Technology support for small businesses.

Alexander, Christine ; Lancaster, Tina ; Gibson, Shonda 等

INTRODUCTION

Information Technology (IT) is an essential tool for operating enterprises in today's business environment (Wilkin, 2009). However, research indicates that small and very small enterprises continue to be the slowest in terms of information technology adoption and utilization (Premkumar, 2003; Niehm, Tyner, Shelley, & Fitzgerald, 2010; Thong, 1999). Niehm et al.'s (2010) study found that "it is critical for firms of all sizes, especially resource constrained small firms, to realize that many competitive strategies needed for success in today's marketplace cannot be implemented without IT support" (p. 499). In addition, while some studies may have concluded that small and medium sized (SME) businesses have limited productivity, according to Wielicki & Arendt (2010), the fact remains that "for any country, regardless of its stage of economic development, small businesses generate the bulk of economic output (usually well over 90%)" (p. 162). Because IT has provided tremendous productivity advantages to large corporations, it can be assumed that implementation of Information and Communications Technology (ICT) within SMEs "may well drive the next wave of economic growth" (Wielicki & Arendt, 2010, p. 163).

With the globalization of business brought on by the continued expansion of the Internet and the opportunities that abound due to the network era, Melville, Kraemer, and Gurbaxani (2004) emphasize that even the smallest of businesses can benefit from IT. The Internet has positioned firms in the international marketplace and therefore makes the wise use of this technology imperative for most businesses (Lituchy & Rail, 1998).

LITERATURE REVIEW

The impacts of IT, including productivity enhancement, profitability improvement, cost reduction, competitive advantage, inventory reduction, and other measures of performance (Melville et al., 2004) are examined within IT business value research. That research found improved processes and organizational performance resulted from IT application within the business process (Melville et al., 2004). Additional improved efficiencies were reported to include management of customers, financial record keeping, and accountability for staff performance (Wilkin, 2009).

Small businesses utilize IT in ways different from their larger business counterparts. Although Small and Medium Sized Enterprises (SME's) often use IT systems for operational and reporting functions, Wilkin (2009) found use was limited by budgetary constraints. Therefore, SME's rarely choose to utilize IT for research and development or IT consultants.

There are multiple claims that small firms are not using technology to its fullest capability or, for a variety of reasons, are not using technology at all (Hopkins, 2001; Tagliavini, Ravarini, & Antonelli, 2001; Dandridge & Levenburg, 2000; van Akkeren & Cavaye, 1999). The reasons most commonly cited for slow adoption or lack of adoption of technologies in small firms include cost, lack of perceived benefits, lack of knowledge, and lack of industry fit (Dennis, 2001; Cragg & King, 1993).

Small Business Defined

The term "small business" is commonly referred to as a business that is privately owned and operated (corporations, partnerships, or sole proprietorships), with a small number of employees, relatively low volume of sales, and is not dominant in its field. The legal definition varies historically, by country, and by industry. In addition to number of employees, a range of independent or mixed methods are used to classify small business and often include annual sales and/or value of assets and net profit. Although there is widespread agreement in relation to the significant economic contribution of small businesses in the United States, the term remains illdefined. Kozmetsky (1986) suggested that this lack of concrete definition lies at the heart of the problem in quantifying the contribution of small businesses.

Definitions of small business vary widely, including: "An organization with a name, a place of operations, an owner, and one or more workers other than the owner" (Tate, Megginson, Scott, & Trueblood, 1978, p. 4); "A business that is managed by not more than 3 managers or whose workforce does not exceed 100 persons" (Hertz, 1982, p. 433); and "Any enterprise employing 500 or fewer employees" (Nappi & Vora, 1980, p. 23). The Small Business Administration (SBA) Office of Advocacy SBA a (2010) describes a small business as an independent business with fewer than 500 employees. Size standards for these for-profit industries denote the largest size that a total business, including subsidiaries and affiliates, may be. Additional criteria are specified by the SBA Office of Size Standards for firms wishing to be designated small businesses for federal government programs (SBA c, 2010).

