Journal of Enterprise Information Management

International case studies: To what extent is ICT infused into the operations of SMEs?
Dieter Fink, Georg Disterer,
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JEIM
19,6 International case studies
To what extent is ICT infused into the
operations of SMEs?
608 Dieter Fink
Edith Cowan University, Churchlands, Australia, and
Georg Disterer
Hannover University of Applied Sciences and Arts, Hannover, Germany

Abstract
Purpose – The paper seeks to overcome previous research limitations by examining both macro
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(industry, country) and micro (functions, enterprise) level phenomena within the information
communication technologies (ICT) use of small and medium-sized enterprises (SMEs). Australia and
Germany were chosen because both recognise the importance of SMEs.
Design/methodology/approach – The study adopted an interpretivist philosophy and a
qualitative case study method that enables gathering data which are rich in detail. Semi-structured,
on-site interviews were carried out in eight firms of various classifications.
Findings – The study found that, for micro enterprises, ICT is only emerging in the form of systems
that have the potential to facilitate the interactions with the outside. Small enterprises rely heavily on
personal interactions, which they supplement with the use of ICT. In medium enterprises, ICT is more
extensively used in interactions, both internally and with the environment. The differences between
Australian and German firms do not significantly affect the extent to which ICT is infused into
observed SMEs.
Research limitations/implications – The study used the interpretivist research paradigm which
is based on the assumption that reality is socially constructed. Findings indicated the need for
increased organisational competencies and greater scope to use ICT to facilitate interaction with the
external environment, especially customers and suppliers and forming alliances.
Originality/value – The case studies provided rich stories of ICT infusion in the important SME
sector on an international scale and produced context-aware institutionalised expectations that can
help other SMEs understand ICT use. They can use the findings as benchmarks against which to
measure their own endeavours.
Keywords Small to medium-sized enterprises, Communication technologies, User studies, Case studies,
Australia, Germany
Paper type Case study

Journal of Enterprise Information
Management
Vol. 19 No. 6, 2006
pp. 608-624
q Emerald Group Publishing Limited
1741-0398
DOI 10.1108/17410390610708490
Introduction
Much attention has been given over the years to the successful adoption and use of
information and communication technologies (ICT) by organisations. It is commonly
accepted that ICT provides many potential benefits to organisations so as to make
them more efficient, effective and competitive. However, unlike extensive research into
ICT practices in large organisation, the small and medium-sized enterprise (SME)
sector has been under-researched. Recently Cragg (2002, p. 269) concluded:
The contributions made to this research by the participating SMEs in Australia and Germany
are gratefully acknowledged.
 Overall, our understanding of IT management in small firms is weak. International
Yet, the importance of the SME sector in the economy is well established. The OECD case studies
(2004, p. 32) stated:
These firms [SMEs] typically account for more than 90 per cent of all firms outside the
agriculture sector, constitute a major source of employment and generate significant domestic
and export earnings. 609
The nature of “ICT in small business” research has varied over time and attracted
criticism mainly because it resulted in artificially constrained set of contextual factors.
For example, the quest to discover key success factors was criticised as an
oversimplification of complex issues and circumstances (Brock, 2000, referenced in
Martin and Matlay, 2001) while others restricted themselves to specific domains such
as the role of ICT in knowledge sharing (Levy et al., 2003) or in the internal context of
SMEs (Caldeira and Ward, 2003). In this paper we seek to overcome previous
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limitations by examining both macro (industry, country) and micro (functions,

enterprise) level phenomena within the ICT use of SMEs.
Our study included case studies from Australia and Germany reflecting micro,
small and medium-sized enterprises across a number of industries. The two countries
were chosen because both economies recognise the importance of SMEs yet there are
differences. For example, Australia is less manufacturing intensive than Germany. The
classifications of SMEs reflect international norms as will be shown later. The findings
of the research should provide insights into the extent to which ICT is integral to small
business. It is hoped that the case studies will provide rich stories for other SMEs to
learn from and to use as benchmarks to evaluate their own approaches to ICT usage.

