ICT and Innovation in Small Companies

The small business sector is very important to most economies generating significant wealth and employment. It has generally been accepted that small business owners are less likely to embrace innovation and less likely to have a well-defined business strategy. Yet for companies to grow and continue to be successful innovation is critical. Given the importance of this sector there is a need for governments and policy makers to understand innovation in small business particularly in terms of ICT implementation and use in order to formulate appropriate programs and policies. There have been few studies reported in the literature however, that have looked at innovation in the small business sector. This study investigated small Swiss businesses with 10 to 49 employees. A survey of 389 small businesses found that most see themselves as innovative and most use IT to support innovation. Further the study found a strong link between companies who invest in ICT, how these companies use ICT and their level of innovativeness. The study supports a hypothesis model which describes the features of innovative companies, how they use ICT for innovation and strategies they employ for gaining competitive advantage.