The impact of Information and Communication Technology capability on the competitive advantage of small businesses

Abstract

The aim of this paper is to establish how Information and Communication Technology (ICT) capability has no effect on competitive advantage through the entrepreneurial orientation and organizational agility of Indonesian SMEs in the apparel retail sector. The study is based on resources that cannot be directly converted into the competitive advantage of companies but must instead be subjected to an entrepreneurial process and offer new insights into the use of ICT as a valuable corporate resource. The paper is based on a quantitative approach using a population comprising apparel retailers from traditional markets in Jakarta, Indonesia. The sample was obtained using random sampling. The survey was conducted among 462 small businesses across five traditional apparel markets managed by PD. Pasar Jaya. The data were processed using Structural Equation Modeling?Partial Least Squares. The results show that ICT capability has no significant effect on competitive advantage, although it does have a significant effect on entrepreneurial orientation and organizational agility. Organizational agility and entrepreneurial orientation have a significant effect on competitive advantage, thus indicating that ICT capability in small businesses cannot be directly converted into a competitive advantage. The finding of the research is that ICT capability is able to create competitive advantage in small businesses but only when present in conjunction with entrepreneurial orientation and organizational agility.