Small business tends not to take a strategic approach to planning and operations. The focus tends to be on efficient operations in the near term. Thus, it is incumbent upon senior management in a small business to take a longer term perspective to strategically address how to gain and sustain competitive advantage. This chapter discusses how the use of information systems will promote the necessary internal environment which, in turn, will facilitate responding to the external environment. The strategic use of information systems will lead to more sophisticated and formal processes. A learning environment will support creative initiatives where information systems will improve performance and contribute to competitive advantage.
TopGenerally, information systems support the efficiency of internal operations for a small business. The strategic use of information systems will contribute to achieving competitive advantage through improved relationships with customers and suppliers. Further, strategic use of information systems will allow the small business to more effectively compete with other small businesses within the industry.
Early investigations into the use of information systems by small business suggested the technology was mainly used to support daily operations (Rivard et al, 1988). Later Pollard and Hayne (1998) identified a shift towards a more strategic use of information systems by small business in an attempt to gain competitive advantage. Kagan et al (1990) supported this finding concluding that as a small business grows there is an increased need for more sophisticated information. As a consequence information systems become employed at a more strategic level within the small business as it grows.
Strategic entrepreneurship is a relatively recently emerging topic at the intersection of strategic management and entrepreneurship (Hitt et al, 2001; Ireland et al, 2003; Zahra & Dess, 2001; Venkataraman & Sarasyathy, 2001; and Kuratko et al, 2005). In general, entrepreneurship identifies opportunities (Shane & Venkataraman, 2000; McCline et al, 2000; Davidsson et al, 2002; Hitt et al, 2002; and Thompson, 1999) and strategic management transforms the opportunities in attempting to contribute sustained competitive advantage (Ireland et al, 2003; Ramachandran et al, 2006; Duncan et al, 1998; Prahalad & Hamel, 1990; Porter, 1985; Wernerfelt, 1984; and Barney, 1991).