Directory UMM :Data Elmu:jurnal:I:Information and Management:Vol37.Issue5.Aug2000:
Information & Management 37 (2000) 257±269
What small business executives have learned about
managing information technology
Cynthia K. Riemenschneidera,*, Peter P. Mykytyn Jr.b,1
a
Computer Information Systems and Quantitative Analysis Department, University of Arkansas, Fayetteville, AR 72701, USA
Department of Information Systems and Management Sciences, University of Texas at Arlington, Arlington, TX 76019, USA
b
Received 23 November 1998; received in revised form 2 May 1999; accepted 26 September 1999
Abstract
In this study, 308 small business executives were interviewed and asked to identify the single most important thing they had
learned about managing the use of information technology (IT) in their ®rms. The most common response was staying current/
keeping up with changing IT. The training/education of end users, the ability to get information quickly, and accurate data
were also given as things the executives had learned. The small business executives interviewed were from a variety of
industries including the computer industry, the health care industry, engineering, consulting, manufacturing, insurance,
accounting, and law. Ninety-two percent of the executives had acquired new hardware and 89.9% had acquired new software
for their ®rms since their ®rms had ®rst started using computers. In approximately 90% of the ®rms, the number of users of
computers had increased and the majority of the new users were classi®ed as both managerial and clerical. Again,
approximately 90% of the ®rms had increased the number of functions for which computers were used within their ®rms with
applications in accounting having the greatest increase. # 2000 Elsevier Science B.V. All rights reserved.
Keywords: Small business; Information technology management; Computer usage
1. Introduction
Information technology (IT) has formed an integral
part of the operational and competitive environment of
large organizations for many years. IT perspectives
have evolved from mainframe environments of the
1960s and 1970s, to the small, so-called minicomputer
era of the latter 1970s and early 1980s, to the PC era of
today. And even the PC phenomenon has been trans*
Corresponding author. Tel.: 1-501-575-6120;
fax: 1-501-575-4168.
E-mail addresses: [email protected]
(C.K. Riemenschneider), [email protected] (P.P. Mykytyn Jr.)
1
Tel.:1-817-272-3537; fax: 1-817-272-5799.
formed from the standalone models of the mid 1980s
to the integrated, network-based systems found today.
Indeed, the continuing evolution in hardware and
software technologies has brought about a spiraling
decline in costs for all organizations, such that even
the smallest of business organizations can afford to
purchase needed IT. Therein, however, lies part of the
problem.
The majority of IT research has been done with
large ®rms [1,14]. And although hardware and software costs are signi®cantly lower today, thereby making it possible for organizations of any size to purchase
IT, the research ®ndings, i.e., problems, solutions,
bene®ts, etc., that relate to the larger organization
may not necessarily apply to smaller ®rms. Small
0378-7206/00/$ ± see front matter # 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 3 7 8 - 7 2 0 6 ( 9 9 ) 0 0 0 5 2 - X
258
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
businesses employ 54% of the private working population, and they contribute 52% of all the sales in the
US [27]. Admittedly, small businesses play a vital role
in the economy of the US, and therefore, warrant more
study tied to IT than has been conducted previously.
Many smaller organizations contain many of the
same functions and activities as their larger counterparts, albeit on a lesser scale. These include sales and
marketing, manufacturing, accounting, etc. It should
be of interest to information systems (IS) researchers
and to the business executives themselves to learn
more about how these ®rms have acquired IT, or perhaps
upgraded their systems, as well as to gain a deeper
understanding of many important problems and managerial issues that have evolved. It should also lead to
additional research that could provide for comparisons
with larger organizations; similarities, if any, as well
as markedly different areas could be identi®ed.
The overall purpose of this research is to assess how
IT is used in smaller organizations. This examination
includes the identi®cation of the different functional
areas of ®rms. Additionally, the results of what small
business executives say they have learned about managing IT are presented. In the next section of this paper,
we discuss some of the previous research dealing with
smaller businesses, drawing attention to the fact that it
does not provide either IS researchers or business
executives with signi®cant information about IT uses.
Following that, the research method is presented. The
paper concludes with a discussion and suggestions for
additional research.
industry speci®c. A number of studies, such as those
by Raymond [22], DeLone [7], Montazemi [16],
Cronan [5], Evans [9], and Cragg and King [4] present
some interesting perspectives. Table 1 reviews each
of these studies, identifying, for the most part, the
number and type of subjects, the research focus, and
the ®ndings/observations/issues. In general, however,
the following points about post 1988 research are
noted:
2. Small business research
The instrument used for this research, attached as
Appendix A, contained seven questions related to IT
usage. Most of the questions were based on the
previous study of Cragg and King [4], which also
allows for certain comparisons between that research
and the current study. Questions dealt with: acquisition of new hardware/software, usage of the new
hardware/software to extend the range of applications,
number of functional areas of computer use, and the
number of users. Other researchers have also examined a number of these issues as well. Regarding the
number of functional areas using computers, Raymond and Magnenat-Thalmann [25], Nickell and
Seado [18], and Farhoomand and Hrycyk [10] found
accounting to be the most common application for
small businesses (See Table 1).
