A2_Riemenschneider & Mykytyn_2000

What small business executives have learned aboutmanaging information technology

Cynthia K. Riemenschneidera,*, Peter P. Mykytyn Jr.b,1

aComputer Information Systems and Quantitative Analysis Department, University of Arkansas, Fayetteville, AR 72701, USAbDepartment of Information Systems and Management Sciences, University of Texas at Arlington, Arlington, TX 76019, USA

Received 23 November 1998; received in revised form 2 May 1999; accepted 26 September 1999

Abstract

In this study, 308 small business executives were interviewed and asked to identify the single most important thing they had

learned about managing the use of information technology (IT) in their ®rms. The most common response was staying current/

keeping up with changing IT. The training/education of end users, the ability to get information quickly, and accurate data

were also given as things the executives had learned. The small business executives interviewed were from a variety of

industries including the computer industry, the health care industry, engineering, consulting, manufacturing, insurance,

accounting, and law. Ninety-two percent of the executives had acquired new hardware and 89.9% had acquired new software

for their ®rms since their ®rms had ®rst started using computers. In approximately 90% of the ®rms, the number of users of

computers had increased and the majority of the new users were classi®ed as both managerial and clerical. Again,

approximately 90% of the ®rms had increased the number of functions for which computers were used within their ®rms with

applications in accounting having the greatest increase. # 2000 Elsevier Science B.V. All rights reserved.

Keywords: Small business; Information technology management; Computer usage

1. Introduction

Information technology (IT) has formed an integral

part of the operational and competitive environment of

large organizations for many years. IT perspectives

have evolved from mainframe environments of the

1960s and 1970s, to the small, so-called minicomputer

era of the latter 1970s and early 1980s, to the PC era of

today. And even the PC phenomenon has been trans-

formed from the standalone models of the mid 1980s

to the integrated, network-based systems found today.

Indeed, the continuing evolution in hardware and

software technologies has brought about a spiraling

decline in costs for all organizations, such that even

the smallest of business organizations can afford to

purchase needed IT. Therein, however, lies part of the

problem.

The majority of IT research has been done with

large ®rms [1,14]. And although hardware and soft-

ware costs are signi®cantly lower today, thereby mak-

ing it possible for organizations of any size to purchase

IT, the research ®ndings, i.e., problems, solutions,

bene®ts, etc., that relate to the larger organization

may not necessarily apply to smaller ®rms. Small

Information & Management 37 (2000) 257±269

* Corresponding author. Tel.: �1-501-575-6120;

fax: �1-501-575-4168.

E-mail addresses: [email protected]

(C.K. Riemenschneider), [email protected] (P.P. Mykytyn Jr.)1 Tel.:�1-817-272-3537; fax: �1-817-272-5799.

0378-7206/00/$ ± see front matter # 2000 Elsevier Science B.V. All rights reserved.

PII: S 0 3 7 8 - 7 2 0 6 ( 9 9 ) 0 0 0 5 2 - X

businesses employ 54% of the private working popu-

lation, and they contribute 52% of all the sales in the

US [27]. Admittedly, small businesses play a vital role

in the economy of the US, and therefore, warrant more

study tied to IT than has been conducted previously.

Many smaller organizations contain many of the

same functions and activities as their larger counter-

parts, albeit on a lesser scale. These include sales and

marketing, manufacturing, accounting, etc. It should

be of interest to information systems (IS) researchers

and to the business executives themselves to learn

more about how these ®rms have acquired IT, or perhaps

upgraded their systems, as well as to gain a deeper

understanding of many important problems and man-

agerial issues that have evolved. It should also lead to

additional research that could provide for comparisons

with larger organizations; similarities, if any, as well

as markedly different areas could be identi®ed.

The overall purpose of this research is to assess how

IT is used in smaller organizations. This examination

includes the identi®cation of the different functional

areas of ®rms. Additionally, the results of what small

business executives say they have learned about mana-

ging IT are presented. In the next section of this paper,

we discuss some of the previous research dealing with

smaller businesses, drawing attention to the fact that it

does not provide either IS researchers or business

executives with signi®cant information about IT uses.

Following that, the research method is presented. The

paper concludes with a discussion and suggestions for

additional research.

2. Small business research

Prior to 1988, IT research relevant to small busi-

nesses fell into three primary categories: studies which

gave advice for purchasing computer hardware and

software, studies which reported on computer usage,

and studies which reported on the use of computers to

make managerial decisions. Inasmuch as the technol-

ogy has changed dramatically since then, i.e., one

study [21] examined the nature and selection of

minicomputers, and the software and applications in

use then were predominately accounting, inventory

control, and word processing, there seems to be little

to be gained by examining the research in detail.

