IT management sophistication in small business: its definition, measurement and relationship with IT impact

Abstract

This research deals with information technology (IT) management in small businesses. Although IT management in large businesses has been extensively researched, only a handful of studies have focused on the small business sector. There are three specific objectives of this research: (a) to characterise IT management sophistication in small business, (b) to develop and validate a comprehensive instrument to measure this construct, and (c) to develop a model that explains the relationship between IT management sophistication and the IT impact, in the context of small business. The characterisation of the construct is based on the work of Raymond and Pare (1992) who explored the concept of IT sophistication within the context of small businesses. This study adopted a multi-method investigative approach, combining both case study research and survey methods. The study population was New Zealand's small chartered accountancy firms. Initially, a pool of indicators representing IT management sophistication in small business was derived on the basis of case study analysis. These indicators were used as the basis for drafting the measurement instrument which was tested within a wider population in the quantitative phase of the investigation. The second generation multivariate analytical technique, Partial Least Square (PLS) modelling, was used in the study's survey data analysis phase. This research characterised IT management sophistication in small business under three sub-dimensions: IT planning, IT controlling and IT leading. These factors were represented by nineteen indicators. The validity and reliability of the measurement instrument was examined in the PLS data analysis. A PLS model explaining the relationship between IT management sophistication, technological sophistication, and informational sophistication on one hand with IT impact on the other, in the context of small business was derived. The characterisation of IT management sophistication in small business will be useful for the researchers to understand this complex construct more clearly. The measurement instrument can be used to examine further the different aspects of IT management in small businesses. The model that related the study constructs will aid understanding the associated links between them. Practitioners will be able to use these results to improve upon their IT managerial practices to derive a greater impact of IT, which can, in tum, result in achieving higher organisational performance.