Segmentation of small firms based on information technology usage and absorptive capabilities

Abstract

Small and medium size firms (SMEs) are recognized fundamental to regional economies as they represent the majority of the business base, and make large contributions to employment and gross domestic product. However, the rate of integration of SMEs into e-commerce and e-business puts them in a disadvantaged position with respect to larger organizations. The slight utilization of Information Technologies and Systems (IT/IS) among SMEs has been explained in terms of scarce IT infrastructure, insufficient managerial and governmental support and limited technical competences. The lack of knowledge about how to effectively use IT/IS particularly refrains SMEs to advance in the implementation of e-business. This work uses a multi-case approach to explore how the acquisition, diffusion and utilization of knowledge about IT/IS is related to the usage of existing technologies and the development of internal technical capabilities. Fourteen small retailing and service firms located in a large city in Mexico were studied. The multivariate statistical analysis of the collected data shows that those SMEs that make full use of available IT/IS resources have better absorptive capabilities. This means, they are able to acquire knowledge from business partners and external consultants, and share and apply this knowledge to improve IT/IS usage.