EXTENT OF UTILIZATION OF INFORMATION AND TECHNOLOGY [ICT] IN SMALL AND MEDIUM ENTERPRISES IN OGUN STATE

Abstract

The  major  purpose  of  this  study was  to  determine  the  extent  of  utilization  of  Information  and Communication  Technology  by  the  mangers  of  Small  and  Medium  Enterprises  in  Ogun  State. Specifically, the study determined: the extent of utilization of word Processing Technology, Electronic Data Processing Technology, Electronic Office Communication Network, E-Commerce Technology, and Small Office Machines by Managers of Small and Medium Enterprises . Five research questions and four null hypotheses were formulated to guide the study. Related literature and some empirical [research] studies were reviewed. The study employed a survey research design, and it was conducted in the three Senatorial  Zones  of Ogun  State.  The population  for the  study was 396 respondents, comprising 132 managers and 264 workers of registered Small and Medium Enterprises operating in Ogun State and listed in the  Nigerian Business Directory. Out of this population, a sample of 198 respondents, consisting 66managers and 132 workers, was randomly drawn from the three Senatorial Zones. 178 copies of the questionnaire [89.9] were filled and returned. A four-point scale, made up of

44 structured questionnaire items was used for collecting data for the study, while the instrument was

face validated by three experts. The reliability co-efficient of the instrument for the study was 0.75, using Cronbach Alpha reliability test. The data were analysed in tables, using Mean Scores to answer the research questions while Analysis of Variance [ANOVA] statistic was employed  to test the null hypotheses. It was found among others that Small and Medium Enterprises Managers utilize some of the Information and Communication Technologies but not frequently used. The study had implications for  the  present  and  potential  Small  and  Medium  Enterprises  Managers,  the  Government/Policy makers, Nigerian Association of Small and Medium Enterprise [NASME] and Nigerian Association of Small Scale Industrialists [NASSI] and the general public. One of the recommendations based on the findings  was  that  Small  and  Medium  Enterprise  Managers  should  engage  in  Information  and Communication  Technology utilization  in business  operations  in order  to remain  in business  and compete  favourably with their counterpart in the world. Suggestions  for further research were also made.

CHAPTER ONE

Background of the Study

During this information age, the utilization of Information and Communication Technologies (ICTs) in business operations has become very essential for the realization of the organizational goals. Considering the trends in technological advancement, Eruanga (2005) observed that technology has revolutionized   communication  during  the  past  decades  and   access  to  people  and  information practically anywhere in the world has become quicker, cheaper and easier, Ayeni (2005) also observed that   Information   and   Communication   Technologies   (ICTs)   have   become   pervasive   within contemporary  organizations  and  they  are  indispensable  tools  in  the  day-to-day  running  of  any establishment.  In view of this,  information  is seen as the tool for the growth of any business for without it a business cannot plan successfully or make better decisions.

Information, according to Brady (1992), is defined as data that has been processed in a form which is meaningful to the recipient and which is of real or perceived value in current or prospective decision  and  action.  He  added  that  information  is  the  basis  of  all  decision  making  in  business enterprises. Similarly, Osuala (2004) stated that information is data that has been processed so that they can be used in making decisions. According to him data are unorganized facts such as numbers, names and quantities.

The  term  communication  involves  the  interchange  of  facts,  thought,  value  judgment  and opinion and may take many forms, such as face to face conversations, telephone calls,  informal and formal meetings,  conferences,  memoranda,  letters,  report  tabulations,  Visual  Display Unit (VDU) transmission  and so on (Lucey,  1994). Urieto  and Baridam  (1995) stated  that   communication  is basically the transmission of message. For the purpose of this study, communication is viewed, in line with the idea of Ayeni (2005) as the transfer of information as raw data from one person to another with the information being understood by the receiver. As stated earlier, technology has revolutionized communication during the past decades.

Technology,  according  to Nneji,  Ogunyemi,  Onyeuku,  Ukponson  and Agbato  (2003),  is  a systematic application of scientific knowledge to practical task in the industry. Osuala (2004) added

that technology is the application of scientific principles in research, design, development, production and distribution of goods or services. It is often used to denote a segment of the applied sciences, that is, electronic technology.

