Technology Assimilation Across the Value Chain: An Empirical Study of Small and Medium-Sized Enterprises

Technology Assimilation Across the Value Chain: An Empirical Study of Small and Medium-Sized Enterprises

Pratyush Bharati (University of Massachusetts, USA) and Abhijit Chaudhury (Bryant University, USA)
Copyright: © 2012 |Pages: 23
DOI: 10.4018/irmj.2012010103
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Abstract

In this paper, the authors study technology assimilation, aggregating technologies and assimilation stages for SMEs. The authors employ the twin lenses of organizational innovation and elements of institutional theory. The research validates some institutional actors and most firm characteristics as important determinants. The relative weaknesses of the institutional actors provide evidence of structural isolation in the SME environment that is inhibiting information flow from intermediaries like government support agencies and vendors. The authors recommend a proactive role on the part of technology and enterprise intermediaries to design SME-appropriate solutions.
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Introduction

Small and medium-sized enterprises (SMEs) play a very important role in the US economy and should be an important subject of study for IS academic researchers for several reasons. First, the employment scope of SMEs is significant in the US and EU countries (Harindranath, Dyerson, & Barnes, 2007); second, the innovation potential of SMEs in many high-tech areas is the primary growth driver of the industry; and finally, this sector drives the renewal process of the economy through birth, death, and restructuring. It is well known that SMEs are different from large firms where information systems are concerned, and organizational theories applicable to large firms may not be applicable to them (Bharati & Chaudhury, 2006). A small firm is “not a little big business,” and there is a need to take off the big organization glasses when studying technology issues in small firms (Thong, 1999). However, few IS researchers in the US focus on the SME sector. This is evidenced by the fact that only a few papers on the subject have been published (Bharati & Chaudhury, 2009) in the last six years in the top IS journals.

This paper focuses on the question, “What institutional actors and what firm-level characteristics affect the full assimilation cycle of technologies spanning the full value chain of small and medium-sized enterprises (SMEs)?” It investigates SMEs in the high-technology manufacturing cluster based in Greater Boston and studies the influences of cluster of competitors, vendors, and others on the direction and pace of innovation. The paper draws on institutional theory (Powell & DiMaggio, 1991) and organization learning theory (Attewell, 1992) to build a model of technology assimilation over the whole technology life cycle. The major contribution of this paper to technology assimilation research is that it seeks to fill the void in research on the determinants of technology adoption and assimilation (i) across the entire value chain of a firm, that is, technologies that support both primary activities such as manufacturing and logistics and secondary activities such as purchase and accounting, and (ii) across the full assimilation life cycle.

IT research on SMEs has mainly been focused on motivators and inhibitors (Caldeira & Ward, 2002; Cragg & King, 1993), acceptance and impact (Iacovou, Benbasat, & Dexter, 1995), factors relating to satisfaction and success (Zhang, Sarker, & Sarker, 2008; DeLone, 1988), and implementation issues (Thong, Yap, & Raman, 1994, 1996). Thong (1999) provided an integrated model of IS adoption in small businesses where factors relevant to the firm, such as CEO characteristics and organizational characteristics, and a single environmental factor of competition were used. The paper extends Thong’s (1999) model of IT adoption in SMEs by looking into a much wider set of institutional actors that play a role in the full assimilation life cycle and across multiple technologies; it extends the model developed by Liang, Saraf, Hu, and Xue (2007), which researches a single technology, into technology aggregates that cover the entire value chain; and it adds and relates to the institutional-theory based models in IS research (Chatterjee, Grewal, & Sambhamurthy, 2002; Teo, Wei, & Benbasat, 2003) to investigate the full assimilation life cycle.

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