Prior to 1988, IT research relevant to small businesses fell into three primary categories: studies which
gave advice for purchasing computer hardware and
software, studies which reported on computer usage,
and studies which reported on the use of computers to
make managerial decisions. Inasmuch as the technology has changed dramatically since then, i.e., one
study [21] examined the nature and selection of
minicomputers, and the software and applications in
use then were predominately accounting, inventory
control, and word processing, there seems to be little
to be gained by examining the research in detail.
Since 1988, much of the IT-related research that
has examined small business perspectives has been
Accounting and financial activities account for a
large portion of IT usage by small businesses.
It is important that businesses examine the nature
and content of training programs directed at managers in small businesses.
Top management support and involvement,
including that from CEOs, is crucial if IT implementations are to succeed.
Consistent with the findings of most IT-related
research, end user involvement is crucial if user
satisfaction is to be achieved. In turn, user satisfaction can lead to system success and, ultimately,
to successful business efforts.
As stated above, most of the prior cited research
since 1988 is industry speci®c; in addition, some of the
research is dated. Therefore, this supports our research
which includes a heterogeneous sample of businesses
from different industries and which examines IT usage
in dynamic situations and environments.
2.1. Questionnaire items
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
259
Table 1
Summary of prior research
Researcher(s)
Research focus
Subjects
Findings/observations/issues
[25]
Computer usage
Small and medium sized
manufacturing firms
[10]
Computer usage
Small businesses
[18]
Computer usage
Small businesses
[22]
Computer training
[7]
IT effectiveness
34 small manufacturing
facilities
98 small manufacturing
firms
[16]
User satisfaction
83 small firms (47 service
industry and 36 manufacturing
industry)
[5]
Computer usage
71 small professional
organizations (i.e.
doctors, lawyers,
accountants)
[9]
Purpose of IT
implementation
68 small firms
Applications which use computers:
-accounts receivable
-payroll
-accounts payable
-sales analysis
Highest percentage of application of
computers in small businesses: accounting
Software most or second most important
consideration in computerization
Accounting most common application which used
computers
Computer training did positively influence small
business managers
Effectiveness linked to:
-CEO involvement in computerization
-on-site computers
-coordinated implementation of planning and
controls
Generated higher user satisfaction:
-end-user participation in systems design
-end-user literacy
-formal information requirements analysis
-decentralized organizations
-number of analysts in the firm
Four variables significant in computer usage:
-net income
-number of vendors considered before acquiring
the system
-total assets
-estimated savings from the computer system
Success of the computer system was dependent on:
-a higher investment in maintenance
-employee involvement with the new system
-higher estimates of cost savings
Purpose of computer implementation:
-solve problems in accounting, data processing time,
inventory
-solve organizational problems, record keeping, and
data storage
Systems were also used to contain:
-overall operating costs
-cost associated with time
-inventory costs
-data access costs
-personnel costs
-reporting costs
Expectations of the system were improvements
in efficiency and time-savings
260
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
Table 1 (Continued )
Researcher(s)
Research focus
Subjects
Findings/observations/issues
[4]
Applications growth
Six small manufacturing firms
Motivators of growth of systems:
-relative advantage
-competitive pressure
-consultant support
-managerial enthusiasm
Inhibitors of growth:
-inadequate financial resources
-inadequate managerial time
-lack of internal expertise
3. Research method
viduals in smaller organizations usually were responsible for IT decisions.
3.1. Sample selection
3.2. Procedures
Using guidelines from the Small Business Administration, a `small' business was de®ned as one that
employed fewer than 500 employees. This categorization is consistent with the Small Business Administration (SBA) which de®nes small businesses based
on Standard Industrial Classi®cation (SIC) codes,
most of which employ 500 as the upper boundary.
Firms were randomly selected from a database of
over 1500 organizations, which were located in a large
southwestern metropolitan area. The database represented ®rms from major industries, including manufacturing, defense, oil and gas, agriculture, ®nance,
and not-for-pro®t. It should also be emphasized that
the database contained ®rms of all sizes, including
some Fortune 500 companies with home of®ces
located in this metropolitan area. Appropriate query
construction enabled the researchers to identify relevant ®rms based on size. Thus, the small businesses
selected were not chosen from some restricted database, such as an association of family-owned businesses.