Entrepreneur Defined

Further complicating this matter, the authors of this study found the definition of an entrepreneur to be as vague and varied as that of small business. The Merriam Webster Dictionary (2010) describes the entrepreneur as "one who organizes, manages, and assumes the risks of a business or enterprise." However, the term has a wide range of meanings in research. From one extreme, an entrepreneur is a person of very high aptitude who pioneers change and possesses characteristics that only a few people possess (McMillan, 2005). At the other end of the spectrum, people who want to work for themselves could be considered entrepreneurs (McMillan, 2005). Schumpeter's (1947) definition is "an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation, simultaneously creating new products and business models largely responsible for the dynamism of industries and longrun economic growth" (as quoted by Volkmann, 2009 p. 42). This implies that wealth is produced by creating new demand. Schumpeter's view emphasized innovation--new products, methods, markets, and organization (QuickMBA). Tranchet and Rienstra (2009) quoted Drucker (1985) as saying "Most of what you hear about entrepreneurship is all wrong. It's not magic; it's not mysterious; and it has nothing to do with genes. It's a discipline and, like any discipline, it can be learned" (p.10).

Research indicates that entrepreneurship is often treated as being synonymous with small business due to the many commonalities (George, 2002). The authors of this study suggest that definitions of both entrepreneurs and small business people often include three key characteristics: 1) they take initiative, 2) they organize resources, and 3) they accept risks and the potential for failures. The commonalities of the entrepreneur and small business owner are sufficient evidence to include both in this article's assessment of technology support. Small businesses have been defined using parameters such as sales, revenue, and number of employees (Thong & Yap, 1995). The U.S. Small Business Administration (USSBA) defines "small" in terms of industry, with firms in some industries deemed small based on the number of employees while other are considered small based on sales revenue. In the travel industry, for example, the USSBA defines "small" as those firms with sales of less than $3 million per year (SBA c, 2010).

This study is not aimed specifically at a particular industry. Therefore, for this study, the small business/entrepreneurial venture is defined as prudently as possible by utilizing the quantitative criterions of one input measure (number of employees less than 100) and one output measure (sales volume below $10 million/year).

Small Business Development Centers

Small Business Development Centers (SBDCs) are funded and managed by the Small Business Administration (SBA) of the U.S. government and were developed to encourage the creation and growth of small business. Most regional SBDCs are often found housed at a college or university, offer similar services across the country, and are responsible for dual reporting of their service performance to the federal SBA and the state SBDC. Essentially the same services are offered at virtually all SBDC's including training on such topics as Developing Business Plans, How to Start Your Own Business, and the use of QuickBooks. Some state SBDC's offer e-Learning Courses (New Hampshire SBDC, 2010), while most regional SBDCs offer face-toface workshops. In the realm of technology support services, the SBDC offers adjunct service centered on the patent process, including trademark, copyright, and licensing (TASBDC, 2010). The mission of the TASBDC (2010) directs their services to new product/process development and issues surrounding intellectual property. The United States Small Business Administration provides the following as the mission of Small Business Development Centers:

The Office of Small Business Development Centers (SBDC) mission is to provide management assistance to current and prospective small business owners. SBDCs offer one-stop assistance to individuals and small businesses by providing a wide variety of information and guidance in central and easily accessible branch locations. The program is a cooperative effort of the private sector, the educational community and federal, state and local governments and is an integral component of Entrepreneurial Development's network of training and counseling services (SBA b, 2010).

Economic Development Corporations

An Economic Development Corporation is an organization common in the United States, usually a 501(c) (3) non-profit organization, the mission of which is to promote economic development within a specific geographical area. The Center for Community and Economic Development (CCED) (2009) reports that most communities are not completely satisfied with their local economies; indicating concerns centered around job opportunities, income growth, rising unemployment rates, average income levels, reliance on a particular sector, or the emergence of an industry cluster or other opportunity. Rather than remain passive about these concerns, the CCED (2009) reports that many communities have chosen to respond with a wide range of reactions including working with chambers of commerce, economic development commissions, zoning laws, and community-owned industrial parks. The CCED (2009) suggests that most communities use a wide range of resources to accomplish the efforts, including promotional efforts, government grants, and various financing tools to influence economic change.

