Strategies to Adopt Information Technology in SMEs

Significance Of Smes

SMEs tend to dominate a country’s new and fast growing industries. Economies which discourage SMEs in any general sense are therefore likely to discourage some newer dynamic industries from putting down the roots they might otherwise do. In this respect, SMEs are associated with dynamism. The most successful developing country over the last 50 years, Taiwan, is built on a dynamic SME sector. This has produced both (for its time) record breaking growth and a quite low level of inequality, by comparative standards. The significance and potential contribution of the SME sector are supported by both theoretical and empirical arguments and evidence.

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  Collective Bargaining: Developing countries without substantial SME sectors tend not only to have capital and the income from it concentrated in the larger firms but also to have a “labour elite” in that sector. They are able to bargain for wages much higher than elsewhere in the economy.

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  Decent Employment: The intermediate technology characteristic gives SME sector a special role in generation of adequate or decent employment. Example of small-scale agriculture, etc.

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  Dynamic Potential: Many are surviving in character but others have dynamic potential. In most countries for which such data are available it appears that most small firms (of say 6-25 workers) began their lives as microenterprises and then grew.

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  Economic Efficiency: Possibly those large firms with an SME background are likely to engage in subcontracting with other SMEs, which culminates into an additional benefit to overall economic efficiency.

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  Employment Generation: SME sector contributes both to the overall total factor productivity such as efficiency of an economy and to employment generation and distributional equality comes by virtue of its pattern of technology choice.

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  Generating Growth: The SME sector plays a key dynamic role in generating growth, especially pro-poor growth. Through employment generation, automatically the people and economy also grow.

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  Highly Heterogeneous: Nearly all developing economies have large micro enterprise sectors that, like the SME sector itself, are highly heterogeneous in many respects like the goods or services produced, the entrepreneurial capacity of the owner, and the potential for growth, etc.

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  Healthy Competition: Healthy competition is possible through SMEs only because of their price-lowering and quality-improving methodology. Because of this they and their products compete with global market also.

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  Income Equality: An economy which is dominated by SMEs has been generating a low level of inequality in the distribution of primary income. Best example is Taiwan.

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  Little Capital, More Employment: A large informal or microenterprise sector uses very little capital with the large amount of labour not employed by the large firms.

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  Very Useful in Dualistic Economy: A larger SME sector is best thought of as the alternative to a highly dualistic economy with most of the capital in the large scale sector and most of the workers in the very small-scale sector.