ROLE OF INFORMATION TECHNOLOGY COSTS ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KENYA

Jacob Kiprotich Yego

Jomo Kenyatta University of Agriculture and Technology (JKUAT)

John Karanja Ngugi (Phd)

Kenyatta University

CITATION: Yego, J., K. & Ngugi, K., J. (2018). Role of Information Technology Costs on the Performance of Small and Medium Enterprises (SMEs) in Kenya. International Journal of Arts and Entrepreneurship, Vol. 7 (6); pg 21 - 37.

ABSTRACT

SMEs are essential in economic development and growth in most of the countries across the globe through employment creation and contribution to the GDP. However, despite the merit surrounding the SMEs, their performance has been minimal with many recorded losses while their collapse rate remains high with more than 60% of them not celebrating their 3^rd anniversary. On the other hand, available data from studies and reports across the globe have revealed that information technology is crucial to the performance of businesses especially in the current 21^st century through enhanced information sharing, increased innovation, integrated operations as well as better production methods. On the contrary, studies reveal that that uptake of IT among the SMEs is below the mark, especially in the developing countries, Kenya being a perfect example. In Kenya, very few SMEs - if any, have embraced effective use of IT in their operations. The study therefore sought to find out the influence of cost of information technology on performance of SMEs in Kenya. The target population under the study was the 98598 registered SMEs in Nairobi County. A sampling formula was used to identify the sample size of 398 SMEs where the managers/owners or their representatives were surveyed. A structured questionnaire was used as the research instrument where it was administered through drop and pick method. The collected data was analysed through mixed method analysis where quantitative data was analysed by use of the SPSS software and presented in form of mean, standard deviation, frequencies and percentages in frequency tables, bar-graphs and pie-charts. On the other hand, the qualitative data was analyzed through content analysed whereby the explanations were sorted and the weighty ones presented in support of the quantitative data. The findings from the study revealed that the cost of IT positively and significantly influenced the performance of SMEs. The study concluded that indeed failure to effectively utilize information technology contributed to the continued underperformance of the SMEs in Kenya. The study recommended that the SMEs' management should invest in IT to enhance their performance and competitiveness.

Key Words: Information Technology, Cost of IT, SMEs, Performance and ICT

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