Measuring Information Technology Capability of Small and Medium Enterprises in Rajasthan

Abstract

Use of Information Technology (IT) at the functional level by the small and medium enterprises (SMEs) is a recent phenomenon. Moreover, IT adaptation by the SMEs in India is at an emerging phase. As investments in IT continue to grow, SMEs managers’ awareness of the need to derive the value of IT is also increasing. Research has shown that SME managers are increasingly adopting new IT technologies in all aspects of business activities. On the backdrop, this research intends to measure information technology capability (ITC) in SMEs in Rajasthan state. ITC is a firm’s ability to acquire, deploy, and leverage its IT related resources in combination with other resources in order to achieve business objectives through IT implementation. The paper identifies four dimensions, viz. IT infrastructure, IT architecture, IT human resource, and IT relationship resource, in an effort to measure the ITC construct. To accomplish the above objective a sample of 193 SMEs have been surveyed through a pre-tested questionnaire. Results suggest that model fit statistics are reasonably acceptable and IT human resource as a significant contributor to the ITC construct followed by IT architecture. The study may help the firms to leverage technology to differentiate them from competition. SME managers and entrepreneurs will be able to develop a clear understanding of the critical components of ITC and their role in supporting and shaping business strategy.