Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
ICT Effects on Companies Performance:
Economical Aspects
Rimantas Gatautis*, Audrone Medziausiene* and Asta Tarute*
ICT became a general technology and widely is adopted by various industries
and companies. ICT also often is named as facilitator of innovations, new
processes and new services/products. However in many cases enterprises do
not try to assess the full ICT impact on activities. Economic impact of ICT on
companies performance is widely studies but from very different perspectives.
The paper propose integrated ICT impact evaluation framework which was
empirically tested between companies in Lithuania.
JEL Codes: L20, L25 and O32
1. Introduction
ICT penetration is growing between enterprises and users and in last year we
observe slowing down ICT adoption rates. However ICT based solutions becomes
more sophisticated and enterprises. Very often enterprises looks for new ICT based
solutions deployment possibilities considering various factors, but most of ICT based
solutions impact assessments are simplified or hypothetical (Gatautis, 2012).
Various researchers analyzed ICT impact on enterprises from various perspectives.
The aim of our research to propose integrated ICT impact on enterprises activities
model and empirically validate model between Lithuania enterprises. The proposed
model construction is based on literature review and systematic analysis.
2. Literature Review
Enterprises are quick to adopt ICT and such situation follows as consequence of
competitive pressure or just follow up of ICT development. Sometimes ICT based
solution adoption is just decision of stakeholders. However this these situations
enterprises do not care so much what the impact ICT is going to bring, but mainly
relay on consultant provided information.
The need of rapid ICT adoption is cause by various factors. Innovation ecosystems,
flexibility of product markets, entrepreneurial culture, flexibility of labor markets are
just some factors pressing enterprises for ICT adoption (Gatautis, 2008;
Damaskopoulos, 2012; Seppa, 2010). As well ICT adoption is influenced by various
facilitators and barriers. These facilitators and barrier might have the difference
importance in different countries however it is important to consider them in the
context of ICT adoption (see Table 1.)
_____________
*Dr. Rimantas Gatautis, Department of Marketing, Kaunas University of technology, Lithuania.
Email : rimantas.gatautis@ktu.lt
Audrone Medziausiene, Department of Marketing, Kaunas University of technology, Lithuania.
Email : audrone.medziausiene@ktu.lt
Asta Tarute, Department of Marketing, Kaunas University of technology, Lithuania.
Email : asta.tarute@ktu.lt
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
Table 1: Facilitators and barriers of ICT adoption in enterprises
ICT adoption in enterprises
Facilitator
Competitive
The
pressure Lack
of
pressure
might
appear awareness
from competitors
introducing new
products/services
or
from
consumers
demanding new
products/services.
Synergies
The opportunities Cost
to have access to
resources
from
other initiatives or
organizations.
State
support As
Knowledge Internal
and supporting Society
knowledge
instruments
development
is
priority for many
countries national
or local support
for ICT adoption
is observed.
Ease
of The
Infrastructure
participation
administrative
requirements for
companies
to
submit a project
proposal must be
reasonably low,
as
otherwise
many companies
shy away right
from the start.
Legal
uncertainties
Barrier
Especially
smaller
companies can be hardly
convinced about the needs
of introducing new ICT
based business practices
and tools unless these are
very simple and benefits
can be proved.
Without
an
external
financial
support
companies are not tended
to move towards ICT
based
decisions.
The
competitive pressure might
work as factor suppressing
cost.
ICT
adoption
requires
appropriate
knowledge
from companies and often
companies
lack
these
knowledge.
For initial use of ICT no
sophisticated infrastructure
is
required.
However
pushing
ICT
adoption
towards more complex
solutions the infrastructure,
especially
from
interoperability
perspective, serves as a
barrier for ICT adoption.
Legal uncertainties and
conflicting
regulatory
environments for crossborder
transactions,
especially
B2C,
affect
enterprises
particularly
strongly.
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
As mentioned above these factors impact ICT adoption differently in various
countries so ICT adoption process should not be considered as deterministic
process leading to the same results everywhere. Facing from company perspective it
might start from very simple ICT solutions such as email and within the time consider
website development, ecommerce system adoption, networked organization
development or possibility to join or to initiate digital business ecosystem. However
ICT adoption will depend on (Gatautis, Damaskopoulos):





Business environment: A favorable business environment is fundamental for
companies to thrive and benefit from ICT use. This includes a transparent,
open and competitive business framework, clear independent rule of law for
all enterprises, easy businesses opening and closing procedures,
transparent, simple and accessible corporate regulation, and equal and stable
legal treatment for national and international transactions.