SMEs and ICT use

The topic of small business computing has received attention since the 1980s when the
emergence of the mini computer and personal computer provided these firms with the
opportunity to introduce low cost systems. However, their system management is
different to large organisations who can afford to hire specialists and managers to
maximise the use of their information system resources. As Cragg and King (1993,
p. 57) observed in the early 1990s, there was “a picture of growth and stagnation in
small-firm computing. While many firms had experienced growth in the number and
type of IT applications, there had been little change with respect to the management of
IT in small firms”.
The 1990s saw attention being given to ICT in small business by researchers who
focused on determining the factors that encouraged the adoption and usage of ICT in
small firms. They did this by carrying out applied research, namely, identifying factors
from statistical analysis of data captured via questionnaires or interviews. These
studies typically identified three to five factors; a cross section of studies and their
findings is shown in Table I.
Among the objectives of such studies was the desire to establish key factors that
would guide the small business to be more successful in its adoption and use of ICT.
For example, the UK Government’s Department of Trade and Industry used earlier
findings to develop an adoption ladder for small firms (Martin and Matlay, 2001). But
these attempts at generalisation were criticised for a number of reasons. First, for their
oversimplification of complex issues and circumstances (Brock, 2000, referenced in
 JEIM Martin and Matlay, 2001). Second, research underpinning attempts at generalisation
19,6 may have been too deeply rooted in local circumstances (Fletcher, 2000, referenced in
Martin and Matlay, 2001).
The above criticisms encouraged more recent researchers to adopt a greater
theoretical approach. Cragg (2002) applied McKinsey & Co’s Seven Ss, as described by
Pascale and Athos (1982), to examine the mature stage of the growth of ICT in small
610 business. These criteria included strategy (IT alignment, continuous improvement,
building partnerships with stakeholders), structure (shared IT leadership, involvement
of management team), systems (IT planning, system selection, external IT
consultants), staff (senior management, IT expertise), style (regular meetings), skills
(hands-on IT skills), and shared values (customer service quality, continuous
improvement).
Levy et al. (2003) applied the game-theoretic approach to establish the role of
information systems in SME’s knowledge sharing. This includes two dimensions,
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namely synergy, “the extend to which cooperation yields additional value beyond the
sum of parties’ individual knowledge” (Levy et al., 2003, p. 4), and leverage, “the
potential of the “knowledge receiver” to increase its value by exploiting the shared
knowledge” (Levy et al., 2003, p. 4). Synergy and leverage were found to be important
in making SMEs “receptive to exchange knowledge, and flexible and responsive
enough to gain competitive advantage” (Levy et al., 2003, p. 16).
Caldeira and Ward (2003) applied resource-based theory which focuses on the
internal context of an organisation to the use of IT/IS in manufacturing SMEs. This
comprises financial resources, human resources, management perspectives and
attitudes, IS/IT competences, organisational structure, power relationships, and user
attitudes. Caldeira and Ward (2003, p. 127) concluded that “the key differentiators for
long-term successful IS/IT deployment reside within the internal context of an
organisation, based on organisational competences”.
In 2003 Lamb and Kling argued for the use of social actor theory when examining
ICT use because this approach provides an enhancement of the old notion of a
computer user. The social actor approach builds on socio-technical (Mumford, 1995,
2000), social constructionist (Giddens, 1984; Goffman, 1974) and institutionalists
(DiMaggio and Powell, 1991; Scott, 1987, 1995) approaches. Social actors are not
primarily users of ICT (as thought previously); rather their everyday interactions are
infused with ICT and hence it is context that shapes ICT use. This approach is suited to
SMEs because their people are not primarily users of ICT but have to fulfil many roles
due to the shortage of human resources. They see themselves as business professionals

Thong and Yap (1995) Iacovou et al. (1995) Cragg and King (1993) Yap et al. (1992)

Organisation size Organisation readiness Relative advantage Consultant effectiveness

CEO attitude to IT External pressure Competitive pressure Vendor support
CEO innovativeness Perceived benefits Consultant support IS experience
CEO knowledge of IT Managerial enthusiasm Financial resource
Table I. CEO support
Early studies into factors User participation
determining ICT
adoption in SMEs Source: Adopted from Fink (1998)
 working with colleagues, customers, suppliers, etc. and use computers during those International
interactions. This means that the adoption and use of ICT in SMEs will be determined case studies
by how well ICT supports activities that are being carried out.
The social actor approach is a context-centred research approach and hence suited
to take into account the diverse nature of SMEs, an aspect ignored in earlier studies. It
focuses on the following research constructs (Lamb and Kling, 2003):
.
Interactions. Social actors see themselves as organisational members, working 611
with others, and using ICT in support of these interactions. Information and
resources are mobilised as people engage with affiliated organisations.
.
Environment. ICT use needs to recognise the environment, which is defined as
locations that circumscribe organisational action.
.
Affiliations. People together with their computers comprise social networks;
these exist within the organisation, but also apply to industry, national and
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international networks.
.
Identities. These are defined as avowed presentations of the self and ascribed
profiles of organisation members as individuals or collective entities.

