An exploratory study of the extent of information technology adoption in SMEs: an application of upper echelon theory

Abstract

Purpose: The paper aims to investigate the effect of compositions of managerial/demographic characteristics of the top management team (TMT) on the extent of information technology (IT) adoption in small businesses (SMEs), where such strategic decisions made by TMT have direct and significant influence on all aspects of business operations and its competitive position in a market. Design/methodology/approach: Based on the upper echelon theory, the study formulated four hypotheses relating the compositions of TMT characteristics to the extent of IT adoption in different functional areas. Multiple regression analysis was employed to analyze the data. Findings: The age average and the education average of TMT in small businesses are significant predictors of the extent of IT adoption. However, the group heterogeneity (either gender or ethnicity), contrary to the prediction, has negative impact on the extent of IT adoption. Practical implications: The research findings indicate that the age and education composition of managers as current/future top management is critical to facilitate the extent of IT adoption in SMEs. Originality/value: The research contributes to the body of knowledge in IT adoption by complementing the results of prior research with the findings that the characteristic compositions of TMT affect the extent of IT adoption in SMEs, applying the upper echelon theory to examine issues surrounding IT adoption, and suggesting practical implications that SMEs could compose, educate, and rejuvenate their top management teams to achieve a high extent of IT adoption.