Document(s) 6 of 17

The very way in which the decision to adopt ITs is made can be one of the strongest determinants of the actual adoption of these technologies (Dean 1987; Pennings 1987; Lefebvre and Lefebvre 1992).

Rogers (1983) proposed one of the best-known models of the innovation-adoption process. According to Rogers, the process can be divided into five stages: (1) becoming aware of the innovation under consideration; (2) forming a favourable or unfavourable attitude toward it; (3) deciding to adopt; (4) implementing the innovation; and (5) deciding whether to keep the innovation after it has been implemented.

In considering the context of the adoption of ITs, we will be especially interested in the first three stages. During the first stage (that is, the "intelligence," or research, stage) systematic scanning of information is of the utmost importance, and the availability of technical information from different sources, as well as from knowledgeable or influential proponents (internal or external), therefore plays a major role. During the second and third stages, or the evaluation and choice stages, the perceived characteristics of the IT application being considered, as well as the credibility of the internal and external proponents, may strongly influence the outcome of the decision-making process. Although the decision-making process is less articulated and less formal in SMEs than in larger firms, it is present even in the very smallest firms.[1]

Based on the above discussion, we propose that the process underlying technology-adoption decisions be captured along five major dimensions: the influence of internal proponents; the influence of external proponents; the availability of technical information; the perceived characteristics of an IT application; and the justification process for the adoption of an IT application. These five dimensions will be treated separately, although in reality they can rarely be dissociated.

Influence of internal proponents

If one characterized the main driving force in SMEs, it would have to be the people who make these productive units work and succeed with them. One important player is the CEO, who not only runs the firm but also provides direction in beliefs, vision, and day-to-day operating procedures. The CEO nevertheless needs support from competent people to achieve the desired goals. These employees obviously have inherent characteristics, such as age, experience, and know-how, but they also have less measurable characteristics, such as motivation or the ability to become involved in change. The underlying dynamic of the adoption of technology is complex, as illustrated in Figure 12, and it evolves.

Figure 12. Evolving influences of the work force on IT applications. Source: Lefebvre et al. (1996).

The first wave of technological change may meet with stiff resistance because fear of the unknown (even deskilling and job destruction) is a common reaction. As the reality of the adoption of IT applications sinks in, however, employees whose skills (because of their age, attitudes, or aptitudes) cannot be upgraded leave; others are trained and become more and more knowledgeable (Adler 1986; Zammuto and O'Connor 1992); and other qualified workers are gradually added to the work force. Thus, the work force as a whole becomes more receptive to technological change. Indeed, the work force may gradually be transformed from an obstacle to technological change (technological retardant) into a technology-neutral factor, even into a factor inducing further adoption of IT applications.

The influences of all internal proponents (or the work force) will evolve as IT adoption becomes more and more intense (Figure 12), but these people will also play different roles, depending on their functional expertise (Dean 1987). For instance, production and marketing managers will emphasize different potential benefits when considering the adoption of IT technologies. Furthermore, all these internal proponents not only will be involved in the actual decision to go ahead with adoption but also will be greatly responsible for the success of the implementation. For these reasons, one must take a careful look at the different characteristics of all the workers, along with the CEO, because some may promote and others may impede the adoption of technology in the firm. These characteristics can be listed as follows:

CEO characteristics

• Age;
• Level of education;
• Type of education;
• Functional experience;
• Computer literacy and experience;
• Attitude toward risk;
• Influence on initiating the idea of adopting; and
• Influence on the actual decision to adopt.

Employees' characteristics

• Age of workers by category;
• Employee attitude and motivation toward technology by category;
• Influence of the different categories of worker on initiating the idea of adopting; and
• Influence of the different categories of worker on the decision to adopt.

Influence of external proponents

Firms are continuously subjected to external pressures. This is also the case where the adoption of technology is concerned. The literature has extensively documented the fact that SMEs must often engage in the adoption of technology because their major customers require them to do so (Hill 1994). In certain industrial sectors, large contractors will force their suppliers to operate under specific guidelines using various forms of technological support, such as EDI, and this accelerates the rate of vertical integration in a specific sector of economic activity.

Similarly, pressures from competitors and even from trade associations will oblige firms to acquire new technology to maintain their competitive position. The adoption of IT applications will also be moulded to a large extent by vendors of hardware and software (especially in SMEs; see, for example, Baker 1987) and by consultants because these two types of external proponents will emphasize certain positive characteristics of IT applications. Among these characteristics, perceived usefulness and ease of use (Davis 1989), perceived relative advantage, compatibility, complexity, triability, and observability (Huff and Munro 1989) are the focus of technology vendors and consultants. Finally, governments may be influential by aggressively promoting IT adoption or creating incentives for such adoption.

