses was
almost non-existent when compared with the amount of research being carried out
for medium and large-sized businesses. Recently, an increasing amount of research
has been conducted into this important, emerging field.
The main purpose for Managing Information Technology in Small Businesses: Challenges and Solutions is to showcase the wide variety of research
being carried out in the area of small business and IT. In doing this, the book examines
the challenges facing small businesses in their use of IT and the solutions that are
being proposed. The book is separated into two major parts, research that deals with
IT and small business in general, and research that deals with the rapidly expanding
field of e-commerce.
Chapters in each part fit into one or more sub-themes. The first sub-theme relates
to Studies that are breaking new ground in the field. Even though the amount of work
being done in the area is rapidly increasing, we still do not know enough about the
manner in which small businesses use IT. The second sub-theme is Frameworks
and Models. Much work is being done to provide frameworks and guidelines that
will allow us to direct small businesses to use IT effectively. The final sub-theme is
Challenges and Solutions, examining some of the current challenges facing small
businesses in the use of IT and the available solutions.
A brief overview of the book follows.
The first chapter, by the editor, provides an introduction to many of the areas
covered in the book.
viii
Part One: Small Business and Information Technology
Chapter Two, by Linda Duxbury, Yves Decady and Angel Tse, examines the
impact of company size on the adoption, use and perceived impact of computer
technology in Canadian businesses. It also compares and contrasts small, medium
and large businesses with respect to their use of computer technology and its
perceived impacts.
Chapter Three, by M. Gordon Hunter, analyses an information systems
development project which is considered by the users to be “completed,” yet
unsuccessful. It concludes with a discussion of how the framework may be
useful in understanding information system success or failure within a small
business context.
Chapter Four, by Aurelio Ravarini, Marco Tagliavini, Giacomo Buonanno
and Donatella Sciuto, suggests that small businesses could benefit from a tool that
supports the business in monitoring information systems adequacy and making
competent choices about information systems development. The purpose of the
chapter is to provide such a tool.
Chapter Five, by Arthur Tatnall, suggests that the introduction of a new
information system into a small business, or the upgrading of an existing system,
should be seen as an innovation and so considered through the lens of innovation
theory. The chapter considers the well-known innovation diffusion theory, but
argues that another approach, that of innovation translation, has more to offer in
the case of innovations that take place in smaller organisations.
Chapter Six, by M. Gordon Hunter, Monica Diochon, David Pugsley and
Barry Wright, explores the unique issues faced by small businesses regarding the
adoption of information technology by examining 10 small businesses in Nova Scotia.
The discussion is presented relative to major themes which emerged during
interviews with the 10 small business managers. A series of recommendations are
made for the major stakeholder groups.
Chapter Seven, by Ye-Sho Chen, Robert Justis and P. Pete Chong, looks at
small businesses involved in franchising. The chapter suggests how IT can be used
to help develop the working knowledge that is disseminated throughout the franchise
system. This is achieved by organising previous studies into a framework to provide
a comprehensive view of the franchising business operations and the role IT plays
in enhancing the effectiveness and efficiency of the franchise system.
Chapter Eight, by Yanqing Duan, Russell Kinman and Mark Xu, is
concerned with current practice in relation to decision support systems (DSSs)
in small businesses. The authors identify managers’ needs for computer-based
support, and explore if and how computer-based DSS could be better developed
and utilised to meet these needs. Factors that hamper the utilisation of DSS in
small firms are also discussed.
Chapter Nine, by Borut Werber, examines basic computer security problems and
the use of IT in 122 small Slovenian businesses. The purpose of the study was to
assess why some Slovene small businesses do not use IT, what kind of security
measures are used, how many and what kind of problems they had with computer
ix
hardware and software and how they managed to solve those problems.
Part Two: Small Business, the Internet and Electronic Commerce
Chapter Ten, by Kristy Lawrence, discusses the advantages of electronic
commerce and the potential of collaborative, or industry-based, practices to
encourage the adoption of electronic commerce technologies among small
businesses. The Tasmanian Wine sector was investigated in order to identify
issues that may inhibit the development of collaborative, industry-wide electronic
commerce adoption programs.
Chapter Eleven, by Ron Craig, examines small and medium-sized manufacturing
businesses in Canada, specifically in their use, and potential use, of the Internet and
electronic commerce. The following questions were examined. Do they lead or lag
larger firms? Is an e-commerce strategy important for them, and what reasons do
they see for pursuing it? Are firms that pursue an e-commerce strategy more
successful than those that do not?