The database contained the ®rm name, the address,
the name of at least one senior executive, the ®rm size,
and the telephone number. Firms that were branch
of®ces or where it was not possible to contact a senior
executive were excluded. This was deemed appropriate because, during preliminary discussions with other
small business executives, it was noted that branch
of®ces of smaller businesses usually did not engage in
IT purchase and use activities; such decisions were
made by the main of®ce. In addition, it was also
ascertained that, for the most part, senior-level indi-
During a 30-day period, 309 randomly selected
®rms were contacted by telephone. As was stated
previously, the commercial database used for this
research contained the names of at least one senior
executive in each ®rm. We contacted senior executives
(i.e. CEOs, presidents, managers, vice presidents) to
ensure that we would be getting information from
someone in the organization who had the authority to
make decisions regarding IT. The individual contacted
was told that the researchers were from a large southwestern university (the subjects were provided with
the name of the institution) and the purpose of the
project. The researchers ensured the subjects that
con®dentiality and anonymity would be maintained
and that individual responses would be aggregated
and compared with those from other smaller businesses. Neither ®rm names nor identi®cation of individuals would be used by anyone other than the
researchers.
The development of the survey instrument (see
Appendix A) was discussed previously. The questions
asked by the researchers were designed to provide for
open-ended responses by the subjects; this can lead to
a much richer treatment of the issues. This type of
research has been used effectively by a number of IS
researchers [8,11,19]. If the individual was unavailable at the time he/she was called, note of this was
taken, and the individual was contacted at a later time.
In several instances, messages were left by the
researchers to have the individual contact us back;
this too proved to be effective.
261
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
The researchers found the executives to be generally cooperative and responsive. Thus, very few ®rms/
individuals refused to participate in the project once
the researchers explained the project and its importance. In fact, only 35 ®rms refused to participate.
4. Results
Of the 309 ®rms originally contacted, one was
dropped since the ®rm employed more than 500
employees. The ®rms ranged in size from 7 to 400
employees with an average size of 92.3 employees and
a standard deviation of 73.9. The titles of the 308
participants are shown in Table 2. Only those titles,
which appeared 3 times or more, are shown. Thirty®ve percent of the respondents were either presidents,
vice presidents, or a chief of®cer while 24% of the
respondents were managers and 15% were MIS directors. Overall the respondents were senior executives
who were responsible for IT decisions within their
organization.
Table 3 illustrates the types of businesses in which
the respondents were employed. Only those business
types, which occurred 3 times or more, are delineated.
The two industries with the most respondents were
health care and computer software/hardware sales. As
illustrated in Table 3, this study included small business executives from a wide variety of industries and
was not limited to a particular industry as other studies
have done [3,4,7,15±17,20,22±25]. However, since the
®rms that participated in this study were not selected
from all regions of the US, it is not possible to say with
certainty that all small businesses are similar to those
we studied. But, since our ®rms were of varying size
Table 2
Titles of executives participating in the study
Title
Number
President/Owner/CEO
Vice President
COO/CFO
Director of MIS
Controller
Manager
Administrator
LAN Administrator
Other
Total
56
49
3
47
10
73
13
7
50
308
Table 3
Participating businesses or firms
Industry
Number
of firms
Accounting
12
Advertising
7
Architecture
8
Automotive
4
Banking
5
Civil engineering
3
Computer Software/hardware/sales 22
Construction
12
Consulting
15
Distribution
5
Education
10
Engineering
17
Environmental services
5
General/electrical contractor
9
Health care
22
Insurance
14
Land surveying
3
Law
12
Manufacturing
18
Non profit
6
Oil & Gas
4
Publishing
3
Real estate
7
Sales/marketing
6
Telecommunication
4
Transportation
3
Wholesale distribution
4
Other
68
Total
308
Median
size
Range
of size
26
46
23
85
168
30
48
90
30
95
100
43
45
65
95
150
25
85
77
55
94
75
90
75
140
140
105
80
10±80
20±220
7±120
25±225
50±200
12±30
15±400
40±180
8±400
78±130
35±200
20±200
25±90
12±205
25±390
24±400
16±30
28±400
23±210
32±250
35±200
70±250
15±300
40±150
31±175
80±200
95±300
10±340
and represented a number of diverse industries that are
found throughout the US, there is no apparent reason
to doubt the representativeness of our sample.
The respondents were also asked if they had
acquired new computer hardware or software since
their ®rm started using computers. Ninety-two and
one-half percent of those responding had acquired new
hardware, and 89.9% had acquired new software. Of
those acquiring new hardware, 30.8% had acquired it
to extend the ®rm's range of applications/uses, 24.7%
had acquired it to replace old hardware and 44.5% had
done both. Of those acquiring new software, 15.3%
had acquired it to replace existing software, 35.2% had
acquired it to extend software applications/uses, and
49.5% had done both. In Cragg and King's [4] study of
six ®rms, four had acquired new hardware primarily to
extend their range of applications. Three of the six
262
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
®rms had acquired new software to totally replace
what they had previously. The other three had acquired
little or no software.
Another question asked if the number of users of
computers in the ®rm had increased since the ®rm ®rst
started using computers. Of those responding, 89.6%
said yes, there were more computer users within their
organization. The new users were then classi®ed as
clerical, managerial, or both. Thirty-nine percent of
the new users were classi®ed as clerical, 20.8% of the
new users were classi®ed as managerial, and 40.2% of
the new users were classi®ed as both. Cragg and King
[4] found the three largest ®rms in their study had
more computer users, which were mostly managers or
professionals.
