Information and communication technology adoption in Malaysian SMEs

Abstract

Summary This study aims to analyse the role of the institutional environment in the adoption of information and communications technologies (ICT) in small and medium‐size enterprises (SMEs) in Malaysia. Findings of the study are based on the data collected from sixty‐seven SMEs. The results suggest that the knowledge base of the owners and the language barriers between employers and employees have played a pivotal role in the adoption of new technologies. In addition, the skill intensity of workers has significantly influenced the adoption of new technologies led by ICT. The results show that firms with foreign technological collaboration adopted more advanced ICT. Anecdotal evidence collected from managing directors suggests that although the Malaysian government has taken several measures to augment the competitiveness of SMEs, the success of such policies has been very limited. Another important finding is that sector‐specific factors have influenced the degree of ICT adoption to a great extent. Perhaps, for the first time, the study found evidence to support the argument that formally trained workers are more useful than on‐the‐job trained workers in SMEs. Availability of knowledge acquisition opportunities in industrial clusters have also played an important role in the adoption of advanced technologies. We conclude that one of the ways to avoid the onslaught posed by globalisation is to focus on the appropriate human resource development policies that can cater to the specific needs of SMEs.