Chapter Twelve, by Celia Romm and Wal Taylor, looks at whether small
businesses should consider national or global business as the main reason for getting
themselves ‘e-commerce enabled.’ The authors promote local e-commerce, particularly as it pertains to regional, rural or remote communities, and propose the
Action, Reaction, Integration (ARI) model, which considers the role that SMEs can
play in promoting Internet technologies in their communities.
Chapter Thirteen, by Shirley Bode and Janice Burn, examines the role of
consultants in the development of small business Web sites. The chapter incorporates an analysis of 10 Western Australian online small businesses who contracted
Web site design consultants to produce their sites. The following questions were
addressed. Do small businesses have explicit e-business strategies prior to development of a Web site? Are Web site consultants engaged through a formal engagement
process, aligning business and web development strategies? To what extent do small
businesses feel their individual e-business needs are understood and met by Web site
design consultants?
Chapter Fourteen, by Dieter Fink, provides an outline for small professional
services practices with an understanding of how to enter the ‘e-age’ by building an
‘e-practice.’ It proceeds by mapping the progress that needs to be made in moving
from a previous stage of organisational development to one that is suitable for the
‘virtual age.’ In the transition to the mature stage of development, they need to reengineer their practices to offer online services and to maximise their intellectual
capital through technology-enabled knowledge management. Much of the content of
the chapter is based on research carried out in small and medium accounting firms.
Chapter Fifteen, by Anthony Stiller, looks at the provision of a procedural
framework for small business managers to follow when designing their e-business
plan and revenue model so they can remain in charge of the process (and not be
pushed into a particular template designed by a consultant to suit their hardware and
software platform). The aim of the framework is to give the small business owner
control over the entire process until they are at the stage to either develop their own
x
online presence, or have sufficient information to take to a web consultant who can
develop a model which reflects the e-business strategy and is in harmony with the
traditional business and marketing plan.
Chapter Sixteen, by Simpson Poon, examines the following questions through
a study of 224 Singaporean small businesses. Is there any difference between
traditional IT applications and e-commerce? Can we apply what we have learned
from earlier small business IT experiences to e-commerce? Does the largely
external nature of e-commerce systems mean that management needs to play a
different role than in the past? The purpose of the study was to bridge the
knowledge gap between traditional small business IT systems and e-commerce
systems, with the idea of helping management to rethink how they can secure ecommerce benefits.
Chapter Seventeen, by Robert Klepper and Andrew Carrington, considers
some of the challenges faced in establishing an electronic commerce store in a
developing country, particularly techniques for reducing costs that otherwise
would be a barrier to entry. The described prototype store utilises many low-cost
(or free) technologies. A discussion of some of the technical issues involved in
developing the prototype is available at the end of the chapter.
Chapter Eighteen, by Mohini Singh, discusses the findings of an Australian study
that identified the objectives, opportunities and challenges of e-commerce experienced by small businesses that were mostly early adopters of the Internet as a
medium of trade. E-commerce issues presented in this chapter include research
findings, supported by theory from literature. The chapter concludes with a series of
recommendations and strategies for small businesses wishing to adopt e-commerce.
Chapter Nineteen, by Yanqing Duan, Roisin Mullins and David Hamblin,
contends that training is often seen as the most effective way to help small businesses
to cope with the increasing demand on improving their skills, while not increasing
staffing. The chapter reports the results and summarises the findings from empirical
studies conducted across five countries. A pilot project supported by the European
Commission’s Leonardo Da Vinci programme was set up to address training issues
and provide on-line training and support for SMEs in participating countries. To
provide the training in the most needed areas and at the most appropriate levels,
surveys and focus group discussions were conducted. Guidelines for the development of the on-line training system are derived from the findings.
Acknowledgments
Primarily, I would like to thank the authors in this book. All of them are ‘pioneers’
of sorts in the area of small business and IT. Their dedication to this task is highlighted
by the final version of this book being very similar to the vision for the book I had after
the initial call for chapters was sent out in late 2000. Virtually all of the authors made
the transition from being ‘potential’ contributors to being ‘actual’ contributors. This
meant that they stuck through the review process (each chapter was blind reviewed
TEAMFLY
Team-Fly®
by two of their peers) and tolerated requests from the editor to alter ‘this focus’ or
‘that paragraph’ on a number of occasions. Once again, I thank them for their
significant contributions to the final result.
