Communications of the ACM

Communications of the ACM

How They Manage IT: SMEs in Canada and the U.S.

By Ali Reza Montazemi
Communications of the ACM, December 2006, Vol. 49 No. 12, Pages 109-112
10.1145/1183236.1183240
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Global competition is forcing enterprises to become agile. Agility in business performance is the ability of a company to prosper in rapidly changing, continually fragmented global markets for high-quality, high-performance, customer-configured products and services. In this endeavor, information technology (IT) plays an increasingly important role in facilitating the introduction of new products or services, in improving operational processes, and in guiding managerial decision making. Therefore, mismanagement of IT can be detrimental to the competitive effectiveness of enterprises. Effective IT management is particularly critical for small and medium enterprises (SMEs) because they operate different from large companies.

First, SMEs tend to have centralized structures and to employ generalists rather than specialists, and this results in a lack of IT/IS knowledge and technical skills. Second, SMEs lack the financial resources to invest in IT infrastructure and to train their IT users. Furthermore, SMEs have less in the way of resources to absorb the shocks of an unsuccessful investment in IT. SMEs are therefore under increasing pressure to employ IT/IS effectively in order not only to maintain their competitive positions but also simply to survive.

We should bear in mind that countries differ in terms of their technological status, their economic development, and their cultures, and all this will affect how IT is managed [6, 11]. One would expect similar management of IT in Canada and the U.S., which are similar in terms of their economic infrastructures, their technology status, and their cultural backgrounds [6]. Despite its importance in global competition, there has been little empirical investigation comparing the IT management issues between competing economies. I address this issue here, describing the results of a survey of 215 employees in 48 SMEs in Canada and the U.S. SMEs make significant contributions to GDPs and growth in job creation in the Canadian and U.S. economies. The Canadian SME market represents 99.8% of all employers in Canada and 99.7% of all employers in the U.S. They generate 85% of new jobs in Canada and 80% of the new jobs in the U.S.

Canada and the U.S. have similar macroeconomic environments. Moreover, they are the world's largest trading partners; a complex daily interaction takes place that supports more than two million jobs in each country. The strong socioeconomic ties between the two countries were further tightened once the North American Free Trade Agreement (NAFTA) went into effect in 1989. This agreement eliminated or drastically reduced most tariff and other trade barriers between the two countries and permitted increased cross-border investment in many industries. As a consequence, advanced technologies, managerial knowledge, and operational experience are exchanged and disseminated freely between the two countries. In this article, I explore the differences between these two countries in regard to IT management of SMEs in the manufacturing sector.

Five major domains affect IT management in SMEs [7]: environment, organization, technology/innovation, task, and technology. Since Canadian and U.S. SMEs operate in the same environment (the free trade zone of NAFTA), I focus the investigation on the remaining four domains affecting IT management in both countries' SMEs. Seven dimensions (see the accompanying table) compare these four domains for the management of IT in U.S. and Canadian SMEs in the manufacturing sector.

I collected data from 215 employees of 48 U.S. and Canadian SMEs by means of face-to-face interviews and structured questionnaires (see the sidebar for details). The average number of employees in these 48 SMEs was 183 (minimum of 25 and maximum of 496). All of the companies had implemented IT to support their operations. On average, their end users had enough IT knowledge to access and manipulate information by means of report generators and/or a limited set of commands from 4-GL programs such as Access and Excel. By and large, respondents believed their managements to some extent had recognized the potential of IT to improve productivity and to support the firm's competitive advantage. I found no significant differences between U.S and Canadian SMEs in this regard.

Using the survey data, I assessed the statistical significance of seven dimensions of the IT implementation (see the table) for the U.S. and Canadian SMEs as follows:

Top management/external support. The findings indicate that support from top management and commitment to IS implementation, IT decision making, and guidance and direction are similar between the two countries. This is not surprising, since management experience and managerial knowledge can be shared among the SMEs in the two countries as a result of extensive exchange of technologies, knowledge, and experience across the border. Furthermore, the statistical analysis shows that consultants provide U.S. and Canadian SMEs with similar levels of expertise to assist in IT implementation, problem identification, and the selection of application packages and vendors who provide user training, after-sales service, and technical support.