Figure 1 shows the above constructs in a diagrammatic form in the context of an SME.
The environment exists as locations outside the SME and impacts on its actions.
Affiliations on the other hand exist inside and outside the SME and members of the
SME interact with these affiliations. Members themselves have identities, either
collectively or as individuals.

Figure 1.
Research constructs in the
context of an SME
 JEIM The above approach aligns well with the underlying theories reviewed above.
19,6 Interactions with others is similar to Cragg’s (2002) strategy (building partnerships
with stakeholders) and Caldeira and Ward’s (2003) information system/information
technology (IS/IT) competences. Environment includes Cragg’s (2002) systems
construct which recognises the relevance of external IT consultants. Affiliations aligns
with Cragg’s (2002) structure (shared IT leadership, involvement of management
612 team), Caldeira and Ward’s (2003) dimensions of organisational structure and power
relationships, and Levy et al.’s (2003) leverage and synergy (cooperation among
individual). Identities have similarities with Cragg’s (2002) staff, style and skills, and
Caldeira and Ward’s (2003) user attitudes. The similarities are summarised in Table II.

Case studies
There is no worldwide accepted definition of a SME; instead a number of definitions are
used in various countries. In Australia, where this research originated, the Australian
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Bureau of Standards (2001) provides a classification according to the number of

employees. Thus a micro enterprise employs one to five, a small enterprise six to 20 and a
medium one less than 200. In Germany, small enterprises employ up to nine staff,
medium ones between ten and 499, and large enterprises 500 or more (IFM, 2004).
As seen above, the upper limit of 200 is not universally accepted and can be as high
as 500. The latter seems to be common as confirmed by Zegveld (1991, p. IX) who
observed that “In most countries, firm with fewer than five hundred employees is
considered an SME”. For the purposes of this research, enterprises have been classified
as micro (one to five employees), small (six to 20 employees) and medium (above 20 but
less than 500 employees).
The study used case studies from two countries, namely Australia and Germany
because both are developed countries in which small businesses play an important role.
In Australia, the Department of Industry, Tourism and Resources (DITR)
acknowledges the worth of small business on their web site as follows. “A healthy
small business sector is vital to the Australian economy, accounting for 70 per cent of
jobs growth over the past decade and generating an estimated 30 per cent of
Australia’s economic growth” (DITR, 2005). In Germany, the Federal Ministry of
Economics and Labour states that SMEs are generating 50 per cent of the gross
domestic product (GDP) and are responsible for 70 per cent of all jobs (FMEL, 2005).

Research methodology
The study adopted an interpretivist philosophy, which assumes that the world is
largely what people perceive it to be (Cavana et al., 2001) and that access to reality is

Caldeira and Ward

Cragg (2002) (2003) Levy et al. (2003) Lamb and Kling (2003)