Since 1988, much of the IT-related research that

has examined small business perspectives has been

industry speci®c. A number of studies, such as those

by Raymond [22], DeLone [7], Montazemi [16],

Cronan [5], Evans [9], and Cragg and King [4] present

some interesting perspectives. Table 1 reviews each

of these studies, identifying, for the most part, the

number and type of subjects, the research focus, and

the ®ndings/observations/issues. In general, however,

the following points about post 1988 research are

noted:

� Accounting and financial activities account for a

large portion of IT usage by small businesses.

� It is important that businesses examine the nature

and content of training programs directed at man-

agers in small businesses.

� Top management support and involvement,

including that from CEOs, is crucial if IT imple-

mentations are to succeed.

� Consistent with the findings of most IT-related

research, end user involvement is crucial if user

satisfaction is to be achieved. In turn, user satis-

faction can lead to system success and, ultimately,

to successful business efforts.

As stated above, most of the prior cited research

since 1988 is industry speci®c; in addition, some of the

research is dated. Therefore, this supports our research

which includes a heterogeneous sample of businesses

from different industries and which examines IT usage

in dynamic situations and environments.

2.1. Questionnaire items

The instrument used for this research, attached as

Appendix A, contained seven questions related to IT

usage. Most of the questions were based on the

previous study of Cragg and King [4], which also

allows for certain comparisons between that research

and the current study. Questions dealt with: acquisi-

tion of new hardware/software, usage of the new

hardware/software to extend the range of applications,

number of functional areas of computer use, and the

number of users. Other researchers have also exam-

ined a number of these issues as well. Regarding the

number of functional areas using computers, Ray-

mond and Magnenat-Thalmann [25], Nickell and

Seado [18], and Farhoomand and Hrycyk [10] found

accounting to be the most common application for

small businesses (See Table 1).

258 C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269

Table 1

Summary of prior research

Researcher(s) Research focus Subjects Findings/observations/issues

[25] Computer usage Small and medium sized

manufacturing firms

Applications which use computers:

-accounts receivable

-payroll

-accounts payable

-sales analysis

[10] Computer usage Small businesses Highest percentage of application of

computers in small businesses: accounting

Software most or second most important

consideration in computerization

[18] Computer usage Small businesses Accounting most common application which used

computers

[22] Computer training 34 small manufacturing

facilities

Computer training did positively influence small

business managers

[7] IT effectiveness 98 small manufacturing

firms

Effectiveness linked to:

-CEO involvement in computerization

-on-site computers

-coordinated implementation of planning and

controls

[16] User satisfaction 83 small firms (47 service

industry and 36 manufacturing

industry)

Generated higher user satisfaction:

-end-user participation in systems design

-end-user literacy

-formal information requirements analysis

-decentralized organizations

-number of analysts in the firm

[5] Computer usage 71 small professional

organizations (i.e.

doctors, lawyers,

accountants)

Four variables significant in computer usage:

-net income

-number of vendors considered before acquiring

the system

-total assets

-estimated savings from the computer system

Success of the computer system was dependent on:

-a higher investment in maintenance

-employee involvement with the new system

-higher estimates of cost savings

[9] Purpose of IT

implementation

68 small firms Purpose of computer implementation:

-solve problems in accounting, data processing time,

inventory

-solve organizational problems, record keeping, and

data storage

Systems were also used to contain:

-overall operating costs

-cost associated with time

-inventory costs

-data access costs

-personnel costs

-reporting costs

Expectations of the system were improvements

in efficiency and time-savings

C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269 259

3. Research method

3.1. Sample selection

Using guidelines from the Small Business Admin-

istration, a `small' business was de®ned as one that

employed fewer than 500 employees. This categor-

ization is consistent with the Small Business Admin-

istration (SBA) which de®nes small businesses based

on Standard Industrial Classi®cation (SIC) codes,

most of which employ 500 as the upper boundary.

Firms were randomly selected from a database of

over 1500 organizations, which were located in a large

southwestern metropolitan area. The database repre-

sented ®rms from major industries, including manu-

facturing, defense, oil and gas, agriculture, ®nance,

and not-for-pro®t. It should also be emphasized that

the database contained ®rms of all sizes, including

some Fortune 500 companies with home of®ces

located in this metropolitan area. Appropriate query

construction enabled the researchers to identify rele-

vant ®rms based on size. Thus, the small businesses

selected were not chosen from some restricted data-

base, such as an association of family-owned busi-

nesses.

