The impact of IT on the growth and development of insular firms

Abstract

PurposeThe purpose of this paper is to show if the use of information technology (IT) strengthens the growth and development of insular firms. It investigates IT usage in an ultra‐peripheral territory of the Economic Union and aims to gain a better understand between the use of the IT and the growth and development of insular firms.Design/methodology/approachThis research examines 118 of the largest Réunionese firms and several interesting factors are identified. Certain characteristics such as size, age, diversification of activities or lack of diversification, status as a subsidiary of a larger firm, degree of computerization and if electronic communications influence IT use were specifically examined. Also looked at were certain factors that could illustrate the relationship between IT use and firm growth and development.FindingsThis paper presents findings and discusses these in terms of the degree of utilization of IT by insular firms, the development of external relationships and the importance of developing IT investment to reduce transaction costs within Réunionese enterprises. From this research, there is an assumption that the use of IT may have an impact on the growth and development of insular firms.Research limitations/implicationsThis research reported in this paper focused only on Réunion Island and not on other insular contexts. Further European ultra peripheral regions must be investigated to support the findings.Practical implicationsThe findings can help governments, public and private actors to increase the ICT investments of insular firms in order to reduce costs and improve the growth and development of local firms.Originality/valueThe originality of this paper is the focus on the role of IT on the growth and development of insular firms.