Information and Communication Technology and Financial Performance of Small and Medium Sized Enterprises in West Pokot County, Kenya.

Abstract

Small to medium-sized enterprises (SMEs) is regarded as the main employment source, technological advancements, and competitive advantages for both developed and developing countries. As a result of competitive pressure and the need for growth in line with increasing its profits margins, these businesses are increasingly employing Information Technology (IT) to take advantage of its benefits. The purpose of this study was to assess the effects of using information and communication technology on financial performance of small and medium sized enterprises, a case of registered SMEs in West Pokot County. The study utilized theories such as diffusion of innovation and technology acceptance model to illustrate ICT adoption among SMEs, It also provided empirical evidences on the effects brought by ICT usage among SMEs. This study adopted a descriptive research design. The target population of the study was the registered SMEs in West Pokot County - Kenya. A sample of 150 SMEs were studied obtained using 30% of the target population, we used stratified random sampling technique to get the sample. The study relied on primary data sources and secondary data. Primary data was collected using structured questionnaires. To analyze the quantitative data, frequency distribution and cross tabulations was used. Statistical Package for Social Sciences (SPSS) was used as the data analysis tool. We used frequency tables, percentages, pie charts and bar graphs in Data presentation. The study established that adoption of IT improved financial performance of SMEs through quality of service, volume of transactions, connections to suppliers, reduced cost of operation, reduced transaction cost, accuracy and efficiency. The study deduced that to a great extent the adoption of IT in business was influenced by competition shown by a mean score of 4.70. The study concluded that adoption of ICT services which the SMEs have adopted in a large extent has improved its performance. Some of the ways in which ICT has improved efficiency in the SMEs includes: increased productivity and efficiency; faster processing of transactions hence greater customer satisfaction; immediate dissemination of information throughout the SMEs. Based on the findings and conclusions, the study recommends that the government of Kenya should consider mobilizing resources geared at creating awareness on and encouraging use of available information technologies at the disposal of the business people to the maximum possible extent in order to enhance business performance.