Adoption of new ICT innovation by SMMEs in Cape Town

Abstract

Establishing Small, Medium and Micro Enterprises (SMMEs) is one of the options for South Africa to grow and develop the economy by creating and maintaining employment. SMMEs need to utilise technology innovation in their businesses for the sustenance of their growth and development in the market. Although Information Technology (IT) has been identified as a key enabler of businesses, the adoption of IT by small businesses is low, owing to different disparaging factors and conditions SMMEs are faced with. The factors culminate in challenges which hinder evaluation, adoption and use of new technology innovation by SMMEs to develop the business. The aim of the study is to explore the evaluation and adoption of new technology by SMMEs. The research objectives are to investigate the evaluation factors affecting decision making and choice of technology adoption, and the effect evaluation and non-evaluation of new technology has on the business. The purpose of the research is to establish the challenges SMMEs encounter with evaluating new technology by SMMEs, being that evaluation is a major contributing factor to the successful adoption of new technology by SMMEs. The study takes the form of a multiple interpretive case study employing both qualitative and quantitative methods of data collection. Qualitative data was collected using semi-structured interviews with 15 managers/owners of SMMEs. Quantitative data was collected in the form of an online survey and results were used against the qualitative data analysis process, with categories formed and patterns identified in the data samples. The research reveals that SMMEs find it increasingly difficult to obtain knowledge on available new technology for business. SMMEs are unable to adequately determine how new technology could align with the business objectives and processes. It seems that government does not play any significant role in the SMME adoption process of new technology. Most SMMEs are oblivious to any government initiative or support available to them. The cost of compliance within the Financial Service Provider (FSP) sector is high due to new standards set by legislation. The increased cost burden of compliance has led to the demise of many FSPs in the financial sector. The study further suggests that with quality evaluation and implementation procedures of new technology, the selected technology will have a positive effect on the SMME industry. SMMEs need to embrace an evaluation culture and practice to enable them to make quality decisions on new technology in order to capitalise on the potential the technology has to offer. This could lead to gaining a competitive advantage and ensuring survival and growth in the market. Guidelines on new technology evaluation and adoption are proposed to SMMEs. These guidelines will assist SMMEs to evaluate and identify all factors relating to the business environment affecting the evaluation of new technology for the business. The study provides new insight and understanding on how SMMEs evaluate new technology. The evaluation includes issues surrounding availability of information, awareness of opportunities, decisionmaking and the need for increased and visible government participation in the process of SMME new technology adoption.