Improving business environment for information technology adoption in small business: evidence from a transition economy

Abstract

ABSTRACT Adoption of information technology is widely known to be important for firm development. Nonetheless, little has been revealed about how to promote micro-sized firms to adopt information technology. Using the zero-inflated Poisson model to analyse longitudinal data adopted from the biennial Small and Medium Enterprises Surveys in the manufacturing sectors and data on the quality of the local business environment from the annual Provincial Competitiveness Index surveys in Vietnam, this study shows that while better infrastructure readiness is associated with more adoption of information technology among larger firms, it is not enough for micro-sized firms. These micro-sized firms need to be further supported by the improved quality of the local business environment. These findings suggest that policies on information technology should be complemented with policies to improve the business environment to facilitate adoption of information technology among micro-sized firms in transition economies.