The database contained the ®rm name, the address,

the name of at least one senior executive, the ®rm size,

and the telephone number. Firms that were branch

of®ces or where it was not possible to contact a senior

executive were excluded. This was deemed appropri-

ate because, during preliminary discussions with other

small business executives, it was noted that branch

of®ces of smaller businesses usually did not engage in

IT purchase and use activities; such decisions were

made by the main of®ce. In addition, it was also

ascertained that, for the most part, senior-level indi-

viduals in smaller organizations usually were respon-

sible for IT decisions.

3.2. Procedures

During a 30-day period, 309 randomly selected

®rms were contacted by telephone. As was stated

previously, the commercial database used for this

research contained the names of at least one senior

executive in each ®rm. We contacted senior executives

(i.e. CEOs, presidents, managers, vice presidents) to

ensure that we would be getting information from

someone in the organization who had the authority to

make decisions regarding IT. The individual contacted

was told that the researchers were from a large south-

western university (the subjects were provided with

the name of the institution) and the purpose of the

project. The researchers ensured the subjects that

con®dentiality and anonymity would be maintained

and that individual responses would be aggregated

and compared with those from other smaller busi-

nesses. Neither ®rm names nor identi®cation of indi-

viduals would be used by anyone other than the

researchers.

The development of the survey instrument (see

Appendix A) was discussed previously. The questions

asked by the researchers were designed to provide for

open-ended responses by the subjects; this can lead to

a much richer treatment of the issues. This type of

research has been used effectively by a number of IS

researchers [8,11,19]. If the individual was unavail-

able at the time he/she was called, note of this was

taken, and the individual was contacted at a later time.

In several instances, messages were left by the

researchers to have the individual contact us back;

this too proved to be effective.

Table 1 (Continued )

Researcher(s) Research focus Subjects Findings/observations/issues

[4] Applications growth Six small manufacturing firms Motivators of growth of systems:

-relative advantage

-competitive pressure

-consultant support

-managerial enthusiasm

Inhibitors of growth:

-inadequate financial resources

-inadequate managerial time

-lack of internal expertise


The researchers found the executives to be gener-

ally cooperative and responsive. Thus, very few ®rms/

individuals refused to participate in the project once

the researchers explained the project and its impor-

tance. In fact, only 35 ®rms refused to participate.

4. Results

Of the 309 ®rms originally contacted, one was

dropped since the ®rm employed more than 500

employees. The ®rms ranged in size from 7 to 400

employees with an average size of 92.3 employees and

a standard deviation of 73.9. The titles of the 308

participants are shown in Table 2. Only those titles,

which appeared 3 times or more, are shown. Thirty-

®ve percent of the respondents were either presidents,

vice presidents, or a chief of®cer while 24% of the

respondents were managers and 15% were MIS direc-

tors. Overall the respondents were senior executives

who were responsible for IT decisions within their

organization.

Table 3 illustrates the types of businesses in which

the respondents were employed. Only those business

types, which occurred 3 times or more, are delineated.

The two industries with the most respondents were

health care and computer software/hardware sales. As

illustrated in Table 3, this study included small busi-

ness executives from a wide variety of industries and

was not limited to a particular industry as other studies

have done [3,4,7,15±17,20,22±25]. However, since the

®rms that participated in this study were not selected

from all regions of the US, it is not possible to say with

certainty that all small businesses are similar to those

we studied. But, since our ®rms were of varying size

and represented a number of diverse industries that are

found throughout the US, there is no apparent reason

to doubt the representativeness of our sample.