IT management climate. The U.S. SMEs surveyed made more efforts to understand their information requirements, resulting in significant differences between the U.S. and Canada in terms of IT management climate. Information requirement analysis (IRA) involves the analysis of organizational requirements for information and the design of IT in order to collect, store, and disseminate data in support of organizational goals. It includes extensive analysis of information needs, and long-range planning of the organizational information requirements [1, 4]. By performing a better IRA, the IT groups in U.S. SMEs are more knowledgeable about the specific information needs for each individual application. With better understanding of users' information requirements, IT people, together with line managers and end users, can have fruitful discussions, apply their personal expertise in new and creative ways, and learn from each other. This is conducive to a more favorable environment for the use of IT in the organization. In such an IT management climate, U.S. SMEs are in a better position to make the most of IT and to be innovative in their operational and strategic activities.

Task and technology characteristics. No significant differences were found in regard to task and technology characteristics between manufacturing SMEs in the U.S. and Canada. The two countries are close to each other geographically and culturally. Close socioeconomic ties have been established, and technologies, knowledge, and experience have been exchanged across the common border. Thus, manufacturing SMEs are generally alike in the two countries so far as technology is concerned, and they have similar organizational structures and production goals, which result in similar types of tasks with similar levels of sophistication.

Task-technology fit. The task-technology fit (TTF) is the degree to which IT assists each individual end user in the performing his/her task. We found significant differences for TTF between U.S. and Canadian SMEs. Although there are no significant differences between SMEs in the U.S. and Canada as far as task characteristics and technology characteristics go, the better IT management climate (involving more efficient use of IRAs) in the U.S. SMEs provide a more favorable environment to fit IT in support of task requirements, individual abilities of the end users, and functionality.

Individual characteristics. Although there is no significant difference between the U.S. and Canada in terms of user involvement and computer experience, there are significant differences in the formal education level of users. This differential is consistent with the difference in the overall educational attainment at the national level in the two countries. For example, in 1998, 86.5% of the U.S. population aged 25–64 had completed secondary education versus 79.7% of Canadians. For the same year, a higher proportion of the U.S population aged 25–64 had completed undergraduate or advanced research programs, 26.6%, versus 18.6% in Canada [5].

Performance impact. Finally, the survey found significant differences between U.S. and Canadian SMEs in terms of individual performance impact. In addition to the importance of task-technology fit (TTF) in predicting individual performance impacts from IT [2], other factors affect individual performance impact, such as the end-user's knowledge of IT [9]. With higher levels of formal education, users in U.S. SMEs tend to contribute more effectively to the IT implementation through their involvement in the requirements and design phases.

Another factor that predicts individual performance impacts from IT is user attitudes about IT [1, 8]. Opinions regarding the usefulness of IT, for example, along with social norms, can predispose people to utilize systems, and this in turn can lead to increased utilization [8]. The survey found U.S. users hold more positive attitudes about IT and have better utilization of systems—and hence gain higher performance impacts.

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Conclusion

These findings, limited to manufacturing SMEs, clearly indicate that there are no significant differences between U.S. and Canadian SMEs in task characteristics, technology characteristics, and top management/external support. However, U.S. SMEs have a better IT management climate because more effort is put into analyzing their information requirements. Furthermore, U.S. end users tend to have a higher level of formal education. Although both U.S. and Canadian SMEs managers recognize the usefulness of IT in the performance impact, U.S. end users experience higher IT performance impacts because they have more knowledge and better attitudes toward implementation of IT. In short, U.S. SMEs make better use of IT than their Canadian counterparts.

Information technologies enable SMEs to enhance their productivity for survival in the global economy. Thanks to the open border, much needed technology and expertise is increasingly accessible to SMEs worldwide. However, use of technology must be managed well to produce optimal returns on investment. Management of IT requires detailed assessment of company information requirements, end-user training programs, and managing organizational change during the IT implementation phase. Improper implementation of IT makes it extremely difficult for the SMEs to compete globally. NAFTA has helped cross-border trade between U.S. and Canadian businesses, but the Canadian SMEs should make a greater effort to manage the implementation and use of IT for improved profitability. We hope that future investigations can compare IT management in U.S. SMEs with those in other countries as a baseline to enhance meaningful exchange of best practice in management of IT resources.

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The Digital Library is published by the Association for Computing Machinery. Copyright © 2006 ACM, Inc.

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