An area of the UK will be chosen for this survey, preferably an area where the author resides to reduce the costs associated with travel and to increase survey response. No personal information will be made public and participants will be notified of this. The author will use online and library resources to obtain a list of SMEs in the selected area. As a result of the methodology, the research will largely be descriptive as it will be collecting information from surveys (Creswell 2003). The research will also be explanatory because the author will attempt to provide an explanation between IT investment and productivity in SMEs (Creswell 2003). This also means that the research will be largely qualitative.
Small and medium sized enterprises (SMEs) are considered to benefit the economies they serve, as they create employment and attract investment into certain areas. However, due to their size they are not able to always access and enjoy the advantages of much larger companies. For instance, large enterprises often have direct access to international and local capital markets, as they can afford the transaction costs (Enterprise Development Agency 1998). This suggests that SMEs are confined to regional markets which does not fully maximise their potential. Larger enterprises are also able to market their products and services across national boundaries whereas SMEs will be restricted to national and/or regional boundaries (Enterprise Development Agency 1998). If one considers the characteristics of SMEs, one will find that most of these enterprises are relatively small and have high operational costs which may prevent them from expanding into larger, more successful enterprises. However, there have been concerns that SMEs may not expand at a favourable rate due to their lack of investment in information technology (IT), which is partly a result of not being able to access financial and other resources that are widely accessed by larger enterprises (Enterprise Development Agency 1998). In inability to access IT limits their ability to be competitive and innovative, and it also limits them from developing new procedures and processes.
IT investment in SMEs is essential as research has shown that the use of various forms of IT often results in performance improvements, especially in the area of production, capital accumulation and marketing (Chahud 2005). Such improvements could probably be credited with streamlining processes and procedures within the SME. For instance, the order process can be instantly transformed through the use of the internet for placing orders, or even enabling electronic payments to be taken over the phone. Without IT, SMEs would face longer lead times which in turn reduce their competitiveness. However, another link has also been found between IT investment and the educational status of the owners of SMEs (Chahud 2005) which suggests that