The respondents were also asked if the number of
functional areas in their business using computers
since the initial use had increased; 89.6% responded
positively. They were then asked to state the number of
new functions and the area of the new function. The
mean number of new functions was 3.6 with a median
of 3 and a mode of 2. Table 4 shows the most common
responses for the number of additional functions for
which the company was using IT. Of those executives
that stated 1, 2 or 4 additional functions, the areas of
usage were the same. There was one difference for
those stating three additional functions, as shown in
Table 4. Three of the six ®rms in the Cragg and King
[4] study were using computers in at least one new
functional area, while two ®rms were using computers
in two new functional areas. Only one ®rm was using
computers in three new functional areas.
Overall, the most commonly stated area for use of
the function was by far accounting, then marketing
and sales, shipping, personnel, production and inventory, administration, and ®nally, ®nance.
Lastly, the respondents were asked, `What is the
single most important thing you've learned about
managing the use of information technology in your
®rm?' Even though the respondents were asked to
state the single most important thing, some gave more
than one response. Responses were given by 257
different individuals resulting in 329 different units
being coded. Content analysis was used in order to
code the responses. Content analysis has been used in
IS research previously. In 1995, Todd et al. [28]
analyzed job advertisements to determine the state
of the job market for systems analysts, programmers,
and IS managers. Jarvenpaa and Ives [13] used content
analysis to analyze letters, which CEOs had written, to
determine the tendency toward IT as a competitive
advantage. One of the premises for their study was that
if IT plays a signi®cant role to the strategy of the
corporation, that signi®cance should be re¯ected in the
letter to the shareholders. By analyzing the IT related
phrases in the letter written by the chairman in the
annual report, they found support for using this data to
give information about IT in the organization. In a
similar fashion, we are analyzing the comments made
by senior executives to summarize collectively what
they have learned about managing IT.
Initially, two raters coded the 329 units creating
their own categories for the responses. Then the raters
came together to compare their coding and reach a
consensus on the placement of each response into a
category. A third rater was then asked to code the
responses using the categories supplied by the previous raters. This was done in order to insure accuracy
of the categories. The three raters were in 90% agreement. Table 5 shows the different categories as well as
the percentage of responses, which fell into each
category. Additionally, a speci®c example of a
response, which fell into each category, is provided.
The 10 categories (excluding non response) from
Table 5 with the largest percentage responses were
analyzed further to see if the response was different
based on the size of the ®rm. The responses which fell
into the top 10 categories account for 193 of the total
329 units coded (59% of the responses). Table 6 shows
the breakdown for the 10 `important thing' categories,
which occurred the most often and the size of the ®rm.
It is interesting to note that those ®rms which
Table 4
Number of functions and their usage
Number of functions stated
Most common usage area
Next common usage area
Third common usage area
1, 2, or 4
3
Accounting
Accounting
Marketing
Marketing
Sales
Shipping
263
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
Table 5
Responses to `Most Important Thing' question
Category
Percentage of responses
Example response from a small business manager
Other
0.120
a
E-mail allows efficient use of time
Initial installment of system
a
Going from proprietary system to open system
IT is constantly changing
Training is key to effective IT use
Able to get information more quickly with computers
Accuracy of data helps reduce mistakes
Can't think of anything
Buy biggest and fastest IT you can afford
Increased productivity
Cost effectiveness is most important element
Supply the user's needs
Must have full time maintenance and support
Efficiency for faster feedback
Back up your work
Integrated software uses
Ease of use
IT is the most important aspect for successful growing companies
Ability to manage people is important
The computer is just a tool
Better decisions
Managing technology correctly
Technology expertise and functional business blend
Need for reliable networks
Speed is essential
Time consuming
Good communications between functional areas
Keeping a step ahead of our competition
Difference between data and information
Did not use IT
Keep good documentation
Stay on top of the market
Don't be intimidated by new hardware or software
Security of data
Keep IT simple
Too small, capacity is limited
Keeping records well organized in the computer
a
Staying current/changing IT
Training/Education of end users
Get information quickly
Accurate data
Non response
Purchasing current systems
Productivity
Costs
Customer/end user support
Maintenance/running of system
Efficiency
Backups & disaster recovery planning
Software compatibility/consistency
Ease of use
IT necessity/importance to firm
Manage people
Computers are tools
Decision making
Management of IT
Matching business requirements
Networks/networking
Speed
Time
Communication
Competition
Data versus information
Did not use IT
Documentation
Knowledge of market/business
Overcome fear/intimidation
Security
Keep information simple
Limited capacity
Organization of records/computers
0.112
0.097
0.076
0.070
0.070
0.040
0.040
0.036
0.033
0.030
0.021
0.018
0.018
0.015
0.015
0.015
0.012
0.012
0.012
0.012
0.012
0.012
0.012
0.009
0.009
0.009
0.009
0.009
0.009
0.009
0.009
0.006
0.006
0.006
a
Three different comments are given as explanation for the other category.
