Ict, Small Business and Sme's

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ICT, E-BUSINESS AND SMEs
INTRODUCTION
Information and communication technology (ICT) and e-business applications provide many benefits across a wide range of intra- and inter-firm business processes and transactions. ICT applications improve information and knowledge management inside the firm and can reduce transaction costs and increase the speed and reliability of transactions for both business-to-business (B2B) and business-to-consumer (B2C) transactions. In addition, they are effective tools for improving external communications and quality of services for established and new customers. Despite these advantages, rapid growth in businesses’ purchases and sales over the Internet has yet to materialize. E-business is increasing but still accounts for a relatively small share of total commerce. Broad definitions of e-business suggest that in 2000 total on-line transactions were generally 10% or less of total business sector sales and are mainly business-to-business, and business-to-consumer sales are even lower, generally less than 2% of the total retail transactions. On-line transactions are mainly B2B and domestic, rather than B2C or cross-border. The situation is similar for small and medium-sized enterprises (SMEs), although they lag behind larger firms in Internet transactions. For small firms to adopt e-business strategies and tools, benefits must outweigh investment and maintenance costs. Commercial considerations and potential returns drive adoption. Beyond a certain level of connectivity (PC, Internet access, on-line information or marketing), not all SMEs will necessarily “catch up” with large firms, simply because e-business may not bring large benefits and SMEs will stay with traditional business processes. Other barriers have been seen to be the availability of ICT competencies within the firm, and availability and cost of appropriate interoperable small-firm systems, network infrastructure and Internet-related support services. Lack of reliable trust and redress systems and cross-country legal and regulatory differences also impede cross-border transactions. Policies that will affect the adoption and use of e-business strategies include those designed to expand and improve the quality of network infrastructure and legal and regulatory environment, foster technological diffusion and create a favourable business environment. Beyond these general framework policies, specific policies for SMEs have focused on ICT and e-business awareness programs, business consultation services and employee and management training to enhance ICT and managerial skills. Policies have shifted over time as firms and economies have moved from concentrating on readiness and connectivity, to diffusion and use, and are moving towards mature e-business strategies which blend broad policies for the business environment with polices for particular areas such as IPRs and competition. Policy has moved beyond a narrow concept of e-business (on-line transactions) to a wider view of e-business integration of internal and external processes, based on technology neutrality. Policy initiatives in some cases aim at facilitating SME participation in product and sector value chains and providing them with information to assess the opportunities and costs of e-business. However there is no one-size-fits all approach to policy and the policy mix and priorities will depend on national circumstances (leading or lagging countries) and sectoral distribution of economic activity, as well as size factors. BENEFITS AND USE BY SMALL BUSINESSES

SMEs have gradually recognized the positive impact that ICTs, such as computer terminals, e-mail and the Internet and their applications can have on their business. In advanced OECD countries, most small firms, including micro-enterprises with fewer than ten employees, now have at least one computer terminal, usually with Internet access. Many types of business software can improve information and knowledge management...
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