Information Systems & Small Business: Research Issues

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1 i Editorial Preface Information Systems & Small Business: Research Issues M. Gordon Hunter The University of Lethbridge, Canada INTRODUCTION Small Business forms a major component of a country s economy (Balderson, 2003; Ballantine et al., 1998). Indeed, it is the small business sector that seems best in the position to respond appropriately to the ever-changing business environment. Information systems play a large part in supporting the functions of all organizations (Laudon & Laudon, 2001). This editorial presents an overview of previous research in this area, along with some issues that lead to some examples of what researchers are doing and a challenge to other researchers. PREVIOUS RESEARCH Previous research has shown that small business is different than large business. Business models that are appropriate for large business do not work all the time for small business. Small business managers face different issues than large business managers (Belich & Dubinsky, 1999; Pollard & Hayne, 1998). Some of these issues are discussed in the subsequent section of this editorial. Further, while large business is employing information systems for strategic purposes, small business tends to emphasize the use of information systems for more immediate daily operations. This comment is supported by the work of a number of researchers (Berman, 1997; Bridge & Peel, 1999; El Louadi, 1998; Fuller, 1996; Lin et al., 1993; Timmons, 1999). Further, Hunter et al. (2002) have emphasized this situation, suggesting that small business concentrates on employing information systems for efficiency gains rather than as a contribution to improved effectiveness. Research (Burgess & Trethowan, 2002; Chapman et al., 2000; Dandridge & Levenberg, 2000) has also determined that the use of the Internet is not as pervasive as one would expect. This situation has been explained by a lack of knowledge and experience (Kuan & Chau, 2001) and lack of personnel and time (Bennett et al., 1999). This latter explanation relates to Thong et al. s (1994) concept of resource poverty, which is discussed in the next section. Another perspective that may be applied to the previous research presented could be geographic. That is, what regions are represented by currently available research studies? Unfortunately, there is a concentration of research on small business in North America and Europe. While the research from these regions is valuable, it is indeed unfortunate that other regions (e.g., Asia, Eastern Europe, and South America)

2 ii seem to be under-represented. To some degree, this situation is being addressed by a project described here in the penultimate paragraph. Given the importance of the small business sector and its uniqueness, it is incumbent upon those researchers to attempt to understand not only the small business itself but how information systems could be employed to facilitate operation and growth of specific businesses. ISSUES The following paragraphs discuss some of the issues regarding information systems and small business that should be addressed. At the very least these issues represent perspectives that should be considered by the small business stakeholders. To begin, there is no common definition of small business. Researchers and government agencies tend to adopt their own definitions, provide this definition at the start of a document, and proceed to present results based upon this specific definition. This makes comparisons between research projects and government documents very difficult. Definitions have included annual revenue, total investment, or number of employees, with the latter being the most prevalent. However, even when number of employees is used there is no consistency in defining small business. To make matters even more complicated, there is no consistency in defining the various sub-categories of small business. For instance, the European Parliament (2002) defines a range of small business from micro (0 to 10), to small (10 to 50) and medium (50 to 250). Further, the uniqueness of small business has been described by the Thong et al. (1994) concept of resource poverty. This concept relates to the lack of financial and human resources. This relates to both possession and access. With regards to financial resources small business tends to have limited cash flow. Also, because of a lack of assets, the ability to borrow money is limited. This situation also exists regarding human resources. A small business tends not to be able to employ many individuals. Further, the individuals who are employed may not possess all the necessary skills. Thus, the small business manager is forced to allocate scarce resources to only those activities that are considered top priority in the near term. An interesting perspective has been provided by Stevenson (1999). He provides a conceptual interpretation of managers approaches to business practices. Table 1 Table 1: Approaches to Business Practice ASPECTS OF BUSINESS PROMOTER TRUSTEE PRACTICE Strategic orientation Capitalize on an opportunity Focus on efficient use of current resources to determine the greatest return Resource commitment and control decisions Act in a very short time frame Long time frame, considering long-term implications Multi-staged One-time up-front commitment Minimum commitment of resources at each stage Large-scale commitment of resources at one stage Respond quickly to changes in competition, market, and technology Formal procedures of analysis such as capital allocation systems

