ICT and external business communication in SMEs

Abstract

This survey focuses on how small and medium sized enterprises (SMEs) use information and communication technology (ICT) for enhanced communication with external business partners. We focus on how SMEs and their external business partners communicate by means of computers, which we define as computer-aided-communication (CAC). The survey is based on firm-level data, collected through a structured questionnaire from 166 SMEs located in Western Sweden in the beginning of 1998. Half of SMEs are successful "growth-SMEs", half are a control group of other-SMEs, which in central respects are almost identical to the growth-SMEs. Comparing how these two categories of SMEs use CAC-linkages to business partners, we can identify possible differences. If growth-SMEs have established more or different CAC-linkages to external business partners compared to other-SMEs, this is an interesting indication of an association between the use of CAC and growth-SMEs . In total, 80 percent of all surveyed SMEs indicated that they have established CAC-linkages with external business partners. Electronic mail seems to be widespread, and a majority also use Internet. A substantial number of SMEs seem to have invested in sophisticated transmission technologies, such as permanent connection and ISDN, while half of SMEs communicate with business partners through standardised data-files (e.g. EDI), indicating co-ordination of communication-technologies between business partners. Although CAC helps to facilitate communication with external business partners, the major effects from using computers are found in the internal organisations of SMEs, above all in their administrative activities, but also in the production of goods and services. SMEs have basically established CAC-linkages to customers, while a smaller number have CAC-linkages to suppliers and corporate firms. The largest number of SMEs use CAC in the sales function and in the manufacturing/production operations. However, the intensity of this communication only seems to be high in the manufacturing and distribution activities. Between 30 and 40 percent of the company managers in SMEs indicate that they experience positive impacts from CAC-linkages with customers. It especially helps to shorten the lead times and it enhances flexibility in customer relations. However, CAC seems to have only marginally substituted face-to-face contacts with customers, and it basically deepens existing customer relations, rather than helps to establish contacts with new customers. In conclusion, these findings indicate some interesting positive associations between growth-SMEs and CAC-linkages with external business partners, enhancing the competitiveness of these SMEs. The use of CAC among growth-SMEs contributes to the fact that these firms have been able to more effectively respond to the new demands in buyer-supplier relationships, which increasingly focus on flexibility and the production and distribution of customer-specified products with short lead times.