Skills upgrading: Lack of ICT skills and business skills are widespread
impediments to effective uptake, especially between medium and small
companies, once adoption decisions are made. Governments play major
roles in providing basic ICT skills in compulsory schooling, and an important
role in conjunction with education institutions, business, and individuals in
providing the framework to encourage ICT skill formation at higher levels.
Government provides various support programs and measures aiming to
increase ICT skills between different sectors- citizens (especially older),
business (especially between small companies) and public sector.
Network infrastructure: this factor covers rollout and use of quality
infrastructure at affordable prices. Broadband connectivity is a key component
in ICT development, adoption and use. Considering the local context,
Lithuania allocated a lot of attention for broadband development. It
accelerates the contribution of ICT to economic growth, facilitates innovation,
and promotes efficiency, network effects and positive externalities. The
development of broadband markets, efficient and innovative supply
arrangements, and effective use of broadband services require policies that:
promote effective competition and continue to stress liberalization in
infrastructure, network services and applications across different
technological platforms; encourage investment in new technological
infrastructure, content and applications; and technology neutrality among
competing and developing technologies to encourage interoperability,
innovation and expand choice.
Trust infrastructure: This factors right regulatory infrastructure enabling trust,
security, privacy and consumer protection. Essential are a culture of security
to enhance trust in the use of ICT, effective enforcement of privacy and
consumer protection, and combating cyber-crime and spam. Typically these
issues depend on the collaboration with other parties from foreign countries,
so strengthened cross-border co-operation between all stakeholders is
necessary to reach these goals. In particular enterprises are interested in lowcost on-line dispute resolution mechanisms among firms and between firms
and consumers.
Digital products and information services: These are an increasingly
significant part of economic activity and they offer important opportunities to
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
small firms. On one hand companies can be actively involved in products and
information services development (in particular in ICT sector), as well as be
active digital products or information services users. Government and the
private sector have key roles in facilitating content availability across all
platforms and encouraging local development of new content, including
content from public sources.
 Intangible investments and assets: Enterprises increasingly rely on intangible
investments and assets (skills, organization, software, networks) for
competitiveness and growth. However common frameworks to identify,
measure and report intangible investments and assets still need to be
developed and be widely accepted. There is a significant role for
governments in conjunction with business associations and accounting
bodies to encourage business to develop and use systems which recognize
and report intangibles in ways that can be reliably used by investors, valued
by capital markets and guide better management practices.
 Information: Enterprises may lack objective information regarding the benefits
and costs of adoption of ICT. The business associations, business supporting
organizations and government have a role, and can provide information about
service available and when necessary improve coordination of government
information on the benefits of adoption and use of ICT, for example case
studies and good-practice demonstrations to tackle market failures in
information supply.
 Online Government: On-line provision of government information and services
can increase the adoption of ICT as companies are forced to switch to
electronic services in order to save time, money and other resources.
Government demand aggregation to provide services can help spread new
services more widely. Education, general government information and
services, and provision of government services to businesses and citizens
can all potentially benefit from the use of new high-speed infrastructure and
services, and should be given priority in government strategies.
The ICT impact was analyzed by several scholars. Manochehri, Al-Esmail and
Ashrafi (2012) outlines fours main areas of ICT contribution to enterprises – more
visibility, more information, less barriers in the market, facilitated financial
operations. On the other hand Consoli (2012) also proposed four area which are
heavily impacted by ICT – performance, growth, expansion and new products. Each
of group consists of several dimensions, such as efficiency, productivity, product
quality, etc. Hanna (2007) in his studies analyzes ICT impact on organizations,
markets, competitive strategies, employment.