3 iii presents this interpretation relative to a continuum. Small business managers are regarded as promoters and large business managers as trustees. It is Stevenson s (1999) contention then that how managers carry out their business responsibilities will vary significantly. As a consequence, the approach to employing information systems by small business may also be unique according to their sector. Another interesting perspective is provided by the theory of entrepreneurship (McMullan & Long, 1990), which suggests businesses of various sizes are ventures in progress. As the venture evolves through various stages (one of which is small business) different factors impinge upon the business manager s use of resources and employment of information systems. In adopting this theory as a framework, researchers will recognize that small business is unique and evolving. CONCLUSION Thus, the manager of a small business will be limited in what activities can be initiated. Hence, the manager will emphasize allocating scarce resources in the near term. This may be interpreted in different ways for various stakeholders including consultants, vendors, and government. Consultants must realize that the near term focus of the small business manager may not be in the best interest of the manager. The multistaged decision making approach of the small business manager should be placed within a long-term plan which will benefit the small business. Vendors should ensure that both software and hardware address the functional requirements of small business, responding to the appropriate level of capacity and capability. Also, government should provide financial and training incentives to stimulate small business in recognition of its major contribution to the country s economy. Further, the results of cross-cultural studies could also be very edifying. Analyses of the approach taken by small business managers of similar firms in different cultures may provide novel ideas for future operations. So, what can we do as researchers? It is incumbent upon us to attempt to understand the uniqueness of small business. There are many perspectives that may be adopted when investigating small business. We should further explore the issues that are considered important to small business managers. While there may be many examples of this, here are a few. Researchers are encouraged to explore various regional practices. There could be some interesting lessons to be learned about how small business applies information systems in different parts of the globe. An extension of this regional perspective could be the comparison of different regions. This comparison could further elucidate how information systems are applied by small business through an analysis of similarities and differences. Yet more may be learned by comparing similar industries in different regions or developing versus developed countries. Stephen Burgess and Andrew Wenn of Victoria University in Melbourne, Australia, along with this associate editor are coordinating a special research cluster of the Information Resources Management Association regarding small business and information technology. There are a number of interesting project and research issues being discussed by the members of this research cluster. The URL is andlaw.vu.edu.au/sbirit/. Also, Burgess and Hunter are guest editors for a special issue of this journal, which will, examine the lessons that can be learned from research into the use of information technology in small businesses