Technology has brought about a greater change in different areas of business operation. In line with  this  study,  Osuala  (2004)  noted  that  electronic  filing  techniques  and  electronic  document interchange  are taking over  the old system  of records  management.  He stated  that  spreadsheet  is challenging the traditional roles of accountants; windows diary utility have become portable diaries; word processing make document production a pleasure while  secretaries can meet with other staff separated by distance via telephone conferencing and video conferencing as a result of technology. He concluded that the environment of today’s offices is complete with Information Technology (IT)

Information Technology (IT) is described by Osuagwu (199) as the convergence of tools of microelectronics,  telecommunications  and computers.  Longley and Shain (1999) also  asserted that Information  Technology  (IT)  is  the  acquisition,  processing,  storage  and  dissemination  of  vocal, pictorial, textual and numerical information by a micro-electronics-based combination of computing telecommunications  and  Video.  According  to  them,  Information  Technology  (IT) has  arisen as a separate technology by the convergence  of computing,  telecommunications  and Video techniques. Computing  provides  the  capability  for  processing  and  storing  information;  telecommunication provides the vehicle for communicating it while video provide high-quality display of images. This concept as put forward by Longley and Shain are applicable to the study in view.

Information acquired, processed and stored have to be transferred to the various users through a communication medium known as Communication Technology. Communication Technology (CT), according to Brady (1992), is concerned with importing or exchanging information in many forms and over all distance, ranging from the minute distance within electronic circuitry to the thousands of miles between continents. He stated that communication devices and systems are primarily concerned with moving large amounts of information, as distinct from processing it, which is what computers have conventionally  been  used  for.  In  addition  to  this,  Eruanga  (2005)  referred  to  Communication Technology as the technical know-how in communication in its various forms. She stated further that

the process through which the transmission and reception of messages and information take today has

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actually  changed.  Computers  (hardware  and  software),  and  telecommunication  have  been  greatly enhanced to communicate effectively.

The  term  “Information  and  Communication  Technology”  (ICT),  therefore,  evolved  from Information  Technology  (IT)  when  the  processing  of  information  with  electronic   technology integrated with telecommunications technology (Oyelude, 2004). Since then, the evolution has brought about unprecedented  and unmatched  speed with which information  is  created, acquired, stored and disseminated.

According   to   Ngurukwem   (2005),   Information   and   Communication   Technology   is   a convergence    of   technologies    that   include   the   computer    and   microprocessor    technology, communication   satellite   technologies   and   networking   technology.   Thus   ICT   devices   include computers, telecommunication devices, communication satellites, the radio and the various networks that have enhanced the capabilities of these devices through interconnectivity.

Arolafase (2004) categorized information and Communication Technologies (ICTs) into three, namely: (i) Information Technology (IT) which has become synonymous with the use of computers. (ii) Telecommunications technologies, which comprise telephones (with fax) and the broadcasting of radio and television, often through satellite. (iii) Networking technologies of which the best known is the internet. The networks, according to Akinola (2003), are communication systems that link together computers, storage devices, word processor, printers and even telephone systems of a firm.

The concept and components of ICT for this study will, therefore, be based on the definition and categorization of ICT as put forward by Ngurukwem (2005) and Arolafase (2004) respectively. Hence, the aspects of business operations which ICTs have revolutionized that will be looked into this study are:  word  processing,  electronic  data processing,  electronic  office  communication  network, electronic commerce, and the use of small office machines to enhance office productivity.

Word  processing  technology  (Word  processor)  is  a  special-purpose  computer  expressly designed for and solely devoted to the preparation, storage and printing of document (Ugwu, 1997), while electronic data processing technology deals with the use of computer for  the data processing (Akinduko, 2000). Communication network is a set of equipment and facilities that provides a service; the transfer of information between users located at various geographical points (Leon – Garcia and

Widjara  2000),  electronic  commerce  technology  deals  with  transacting  business  through  digital processes over a network Osuala (2004), while office machines are devices used to record information, to prepare statements and bills, and to determine inventory (Stewart, Blockhus, Reigel and Schroeder. (1990).

Information  and Communication  Technology  has bee recognized  as a viable  and  versatile vehicle   for   national   development   through   job   creation   and   increased   office   or   commercial productivity. The effective utilization of ICT is, therefore, beneficial to Small and Medium Enterprises in terms of cost and time effectiveness and quality of products and services.