The respondents were also asked if they had

acquired new computer hardware or software since

their ®rm started using computers. Ninety-two and

one-half percent of those responding had acquired new

hardware, and 89.9% had acquired new software. Of

those acquiring new hardware, 30.8% had acquired it

to extend the ®rm's range of applications/uses, 24.7%

had acquired it to replace old hardware and 44.5% had

done both. Of those acquiring new software, 15.3%

had acquired it to replace existing software, 35.2% had

acquired it to extend software applications/uses, and

49.5% had done both. In Cragg and King's [4] study of

six ®rms, four had acquired new hardware primarily to

extend their range of applications. Three of the six

Table 2

Titles of executives participating in the study

Title Number

President/Owner/CEO 56

Vice President 49

COO/CFO 3

Director of MIS 47

Controller 10

Manager 73

Administrator 13

LAN Administrator 7

Other 50

Total 308

Table 3

Participating businesses or firms

Industry Number

of firms

Median

size

Range

of size

Accounting 12 26 10±80

Advertising 7 46 20±220

Architecture 8 23 7±120

Automotive 4 85 25±225

Banking 5 168 50±200

Civil engineering 3 30 12±30

Computer Software/hardware/sales 22 48 15±400

Construction 12 90 40±180

Consulting 15 30 8±400

Distribution 5 95 78±130

Education 10 100 35±200

Engineering 17 43 20±200

Environmental services 5 45 25±90

General/electrical contractor 9 65 12±205

Health care 22 95 25±390

Insurance 14 150 24±400

Land surveying 3 25 16±30

Law 12 85 28±400

Manufacturing 18 77 23±210

Non profit 6 55 32±250

Oil & Gas 4 94 35±200

Publishing 3 75 70±250

Real estate 7 90 15±300

Sales/marketing 6 75 40±150

Telecommunication 4 140 31±175

Transportation 3 140 80±200

Wholesale distribution 4 105 95±300

Other 68 80 10±340

Total 308


®rms had acquired new software to totally replace

what they had previously. The other three had acquired

little or no software.

Another question asked if the number of users of

computers in the ®rm had increased since the ®rm ®rst

started using computers. Of those responding, 89.6%

said yes, there were more computer users within their

organization. The new users were then classi®ed as

clerical, managerial, or both. Thirty-nine percent of

the new users were classi®ed as clerical, 20.8% of the

new users were classi®ed as managerial, and 40.2% of

the new users were classi®ed as both. Cragg and King

[4] found the three largest ®rms in their study had

more computer users, which were mostly managers or

professionals.

The respondents were also asked if the number of

functional areas in their business using computers

since the initial use had increased; 89.6% responded

positively. They were then asked to state the number of

new functions and the area of the new function. The

mean number of new functions was 3.6 with a median

of 3 and a mode of 2. Table 4 shows the most common

responses for the number of additional functions for

which the company was using IT. Of those executives

that stated 1, 2 or 4 additional functions, the areas of

usage were the same. There was one difference for

those stating three additional functions, as shown in

Table 4. Three of the six ®rms in the Cragg and King

[4] study were using computers in at least one new

functional area, while two ®rms were using computers

in two new functional areas. Only one ®rm was using

computers in three new functional areas.

Overall, the most commonly stated area for use of

the function was by far accounting, then marketing

and sales, shipping, personnel, production and inven-

tory, administration, and ®nally, ®nance.

Lastly, the respondents were asked, `What is the

single most important thing you've learned about

managing the use of information technology in your

®rm?' Even though the respondents were asked to

state the single most important thing, some gave more

than one response. Responses were given by 257

different individuals resulting in 329 different units

being coded. Content analysis was used in order to

code the responses. Content analysis has been used in

IS research previously. In 1995, Todd et al. [28]

analyzed job advertisements to determine the state

of the job market for systems analysts, programmers,

and IS managers. Jarvenpaa and Ives [13] used content

analysis to analyze letters, which CEOs had written, to

determine the tendency toward IT as a competitive

advantage. One of the premises for their study was that

if IT plays a signi®cant role to the strategy of the

corporation, that signi®cance should be re¯ected in the

letter to the shareholders. By analyzing the IT related

phrases in the letter written by the chairman in the

annual report, they found support for using this data to

give information about IT in the organization. In a

similar fashion, we are analyzing the comments made

by senior executives to summarize collectively what

they have learned about managing IT.

Initially, two raters coded the 329 units creating

their own categories for the responses. Then the raters

came together to compare their coding and reach a

consensus on the placement of each response into a

category. A third rater was then asked to code the

responses using the categories supplied by the pre-

vious raters. This was done in order to insure accuracy

of the categories. The three raters were in 90% agree-

ment. Table 5 shows the different categories as well as

the percentage of responses, which fell into each

category. Additionally, a speci®c example of a

response, which fell into each category, is provided.

The 10 categories (excluding non response) from

Table 5 with the largest percentage responses were

analyzed further to see if the response was different

based on the size of the ®rm. The responses which fell

into the top 10 categories account for 193 of the total

329 units coded (59% of the responses). Table 6 shows

the breakdown for the 10 ìmportant thing' categories,

which occurred the most often and the size of the ®rm.