Strategy IS/IT competences Interactions

Systems Environment
Structure Organisational Synergy, leverage Affiliations
Table II. structure, power
Theoretical dimensions in relationships
ICT usage Staff, style, skills User attitudes Identities
 only attainable through social constructions such as language, consciousness and International
shared meanings (Myers, 1997). This qualitative method enables the researcher to
maximise the likelihood of gathering data rich in detail (Crabtree and Miller, 1992). It
case studies
aligns well with the case study approach, defined as an “empirical inquiry that
investigates a contemporary phenomenon within its real-life context, especially when
the boundaries between phenomenon and context are not clearly evident” (Yin, 1994,
p. 13). The focus in case study research is on in-depth understanding of a phenomenon 613
and its context (Darke et al., 1998).
In general, “the sample size in qualitative research is relatively small but consists of
‘information-rich’ cases” (Holloway, 1997, p. 142). The sample size itself does not
determine the significance of the research (Crabtree and Miller, 1992). The “validity,
meaningfulness and insights generated from qualitative inquiry have more to do with
the information richness of the cases selected and the analytical capabilities of the
researcher than with sample size” (Patton, 1990, p. 185). Crabtree and Miller (1992),
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however, advocate a sample size of six to eight subjects for homogenous samples,
which is the case of SMEs.
Semi-structured, on-site interviews were carried out and questions centred on the
social actor research constructs, described earlier. This enabled perspectives about the
firm and its ICT use to evolve during the interviews as they became relevant. It was
decided to interview eight firms of various SME classifications on a convenience
sample basis, namely, firms that the researchers were able to obtain contact with.
Detailed interview notes were made which were subsequently coded and thematically
analysed. Data reduction through site summaries enabled various comparisons
outlined in the paper. Because of the Social Actor approach, interviews were arranged
with high-ranking management in the organisations. A summary of participating
organisations is provided in Table III.

“IT Services”
This is a micro business, very recently formed, and currently headed by two directors.
Staff will be employed as growth requires. The firm has been set up in government
supported incubator premises. Its objective is to provide IT supported services to
clients, initially in the form of a “help desk” and later as a more comprehensive “service
desk”. This means that the firm will support clients with technical as well as high level
services such as IT planning. The firm’s brochure promotes the concept of “IT is a
Business Service”. Support will be offered through online technology, i.e. connecting
electronically to clients and their computers to solve their hardware, software and
systems problems or provide advice:
.
Interactions. Perceive the potential client as aged 16 (enterprising ideas) to 60
(retiree with capital). Developing customer relationship management (CRM)
system. Use of CRM system to maximise customer service.
.
Environment. Initially focus on locality with plans to spread client base wider.
Seeking to increase contacts with decision makers in the industry. Difficulty of
establishing in a new competitive market requires personal contact, networking,
etc.
.
Affiliations. Strong affiliations with “Scottish Enterprise” and local small
business sector. Some disappointment in government support provided.
Government should play a larger role in the establishment of the SME sector.
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19,6

614
JEIM

Table III.
Participating
organisations
Alias Interviewees Country Nature of business Type Employees

IT Services 2 managing directors Australia IT help and services Micro 2

Financial Planning Managing director Australia Financial planning and advice to clients Micro 5
IT Software A Managing director, IT product manager Germany Software development and consulting Small 15
IT Software B Chief joint managing director Australia IT development/project management services Small 18
Printing Company A Managing director Germany Offset printing of import/export forms Medium 34
Printing Company B Managing director Australia Digital and offset printing Medium 38
Processing Company EDP manager, marketing manager Germany Heat treatment of metal components Medium 230
Manufacturing Company Vice president, finance and administration Germany Manufacturing of ship transmission gears Medium 350
 .
Identities. Seeking staff with IT and customer service skills. Will work inside for International
a year before allowed to meet customers. Overseas exchanges are planned. Pay is
performance based.
case studies

“Financial Planning”
This professional services firm is led by a managing director who is the authorised
representative and mentor to the other two financial planners/advisors, aged in their 615
30s. Support is provided by two office staff and there are about 3,000 clients. The firm
is a member of a larger financial investment services group who holds the required
financial licences. IT consists of an intranet, to provide access to the client management
system (CMS), and broadband outside connections to access product and client
information stored with fund managers. Hardware is rented to avoid making the
wrong choice and software is provided by fund managers and the group. Laptops are
used to support presentations to clients. The firm has a web site but no web presence;
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for example the firm does not respond to incoming e-mail requesting financial advice:
.
Interactions. Intranet is heavily used to access client database. The internet is
used to access client databases with fund managers. Limited use of laptops.
Client and product databases are essential to service clients.
.
Environment. Industry is heavily regulated by government and industry bodies.
Business is gained mainly through referrals and personal networking. Web site
has limited role in servicing and increasing client base.
.
Affiliations. Membership of large group provides practice management software
and professional development. Strong reliance on outside IT facilities.
.
Identities. Planners look after their client base as well as raising the profile of the
firm. Three to five planners is the ideal; next appointment to be a woman. Size
and composition of firm is important for future success.