I particularly want to thank the following groups and individuals, who have in some
way contributed to and nurtured by interest in this area:
• My employer, the School of Information Systems at Victoria University (VU),
Australia, especially my colleagues who have tolerated my varying moods over
lunch after some heavy ‘reading sessions.’
• John Breen, Head of the Small Business Research Unit in the Faculty of Business
and Law at VU.
• The staff of Small Business Victoria, now a section of the Department of State
Development in the State Government of Victoria, Australia – especially Geoff
Lee for assistance in recent years.
• Members of the Small Business Counselling Service, an ‘arm’ of Small Business
Victoria. This group specifically helped to add the ‘reality’ to my research.
• The Owner/Managers of the many small businesses who have answered
surveys, tolerated interviews or complained about how things should be! They
all helped to supply another piece to the puzzle and provide the ‘practical’
aspect that is vital to this type of research.
Special thanks to Idea Group Publishing for inviting me to edit this book, and to
Michele Rossi (Development Editor from Idea Group Publishing) for her assistance,
encouragement and prompt replies!
Stephen Burgess
Victoria University
Melbourne, Australia
xi
Information Technology in Small Business: Issues and Challenges 1
Chapter I
Information Technology in
Small Business:
Issues and Challenges
Stephen Burgess
Victoria University, Australia
Copyright © 2002, Idea Group Publishing.
INTRODUCTION
Research into the use of information technology (IT) in small businesses is extremely diverse. It encompasses the many different characteristics of small businesses, including size, culture, business strategy,
attitudes to IT, industry and location, to name a few. The authors in this
book have contributed chapters that address many of these characteristics
of small businesses. This chapter provides an introduction to many of the
areas covered in the book.
A VIEW ON RESEARCH INTO IT AND SMALL
BUSINESS
There is some anecdotal evidence to suggest that the use of information
technology in small businesses has been the subject of an increasing amount
of research over the last 10 to 15 years. The ‘evidence’ often occurs in the form of
a general comment at the commencement of a published paper, which mentions the
‘explosion’ of recent research in the area or ‘increased interest’ in the area. As one
means of examining this, a review of the business article research reference tool,
ABI/Inform,1 was conducted in March 2001. ABI/Inform is a global business
2 Burgess
database that covers areas such as marketing, advertising, economics, human
resources, taxation, computers and companies. It contains a large component of
mainly full text articles. A count of the number of peer review articles was made
under the search topic (Computers or “Information Technology”) for information
technology and (“small business” or SME) for small businesses (refer to Table 1).
The number of peer-reviewed articles listed that had the combined defined search
topics (small business and information technology) listed in the citation or abstract
reached its highest level in the three years 1997-1999, with the highest number of
23 articles being in 1999. Whether or not this means that there has been more
research in the area is difficult to claim, as it depends upon a number of factors,
including the number of journals listed in the service each year. For instance, if there
had been an addition to the number of journals being referenced in the service, it may
look like there has been an increase in the research output of a number of topics.
Perhaps a better comparison is that of the amount of articles listed in the combined
research area with the peer-reviewed articles available in each separate area. The
number of peer-reviewed articles related to small business and IT has hovered
around two-thirds to one percent of the total number of peer-reviewed articles in
the general area of IT over the last decade and a half. There has been some weak
evidence of an increase in the percentage since 1993. There is no evidence
presented to conclude that the number of peer-reviewed articles related to small
business and IT has increased at all when compared with those listed for small
business in general.
Perhaps then, this idea of an increasing amount of research in the area is more
Table 1: The number of peer-reviewed articles related to small business and
information technology listed in ABI/Inform 1986-1999
Year Number of Peer-Reviewed
Articles in the Area of
Computing and Small
Business
% Related to PeerReviewed Articles in
the Area of
Information
Technology
% Related to PeerReviewed Articles in
the area of Small
Business
1999 23 1.35 4.8
1998 12 0.95 2.9
1997 15 0.62 2.1
1996 10 0.64 2.5
1995 11 1.17 3.1
1994 10 0.89 3.2
1993 10 0.95 3.5
1992 6 0.61 2.8
1991 6 0.69 3.9
1990 6 0.82 7.6
1989 8 0.86 7.3
1988 4 0.54 4.3
1987 5 0.81 4.8
1986 5 0.76 6.0