Since the adoption of the Development Corporation Act in 1979, Texas law has allowed cities to form economic development corporations (EDCs) to attract businesses and create job opportunities (Combs, 2005). The Texas State Legislature has amended the Act in 1989 and in 1991 to allow eligible cities to adopt dedicated sales and use taxes to fund development projects. According to the Comptrollers' report (Combs, 2008) for fiscal 2006 and 2007, most corporations listed more than one primary economic development objective. Job creation/job retention was the preferred activity, followed closely by infrastructure projects. Sports facilities/recreation and tourism were popular third and fourth choices.

Whereas SBDCs are focused on assisting small businesses with the fundamentals of startup and various management issues, EDCs are typically geared toward attracting large corporations involved with manufacturing to a community. This study found that there is a substantial gap in the type and level of service that small businesses and entrepreneurs need and the SBDCs and EDCs are prepared to offer them, specifically in the use and support of Information Technology.

THE GAP

SBDCs and EDCs have fundamental differences in terms of their missions, and both appear not to possess the resources required to provide information technology support for a small business/entrepreneur. In addition, technology support is not part of the mandate of the SBDCs or the EDCs. This research reveals that neither provides for the small business/ entrepreneur consultation, counseling or training specifically designed for addressing the ways in which information technology can be useful in aiding business success.

Several SBDCs across the country have added to their names 'T' for Technology and have become SBTDCs. In the cases researched, the 'T' referred to cultivating technology-based industries rather than offering technology solutions and support to existing or new businesses (George Mason University, 2010; North Carolina State, 2010; University of Minnesota, 2010). Several EDCs have also developed entrepreneurial development centers, business accelerator programs, and incubation centers in an effort to expand and grow their services. These additions expand the existing EDC focus of manufacturing and creation of industrial related jobs (Alsobrook, 2008; Iowa EDC, 2010; St. Charles, 2005; Texas EDC, 2010) but fail to address Information Technology issues with small businesses and entrepreneurs. These expanded functions are important areas for growth in many parts of the country, but they do not address the 'gap' that the authors of this study want to bridge by offering technology support services and education to small businesses and entrepreneurs in the North East Texas region.

From a practitioner's perspective, an increasing number of small firms are beginning to utilize technology. Pratt (2002) provided statistics relating to research conducted for the U.S. Small Business Administration as follows: (1) 57% of small businesses use the Internet, with 61% of those firms having websites; (2) 77% of small businesses with 20-249 employees have websites, while 58% of firms with fewer than 10 employees had websites; (3) 35% of small firms sell online; and (4) The average life span of these web sites is 21 months. In 2006, U.S. consumers spent $170.8 billion online including $102.1 billion on retail e-commerce and $68.8 billion on travel (Rosencrance, 2007). Online sales accounted for 6% of growth in retail sales in 2009, up from 5% in 2008 (Internet Retailer, 2009).

The U.S. Census Bureau of the Department of Commerce (2009) reported that total eCommerce sales for 2009 were $134.9 billion, an increase of 2% from 2008 whereas total retail sales actually decreased 7% from 2008. E-Commerce sales in 2009 accounted for 3.7% of total retail sales as compared with 3.3% in 2008. Though the benefits of technology adoption for small firms are generally acknowledged, there is little guidance on how small businesses should go about adopting and using the Internet and other information technologies to improve their business performance.

In a 2010 interview, Roger Feagley, Executive Director of the Sulphur Springs, Texas EDC, stated that "broadband internet should be considered a utility and provided as a service to an incoming business just as water or sewer would be." Under current time, staff, and budgeting limitations, he could not commit to providing training in the realm of Information Technology. Similarly, in a 2010 interview, Pat Bell, Executive Director of the SBDC at Paris Junior College in Paris, Texas, was not sure which additional Information Technology services or training might be offered with the current limits of her staff. Therefore, the gap lies in identifying and addressing which information and services small businesses/entrepreneurs need in order for Information Technology to be useful to them. This research reveals opportunities where a university may be able to fill this gap (see Figure 1).

