Capacity Building in SMEs

Capacity Building in SMEs

Stephen M. Mutula (University of Botswana, Botswana)
Copyright: © 2010 |Pages: 17
DOI: 10.4018/978-1-60566-420-0.ch015
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Abstract

The preceding chapter demonstrated that one of the more pressing challenges facing SMEs is the lack of adequate skills, which makes capacity building a critical preoccupation. The 2003 WSIS highlighted the need for capacity building to achieve an information society where there is rapid growth and the wide spread use of information, and where people have the necessary literacy competencies to appreciate what information is needed, where to get it, and most importantly, how to use it. Appropriate levels of education and Internet familiarity are necessary for digital commerce to be viable. Digitally enabled consumers and businesses are the basic cornerstones of the digital economy. Without the necessary ICT skills, firms would find it difficult to penetrate global markets. Notably, labour-intensive businesses that support digital commerce, such as call centres or KM outsourcing providers, move quickly into markets where skills are available to support their operations.
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Sme Capacity Building Initiatives

Porter (1990), in a study that focused on Germany, Japan and Korea, established that education and training are decisive in determining national competitive advantage. Nations that invest heavily in education have advantages in many industries that can be traced back to human resources. Highly competitive industries have often made significant investment in the education and training of their personnel. Infact, education and training constitute the single greatest long–term investment in any organization and at all levels of government. Without knowledge, even nations that are well endowed with natural resources cannot compete effectively on the global arena.

Capacity building in SMEs is increasingly being perceived by governments the world over as a sustainable empowerment tool in the global economy, although it would seem as though most small-sized enterprises do not put much premium on training. For example, in a UK study on SMEs, Gray and Lawless (2000) found that the small-sized enterprises were, on average, generally averse to adopting a formal staff development policy. They attributed this to a number of external factors, such as the scale effects on resources and time, relative organisational simplicity, and the need to remain flexible (hence the dominance of a ‘react to need’ approach among the SMEs). The authors observed that most small-sized enterprises viewed the formal development of a capacity building policy to be of low priority, whereas most medium-sized enterprises felt that staff capacity building should be high on their agenda. Furthermore, the level of formality, planning, and even successful nature of staff development appeared to be linked to the complexity of the business. Firms with written, explicit staff development policies - mainly medium enterprises or large firms - were more likely to benefit from most forms of training.

It has already been mentioned that in order to fully exploit the benefits of ICT, the adequate development of human capacity is necessary. Furthermore, creating awareness of the abilities of ICT to improve the lives of people by circumventing traditional obstacles, such as distance and time, is necessary within SMEs. McConnell International (2000) opines that the world faces an incredible shortage of ICT skills, particularly in four areas:

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