Factors that influence ICT adoption by small and medium enterprises : a case study of SMEs in Thika municipality

Abstract

The SME sector is important in the social economic development of Kenya and is perceived as an engine for growth. However, SMEs seem ill equipped to confront the challenges of globalization, whose hallmark is ICT and information a major determinant of competitiveness. Whereas large enterprises have embraced ICT to gain a competitive edge, evidence relating to ICT adoption and use by SMEs has suggested a slow response and limited progression. The research was therefore carried out to find out the level of ICT adoption and factors influencing the adoption and use by StLIEs in order to enhance adoption. A cross- sectional survey of 75 SMEs in Thika Municipality was carried out, Stratified random sampling was used to draw the sample out the total population of 240 SMEs. Structured questionnaires were used as the instrument of data collection and were administered to the owners managers of the enterprises. Data was collected in two weeks and analyzed using descriptive statistics. The findings of the survey indicated that ICT adoption measured by the adoption index was higher than expected with an average index of 68 %. The mobile phone was the most common ICT and most frequently used, followed by the computers, fixed phones and lastly the fax. Most enterprises used ICT for basic applications i.e. communication and office automation. Usage of more advanced ICT tools and applications was very low and only 28% of the enterprises had a web page. Such kind of ICT applications may not be sufficient to address the challenges faced by the sector. ICT adoption was to a great extent influenced by internal factors to the enterprises as compared to external factors. These factors are ICT knowledge and skills of the manager/owner and employees, Identified need for ICT/ perceived usefulness of ICT in the enterprise, Availability of funds, Type of market and customers, Type of business operations. Efforts to enhance adoption should be focused- on the internal factors and could include Stepping up ICT awareness and training among SMEs owners, employees and stakeholders, Formulating policies that support ICT adoption by the sector, Subsiding the cost of ICT purchase and maintenance, ICT providers coming up with customized ICT products and applications for SMEs.