“IT Software A”
This small enterprise currently employs ten to 15 IT staff and offers consulting
services (e.g. Java developments, performance optimisation, project management) and
software reselling and support. Most revenue is generated by providing services, with
a small number of staff embedded with client organisations. The aim is to balance
services income and licence income to smooth out business cycles. Use is made of an
in-house Linux Server, Windows Server and an IBM AS400 to test and evaluate
software. Staff access a client database to record and retrieve project experiences,
contact details, etc. This is used to produce 400 postal mailouts a month. Use is made of
a generic web mail address and advertising in trade publications rather than
marketing through the web site:
.
Interactions. Interactions between and with staff are kept personal (telephone,
meetings). Personal contact supports empathy and richness of communications.
This includes staff who work on client premises.
.
Environment. Focus is on few large, local clients, mainly banking and insurance.
Difficult to attract new clients because of a culture of loyalty. E-mail not
acceptable to clients who prefer traditional and focused mail.
.
Affiliations. Continuous co-operation with ex partner. Varying degrees of
relationship with US and UK software providers. Industry affiliations are not
 JEIM important; membership to the Chamber of Commerce is useful. Alliances needed
19,6 so that firm is competitive for tackling bigger projects.
.
Identities. Titles are descriptive and not status oriented. IT expertise is valued
although business experience is required. Wants to be recognised for IT
expertise but realises need for business experience.
616 “IT Software B”
This small enterprise of 18 employees provides IT development and project
management for intranets, browsers, portals to mainly large organisations and
government departments. It had experienced big growth in late 1990s with the
emergence of web, the year 2K problem and the trend to IT outsoucing in government,
employing up to 60 staff. The slow down in 2000/2001 was caused by the dotcom crash
and change in government policy towards IT insourcing. This required the firm to seek
financial backing from a larger firm with some complementary IT activity. Boom and
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bust times affect size, nature of employment and financial viability:

.
Interactions. Heavy e-mail communications and collaboration between project
members. Much work done from home. Clients use e-mail to get quick response
and to obtain an audit trail. IT communications and collaboration has become the
norm for the young generation.
.
Environment. Clients swing between IT outsourcing and insourcing. The ideal is
to grow with the client through business cycles. Spam is controlled through a
spam waste bucket.
.
Affiliations. Alliances sought to provide financial support and synergies (e.g.
product vendors). Organisation is seen as “accelerator” and partner as “brake”.
Alliances essential for business diversity and continuity.
.
Identities. Executives come from marketing background. Regard themselves as
“bilingual” in marketing and IT. Business and IT skills should be merged.

“Printing Company A”
This medium-sized printer operates in a niche market in that it prints mainly forms
used by German exporters and importers. These forms use special paper so that
changes cannot be made to the data entered on the forms. It has two printing locations
and employs about 34 staff and four sales representatives located across Germany.
There are a total of 35,000 customers of which 15,000-18,000 order once a year in a total
of 22,000 invoices/year. Printing is done in offset mode. The firm has operated
profitable in a niche market, which is being seriously challenged:
.
Interactions. Customer orders are received mainly by telephone and fax because
of concern for viruses and spam. Inter-organisational supply systems are
emerging. Representatives access centralised customer database. There is
pressure from larger customers to adopt an integrated inter-organisational
supply system.
.
Environment. Industry is being re-engineered to electronic import (2004) and
export (2007) forms. Will have significant effect challenging the existence of the
firm. Number of niche printers is shrinking.
 .
Affiliations. Heavy use of outside IT support for internal administration and International
production systems. Software vendor provides packages which are increasingly case studies
adopted by other similar type of companies.
.
Identities. With change from hared copy to electronic forms, printing skills will
be replaced by business and entrepreneurial skills. Internal expertise will have to
change.
617
“Printing Company B”
This medium-sized printer operates in two equal sized, but far from each other,
locations and employs about 38 staff. The managing director is located in one location
because of personal preference and focuses on two key activities – sales and
production. There are three sales representatives and an IT person. Printing uses
advanced digital technology (Xerox) as well as traditional offset. The market is
regarded as competitive in terms of service and price. The focus is on customer service
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to obtain repeat business but each job is different. It is a competitive industry requiring
long working hours (4 a.m.-10 p.m.). ICT is in the form of a central hub, providing
production support and internet access. The accounting system operates in a
stand-alone mode:
.
Interactions. A total of 50 per cent of orders received by e-mail. Web site has
“request for quote” facility. MD does not encourage staff internet access or
working from home. High use of electronic communications (e-mail, web) to
speed up response and delivery.
.
Environment. Highly competitive industry, with key value of customer service
and maintaining personal contact. Reliance on repeat business build up by
reputation and quality of service.
.
Affiliations. Use of outside firm for design work. Electronic exchanges between
production locations. Membership to business associations. Reliance on being
competitive and service oriented rather than on alliances with other firms.
.
Identities. No computer on MD’s desk sends deliberate message – to seek
business is more important than being in front of the computer. IT person is a
“techie”. IT’s potential strategic role is not being actively considered.