4 iv In conclusion, this is an exciting area of research. There are many perspectives that may be taken and many theories that may be applied to this subject area. There are many opportunities to conduct research and to provide assistance to the small business manager. REFERENCES Balderson, D.W. (2003). Canadian Entrepreneurship and Small Business Management (5 th ed.). Toronto, Canada: McGraw-Hill Ryerson. Ballantine, J., Levy, M., & Powell, P. (1998). Evaluating information systems in small and medium-sized enterprises: Issues and evidence. European Journal of Information Systems, 7, Belich, T.J., & Dubinsky, A.J. (1999, Fall). Information processing among exporters: An empirical examination of small firms. Journal of Marketing Theory and Practice, 7(4), Bennett, J., Polkinghorne, M., Pearce, J., & Hudson, M. (1999, April). Technology transfer for SMEs. Engineering Management Journal, Berman, P. (1997). Small Business and Entrepreneurship. Scarborough, Ontario: Prentice Hall. Bridge, J., & Peel, M.J. (1999, July/ September). A study of computer usage and strategic planning in the SME sector. International Small Business Journal, 17(4), Burgess, S., & Trethowan, P. (2002). GP s and their Web sites in Australia: Doctors as small businesses. Proceedings of ISOneWorld Conference, Las Vegas, NV. Chapman, P., James-Moore, M., Szczygiel, M., & Thompson, D. (2000). Building Internet capabilities in SMEs. Logistics Information Management, 13(6), Dandrige, T., & Levenburg, N.M. (2000, January-March). High-tech potential? An exploratory study of very small firms usage of the Internet. International Small Business Journal, 18(2), El Louadi, M. (1998). The relationship among organizational structure, information technology and information processing in small Canadian firms. Canadian Journal of Administrative Sciences, 15(2), European Parliament. Retrieved July 6, 2002: factsheets/en/4_14_0.htm Fuller, T. (1996). Fulfilling IT needs in small businesses: A recursive learning model. International Journal of Small Business, 14(4), Hunter, M., Gordon, M., Diochon, D., Pugsley, & Wright, B. (2002). Unique challenges for small business adoption of Information Technology: The case of the Nova Scotia ten (Chapter 6). In S. Burgess (Ed.), Managing Information Technology in Small Business: Challenges and Solutions. Hershey, PA: Idea Group Inc.. Kuan, K. & Chau, P. (2001). A perceptionbased model for EDI adoption in small businesses using a technology-organized environment framework. Information and Management, 38, Laudon, K. C. & Laudon, J.P. (2001). Essentials of Management Information Systems Organization and Technology in the Networked Enterprise (4 th edition). Upper Saddle River, NJ: Prentice Hall. Lin, B., Vassar, J. & Clark, L. (1993). Information technology strategies for small business. Journal of Applied Business Research, 9(2), McMullin, W. E. & Long, W.A. (1990). Developing New Ventures: The Entrepreneurial Option, San Diego,

5 v CA: Harcourt Brace Jovanovich Publishers. Pollard, C. & Hayne, S. (1998). The changing faces of information systems issues in small firms. International Small Business Journal, 163, Stevenson, H. H. (1999). A perspective of entrepreneurship. In H. H. Stevenson, H. I. Grousebeck, M. J. Roberts & A. Bhide (Eds.), New Business Ventures and the Entrepreneur (pp. 3-17). Boston, MA: Irwin McGraw-Hill. Thong, J., Yap, C. & Raman, K. (1994). Engagement of external expertise in Information Systems implementation. Journal of Management Information Systems, 11(2), Timmons, J. A. (1999). New Venture Creation, (5 th edition). Boston, MA: Irwin McGraw-Hill. Dr. M. Gordon Hunter is currently an associate professor in information systems in the Faculty of Management at The University of Lethbridge. Gordon has previously held academic positions at universities in Canada, Hong Kong, and Singapore. He has held visiting positions at universities in Australia, Monaco, Germany, the US, and New Zealand. He has a Bachelor of Commerce from the University of Saskatchewan in Saskatoon, Saskatchewan, Canada, and a doctorate from Strathclyde Business School, University of Strathclyde, Glasgow, Scotland. Gordon has also obtained a Certified Management Accountant (CMA) designation from the Society of Management Accountants of Canada. He is a member of the British Computer Society and the Canadian Information Processing Society (CIPS), where he has obtained an Information Systems Professional (ISP) designation. He has extensive experience as a systems analyst and manager in industry and government organizations in Canada. Gordon is an associate editor of the Journal of Global Information Management. He is the Canadian world representative for the Information Resource Management Association. He serves on the editorial board of the Journal of Global Information Technology Management and the Journal of Information Technology Cases and Application. Gordon has published articles in MIS Quarterly, Information Systems Research, The Journal of Strategic Information Systems, Journal of Global Information Management, Information Systems Journal, and Information, Technology and People. He has conducted seminar presentations in Canada, the US, Asia, New Zealand, Australia, and Europe. Gordon s current research interests relate to the productivity of systems analysts with emphasis upon the personnel component including cross-cultural aspects, the use of information systems by small business, and the effective development of information systems.

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