The term enterprise is defined as any unit engaged in the production of goods and services for sale or barter (Hussmans, 2003). Osuala (2004) also asserted that an enterprise is any organization engaged in economic activity irrespective of its legal form. According to him, and enterprise includes self-employed person and family businesses engaged in craft or other activities, and partnerships or associations regularly engaged in an economic activity.

It should be noted that there is no universally acceptable  definition  of Small and  Medium Enterprises.  Each country tends to derive its own definition based on the role Small  and Medium Enterprises (SMEs) are expected to play in the economy and the programme of assistance designed to achieve that goal (Osuala, 2004).

In spite of the absence of a universal definition of Small and Medium Enterprise (SMEs), there is a general consensus regarding the variable used in identifying SMEs. The criteria,  according to Osuala, include capital investment (fixed assets), annual turnover, gross output and employment. He added that what constitutes small or large-scale enterprise varies across space and time. What may be regarded as a small sized firm in an economically advanced country like the United State of America, Germany and Japan, might be considered as a medium or larger sized firm in a developing economy like Nigeria. Osuala (2004) stated further that definitions  of  SMEs also charge overtime, owing to changes in price levels, advances in technology or other considerations.  Even in the same country, what constitutes small or large-scale enterprises  varies over time and from one agency to the other depending on their policy focus.

Based on the variable used to define SMEs, the National Council of Industries (NCI) defined small scale enterprises (SSE) as those with fixed assets not above N10milllion,  excluding land but including working capital Adebusuyi (1999). Adebusuyi also recognized  the definition of medium scale enterprise put forward by the Nigerian Bank for Commerce and Industries (NBCI) that they are enterprise with fixed assets excluding land but including working capital of over N10milllion. Osuala (2004) then concluded  that Small and Medium Enterprise  (SMEs) are those businesses  that could operate in different market and social environments.

For the purpose of this study, SME is defined as Sanusi (the former governor, Central Bank of Nigeria (CBN)) described it. Sanusi (2003) described Small and Medium Enterprises (SMEs) as any enterprise with a maximum assets base of N200milllion, excluding land and working capital, with the number of staff employed by the enterprise not less than 10 and not exceeding 300. With the present government policy of privatization and the world idea of globalization, It is envisaged that there will be influx of competition among these business organizations and this will have effect on the Nigerian market in such a way that there will be a  rise in the standard and quality of industrial goods and services.

Privatization,  according to Obi (2002), is an umbrella term to describe a variety of  policies which  encourage  competition  and  emphasized  the  role  of  market  forces  in  place  of  statutory restrictions and monopolistic power. Tijani-Alawe (2004) also stated that, privatization is the transfer of powers,  authority and responsibility  for entrepreneurship  development  from government  to the private sector of the national economy, private individuals and institutions, domestic or international.

Adei  (2003)  described  globalization  as  that  which  represents  a  phenomenon   whereby historically distinct and separate national markets are becoming one huge global market place, with resulting  internationalization  of production  and  selling  to  the world  as one  market.  Tijani-Alawe (2004), in agreement with this definition, also stated that globalization is a business initiative based on the brief that the world is becoming more homogenous and that distinctions between national markets are not only fading out but for some products, will eventually and ultimately disappear.

According to Obi (2002), the on going privatization process in Nigeria is an aspect of  the globalization process. Hence, Information Technology (IT) is playing a vital role in the current process

of globalization. Indeed, the current globalization process in highly information-based. According to Kwanashie (1998), for those countries with the domestic capacity, more efficient production processes have been introduced in a bid to maintain a competitive edge within the changing global environment.

To ward off competition that might come up as a result of privatization and globalization, as well as enhance business development small and medium enterprise (SMEs) operators (persons who run and own a business  or industry)  in Nigeria,  particularly  in Ogun state,  have  to embrace  the utilization of information and communication technologies that will enhance effective and efficient business transactions to make them compete favourably with their counterpart in the world.

Ogun State, since its inception in 1976 has always been conscious of the importance of Small and Medium Enterprises. Thus, the government of the state, headed by Otunba Gbenga Daniel, set up Ogun  State  Agricultural  and  Multipurpose  Credit  Agency  (OSAMCA)  in 2003  to  give  loans  to deserving applicants to boost agriculture and industrial sectors. To crown it  all,  the government of Ogun State established Information and Communication Technology (ICT) institute tagged Gateway Polytechnic at Ijebu-Igbo and Saapade both in Ogun East, Igbesa in Ogun West, Itori in Ogun central zone (OGSG, 2006). These institutes were founded to enable both current and prospective investors and entrepreneurs, and most members of the state computer literate to make them withstand and test of time.