Many researchers agree ICT impact on economic development through three main
channels:
 First, efficiencies are realized through rapid technological progress in the
production of ICT goods and services in ICT producing industries. Thus, the
ICT sector is a driver of productivity growth for the whole economy. Efficiency
gains in the ICT sector are also reflected in the fast price declines of ICT
products;
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
 Second, investments in ICT provide more capital for workers which raises
their productivity;
 Third, greater use of ICT in all sectors in the economy helps firms to increase
their efficiency.
After a thorough situation analysis of advanced economies and some newly
industrialized countries Hanna (2007) suggested a pervasive impact of ICT areas
(see Table2).
Table 2: ICT impact
Area
Markets
Organizations
Impact description
ICT is transforming global and local markets.
Organizations focuses on their core competencies
while outsourcing increasing amounts of activities and
services.
Competitive strategies
ICT-induced changes are transforming the rules of
competition and giving rise to new types of competitive
strategies: innovation-driven competition, time-based
competition, mass customization, lean manufacturing
and demand-driven, built-to-order products.
Innovation
ICT is enabling the creation and evolution of innovation
clusters,
knowledge
networks,
and
learning
communities.
Financial
and
other ICT allows establishing financial systems without first
services
building a fully functioning financial infrastructure.
Employment
ICT-induced changes in jobs and employment
opportunities are leading to labor migration and global
competition for knowledge workers, particularly in the
ICT industries.
Education
New competition, modes of operation, and forms of
delivery are emerging in higher education and
corporate training, including distance education, open
online universities, mega and virtual universities,
corporate universities and various forms of private
sector participation and borderless educational
services.
Regional
and
spatial ICT revolution is likely to promote dispersal of services
development
that can be delivered remotely and effectively.
Poverty reduction
ICT can open up new opportunities for the poor and
small enterprises.
The important aspect of ICT impact is period during which the impact is observed.
Many researches emphasizes that the positive impact of ICT occurs only after a
period of adoption (Higon, 2013; Hanna, 2007).
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
However, research has usually focused on direct, easy measurable effects of ICT
(e.g. growth, productivity, profits etc.) while indirect effects, especially of ICT on
SMEs performance, have been, in general, less studied.
After literature review we propose integrated ICT impact model:
 Performance – considering ICT impact for efficiency, effectiveness,
competitiveness and intangible benefits (Liang, You, Liu, 2010; Consoli, 2012;
Santos , Brito, 2012; Bayo-Moriones, Billon, Lera-Lopez, 2013).
 Growth – considering productivity growth, sales growth and strategic growth
(Raymond, Bergeron , Blili, 2005; Matthews, 2007; Consoli, 2012).
 Innovations- considering ICT impact on new business models, new products, new
services and other related changes (Markides, Anderson, 2006; Gago,
Rubalcaba, 2007; Higon, 2011; Consoli, 2012; Hall, Lotti, Mairesse, 2013).
3. ICT Impact Assessment Model
As it is mentioned above the proposed model analyses three areas of ICT impact –
performance, growth, and innovations.
The performance dimension is measured through 3 sub-dimension – effectiveness,
efficiency and intangible benefits. These sub-dimension are described through 21
indicator, such as number of clients, revenues, number of personnel,
product/services assortment, etc.
The growth dimension is measured through 2 sub-dimensions – strategic
development and internationalization, which are analysed through 7 indicators, such
as number of new units, level of competitiveness in foreign market, number of
foreign market, etc.
The innovation dimension is measured through 11 indicators, such as number of
new products/services, number of new methods adopted, etc.
The detailed indicators for these areas assessment are presented in Table 3.
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
Table 3: ICT impact assessment indicators
Subdimension
Effectiveness
Efficiency
Intangible benefits
Strategic
development
Internationalization
Innovations
Performance dimension
Indicator
Profit/revenues
Number of clients
Change of market share
Change of number of staff
Number of standard tasks performed
Average time to perform standard task
Improved work
Improvement of internal communication
Cost reduction
Investment into staff qualification improvement
Investment into staff training
Policy of salary
Climate of organization
Staff satisfaction
Customers satisfaction
Products/ services assortment
Number of “green” projects
Environment friendly initiatives
Level of pollution
Number of social projects
Number of cultural projects
Growth dimension
New business units
New departments
Number of employers
New working places
Number of foreign markets where enterprise is operating
Share of revenues from foreign markets
Level of competitiveness
Innovation dimension
Number of innovative products/services
Number of registered patents
New manufacturing processes
New methods of logistic
New business processes
New methods of work
New methods of communication/PR activities
Significant changes of product design
New sales and distribution methods
New pricing methods
New equipment
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
In order to test model we outlined several hypothesis:
 H1. Higher investment to ICT causes higher degree of innovations in
enterprises;
The analysis of enterprises investment to research and innovation outcomes do not
have connection to innovativeness of enterprises and this situation can be caused
due to insufficient statistical data reported by enterprises. For this reason H1 was
established
 H2. The higher level of ICT knowledge causes better enterprise economic
performance results and innovativeness.
