IT Industry Success in Small Developed Countries

While much research has focused on the reasons for information systems success, little research has focused on reasons for the success of U industries. This study investigates IT industry success in three small developed countries: Israel, New Zeahid and Singapore. All three countries have seen the rapid development of their IT industries in recent years. This is despite the fact that they are considerably different in many geographic, cultural, and political aspects and are widely dispersed around the globe. Neuinann has suggested that it is the highly developed but small countries that cm realize the payoff from using IT for globalization. These countries, with no inherent advantages in raw materials and only small domestic markets, have the IT infrastructure and the human skills needed. They are nimble and flexible, and can Fad niche markets in which to specialize (Neumarin 1992). In this paper we take Neumann’s work further and hypothesize that there are factors specific to small developed countries which facilitate not only the employment of IT globally but also the development of indigenous IT industries. Not all small developed countries have developed IT industries to the same extent; in this paper we attempt to explain why this is the case. Preliminary findings suggest that factors suchas geographical location, availability of raw materials, national culture, localIT use and firm strategies do not seem to explain differential developments ir, IT industries. me dominant factor whichdoes seem to provide some explanationis govemment policy in promoting 1T industries directly, supporting IT industryK&D;, and in education policies to provide appropriately trained labor poois. This is consistent with the macro-economictheory ofGrossman and IIelpman (1991) on the relationship between technoiogy development, trade, and growth as appliedto small open economies. REFERENCESGrossman, G. M., and Helpman, E. Innovation and Growth in the GZobaZ Economy. Cambridge, Massachusetts: The MITPress, 1991. Neumann,S. “Issues and Opportunities in Intemationd Information Systems.” international Information Sysfems, Volume1, Nurnber 4,October 1992, pp. 1-13.