Owner’s support, IT sophistication and IT Adoption in indonesian manufacturing SMEs

Abstract

The importance of technology, especially information technology (IT), to business is widely accepted. But, different from large enterprises, small and medium-sized enterprises (SMEs)– with their limited resources –adopt IT slowly.The literature on technology adoption suggests that organizational readiness is one of many factors that determine the adoption of technology. This paper relates IT adoption in Indonesian B-to-B manufacturing SMEs with their IT readiness, which is represented by the owner’s support and the IT sophistication they have. In this paper, the variety of IT adoption by SMEs is explored using a business process approach. Owner’s support is represented byIT knowledge of the owners and resource allocation by the owners. IT sophistication includes the management level that is supported by IT, IT skills and IT innovativeness of the SMEs’ staffs. Three propositions were formulated and explored using data that were collected from 320 SMEs. Using cluster analysis, these SMEs were grouped into five types of IT adoption based on three business sides(supplier, internal and customer): early adoption, internal focus adoption, customer focus adoption, internal-customer focus adoption and balanced adoption. The results suggest that a wider IT adoption requires a greater support from the owner and a higher IT sophistication.