The analysis of statistical data show that level of ICT knowledge causes more
intensive ICT deployment, which might lead for better enterprise performance.
 H3. Enterprise typology influence ICT based enterprise development.
Typically enterprises operate with different resources they can allocated for ICT
deployment. Generally it is considered large enterprises are more successfully in
deploying ICT, but on the other SMEs being more flexible and more oriented
towards market also can be very successful in ICT deployment.
 H4. ICT adoption in enterprise influence innovation development in the
enterprise.
Generally ICT is accepted as technology facilitating innovation development, still
various reports demonstrate it might not be a case in different industries.
4. The data collection and empirical findings
As the data collection process is in the progress we present preliminary results of
the study. The study was carried on through survey distributing link to questionnaire
web site and questionnaire in doc format between enterprises in Lithuania. The
study aims to attract representative number of enterprises from different stages
however at current stage for the preliminary results we chosen.
Quantitative research was chosen for the empirical research, and primary data were
collected using a survey method, non-random convenience sampling. A survey
method – a questionnaire – was chosen for creation of the research instrument.
Reliability of the used instrument is assessed with the help of the Cronbach’s alpha
coefficient, which measures internal consistency of the questionnaire scale. The
value of the Cronbach’s alpha coefficient of the questionnaire compiled for this
research is 0.968. This means that the questionnaire is reliable, and it can be used.
During the research the questionnaires were distributed between various companies
in Lithuania. So far only 53 companies send the data so the research results are
given based on these companies’ answers. The research data are analysed with the
help of the software SPSS 17.0 (Statistical Package for the Social Sciences).
Correlation and regression analyses of the research constructs are performed for
verifying the hypotheses.
Currently we analysed data from 53 enterprises mainly from construction, ICT,
logistic and trade sectors. The results of these companies answers analysis is
summarized below.
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
 According to statistical data investments in ICT had a slow growth tendency in
Lithuania. Correlation analysis was used to access H1 - Higher investment to
ICT causes higher degree of innovations in enterprises. However analysis of
data demonstrate that ICT causes higher degree of innovation mainly in ICT
industry. This can be easily explained as these companies activities are
directly related to ICT based products and services development. In others
sectors (trade, logistic, construction) this no correlation was observed.
 The higher ICT knowledge has direct impact on enterprises performance. This
tendency is observed in all industries. However ICT knowledge contribution to
enterprise innovativeness was not observed. The ICT knowledge varies
between enterprises, but overall positive relation is observed.
 Empirical data demonstrate enterprise topology do not influence ICT based
development as no correlation was observed between different types of
industries. This effect was observed in ICT industry. If ICT solutions are smart
and might have high impact even SMEs are keen on investing in ICT.
 The ICT development is intensifying in many industries however there are no
clear evidences that higher ICT adoption causes higher enterprise
innovativeness. The general correlation is very low, which might be explained
due to the differences of ICT adoption and deployment in different industries.
5. Summary and Conclusions
The ICT impact on enterprises is widely analysed but typically from fragmented
perspectives. The proposed integrated ICT impact assessment model evaluate 3
dimensions of ICT adoption – performance, growth and innovation.
Analysis of preliminary empirical data demonstrate ICT might play important role in
innovativeness only in certain industries still many industries hardly become more
competitive from ICT adoption. However the better performance of enterprises is
supported by ICT and this tendency is observed in various industries. Enterprises
are willing to spend time on finding smart ICT solutions and dedicate appropriate
financial investments for it.
End Notes
This research was funded by Lithuania Research Council and Ministry of Education
and Science of the Republic of Lithuania.
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