Impact of ICT-Usage on SMEs’ Innovations in Western Province of Sri Lanka

Abstract

Small and Medium Size Enterprises (SMEs) are major sources of employment and value creation, as it plays a key role in Sri Lankan livelihood. It is evident that the SME sector in Sri Lanka does not provide the expected results and this sector lacks innovation. Thus, it is important to identify opportunities to improve the SME’s innovative capacity and business performance. This study was designed to investigate the impact of Information and Communication Technology (ICT) on innovations of SMEs in the Western Province of Sri Lanka, and to identify the existing level of ICT usage among the SMEs in the Western Province of Sri Lanka. This study used a quantitative research method. The population of the study was SMEs with less than 500 employees in the Western Province. The sample frame was derived from the two main listings of organizations: the Ceylon Chamber of Commerce and the Ministry of Industries and Industrial Development Board. Accordingly, 350 respondents were selected by using the simple random sampling method. Data were analyzed using the SPSS statistical tool with descriptive and inferential statistics. This study identified four main types of innovations namely: product, process, market, and organizational, and found that there is a significant effect of ICT usage on SMEs innovations. Future research could be undertaken to examine the mediating effect of ICT-based innovations and ICT usage on business performance.

Keywords: Entrepreneur, Innovation, Small and Medium size Enterprises, Information and Communication Technology