“Processing Company”
The organisation’s business is heat treatment of component parts, typically those of
motor car manufactures. The industry is highly energy intensive. Of the 13 company
centres/locations, situated on a west/eat axis in Germany, nine are production centres.
Currently there are about 230 employees of which 70 per cent are currently employed in
processing. However, the administration percentage is growing. Customers number
approximately 3,500. Data processing consists of 160 computers in total,
approximately 80 at office desks, approximately 80 at processing machines. Since
the major customers are large organisations (e.g. VW, Daimler Chrysler), the aim is to
have business-to-business (B2B) systems in place for data exchanges that are of a
technical nature (e.g. process specifications) and of a commercial nature (e.g. orders).
They have for a SME a somewhat sophisticated materials requirement planning (MRP)
system and shop floor control:
 JEIM .
Interactions. Moving to B2B systems and MRP integration with larger
19,6 customers. E-mail for smaller customers and internal management
communications. Centralised approach to data processing. Emergence of
sophisticated inter-organisational system (IOS) with larger customers.
.
Environment. Because of high energy needs, work is increasingly being
outsourced. Industry requires strong environmental management controls.
618 Moving to maximise transparency to forestall public environmental criticisms.
.
Affiliations. Little sharing with other firms except for larger orders where dual
sourcing is required. A European Union (EU) project is examining establishing a
network of logistics providers. With greater industry concentration, more
cooperation will emerge.
.
Identities. Older workforce is more comfortable with a paper-based system (seen
as a generation problem). Large customers require higher levels of business
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professionalism in presentations and conduct. Engineering culture (quality,

reliability) is to be supplemented with business culture (e.g. internet usage,
promotional material).
“Manufacturing Company”
The organisation operates in an engineering industry for which Germany is well
known, namely the manufacturing of transmission gear for ships and subsequent
servicing and maintenance. All manufacturing takes place in Germany and is
customised according to the demands of the customer. Manufacturing of a product can
take up to two years. The firm has a long history and is a major employer in the local
town. There are about 320 employees in the local town, in a total of 350 employees. It
has 380 customers worldwide. Sales are between 500-600 gears a year. A total of 90 per
cent of sales are to countries outside Germany. Since control of the manufacturing life
cycle is critical, IT supports project management and computer-aided design (CAD)
and MRP applications:
.
Interactions. Strong usage of e-mail internally and for fine tuning of projects with
outside; but fax is preferred to transfer offers, contracts, manufacturing
specifications and invoices. Well balanced use of e-mail and fax technologies to
maintain customer service.
.
Environment. Engineering capability and quality is essential. Limited number of
competitors (three to four). Strong certification required for warranty and
insurance. Success is determined by the engineering quality of the product and
service in a worldwide market.
.
Affiliations. Some frustration with lack of suitable enterprise resource planning
(ERP) being offered by vendors for SMEs. Affiliations with ship builders
possible. Requires support for ERP as well as strategic alliances with ship
builders.
.
Identities. Long history and stability has resulted in high staff retention and
loyalty. Ethos is excellence in design and development. Some staleness of image
is being addressed in the forthcoming anniversary celebrations.

