SMEs: Aligning is and the Strategic Context

Abstract

Based on multiple-case research, this paper develops a model of strategic information systems (IS) investment in small and medium-sized enterprises (SMEs). IS investment is modelled as a function of an SME's strategic context as defined by its strategic focus, i.e. cost reduction versus value added and its market positioning, i.e. few versus many customers. The paper first investigates the ways in which IS may add value to organizations. It then outlines the use of IS in SMEs. This is followed by an analysis of competitiveness in small businesses. The paper develops an analytical model, which is termed the focus-dominance model, analyses case studies of 27 firms and reports that IS investment is strongly influenced by an SME's strategic context. Four cases are presented in order to illustrate the four different IS profiles identified. Finally, the implications for theory and practice are discussed.