In sum, the external proponents can be listed as follows:

• Customers and contractors;
• Direct competitors;
• Trade associations;
• Hardware and software vendors;
• Consultants; and
• Governments.

The relative importance of these external proponents will vary not only from sector to sector, but also sometimes from country to country.

Availability of technical information

One important aspect of IT adoption is the availability of information concerning specific technologies. This information is essential when developing diffusion policies. The following is a list of the sources of technical information, derived from our literature review:

External sources

• Trade shows;
• Professional journals;
• Technology suppliers and vendors;
• Consultants;
• Customers;
• Bankers;
• Competitors;
• Industrial partners;
• Government agencies;
• Trade associations; and
• Colleges, technical schools, and universities.

Internal sources

• R&D group (if it exists);
• Marketing group;
• Production group;
• Accounting­finance group; and
• IT group (if it exists).

External sources of information were the most widely cited, but internal sources may also prove useful. Indeed, internal proponents not only are influential during the decision process (see "Influence of Internal Proponents") but also are active as prime sources of technological information. The technological gatekeepers, or boundary specialists (usually computer specialists, engineers and employees or CEOs with an ongoing curiosity about new technological developments), can be valuable (and relatively cost free) sources of information.

Irrespective of the source, there is clearly a contextual dimension related to the importance of all these sources that takes into account their existence and accessibility and relative cost of consultation. This should be monitored closely for all the sources of technical information.

Finally, leaders of the most innovative firms tend to assign greater importance to a widespread internal and external search for technological information.

Perceived characteristics of an IT application

Characteristics of IT applications explain their rate of adoption and diffusion. On the basis of a very well known and thorough analysis of more than 1500 studies on the diffusion of innovations, Rogers (1983) emphasized the crucial importance of perceived[2] characteristics or attributes of innovations when predicting the future rate of adoption. Five attributes that were "as mutually exclusive and as universally relevant as possible" (Rogers 1983, p. 211) were shown to influence the rate of adoption: relative advantage, compatibility, complexity, triability, and observability. These five attributes were shown to influence the adoption of IT applications, which is known as one form of innovation, namely, process innovation (Pennings 1987).

When a specific IT application is perceived as having low compatibility (with existing values, past experiences, needs of potential users, and implemented technologies), high complexity, low triability, and low observability, they are considered radical (see "Characteristics of IT Applications: Primary Versus Secondary Attributes"). Relative advantage (or the degree to which an IT application is perceived as better) can be assessed in terms of its economic­financial and competitive advantages (see "Overemphasis on Financial Feasibility").

Roger's (1983) five characteristics were found to be associated with the adoption of microcomputers (Huff and Munro 1989). Other characteristics were also found to be associated with the adoption of some specific IT applications: for example, perceived usefulness and ease of use (Davis et al. 1989), perceived utility (Nilakanta and Scamell 1990) or task­technology compatibility,[3] and technical complexity (Cooper and Zmud 1990). Finally, cost, which is often underestimated in SMEs because implementation costs are not always accurately estimated, is definitely the major factor hampering the adoption of technology in these firms. However, cost is relative to the context of each firm.[4]

Justification process for the adoption of an IT application

The literature on the justification for advanced computer-based technologies is extremely voluminous. The relevant information is scattered throughout numerous scholarly and professional journals. For instance, Son (1992) published a comprehensive bibliography on the justification for AMTs, listing 274 articles from 92 sources (77 journals and magazines and 15 conference proceedings; books and unpublished working papers were excluded).

After scanning such a vast literature, we can make two main observations: first, there is a need for an interactive top-down­bottom-up decision-making process; second, the importance of financial feasibility overrides that of organizational and technological feasibility.

Top-down­bottom-up decision-making process

Most small firms are characterized by a top-down decision-making process, that is, from the CEO down through the organization. This process can be beneficial by speeding up decisions that might otherwise be difficult to make, but because of the very nature of some of the intangible benefits associated with the adoption of technology, such a process can also become a barrier to successful adoption and dissemination. Most of the literature on organizational change stresses the importance of employees' participating and buying in when entering into a process of change like the one technology generates in most circumstances. This supports more of a bottom-up approach, whereby employees are involved in the decision to adopt and in the actual implementation process. It would thus appear that a mixture of both top-down and bottom-up decision-making processes would best ensure the successful adoption of technology in small firms.

Overemphasis on financial feasibility

In the evaluation­choice, or justification, stage, many CEOs and top managers appear to place too much emphasis on short-term profitability. This emphasis on short-term profit may hinder the adoption of new technology. Moreover, top managers who do not get involved in the technological process tend to underestimate the financial resources to be allocated to technology-related activities and favour those divisions that are likely to bring in immediate profits.

