Information and Communication Technology for SMEs' Competitiveness

Information and Communication Technology for SMEs' Competitiveness

Neeta Baporikar (HP-GSB, Namibia University of Science and Technology, Namibia)
DOI: 10.4018/IJSITA.2016070103

Abstract

Competitiveness of a firm is its capacity to achieve its targets. These targets are likely to be expressed in a variety of terms depending on the context (Barney 2002). Within a macroeconomic perspective, a competitive firm develops and sustains a level of performance that contributes to the Gross Domestic Product (GDP), employment opportunities, and the wealth of the people. From an entrepreneurial perspective, a competitive firm needs to survive in the market and to achieve market share and profitability. This paper deliberates regarding the theory of competitive advantage and discusses the role of Information and Communications Technology (ICT) for augmenting SMEs' competitiveness.
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Literature Review

Barney (2002) discusses four approaches to measure the firm’s competitiveness. These measurements are firm's survival, stakeholder approach, simple accounting measures, and adjusted accounting measures. Porter (1985) indicates that a firm experiences a competitive advantage when “its actions in an industry create economic value and when few competing firms are engaging in similar actions.” De Wit and Meyer (1999) and Buffam (2000), indicate that a firm has a competitive advantage when it has the means to edge out rivals when competing for the favour of customers. Barney (2002) explains that a firm experiences a competitive parity when the firm’s action creates economic value applied in several other firms engaging in a similar action. An important goal of a business enterprise is to optimize shareholders’ returns. However, optimizing short-term profitability does not necessarily ensure optimal shareholders returns since shareholder value represents the net present value of expected future earnings. One of the techniques that reflect the shareholders return is the concept of the Balanced Scored Card (BSC) as an indicator for the firm’s competitive advantage.

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