It is interesting to note that those ®rms which

Table 4

Number of functions and their usage

Number of functions stated Most common usage area Next common usage area Third common usage area

1, 2, or 4 Accounting Marketing Sales

3 Accounting Marketing Shipping


Table 5

Responses to `Most Important Thing' question

Category Percentage of responses Example response from a small business manager

Other 0.120 aE-mail allows efficient use of timeaInitial installment of systemaGoing from proprietary system to open system

Staying current/changing IT 0.112 IT is constantly changing

Training/Education of end users 0.097 Training is key to effective IT use

Get information quickly 0.076 Able to get information more quickly with computers

Accurate data 0.070 Accuracy of data helps reduce mistakes

Non response 0.070 Can't think of anything

Purchasing current systems 0.040 Buy biggest and fastest IT you can afford

Productivity 0.040 Increased productivity

Costs 0.036 Cost effectiveness is most important element

Customer/end user support 0.033 Supply the user's needs

Maintenance/running of system 0.030 Must have full time maintenance and support

Efficiency 0.021 Efficiency for faster feedback

Backups & disaster recovery planning 0.018 Back up your work

Software compatibility/consistency 0.018 Integrated software uses

Ease of use 0.015 Ease of use

IT necessity/importance to firm 0.015 IT is the most important aspect for successful growing companies

Manage people 0.015 Ability to manage people is important

Computers are tools 0.012 The computer is just a tool

Decision making 0.012 Better decisions

Management of IT 0.012 Managing technology correctly

Matching business requirements 0.012 Technology expertise and functional business blend

Networks/networking 0.012 Need for reliable networks

Speed 0.012 Speed is essential

Time 0.012 Time consuming

Communication 0.009 Good communications between functional areas

Competition 0.009 Keeping a step ahead of our competition

Data versus information 0.009 Difference between data and information

Did not use IT 0.009 Did not use IT

Documentation 0.009 Keep good documentation

Knowledge of market/business 0.009 Stay on top of the market

Overcome fear/intimidation 0.009 Don't be intimidated by new hardware or software

Security 0.009 Security of data

Keep information simple 0.006 Keep IT simple

Limited capacity 0.006 Too small, capacity is limited

Organization of records/computers 0.006 Keeping records well organized in the computer

aThree different comments are given as explanation for the other category.

Table 6

Size by Ìmportant Thing'a

1 3 4 8 9 16 17 22 34 35 Total

<101 16 5 24 9 6 17 8 8 19 21 133

101±200 5 6 9 1 0 3 2 1 9 8 44

201±300 1 2 2 0 2 1 1 0 2 1 12

301±400 1 0 1 0 0 0 0 1 1 0 4

Total 23 13 36 10 8 21 11 10 31 30 193

aLegend: 1 � Accurate data; 3 � Purchasing current systems; 4 � Staying current/changing IT; 8 � Costs; 9 � Customer/end user

support; 16 � Get information quickly; 17 � Productivity; 22 �Maintenance/running of system; 34 � Training/education of end user;

35 � Other.


Table 7

Position by Ìmportant Thing'a

Title 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Total

President/Owner/CEO 5 1 1 4 0 1 1 6 4 2 1 1 0 2 2 5 2 1 0 0 0 0 0 1 1 0 3 1 0 0 0 1 0 4 8 58

Vice President 5 0 0 7 0 1 1 1 2 0 1 0 0 1 1 6 2 1 1 1 0 1 2 0 0 2 4 0 1 0 1 0 1 3 6 52

COO/CFO 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 1 3

Director of MIS 3 2 2 9 0 0 0 1 4 1 0 0 0 1 0 3 0 0 0 0 0 3 0 0 0 0 1 0 0 1 0 1 1 6 2 41

Controller 1 1 0 1 1 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 1 0 2 0 0 0 0 0 1 0 0 0 0 3 13

Manager 4 1 3 8 1 1 2 1 0 0 1 0 2 1 3 3 4 1 1 0 2 1 1 0 2 2 7 0 1 1 3 1 0 9 8 75

Administrator 2 0 1 1 0 0 0 1 0 0 0 0 0 0 0 3 1 2 0 0 0 0 0 0 0 0 3 0 0 0 0 2 1 3 0 20

LAN Administrator 0 1 2 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 0 1 1 0 0 0 0 0 0 0 0 0 1 1 1 11

Other 3 0 4 7 1 0 0 2 1 0 0 2 1 0 1 4 2 0 0 1 0 3 1 0 1 0 5 1 1 0 0 1 0 5 9 56

Total 23 6 13 37 3 3 4 12 11 3 4 3 3 5 7 25 13 5 2 3 2 10 5 4 4 4 23 2 3 3 4 6 4 32 38 329

aLegend: 1 � Accurate data; ; 2 � Backups & disaster recovery planning; 3 � Purchasing current systems; 4 � Staying current/changing IT; 5 � Communication; 6 � Competition;