The University's Role

As a regional University in a primarily rural part of Northeast Texas, Texas A&M University-Commerce (TAMU-C) is poised to become a technology bridge-builder between the small business/entrepreneur community and the talent pool its students represent. Not only do regional businesses lack IT knowledge and expertise needed to effectively use technology, but they are also physically located away from large business centers (e.g., the Dallas--Fort Worth Metroplex), so gaining access to technology resources is difficult and expensive.

The types of technology projects for which the University could provide expertise include web site development and enhancement, networking support, database development, systems analysis and design, and data analysis. Building on the idea of filling a knowledge gap, workshops could be developed to introduce such projects to small businesses and entrepreneurs. These workshops could be held annually to introduce the project concepts to area business leaders, encourage networking among the University staff members and regional businesses, and provide students with networking and presentation opportunities. Follow-up workshops could be developed to provide cutting-edge information in a context and at a level appropriate for nontechnical business leaders. Additionally, the curriculum of the Management Information Systems Department will reap huge benefits, becoming even richer in its depth with internships for both undergraduate and graduate students.

[FIGURE 1 OMITTED]

According to the Texas Strategic Economic Development Planning Commission (TSEDPC) report (2008), building its workforce is a top priority for Texas, a challenge that requires action at all levels of the State's educational and workforce training institutions. Texas A&M University-Commerce can be even more effective at building that workforce by having its students become part of the solution before graduation. The TSEDPC (2008) notes that a knowledgeable and skilled workforce is the greatest economic development tool the State of Texas, or any region, can acquire and that such a workforce will rank Texas, and its regions, favorably with its competition.

Benefits to the Business Community

Local Small Business Development Centers do an admirable job of providing assistance to the region's small businesses and entrepreneurs in the areas of business plan preparation, funding opportunities and options, and general business education. The gap between their services and those of the local EDCs, which are geared more towards the recruitment of large businesses to the communities, is a technology 'hole' or gap that is detrimental to the success of the areas' small businesses and entrepreneurs. With a university-sponsored technology enrichment program, the business community will possess a bridge providing university resources, including expert knowledge in all areas of Information Technology. Further, these same businesses will gain access to technology support and guidance concerning their technology decisions.

As small businesses strive to be successful, there are universal critical success factors (CSF's) to be considered. Critical success factors are commonly thought of as the essential items, i.e., the 'must-haves' that enable an organization to achieve a competitive advantage. They are the factors that are so critical that without them the potential for success would be severely limited. According to TSEDPC (2008), the three types of 'must-haves' are resources, process and systems, and products and services.

Yew Wong (2005) suggested that critical success factors needed by SME's are unique and require special attention. From his assessment, 11 factors were highlighted as CSF's for SME's including: Management leadership and support, culture, IT, strategy and purpose, measurement, organizational infrastructure, processes and activities, motivational aids, resources, training and education, and human resources management (Yew Wong, 2005). The University can contribute to each of these areas, particularly in the area of IT.

Virtually every day there are new technological advancements which could be of benefit to small businesses and entrepreneurs. Without expert guidance and education, keeping up with these changes can be a daunting, if not impossible, task. The University can offer annual cuttingedge 'updates' to assist businesses in "weeding through the hype" and understanding how particular technologies might apply to their situation. This will be a further opportunity for the business leaders to network, not only with University personnel, but also with each other. Additionally, the business community would gain contact with a potential employee pool and have the opportunity for input as to that pool's preparation for life in the business world.

Benefits to the University

One of the most important benefits that this bridge-building opportunity will bring to the University is its branding as a leader in Information Technology. This branding is important not only to the efforts of working with the regional business community, but perhaps more important, it will brand TAMU-C for potential students. Having opportunities for students to perform projects for actual businesses and internships in local settings is paramount to continuing the University's technology leadership role in the Northeast Texas area.

Along with the branding opportunity, having access to real-life problems for course development and hands-on learning will be extremely valuable. One of the most priceless commodities in any college of business is its instructors' business experience. The technology bridge will aid in continuing that tradition as well as providing opportunities to showcase our knowledge and expertise.