In addition, other authors have noted that the measures used to evaluate these profits have been inadequate. For example, in a classic study, Dearden (1969) denounced the dysfunctional aspects of the emphasis on return on investment (ROI). Many researchers (in particular, Finnie 1988; Kumar and Loo 1988) maintained that the financial evaluation techniques used during the process of deciding to acquire new manufacturing technologies constituted in themselves major obstacles to the process.

Finally, the basic applications (such as transactional systems) can provide very tangible benefits, usually in the form of expected cost savings. However, the most advanced IT applications may also increase profits and revenues (through gaining competitive advantages, such as improved flexibility or increased quality) or reduce the investments[5] required to sustain daily activities (such as stock control and planning). The main problem resides in correctly assessing these benefits, especially the intangible ones such as the quality of customer services. This constitutes a major problem in SMEs because they may not keep track of the different indicators[6] of competitive advantage. Financial feasibility is strongly biased toward the benefits that can be more easily identified.

Organizational and technological feasibility

Beyond financial feasibility, one must consider organizational feasibility, that is, the capacity of the organization to adopt and successfully implement the new technologies considered. More specifically, does the organizational culture favour such change? Are the employees ready for and open to these changes? Are proposed changes in line with the current activities of the organization? Is it the right time to make them? Will these changes modify the employees' tasks, the organizational structure, the relationship with suppliers and clients? All these questions need to be addressed before the final adoption decision, and when overlooked they can lead to disastrous situations, even when financial feasibility is positive.

Finally, one must evaluate the technological feasibility in terms of compatibility with existing in-house systems and those in the industry, level of complexity, dependability, ease of repair, quality of service, and upgrading possibilities. This evaluation can be done by experts in the firm, technology suppliers, and ultimately, other users of similar technologies. Technological feasibility in SMEs is fairly difficult to assess because of the lack of internal expertise. In fact, the main factors that tend to hinder the adoption of IT applications in small firms were found to be as follows (Baker 1987):

• A feeling that technology was changing too rapidly;
• Lack of confidence in claims made by computer sales representatives;
• Lack of time to do the necessary analysis to determine what or how to automate;
• Lack of confidence in the ability of computer vendors to provide ongoing service and support after implementation; and
• Lack of knowledge of new technology.

These five factors indicate how difficult it is for SMEs to address the issue of technological feasibility, which is, of course, essential to the successful adoption and implementation of new technologies.

In sum, the following are the four main characteristics of the justification process:

• Top-down­bottom-up decision-making process;
• Financial feasibility;
• Organizational feasibility; and
• Technological feasibility.

A top-down decision-making process and too much emphasis on financial feasibility may well hamper IT adoption, whereas a bottom-up decision-making process and organizational and technological feasibility are closely related to the successful adoption of IT applications. However, if financial feasibility is overlooked, small firms face many difficulties, especially during the implementation phase.

Operational measures for characteristics of the decision-making process as a prime adoption factor

Each characteristic of the decision-making process has to be measured. Table 18 summarizes the operational measures for each of these characteristics.

One may wish to analyze in greater detail the relative importance of the different sources of technical information. It is possible to assess the accessibility, usefulness, credibility, and cost of each of these sources (although cost is difficult to estimate for internal sources of information). However, this might be a rather lengthy exercise because 17 sources are considered here. In general, the characteristics of the decision-making process are better captured by on-site interviews with multiple respondents (including the CEO) because of the behavioural aspect and the complexity of these characteristics.

Note: CEO, chief executive officer; R&D, research and development; ROI, return on investment.

[1] For example, small firms rarely perform a cost­benefit analysis before adopting an IT application, and the evaluation is based on expected outcomes (which are sometimes grossly underestimated or overestimated). Small firms also tend to rely very heavily on technology vendor­suppliers (Gerwin and Kolodny 1992; Lefebvre et al. 1996).

[2] The notion of perceptual rather than factual characteristics should be emphasized here. Perceptions, no matter how distorted they may be (Byod et al. 1993), override reality (Lefebvre et al. 1996).

[3] These two attributes cover some aspects of compatibility and complexity, as described by Rogers (1983).

[4] What is considered rather expensive by one firm may be considered affordable by another firm of similar size but in a different competitive position.

[5] For example, JIT can radically reduce inventory levels, and a firm's capital investment in stock will therefore be much lower.

[6] Basic indicators, such as average number of rejects or average delivery time, are not monitored in some SMEs.

Document(s) 6 of 17