Table 6
Size by `Important Thing'a
What small business executives have learned about
managing information technology
Cynthia K. Riemenschneidera,*, Peter P. Mykytyn Jr.b,1
a
Computer Information Systems and Quantitative Analysis Department, University of Arkansas, Fayetteville, AR 72701, USA
Department of Information Systems and Management Sciences, University of Texas at Arlington, Arlington, TX 76019, USA
b
Received 23 November 1998; received in revised form 2 May 1999; accepted 26 September 1999
Abstract
In this study, 308 small business executives were interviewed and asked to identify the single most important thing they had
learned about managing the use of information technology (IT) in their ®rms. The most common response was staying current/
keeping up with changing IT. The training/education of end users, the ability to get information quickly, and accurate data
were also given as things the executives had learned. The small business executives interviewed were from a variety of
industries including the computer industry, the health care industry, engineering, consulting, manufacturing, insurance,
accounting, and law. Ninety-two percent of the executives had acquired new hardware and 89.9% had acquired new software
for their ®rms since their ®rms had ®rst started using computers. In approximately 90% of the ®rms, the number of users of
computers had increased and the majority of the new users were classi®ed as both managerial and clerical. Again,
approximately 90% of the ®rms had increased the number of functions for which computers were used within their ®rms with
applications in accounting having the greatest increase. # 2000 Elsevier Science B.V. All rights reserved.
Keywords: Small business; Information technology management; Computer usage
1. Introduction
Information technology (IT) has formed an integral
part of the operational and competitive environment of
large organizations for many years. IT perspectives
have evolved from mainframe environments of the
1960s and 1970s, to the small, so-called minicomputer
era of the latter 1970s and early 1980s, to the PC era of
today. And even the PC phenomenon has been trans*
Corresponding author. Tel.: 1-501-575-6120;
fax: 1-501-575-4168.
E-mail addresses: [email protected]
(C.K. Riemenschneider), [email protected] (P.P. Mykytyn Jr.)
1
Tel.:1-817-272-3537; fax: 1-817-272-5799.
formed from the standalone models of the mid 1980s
to the integrated, network-based systems found today.
Indeed, the continuing evolution in hardware and
software technologies has brought about a spiraling
decline in costs for all organizations, such that even
the smallest of business organizations can afford to
purchase needed IT. Therein, however, lies part of the
problem.
The majority of IT research has been done with
large ®rms [1,14]. And although hardware and software costs are signi®cantly lower today, thereby making it possible for organizations of any size to purchase
IT, the research ®ndings, i.e., problems, solutions,
bene®ts, etc., that relate to the larger organization
may not necessarily apply to smaller ®rms. Small
0378-7206/00/$ ± see front matter # 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 3 7 8 - 7 2 0 6 ( 9 9 ) 0 0 0 5 2 - X
258
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
businesses employ 54% of the private working population, and they contribute 52% of all the sales in the
US [27]. Admittedly, small businesses play a vital role
in the economy of the US, and therefore, warrant more
study tied to IT than has been conducted previously.
Many smaller organizations contain many of the
same functions and activities as their larger counterparts, albeit on a lesser scale. These include sales and
marketing, manufacturing, accounting, etc. It should
be of interest to information systems (IS) researchers
and to the business executives themselves to learn
more about how these ®rms have acquired IT, or perhaps
upgraded their systems, as well as to gain a deeper
understanding of many important problems and managerial issues that have evolved. It should also lead to
additional research that could provide for comparisons
with larger organizations; similarities, if any, as well
as markedly different areas could be identi®ed.
The overall purpose of this research is to assess how
IT is used in smaller organizations. This examination
includes the identi®cation of the different functional
areas of ®rms. Additionally, the results of what small
business executives say they have learned about managing IT are presented. In the next section of this paper,
we discuss some of the previous research dealing with
smaller businesses, drawing attention to the fact that it
does not provide either IS researchers or business
executives with signi®cant information about IT uses.
Following that, the research method is presented. The
paper concludes with a discussion and suggestions for
additional research.
industry speci®c. A number of studies, such as those
by Raymond [22], DeLone [7], Montazemi [16],
Cronan [5], Evans [9], and Cragg and King [4] present
some interesting perspectives. Table 1 reviews each
of these studies, identifying, for the most part, the
number and type of subjects, the research focus, and
the ®ndings/observations/issues. In general, however,
the following points about post 1988 research are
noted:
2. Small business research
The instrument used for this research, attached as
Appendix A, contained seven questions related to IT
usage. Most of the questions were based on the
previous study of Cragg and King [4], which also
allows for certain comparisons between that research
and the current study. Questions dealt with: acquisition of new hardware/software, usage of the new
hardware/software to extend the range of applications,
number of functional areas of computer use, and the
number of users. Other researchers have also examined a number of these issues as well. Regarding the
number of functional areas using computers, Raymond and Magnenat-Thalmann [25], Nickell and
Seado [18], and Farhoomand and Hrycyk [10] found
accounting to be the most common application for
small businesses (See Table 1).