7 � Computers are tools; 8 � Costs; 9 � Customer/end user support; 10 � Data vs. information; 11 � Decision making; 12 � Did not use IT; 13 � Documentation; 14 � Ease of use;

15 � Efficiency; 16 � Get information quickly; 17 � Productivity; 18 � IT necessity/importance to firm; 19 � Keep information simple; 20 � Knowledge of market/business;

21 � Limited capacity; 22 �Maintenance/running of system; 23 �Manage people; 24 �Management of IT; 25 �Matching business requirements; 26 � Networks/networking;

27 � Non response; 28 � Organization of records/computers; 29 � Overcome fear/intimidation; 30 � Security; 31 � Speed; 32 � Software compatibility/consistency; 33 � Time;

34 � Training/education of end user; 35 � Other.

employed 100 or fewer employees gave the majority

of the responses except for the category of `purchase

current systems'. Due to major violation of assump-

tions, a w2 test for independence could not be per-

formed. However, Reynolds [26] suggests that

proportional-reduction-in-error (PRE) logic may be

employed `to avoid the weaknesses based on chi

square' (p. 32). One of the PRE measures is Goodman

and Kruskal's lambda, which indicates how much the

classi®cation error of the important thing would be

reduced by knowing the size of the ®rm. The value of

the lambda was 0.0, which indicates that the classi-

®cation error is not improved by knowing the size of

the ®rm. Therefore, knowing a ®rm's size does not

indicate what important thing learned would apply to

that ®rm.

To be sure that a respondent's position was not

biasing his/her response, we conducted some addi-

tional analyses. Table 7 shows the categorization of all

35 of the important things and the position of the

respondent. Again, Goodman and Kruskal's lambda,

which indicates how much the classi®cation error of

the important thing would be reduced by knowing the

respondent's position, was analyzed. The value of the

lambda was 0.045 with a 95% con®dence interval of

0±0.09. Therefore, the classi®cation error is only

minimally improved by knowing the respondent's

position. This shows strong support for the fact that

all subjects regardless of their position had something

signi®cant to say.

Additionally, the responses of the top 10 ìmportant

things' are shown by industry in Table 8. The indus-

Table 8

Industry by Ìmportant Thing'a

1 3 4 8 9 16 17 22 34 35 Total

Accounting 2 1 2 1 0 0 0 0 2 0 8

Advertising 0 0 4 0 1 1 0 0 0 0 6

Architecture 0 0 2 0 0 1 1 0 3 0 7

Automotive 1 0 1 0 0 0 0 0 0 0 2

Banking 0 0 1 0 0 0 0 0 1 0 2

Civil engineering 0 0 0 0 0 0 0 0 0 1 1

Computer software/hardware/sales 5 1 0 3 1 1 0 2 1 2 16

Construction 0 1 2 0 0 1 0 0 1 0 5

Consulting 1 0 1 1 1 2 0 1 2 0 9

Distribution 0 0 0 1 0 0 2 0 0 0 3

Education 0 0 3 0 0 0 0 1 2 2 8

Engineering 1 1 4 1 0 0 0 0 1 2 10

Environmental services 1 0 0 0 0 0 0 0 1 0 2

General/electrical contractor 0 1 0 1 0 0 1 1 0 2 6

Health Care 1 1 2 0 0 2 1 2 5 1 15

Insurance 1 1 2 0 2 2 1 0 0 1 10

Land surveying 0 0 0 0 0 1 0 0 0 0 1

Law 0 0 3 0 1 1 0 0 0 1 6

Manufacturing 1 1 1 0 1 2 1 0 3 3 13

Non profit 1 1 2 0 0 0 0 1 1 0 6

Oil & gas 0 0 0 0 0 0 0 0 0 2 2

Other 6 3 5 2 1 5 3 2 3 7 37

Publishing 0 0 0 0 0 0 0 0 0 2 2

Real estate 0 0 1 0 0 1 1 0 1 0 4

Sales/marketing 1 0 0 0 0 0 0 0 1 3 5

Telecommunication 0 0 0 0 0 1 0 0 0 1 2

Transportation 0 1 0 0 0 0 0 0 1 0 2

Wholesale distribution 1 0 0 0 0 0 0 0 2 0 3

Total 23 13 36 10 8 21 11 10 31 30 193

a Legend: 1 � Accurate data; 3 � Purchasing current systems; 4 � Staying current/changing IT; 8 � Costs; 9 � Customer/end user

support; 16 � Get information quickly; 17 � Productivity; 22 �Maintenance/running of system; 34 � Training/education of end user;

35 � Other.


tries which had the majority of the respondents stating

one of the top 10 categories of most important thing

were computer software/hardware/sales, health care,

manufacturing, insurance, and engineering. The

Goodman and Kruskal lambda value was 0.204 with

a 95% con®dence interval of 0.12±0.288. This indi-

cates that the classi®cation error is improved by

knowing the respondent's industry.

