FACTORS THAT DRIVE INTERNET USAGE AMONG SMALL AND MEDIUM SCALE ENTERPRISES: EVIDENCE FROM GHANA

ABSTRACTThe internet continues to significantly affect the way business is carried out globally. As businesses of all sizes align information communication technology to its processes to achieve operational excellence while reducing cost, using the internet has become even more critical than ever. This study uses both quantitative and qualitative approaches to assess factors that drive the usage of internet as part of the business operations of small and medium-scale enterprises. The analysis compares internet usage with the use of mobile phones and televisions. From the results, service-related businesses are more likely to use the internet for business operations than other business typologies. However, the length of experience in internet usage is strongly associated with business operators that use the internet. Results also indicated that the small and medium-scale enterprises are gradually adopting more sophisticated internet technologies in business. Although respondents assert to the benefits derived from the use of the internet in business, replacing conventional media with internet services is unlikely. Issues about cost, slow access speed and customer communication preferences are major internet usage challenges. We propose that further studies should adopt extensive statistics financial indices to measure internet usage against perceived outputs and benefits in these enterprises.JEL: M15, 033KEYWORDS: Small and Medium-Scale Enterprises, Information and Communication Technology, Internet Adoption, Business OperationsINTRODUCTIONThe internet represents one of the most successful examples of sustained investment and commitment to research and development in information infrastructure. A survey conducted in Ghana by Frempong and Essegbey (2006) on the use of information communication technology (ICT) indicates that despite the wide availability of internet service and relatively high literacy rate among the owners of SMEs only a few of them (7%) use the internet for business activities in the Ghanaian economy. The issue that immediately rises is that if it is neither a question of literacy nor the availability of the service, then what other factors drive internet usage patterns in Ghana?One determinant, well noted in literature is the proliferation of devious individuals who wish to exploit the internet for their own selfish interests. This type of conduct makes sincere users vulnerable to a host of possible attacks that compromise the confidentiality, integrity, and availability of information they exchange through the internet. As a result of such illicit activities, people tend to lose trust on the security of doing business using the internet and thus, forego its huge potential to stimulate business growth.Findings from Bessen (2000) indicate that the higher the costs associated with adopting innovation, the slower the pace of usage expansion. This suggests that the cost of adoption is an important factor in the adoption and use of the internet for business.Literature findings of Mohammad and Alam (2009) suggest that small businesses tend to avoid internet usage in their business because it is perceived as complex to use. Literature findings of Poon & Strom (1997) also suggest that the benefits perceived by the small businesses from internet usage are vestigial and hence discourage the adoption of this technology. But do these factors apply within the Ghanaian context?Although extensive research literature exists on the usage of the internet in supporting competitiveness of small and medium-scale enterprises (SMEs), there is still the need for a deeper understanding of the factors that either promote or inhibit the adoption and usage of this facility by SMEs within specific contexts. The need for this study is therefore for two main reasons. First, most of the empirical research studies available about determinants of Internet usage for business activities are related to larger formal companies. …