Prior to 1988, IT research relevant to small businesses fell into three primary categories: studies which
gave advice for purchasing computer hardware and
software, studies which reported on computer usage,
and studies which reported on the use of computers to
make managerial decisions. Inasmuch as the technology has changed dramatically since then, i.e., one
study [21] examined the nature and selection of
minicomputers, and the software and applications in
use then were predominately accounting, inventory
control, and word processing, there seems to be little
to be gained by examining the research in detail.
Since 1988, much of the IT-related research that
has examined small business perspectives has been
Accounting and financial activities account for a
large portion of IT usage by small businesses.
It is important that businesses examine the nature
and content of training programs directed at managers in small businesses.
Top management support and involvement,
including that from CEOs, is crucial if IT implementations are to succeed.
Consistent with the findings of most IT-related
research, end user involvement is crucial if user
satisfaction is to be achieved. In turn, user satisfaction can lead to system success and, ultimately,
to successful business efforts.
As stated above, most of the prior cited research
since 1988 is industry speci®c; in addition, some of the
research is dated. Therefore, this supports our research
which includes a heterogeneous sample of businesses
from different industries and which examines IT usage
in dynamic situations and environments.
2.1. Questionnaire items
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
259
Table 1
Summary of prior research
Researcher(s)
Research focus
Subjects
Findings/observations/issues
[25]
Computer usage
Small and medium sized
manufacturing firms
[10]
Computer usage
Small businesses
[18]
Computer usage
Small businesses
[22]
Computer training
[7]
IT effectiveness
34 small manufacturing
facilities
98 small manufacturing
firms
[16]
User satisfaction
83 small firms (47 service
industry and 36 manufacturing
industry)
[5]
Computer usage
71 small professional
organizations (i.e.
doctors, lawyers,
accountants)
[9]
Purpose of IT
implementation
68 small firms
Applications which use computers:
-accounts receivable
-payroll
-accounts payable
-sales analysis
Highest percentage of application of
computers in small businesses: accounting
Software most or second most important
consideration in computerization
Accounting most common application which used
computers
Computer training did positively influence small
business managers
Effectiveness linked to:
-CEO involvement in computerization
-on-site computers
-coordinated implementation of planning and
controls
Generated higher user satisfaction:
-end-user participation in systems design
-end-user literacy
-formal information requirements analysis
-decentralized organizations
-number of analysts in the firm
Four variables significant in computer usage:
-net income
-number of vendors considered before acquiring
the system
-total assets
-estimated savings from the computer system
Success of the computer system was dependent on:
-a higher investment in maintenance
-employee involvement with the new system
-higher estimates of cost savings
Purpose of computer implementation:
-solve problems in accounting, data processing time,
inventory
-solve organizational problems, record keeping, and
data storage
Systems were also used to contain:
-overall operating costs
-cost associated with time
-inventory costs
-data access costs
-personnel costs
-reporting costs
Expectations of the system were improvements
in efficiency and time-savings
260
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
Table 1 (Continued )
Researcher(s)
Research focus
Subjects
Findings/observations/issues
[4]
Applications growth
Six small manufacturing firms
Motivators of growth of systems:
-relative advantage
-competitive pressure
-consultant support
-managerial enthusiasm
Inhibitors of growth:
-inadequate financial resources
-inadequate managerial time
-lack of internal expertise
3. Research method
viduals in smaller organizations usually were responsible for IT decisions.
3.1. Sample selection
3.2. Procedures
Using guidelines from the Small Business Administration, a `small' business was de®ned as one that
employed fewer than 500 employees. This categorization is consistent with the Small Business Administration (SBA) which de®nes small businesses based
on Standard Industrial Classi®cation (SIC) codes,
most of which employ 500 as the upper boundary.
Firms were randomly selected from a database of
over 1500 organizations, which were located in a large
southwestern metropolitan area. The database represented ®rms from major industries, including manufacturing, defense, oil and gas, agriculture, ®nance,
and not-for-pro®t. It should also be emphasized that
the database contained ®rms of all sizes, including
some Fortune 500 companies with home of®ces
located in this metropolitan area. Appropriate query
construction enabled the researchers to identify relevant ®rms based on size. Thus, the small businesses
selected were not chosen from some restricted database, such as an association of family-owned businesses.
The database contained the ®rm name, the address,
the name of at least one senior executive, the ®rm size,
and the telephone number. Firms that were branch
of®ces or where it was not possible to contact a senior
executive were excluded. This was deemed appropriate because, during preliminary discussions with other
small business executives, it was noted that branch
of®ces of smaller businesses usually did not engage in
IT purchase and use activities; such decisions were
made by the main of®ce. In addition, it was also
ascertained that, for the most part, senior-level indi-
During a 30-day period, 309 randomly selected
®rms were contacted by telephone. As was stated
previously, the commercial database used for this
research contained the names of at least one senior
executive in each ®rm. We contacted senior executives
(i.e. CEOs, presidents, managers, vice presidents) to
ensure that we would be getting information from
someone in the organization who had the authority to
make decisions regarding IT. The individual contacted
was told that the researchers were from a large southwestern university (the subjects were provided with
the name of the institution) and the purpose of the
project. The researchers ensured the subjects that
con®dentiality and anonymity would be maintained
and that individual responses would be aggregated
and compared with those from other smaller businesses. Neither ®rm names nor identi®cation of individuals would be used by anyone other than the
researchers.