CONCLUSIONS AND IMPLICATIONS

In order to thrive, small businesses are often advised to develop relationships with external organizations that have the potential to assist business development, survival, and growth. A focus on the external relationships of the small business underlines the vital importance of external resources in moving a small business toward increased success and profitability (Street & Cameron, 2007). Economic growth, job creation, and balanced regional development are noted by Hynes and Richardson (2007) to be a result of entrepreneurship and enterprising activity. In their research, Hynes and Richardson (2007) challenged educational institutions to utilize an entrepreneurial perspective and change teaching methods in an effort to better prepare graduates for the expectations and demands of the workplace. Facilitation of linkages with the small business community is proposed as an efficient and effective mechanism in achieving this goal (Hynes & Richardson, 2007).

IT students in the BS, MS and MBA degree programs at Texas A&M UniversityCommerce are often in need of projects allowing them to hone their IT skills. Small businesses and entrepreneurs in the North East Texas region are presumably a microcosm of other parts of the country in that they, too, would benefit from IT support and education. It appears that opportunities exist for universities to partner with local small enterprises (SE's) and very small enterprises (VSE's), as well as entrepreneurs to remedy both their limited resources and lack of IT knowledge.

FUTURE RESEARCH

In order to better understand technology needs of small businesses/entrepreneurs, authors of this study are undertaking an empirical study of regional small businesses/entrepreneurs. The research will initially include face-to-face interviews with small business owners in a variety of industries. This study will be used to as a springboard for a larger survey of the regional small business/entrepreneur community in determining technology needs and knowledge gaps, as well as identifying specific areas where the University may offer its resources.

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About the Authors:

Christine Alexander is Assistant Professor of Management Information Systems (MIS) at Texas A&M UniversityCommerce. Her Ph.D. from Southern Illinois University is in MIS with a minor field in Production and Operations Management. Her research interests and publications are in the areas of MIS, Experiential Learning, eBusiness Adoption in Small Businesses, MIS Education, and The Role of IS in Logistics. She is a member of Association of Computing Machinery, Production and Operations Management Society, and Decision Sciences Institute. Her articles have appeared in the International Journal of Education Research; the International Journal of Business, Marketing, and Decision Sciences; the Kentucky Business Education Association Journal of Industrial Management & Data Systems and the Journal of Internet Commerce. Dr. Alexander was a 2011 and 2010 recipient of the Texas A&M System Teaching Excellence Award.

Tina Lancaster is Instructor of Management Information Systems and the MIS Faculty Advisor at Texas A&M University-Commerce. Her Information Systems career has included work primarily in small businesses: identifying productivity opportunities with information systems, implementing systems, managing software systems and databases, and supporting virtually all areas of IT. Publication interests include creating elearning opportunities for teamwork and collaboration and student attitudes toward IT. She was a 2011 and 2009 recipient of the Texas A&M System Teaching Excellence award.

Shonda Gibson is a second year Ph.D. candidate in Educational Psychology at Texas A&M University-Commerce. She completed her MBA with concentrations in management and economics and has served as a graduate research assistant in the College of Business and Technology. Her research interests (e.g., leadership, organizational behavior, culture and diversity, training, ethical decision making, small business management, and technology management) stem from years of management experience with Sara Lee Corporation and other Fortune 500 corporations,

Mildred Golden Pryor is Professor of Management and Faculty Mentor at Texas A&M University-Commerce. Her management positions in Quality Improvement and Organizational Transformation were at E-Systems (Raytheon) and Campbell Soup. Consulting and publication interests include Strategic Management, Organizational Transformation, Performance Excellence, and Leadership. Her articles have appeared in numerous journals, including the Harvard Business Review, Journal of Management History, Industrial Management, International Journal of Management, Academy of Strategic Management Journal, International Journal of Business and Public Administration, Journal of Management Research, and the International Journal of Sustainable Strategic Management. Dr. Pryor was a recipient of the 2011 and 2010 Texas A&M System Teaching Excellence Award and the 2011 recipient of the Texas A&M University-Commerce Outstanding Research Award.

Christine Alexander

Tina Lancaster

Shonda Gibson

Mildred Golden Pryor

Texas A&M University-Commerce