A positive environment will contribute to the beneficial use of information systems by small business. It is incumbent upon senior management to take a proactive approach to the strategic use of information systems. Employees must be trained with the appropriate skills. New processes should be explored regularly both with current information systems and new systems that could potentially provide an improvement in performance. Information systems should be sued in a way that contributes to both efficiency and effectiveness to support operational decision making and eventually the competitive advantage of small business. This chapter presents an overview of the issues involved in the use of information systems by small business. Management of small business tends to make decisions based upon an informal approach to gathering information. Once adopted, an information system formalizes this approach and promotes a more structured process for decision making. From an external perspective the use of information systems by small business presents a positive image to customers, suppliers and other small businesses. Internally the responsibility resides with senior management to set a positive environment regarding the use of information systems.
TopIf information system use is different in small business versus large companies, how does this use evolve as a small business grows and matures? The answer to this question will be addressed in Chapter Thirteen which presents a maturity framework for small business use of information systems. The following paragraphs provide the basic description of information system use within small business.
Briefly, two theories, reported here, have been employed to provide a context for information use in small business. These theories are the Resource-based View of the firm Theory and the Theory of Absorptive Capacity. Caldeira and Ward (2003) employed Resource-based View Theory to attempt to explain small business success with the use of information systems. Factors associated with success were related to internal aspects of the business. One factor involved positive management perspectives and attitudes toward the use of information systems. The other internal aspect involved the development of capabilities to use information systems.
Francalanci and Morabito (2008) employed Absorptive Capacity Theory to analyze how the use of information technology facilitates the performance of small business. The Theory of Absorptive Capacity (Cohen & Levinthal, 1990; and Zahra & George, 2002) relates to a small business’ ability to uniquely identify, assimilate, and exploit knowledge from external sources (Cohen & Levinthal, 1990). Francalanci & Morabito (2008) determined that absorptive capacity facilitates information system integration which promotes maturity and quality in the use of information systems.
Winter et al (2009) determined that the impression held by customers and other firms of a small business’ legitimacy is facilitated through the use of information systems. A positive image may influence purchase decisions which in turn, may contribute to survival and competitive advantage.
It is important that small business managers chose the appropriate information system for their purposes. The acquisition of an information system represents a relatively large investment which must provide a benefit (Delvecchio & Anselmi, 2006) for its subsequent use.
Cragg and Mills (2011) found that few small business employed information systems to support two strategically important processes which are facilitating the delivery of products and services and managing customer service.
Earlier, Cragg (2002) had investigated information technology use in small business. He developed a framework which differentiates laggards and leaders in the use of information technology and is included here as Table1.