Discussion of findings
The findings of the case studies are summarised in Table IV, followed by a discussion.
 International
Dimensions Micro Small Medium
case studies
Interactions Interactions are with Interactions with other staffInteractions are with
clients; ICT resources are and clients; use of ICT customers and other
starting to be mobilised supplemented with organisations; extensive
personal contacts use of diverse ICT
Environment Oriented towards local Oriented towards local Part of a changing, 619
market; little ICT utilisation market; little ICT utilisation
increasingly competitive
market; future success
requires ICT utilisation
Affiliations Strong alliances with Strong alliances with other Reliance on outside ICT
outside groups partly ICT businesses but not ICT support; potential for ICT
facilitated; reliance on facilitated facilitated business
outside ICT support networks
Identities Present themselves as Present themselves as ICT Staff being replaced by
Table IV.
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professional (non-ICT) and business individual marketing and

individuals entrepreneurial identities Summary of findings

Micro enterprises
There was reasonable consistency in the manner in which ICT was used in the two
micro firms studied. Firm members are heavily involved with interacting with their
clients because this will determine the continued existence of the firm. However, the
use of ICT, for example in developing a CRM system, is only emerging and not fully in
place. In both cases firm members are occupied with developing personal contacts
within the environment and have not reached the stage were ICT can be usefully
employed, for example in establishing computer-based networks.
The slow ICT developments are reflected in the reliance on support obtained from
the environment. In the case of “IT services”, ICT expertise and guidance are gained
from affiliations with larger entities, such as “Scottish Enterprise” and the government
sector. In the second case study, good affiliations exist within the broader group which
provides benefits in terms of business and external ICT support.
The focus on clients and interactions with the outside is reflected in the individuals
working within the firms. They see themselves primarily as business professionals.
Even the “IT services” firm recognises that IT skills have to be complemented with
business skills to ensure organisational effectiveness.

Small enterprises
The interactions in the small enterprises indicated that most of them are done
internally and to a lesser extent with clients. While ICT has the potential to play a
major role in communications, its use is ameliorated by strong considerations for the
human element. The environment in which they operate poses challenges, such as the
difficulty of attracting new clients, and the use of ICT does not appear to assist in this
regard.
Similarly, alliances are based on business grounds and are not facilitated by ICT.
The purpose of affiliations is to seek benefits of co-operation, regarded as essential for
business growth and continuity. This has resulted in identities within both firms to
emphasise business behaviour and skills in addition to ICT ones. As “IT software B”
 JEIM stated, they prefer their staff to be “bilingual”, i.e. possess both business and ICT
19,6 expertise.

Medium enterprises
Interactions in the case of medium enterprises are extensively supported by the use of
ICT and are mainly applied to connect with customers. The types of ICT used include
620 simple technologies such as fax and e-mail but more sophisticated approaches, such as
inter-organisational system, are emerging. The latter are intended to link internal
systems (e.g. MRP) with external ones (i.e. those of large customers).
The pressure to become more efficient and effective through the use of ICT is
brought about by the competitiveness and high customer expectations of the market
place. However, ICT use has to be supplemented by business behaviour such as
maintaining personal contact and creating positive images. The focus of affiliations
currently is on ICT vendors in order to improve internal IT systems, but affiliations
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can be expanded by creating ICT facilitated networks.

Medium-sized enterprises rely heavily on their staff’s ability to maintain existing
and create new business in a rapidly changing market place. This requires them to
attract employees with greater business expertise than in the past. A good example is
that of “Processing company” where the existing engineering culture is progressively
supplemented with a stronger business culture.

International comparisons
Both Australia (Fink, 1998) and Germany (Burton, 1999, referenced in Duan et al., 2002)
are regarded as developed countries who are leaders in the use of modern IT by the
SME sector. Hence the primary purpose of research was not to study differences that
may exist. Therefore those that can be observed will have to be subject to further
investigation to establish the underlying reasons for them. An international
comparison did not apply do micro businesses because both cases were Australian.
However, observations can be made for SMEs.
For the small enterprises, as expected commonalities can be observed as to the work
they carry out. However, their approaches differ in some ways. For the German small
enterprise, personal relationships with clients were emphasised such as embedding
staff within client organisations and using communications media that supported
empathy and richness. By contrast the Australian small business relied on technology
as illustrated by the heavy use of e-mail. Among the German clients a degree of loyalty
to their current vendor was observed while in Australia the market seems more
dynamic as seen by the change in client strategy towards insourcing. Not surprisingly,
the German firm had established strong international alliances with firms in the UK
and USA, possibly due to history and proximity. Alliances were deemed important for
the Australian firm, but were restricted to the local environment.
Among the medium-sized firms, a comparison can be made between the two
printing firms. The other two were based in Germany. The nature of the work differs in
that the German firm is a specialist printer while the Australian firm is of more of a
generalist. However, the issues facing them are similar. Both printing firms had some
reluctance to use technology to engage with customers: the German firm preferred to
receive customer orders by telephone and fax and the Australian firm used basic e-mail
and web site technology. However, pressure is emerging for the German firm from
 larger customers to provide an inter-organisational system. Both are in an industry International
showing strong competitive characteristics and both rely on outside IT support for case studies
their internal systems.

