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nnovate, learn, leverage relationships and implant vision.The success of a strategy is linked to proper development and building of coreand distinctive competencies which enable a firm to create a competitive advantage.Information Technology (IT) and Information Systems (IS) play a significant
role in supporting this goal. It is often argued that effective utilization of
IT supports or even shapes the strategies of many organizations (Henderson andVenkatraman, 1999; Sabherwal and King, 1991). This study is focused on thestrategic utilization of IT resources. This refers to the use of IT resources suchas hardware and software to provide an organization with a competitive advantage.Porter’s (1980, 1985) view of IT utilization is therefore considered in thisstudy. IT utilization may concentrate on the company’s internal operations or
on its relationship with outside forces. It may be aimed at internal, competitive,or business portfolio levels of the company’s strategy, and may be caused bytechnological changes or by organizational issues (Porter, 1980,1985; Sabherwaland King, 1991).Most of the studies conducted on strategic utilization of IT resources have,however, concentrated on large-sized organizations. Little is still known aboutstrategic utilization of IT resources in the small-to-medium sized firms (SMEs).According to Hodge and Miller (1997) research in this area is sadly lacking in
South Africa.
1.1. The Aim of the Study
SMEs form the vast majority of businesses in South Africa and in many other
countries. They are increasingly looked at by governments and economists as a
mechanism by which national growth is created (English and Henault, 1995;
Harper, 1984; Parliament of the Republic of South Africa, 1995). They have, for
instance, shown a remarkable capacity to absorb labour – about 90 percent of
formal businesses in South Africa are thought to be small, micro or medium,
employing approximately 15m people (DTI, 1997; Parliament of the Republic of
South Africa, 1995). It is also argued that SMEs’ contribution to development
can be enhanced through intensive and effective utilization of IT.
International Small Business Journal 22(2)
132While Sabherwal and King (1991) attempted to develop a theory of strategic
use of information resources, their work mainly focused on large-sized organizations.
Recognition of strategic IT/IS utilization issues faced by SMEs is perhaps
more important than those facing big businesses since SMEs drive the economies
of many nations. In addition, previous research suggests that there is a relationship
between organizational size and computer success characteristics (DeLone,
1988; Ein-Dor and Segar, 1978). This implies that findings based on IT/IS utilization
in the large-firm environment do not necessarily have to be generalized to
small firms. It is therefore imperative to examine the situation in SMEs, and
advise SME managers with results taken from these organizations.
The current study extends previous research on strategic IT utilization by
investigating such utilization in SMEs. It seeks to answer the following research
questions:
1. To what extent do SMEs in South Africa utilize their IT resources strategically?
2. What are the factors that inhibit such utilization?
The article discusses the theoretical background to the study, and then provides
original data on which the analysis and conclusions are drawn.
2. Theor