5. Discussion

This study is one of the ®rst projects, if not the ®rst,

which has examined extensively the expanding uses of

IT in a wide range of industry types within the small

business community. It is strengthened by the fact that

only senior executives in each ®rm, e.g., CEO, Pre-

sident, Manager, and Director of IS, provided infor-

mation about their organizations. That too is important

because it is generally regarded that these are the same

individuals who decide on IT investment decisions, or

at least are the ones who participate in this decision

process.

One of the purposes for conducting this research

was to investigate possible differences between smal-

ler and larger organizations related to acquiring and

using IT. It is apparent that even smaller ®rms experi-

ence similar pressures related to IT investment deci-

sions, as reported above. In itself, this is enlightening

for both IT researchers and small business executives

because it has not been examined extensively before,

nor has it dealt with the topic from the directions

addressed in this research.

The issue related to the growth in the number of

computer users is probably not too surprising. It is,

however, revealing that, compared with the study by

Cragg and King [4], the extent of growth of users

involved with clerical activities has increased in just a

few short years. Executives and IS researchers must

not exclude any groups of users today as they inves-

tigate the many factors that impact ®rms today, such as

system success, competitive advantage, and globali-

zation. In part, this has no doubt occurred because

hardware and software costs have declined dramati-

cally since the so-called PC revolution began in the

mid 1980s. In addition, the expanding range of appli-

cations, their ease of use, and the increased general IT

knowledge by many individuals today would tend to

give rise to large numbers of new users. However,

what is perhaps more important are the reasons for

this growth and the possible implications of it to

the ®rms. Are smaller ®rms experiencing operational

pressures to increase the number of computers and

computer users? Perhaps like their larger counterparts,

competitive pressures, such as the need to increase

or at least maintain customer satisfaction, could be

a driving force behind this growth. The implications

to the smaller ®rm could be dramatic. In general,

smaller ®rms may lack the extensive IT infrastructure

and support structure that larger organizations

have, and they may experience pressures for extensive

training and retraining of older employees. Training

issues could also extend to the population of potential

new hires as well who, because of a lack of a strong

IT support infrastructure in some smaller ®rms,

might be expected to acquire speci®c new skills on

their own prior to entering the job market. It is

probable that the term `computer literate' has esca-

lated to the point that, to be considered literate, a new

hire must have extensive knowledge in products such

as Microsoft Of®ce, ®nancial modeling tools extend-

ing beyond today's spreadsheets, and web page

authoring and development tools to support the fast

increasing pace of electronic commerce. Support for

this may be found in the fact that nearly 45% of the

responding ®rms both replaced older hardware as well

as purchased new hardware to add to the ®rm's

portfolio of uses. At the same time, nearly 50% of

the respondents had replaced and enhanced software

as well, and more than 40% of the organizations

experienced growth in both clerical and managerial

users.

Correspondingly, smaller ®rms could also investi-

gate the newer forms of IT training, such as general

types of computer-based training (CBT) or even CBT

that is more intelligent, such as products that contain

expert-like capabilities, to guide the trainee. The

attention to additional training provided by smaller

®rms could also act as a marketing mechanism to help

them to attract new hires as well. The ®ndings of this

study relate to the training of end users and the

importance of the end users being able to use systems

successfully. Montazemi [16] too found that end user

literacy generated higher user satisfaction, and the

training of end users de®nitely plays an important

role in improving end user literacy.


The other major question addressed in this research

dealt with the `. . . single most important thing you've

learned about managing the use of information tech-

nology in your ®rm.' The category with the highest

percentage of responses was `staying current/chan-

ging IT,' with more than 11% of the respondents citing

it. This is an issue that confronts large businesses

daily, and it is apparent that even executives in smaller

®rms are experiencing the same dif®culties. Perhaps,

however, the problem as it pertains to small businesses

is exacerbated by the fact that many of these organiza-

tions lack much of the IT infrastructure, such as

emerging technologies groups or so-called technolo-

gical strategists who can identify new and forthcoming

technologies and suggest ways for their implementa-

tion. Such limitations obviously can impact senior

executives who must contend with competitive pres-

sures, improving or expanding customer service, as

well as with internally expressed needs and wants.

