Investigating investment decisions of SMEs in information technology sector: an application of BWM-ISM approach

Abstract

This paper aims to identify the important risk factors considered by Small and Medium Enterprises (SMEs) in lucrative investment options and also prioritizes and ranks risk factors based on their respective impacts on investment. In addition, we propose a level-wise hierarchical structure model and its interrelationships based on driving power and dependence. A hybrid four-phase methodology was used to address the research objectives. In the initial phase of the literature review, expert opinions and “Delphi” techniques were used to identify and finalize critical risk factors that impact SMEs’ investment opportunities. The Best Worst Method (BWM) was applied to rank to prioritize, and study the relationship with the help of the Interpretive Structural Modelling (ISM), and the MICMAC was used to cluster the critical issues based on their driving power and dependence. Furthermore, a more exhaustive analysis can be conducted on the earnings and disposition of SMEs’ income in lucrative investment options. The study finds that financial uncertainty, security in investment, and earnings are the most critical risk factors influencing SMEs’ investment decisions in the IT sector, with high return expectations and fear acting as key driving forces shaping these decisions.