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ICT adoption and SME growth in New Zealand

ICT adoption and SME growth in New Zealand. Stuart Locke University of Waikato Management School. Objectives of Study. is there a clear relationship between ICT use and the growth of a small business (Sales, profitability, market share & number of employees) ?

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ICT adoption and SME growth in New Zealand

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  1. ICT adoption and SME growth in New Zealand Stuart Locke University of Waikato Management School ICT & SME Growth

  2. Objectives of Study • is there a clear relationship between ICT use and the growthof a small business (Sales, profitability, market share & number of employees)? • the nature of this relationship, • how the relationship is affected when other factors found to have a significant impact upon the ICT-growth relationship are considered. ICT & SME Growth

  3. Source Data • SME Quarterly phone survey of 1200 businesses - December quarter 2002 • Sample is not entirely random, endeavoring to get regional and industry balance to allow statistical analysis. ICT & SME Growth

  4. Findings -1For previous 12 months ICT & SME Growth

  5. Findings – 2Assessment of 12-month outlook ICT & SME Growth

  6. Findings - 3 ICT & SME Growth

  7. Findings - 4 ICT & SME Growth

  8. Findings - 5Summary of Results from Univariate Probit Regressions of Growth Measures on Adoption of Selected ICT within the Small Business Sample ICT & SME Growth

  9. ICT & SME Growth

  10. Findings - 6 • It is more than likely some non ICT-related factors are also impacting upon both ICT use and growth, and thus the apparent impact ICT adoption is having on growth may be at least partially attributable to other underlying factors. Several potential factors are identified from the cross-tabulation analysis. Those showing as important include the industry orientation, gender, size, change in number of employees, and understanding of ICT by owner/managers. ICT & SME Growth

  11. Policy Implications - 1 • 1. Rather than there being a strong positive relationship similar to that which has been established between economic growth and investment in IT, the results for growth in terms of market share and sales levels are not supportive of a strong positive correlation for individual small businesses. However, the findings relating to growth in profit are largely in line with expectations. ICT & SME Growth

  12. Policy Implications - 2 • 2. While ICT does not appear to have been particularly useful in boosting the market share and sales levels of a business, results indicate it has the potential to provide substantial cost-reducing benefits to its users. ICT & SME Growth

  13. Policy Implications - 3 • 3. To promote growth in the profit levels of small NZ businesses, enterprises operating within the small business sector should be encouraged to have a high extent of internet adoption and moderate levels of cellular phone adoption. • 4. The positive association between growth in profits and the adoption of cellular phones and the internet within this sample of small NZ businesses is relevant to the policy issues concerning how to encourage entrepreneurship and small business growth. ICT & SME Growth

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