The development of the survey instrument (see
Appendix A) was discussed previously. The questions
asked by the researchers were designed to provide for
open-ended responses by the subjects; this can lead to
a much richer treatment of the issues. This type of
research has been used effectively by a number of IS
researchers [8,11,19]. If the individual was unavailable at the time he/she was called, note of this was
taken, and the individual was contacted at a later time.
In several instances, messages were left by the
researchers to have the individual contact us back;
this too proved to be effective.
261
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
The researchers found the executives to be generally cooperative and responsive. Thus, very few ®rms/
individuals refused to participate in the project once
the researchers explained the project and its importance. In fact, only 35 ®rms refused to participate.
4. Results
Of the 309 ®rms originally contacted, one was
dropped since the ®rm employed more than 500
employees. The ®rms ranged in size from 7 to 400
employees with an average size of 92.3 employees and
a standard deviation of 73.9. The titles of the 308
participants are shown in Table 2. Only those titles,
which appeared 3 times or more, are shown. Thirty®ve percent of the respondents were either presidents,
vice presidents, or a chief of®cer while 24% of the
respondents were managers and 15% were MIS directors. Overall the respondents were senior executives
who were responsible for IT decisions within their
organization.
Table 3 illustrates the types of businesses in which
the respondents were employed. Only those business
types, which occurred 3 times or more, are delineated.
The two industries with the most respondents were
health care and computer software/hardware sales. As
illustrated in Table 3, this study included small business executives from a wide variety of industries and
was not limited to a particular industry as other studies
have done [3,4,7,15±17,20,22±25]. However, since the
®rms that participated in this study were not selected
from all regions of the US, it is not possible to say with
certainty that all small businesses are similar to those
we studied. But, since our ®rms were of varying size
Table 2
Titles of executives participating in the study
Title
Number
President/Owner/CEO
Vice President
COO/CFO
Director of MIS
Controller
Manager
Administrator
LAN Administrator
Other
Total
56
49
3
47
10
73
13
7
50
308
Table 3
Participating businesses or firms
Industry
Number
of firms
Accounting
12
Advertising
7
Architecture
8
Automotive
4
Banking
5
Civil engineering
3
Computer Software/hardware/sales 22
Construction
12
Consulting
15
Distribution
5
Education
10
Engineering
17
Environmental services
5
General/electrical contractor
9
Health care
22
Insurance
14
Land surveying
3
Law
12
Manufacturing
18
Non profit
6
Oil & Gas
4
Publishing
3
Real estate
7
Sales/marketing
6
Telecommunication
4
Transportation
3
Wholesale distribution
4
Other
68
Total
308
Median
size
Range
of size
26
46
23
85
168
30
48
90
30
95
100
43
45
65
95
150
25
85
77
55
94
75
90
75
140
140
105
80
10±80
20±220
7±120
25±225
50±200
12±30
15±400
40±180
8±400
78±130
35±200
20±200
25±90
12±205
25±390
24±400
16±30
28±400
23±210
32±250
35±200
70±250
15±300
40±150
31±175
80±200
95±300
10±340
and represented a number of diverse industries that are
found throughout the US, there is no apparent reason
to doubt the representativeness of our sample.
The respondents were also asked if they had
acquired new computer hardware or software since
their ®rm started using computers. Ninety-two and
one-half percent of those responding had acquired new
hardware, and 89.9% had acquired new software. Of
those acquiring new hardware, 30.8% had acquired it
to extend the ®rm's range of applications/uses, 24.7%
had acquired it to replace old hardware and 44.5% had
done both. Of those acquiring new software, 15.3%
had acquired it to replace existing software, 35.2% had
acquired it to extend software applications/uses, and
49.5% had done both. In Cragg and King's [4] study of
six ®rms, four had acquired new hardware primarily to
extend their range of applications. Three of the six
262
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
®rms had acquired new software to totally replace
what they had previously. The other three had acquired
little or no software.
Another question asked if the number of users of
computers in the ®rm had increased since the ®rm ®rst
started using computers. Of those responding, 89.6%
said yes, there were more computer users within their
organization. The new users were then classi®ed as
clerical, managerial, or both. Thirty-nine percent of
the new users were classi®ed as clerical, 20.8% of the
new users were classi®ed as managerial, and 40.2% of
the new users were classi®ed as both. Cragg and King
[4] found the three largest ®rms in their study had
more computer users, which were mostly managers or
professionals.