Research comparisons
This study examined both macro (industry, country) and micro (functions, enterprise)
level phenomena within the ICT use of SMEs by using a contextual-centred approach. 621
It has therefore ameliorated the weaknesses to some extent those of previous studies
which carried out simplistic quantitative research and applied artificially constrained
sets of contextual factors. Rather than identifying key success factors through
questionnaire surveys, as was the case with the 1990s studies discussed, a qualitative
interpretive approach was undertaken. The study’s context is broader compared to
previous theory-based studies reviewed (e.g. Levy et al., 2003; Caldeira and Ward, 2003)
who were narrow in their scope of research. As postulated by Lamb and Kling (2003),
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the approach chosen provided systematic research of highly complex, highly

contextualised, dimension-by-dimension perspectives of organisational ICT use. The
approach therefore produced more context-aware institutionalised explanations
(“better stories”) that can help other SMEs understand ICT use.
The finding of a slow uptake of ICT, particularly in micro and small businesses,
points to the need for increased organisational competencies. This aligns with Caldeira
and Ward’s (2003) application of resource-based theory and their finding that
long-term IS/IT success resides within the internal context. More specifically SMEs
should follow the following advice of the OECD (2001, p. 13):
Investing in human capital is good for growth, especially in the context of rapid technology
change: for ICT to be used effectively and the benefits of new technology to materialise, the
right skills and competencies must be in place.
It is recommended that future research be directed at this challenge.

Conclusions, limitations and recommendations

The differences between Australian and German firms, as discussed above, do not
significantly affect the extent to which ICT is infused into observed SMEs. There were
some differences among small enterprises but these are of a behavioural nature and
therefore could be due to social, political or economic factors and should be explored
further. However, this did not prevent broad conclusions to be drawn in line with the
objectives of the study.
The study found that ICT infusion into business activities, along the dimensions
used in this research, is low for micro and small enterprises but higher for medium
enterprises. For micro enterprises, ICT is only emerging and in the form of systems
that have the potential to facilitate interactions with the outside (e.g. CRM). Small
enterprises rely heavily on personal interactions which they supplement with the use of
ICT. However, ICT infusion does not go beyond organisational boundaries since there
is no ICT used to facilitate links with the environment or affiliations. In medium
enterprises, ICT is more extensively used in interactions, both internally and with the
environment. This should bring about greater efficiencies and effectiveness benefits
which will be required by them to remain successful in a rapidly changing and
competitive marketplace.
 JEIM Limitations of the study are as follows. The study used the interpretivist research
19,6 paradigm, which is based on the assumption that reality is socially constructed
(Cavana et al., 2001). As a consequence, “the interpretivist researcher is interested in
understanding the lived experiences of human beings and identifies what is
meaningful to individuals” (Cavana et al., 2001, p. 9). Although this allows for the
understanding of the constructs being investigated, it can be criticised for being
622 subjective. Furthermore, the sample of enterprises included as case studies was based
on convenience access to those businesses and not purely random.
Finally, the emphasis on the user in social actor theory coupled with the finding of a
slow uptake of ICT, particularly in micro and small businesses, enables key
recommendations to be made. First, there exists the need for increased organisational
competencies. This means that members of SMEs have to develop their ICT skills in
order to maximise its exploitation in order to gain business advantages. Technical
skills, however, need to be associated with business skills. Second, there is greater
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scope to use ICT to facilitate interaction with the external environment, especially
customers and suppliers and forming alliances. Today’s firms not only compete with
each but also cooperate, and ICT can play an important role in these respects. This
strategic view should be adopted by SME management.

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Corresponding author
Dieter Fink can be contacted at: d.fink@ecu.edu.au
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