With the springing up of Small and Medium Enterprise in Ogun State, even though some are winding up, it is believed that if various modern information and Communication Technologies are fully integrated into their system of operation, the Small and Medium Enterprise will continue to grow and later become large scale enterprise.

Statement of the Problem

In the process of development,  the operations of Small and Medium Enterprises  change  as dictated   by  the  socio-economic,   political   and  technical   circumstances.   Old   systems   become inapplicable,  new technologies  appear, old skills become  redundant  or obsolete  while  the human element requires new skills, new attitude and a new orientation to facilitate  efficient and effective business management. These charges are obviously eliciting new sets of beliefs and practices on the

part of business firms demanding that goods and services produced are of high value to satisfy the needs of the consumers. In view of this, most economies of the world utilize some current information and Communication Technologies.

Despite  the  popularity  and  enormous  benefits  derivable  from  the  utilization  of  current Information  and Communication  Technology (ICT) by entrepreneurs  in the advanced  countries  to boost  their  enterprises,  it  is  observed  that  some  enterprises  in  Nigeria  are  still  backward  in  the utilization of some of these current Information and Communication Technologies (ICTs).

It seems that some of the operators of small and medium Enterprises (SMEs) in Nigeria are reluctant to go internet and to embrace all forms of computer and telecommunication networks. They presumably fail to globalize their business transactions and decide to forgo the benefits of cheaper cost of  operation,  quick  information  processing,  and  accurate  business  information  derivable  fro  the effective  utilization  of these  new Information  and  Communication  Technologies  in their  business operation.

In Ogun State, when one goes to internet to seek information about some Small and Medium Enterprises in the state, one hardly finds anything relevant to one’s request which may enable him/her transact business with them on internet unless one visits their premises. Also, it is observed that a lot of document flow within and between organizations and most of their products are costly and are not sold beyond the local market. The business cycle time is seemingly increasing daily, and the speed and accuracy of transaction processes are presumably not guaranteed.

It is observed  that Small and Medium (SMEs) in Ogun State have been performing  below expectation.  This prompts the researcher  to want to determine  the extent  of utilization  of current Information and Communication Technology (ICT) in small and medium enterprises in Ogun State.

Purpose of the Study

The major purpose of this study is to determine the extent of utilization of current Information and Communication Technology in Small and Medium Enterprises (SMEs) in Ogun State.

Specifically, the study seeks to determine:

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1.        The extent of utilization of word processing technology by the managers of Small  and

Medium Enterprises (SMEs)

2.        The extent of utilization of Electronic  Data Processing technology by the managers  of

Small and Medium Enterprises.

3.        The extent of utilization of e-office communication network by the managers of Small and

Medium Enterprise (SMEs)

4.        The extent of utilization of e-commerce technology by the managers of Small and Medium

Enterprises (SMEs).

5.        The extent of utilization of small office machines by the managers of Small and Medium

Enterprises (SMEs).

Significance of the Study

Many   organizations   now   require   their   business   partners   and   customers   to   operate electronically.  If  an  organization  lags  behind  its  competitors  in  using  modern  Information  and Communication Technologies (ICTs) such as word processing technology, electronic data processing technology, e-office communication network, e-commerce technologies and small office machines, or other business partners. Organizations that continue to operate paper-based systems that are slow and inefficient will tend to lose market share to their competitors. Based on these facts, it is hoped that this study would be of tremendous benefits to the following groups; government, Nigerian Association of Small  and  Medium  Enterprises  (NASME)  and  Nigerian  Association  of  small-scale  Industrialists (NASSI), general public, and Business Education and Business management students.

The findings of this study will be of immense significance to SMEs managers as it will enable them face the challenges of this information age. The study will create awareness and knowledge of better  ways  of transacting  business  to  enhance  the  success  and  growth  of  these  businesses.  The information that would be obtained from this study will assist SMEs managers reach a large number of potential customers as well as promote their products. It will also expose them to the procedure of accessing relevant information at any time and anywhere around the globe. The findings of this study, if properly implemented, will give the operators of SMEs a tool for reducing administrative costs and

cycle time, streamlining business processes, and improving relationship with both business patners and customers. This will further lead to increase in profits and in the standard of living of the managers.