The respondents were also asked if the number of
functional areas in their business using computers
since the initial use had increased; 89.6% responded
positively. They were then asked to state the number of
new functions and the area of the new function. The
mean number of new functions was 3.6 with a median
of 3 and a mode of 2. Table 4 shows the most common
responses for the number of additional functions for
which the company was using IT. Of those executives
that stated 1, 2 or 4 additional functions, the areas of
usage were the same. There was one difference for
those stating three additional functions, as shown in
Table 4. Three of the six ®rms in the Cragg and King
[4] study were using computers in at least one new
functional area, while two ®rms were using computers
in two new functional areas. Only one ®rm was using
computers in three new functional areas.
Overall, the most commonly stated area for use of
the function was by far accounting, then marketing
and sales, shipping, personnel, production and inventory, administration, and ®nally, ®nance.
Lastly, the respondents were asked, `What is the
single most important thing you've learned about
managing the use of information technology in your
®rm?' Even though the respondents were asked to
state the single most important thing, some gave more
than one response. Responses were given by 257
different individuals resulting in 329 different units
being coded. Content analysis was used in order to
code the responses. Content analysis has been used in
IS research previously. In 1995, Todd et al. [28]
analyzed job advertisements to determine the state
of the job market for systems analysts, programmers,
and IS managers. Jarvenpaa and Ives [13] used content
analysis to analyze letters, which CEOs had written, to
determine the tendency toward IT as a competitive
advantage. One of the premises for their study was that
if IT plays a signi®cant role to the strategy of the
corporation, that signi®cance should be re¯ected in the
letter to the shareholders. By analyzing the IT related
phrases in the letter written by the chairman in the
annual report, they found support for using this data to
give information about IT in the organization. In a
similar fashion, we are analyzing the comments made
by senior executives to summarize collectively what
they have learned about managing IT.
Initially, two raters coded the 329 units creating
their own categories for the responses. Then the raters
came together to compare their coding and reach a
consensus on the placement of each response into a
category. A third rater was then asked to code the
responses using the categories supplied by the previous raters. This was done in order to insure accuracy
of the categories. The three raters were in 90% agreement. Table 5 shows the different categories as well as
the percentage of responses, which fell into each
category. Additionally, a speci®c example of a
response, which fell into each category, is provided.
The 10 categories (excluding non response) from
Table 5 with the largest percentage responses were
analyzed further to see if the response was different
based on the size of the ®rm. The responses which fell
into the top 10 categories account for 193 of the total
329 units coded (59% of the responses). Table 6 shows
the breakdown for the 10 `important thing' categories,
which occurred the most often and the size of the ®rm.
It is interesting to note that those ®rms which
Table 4
Number of functions and their usage
Number of functions stated
Most common usage area
Next common usage area
Third common usage area
1, 2, or 4
3
Accounting
Accounting
Marketing
Marketing
Sales
Shipping
263
C.K. Riemenschneider, P.P. Mykytyn Jr. / Information & Management 37 (2000) 257±269
Table 5
Responses to `Most Important Thing' question
Category
Percentage of responses
Example response from a small business manager
Other
0.120
a
E-mail allows efficient use of time
Initial installment of system
a
Going from proprietary system to open system
IT is constantly changing
Training is key to effective IT use
Able to get information more quickly with computers
Accuracy of data helps reduce mistakes
Can't think of anything
Buy biggest and fastest IT you can afford
Increased productivity
Cost effectiveness is most important element
Supply the user's needs
Must have full time maintenance and support
Efficiency for faster feedback
Back up your work
Integrated software uses
Ease of use
IT is the most important aspect for successful growing companies
Ability to manage people is important
The computer is just a tool
Better decisions
Managing technology correctly
Technology expertise and functional business blend
Need for reliable networks
Speed is essential
Time consuming
Good communications between functional areas
Keeping a step ahead of our competition
Difference between data and information
Did not use IT
Keep good documentation
Stay on top of the market
Don't be intimidated by new hardware or software
Security of data
Keep IT simple
Too small, capacity is limited
Keeping records well organized in the computer
a
Staying current/changing IT
Training/Education of end users
Get information quickly
Accurate data
Non response
Purchasing current systems
Productivity
Costs
Customer/end user support
Maintenance/running of system
Efficiency
Backups & disaster recovery planning
Software compatibility/consistency
Ease of use
IT necessity/importance to firm
Manage people
Computers are tools
Decision making
Management of IT
Matching business requirements
Networks/networking
Speed
Time
Communication
Competition
Data versus information
Did not use IT
Documentation
Knowledge of market/business
Overcome fear/intimidation
Security
Keep information simple
Limited capacity
Organization of records/computers
0.112
0.097
0.076
0.070
0.070
0.040
0.040
0.036
0.033
0.030
0.021
0.018
0.018
0.015
0.015
0.015
0.012
0.012
0.012
0.012
0.012
0.012
0.012
0.009
0.009
0.009
0.009
0.009
0.009
0.009
0.009
0.006
0.006
0.006
a
Three different comments are given as explanation for the other category.
Table 6
Size by `Important Thing'a