The category that tied for third place in the `most

important thing I've learned' rankings is, perhaps, just

as signi®cant as the one which ®nished in ®rst place.

This category is the `non response' category; it is

characterized by the common response provided by

the respondents: Ì can't think of anything.' On the one

hand, it is evident that smaller organizations are

experiencing many IT pressures, such as staying

current, the need for accuracy in their data, obtaining

information quickly, and even having to deal with

being more productive. These responses are quite

similar to those discussed in the literature dealing

with large organizations. However, if a small business

executive responds that he/she can't think of anything

related to issues or problems regarding managing its

IT investments, it should be a cause for alarm.

Are these executives just following the crowd,

purchasing what their employees say they want or

need? Do small business executives experience the so-

called àirline magazine syndrome' that is often asso-

ciated with larger organizations? Or perhaps some

smaller ®rms have entered into various forms of out-

sourcing arrangements or have engaged consultants to

help them in their IT efforts, with the result that they

simply `can't think of anything' related to managing

IT?

The additional analyses that examined the relation-

ships between ®rm sizes, industries, and the top 10

most important things learned are interesting. As

stated previously, knowing a ®rm's size does not

indicate what important things learned would be

applicable to that ®rm; knowing the ®rm's industry,

however, does tell us what lessons learned might be

important for a ®rm. Regarding size, consultants

working with smaller businesses, as well as IS

researchers, might ®nd it more dif®cult to focus their

attention on speci®c issues for given ®rms. Said

differently, regardless of size, small businesses are

confronted with a diversity of issues today. In addition,

this ®nding might also indicate some maturation

perspective regarding IT lessons learned among small

businesses of the sizes examined in this study. Regard-

ing a ®rm's industry, business executives, consultants,

and IS researchers might ®nd it easier, for example, to

develop IS plans more closely integrated with a ®rm's

business plan, knowing lessons learned ahead of time.

Further research into these lessons learned and indus-

tries is warranted.

This research has focused on a heterogeneous sam-

ple of small businesses and identi®ed the expanding

and changing role the IT serves in these ®rms. Our

concluding remarks have led to a number of questions

as well, many listed above. These questions should

serve as an invitation to IT researchers to delve more

deeply into the smaller business community. Inter

disciplinary studies, such as those involving small

business centers and entrepreneurial institutes found

in some colleges and universities could be included.

More theoretically based research should be applied to

the small business community. For example, attitudi-

nal research may help provide answers to some of our

questions, with Ajzen's [2] Theory of Planned Beha-

vior and Davis' Technology Acceptance Model [6]

serving as appropriate theories. Harrison et al. [12]

research pertaining to competitive advantage was a

positive step in this regard.

Appendix

IT Questions from Survey Instrument

1. Do you make decisions about obtaining and

using computers and information technology in

your business?

2. What computer-based system or use of compu-

terized information that you do not currently have


would you like to have to help you compete better?

3a. Since your firm first started using computers,

has it acquired new computer hardware?

3b. If yes, has this acquisition typically been to

extend your firm's range of applications/uses, or

has it been to replace old hardware?


has it acquired new computer software?

4b. If yes, has this acquisition typically been to

replace old software, or has it been to expand the

range of applications in use?


have the number of functional areas using

computers since the initial use increased?

5b. If yes, how many new areas?

5c. Which functions?


have the number of users of computers increased?

6b. If yes, are the new users more oriented toward

clerical or managerial?

7. What's the single most important thing you've

learned about managing the use of information

technology in your firm?

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Cynthia K. Riemenschneider is an

Assistant Professor in the Computer

Information Systems and Quantitative

Analysis Department at the University of

Arkansas. She received her Ph.D. in

Management Information Systems from

the University of Texas at Arlington.

Her research publications have appeared

in Information Systems Research, Jour-

nal of Computer Information Systems,

and Electronic Markets: The International Journal of Electronic

Commerce & Business Media. Dr. Riemenschneider's research

interests include the use of information technology in small

businesses and the adoption of innovative technology.

Peter P. Mykytyn Jr. is a Professor in

the Department of Information Systems

and Management Sciences at the Uni-

versity of Texas at Arlington. He ob-

ta in ed h i s Ph .D. in Compute r

Information Systems from Arizona State

University. His current research interests

include strategic aspects of information

technology, and legal issues impacting

information systems and organizations,

with special emphasis involving intellectual property. He has

participated actively in national and regional conferences, and in

June 1978 he concluded a visiting professorship position at Agder

College in Kristiansand, Norway. He is currently Associate Dean

for Research and Graduate Studies in the College of Business

Administration at the University of Texas at Arlington.


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