The outcome of this study will also be of immense benefits to the government as it will enable them formulate policies in favour of the operators of SMEs in the area of ICT utilization. As a result of this, the SMEs managers, if they fully integrate modern ICT into their operating system, will operate their business effectively and efficiently.  This will increase the managers  profits and consequently increase the revenue to the government in form of tax.

The findings and suggestions of this study will be significant to the Nigerian Association of Small and Medium Enterprise (NASME) and the Nigerian Association of Small Scale  Industrialist (NASSI). The result will serve as a good resource material which they can use to organize seminars and workshops to train their members.

The benefits of this study to the SMEs managers will have consequential effects on the general public. The general public will enjoy better quality services and derive maximum  utility from the goods and services purchased from SMEs as a result of the improved operating system through the integration  of modern  Information  and Communication  Technologies  (ICTs)  into  their  system.  In addition to this, the growth that will be experienced by the Small and Medium Enterprises (SMEs) through  the  utilization  of  modern  Information  and  Communication,  Technologies  (ICTs)  in their operating system will consequently provide job opportunities for the youths in the community. This will reduce poverty and unemployment, improve their standard of living, and abate the rate of crime and moral decadence in the society.

Lastly,  the  Business  Education/Management   students  will  find  the  result  of  this  study beneficial for further and future research. The review of related literature in this study will be useful to them as it will broaden their horizon on the utilization of ICT in SMEs.

Research Questions

The study provided answers to the following research questions:

1.        What is the extent of utilization of word processing technology by the managers of Small and Medium Enterprises (SMEs)?

2.        To  what  extent  is  Electronic  Data  processing  (EDP)  technology  being utilized  by  the managers of Small and Medium Enterprises (SMEs)?

3.        To  what  extent  do  the  managers  of  Small  and  Medium  Enterprises  (SMEs)  utilize electronic office communication network?

4.        What is the extent of utilization of e-commerce technology by the managers of Small and

Medium Enterprises (SMEs)?

5.        What is the extent of utilization of small office machines by the managers of Small and

Medium Enterprises (SMEs)?

Hypotheses

The following four null hypotheses (Ho) were postulated for this study, and were tested at 0.05 level of significance:

Ho1:    There  is  no  significant  difference  among  the  mean  (  X  )  responses  of  the  managers  of

Small Enterprises in the three Senatorial Zones on the extent of utilization Information     and

Communication Technology in Small and Medium Enterprises.

Ho2:    Significant difference does not exist in the mean ( X ) responses of the workers of Small

Enterprises in the three Senatorial Zones on the extent of utilization of       Information        and

Communication Technology in Small and Medium Enterprises.

Ho3:    Significant  difference  does  not  exist  in  the  mean  (  X  )  responses  of  the  managers  of

Medium Enterprises in the three Senatorial Zones on the extent of utilization of     Information and Communication Technology in Small and Medium Enterprises.

Ho4:    There  is  no  significant  difference  among  the  mean  (  X  )  responses  of  the  workers  of

Medium Enterprises in the three Senatorial Zones on the extent of utilization of     Information and Communication in Small and Medium Enterprises.

Delimitation of the Study

This study was delimited to Small and Medium Enterprises in Ogun State that are enlisted in

Nigerian  Business  Directory  with  a maximum  assets  base of N200  millions,  excluding  land  and

working  capital,  with  the  number  of  staff  employed  by the  enterprise  not  less  than  10  and  not exceeding 300. It was also restricted to the modern information and Communication Technologies known  in  this  study  as  Word  Processing,  Electronic  Data  Processing  (EDP),  Electronic  Office Communication Network, Electronic Commerce Technology and Small Office Machines.

The  population  for  this  study  comprised  managers  and  workers  of  registered  Small  and

Medium Enterprises (EMEs) in Ogun State that are listed in Nigerian Business Directory.

Assumption of the Study

The following assumptions were made in the course of carrying out this study:

1.        The Small and Medium Enterprises (SMEs) sampled for the study were the representatives of SMEs in Nigerian.

2.        The managers  and workers of Small  and Medium  Enterprises  chosen  were  considered competent enough to give honest and unbiased response to the questionnaire structured for this study.

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