Effect of Information and Communication Technologies (Icts) as Innovation Facilitators of Service Sector Smes in Nairobi County

Abstract

This study focused on the Effect of Information and Communication Technologies (ICTs) as Innovation Facilitators of Service Sector SMEs in Nairobi County. The objectives of the study were to establish the extent of ICT adoption in Service Sector SMEs in Nairobi County and to determine the effect of ICT adoption on innovation by Service Sector SMEs in Nairobi County. A descriptive research design was adopted. The study targeted all Service Sector SMEs in Nairobi County and a sample of 100 Service Sector SMEs was chosen. Primary data was gathered from the owners and managers of the Service Sector SMEs using questionnaires. Data was analysed using descriptive statistics and regression analysis was used to establish the relationship between ICT adoption and innovation in the SMEs under study. The study found that a large number (94.62%) of these SMEs had adopted ICT tools and applications. The adoption of ICT in most (37.63%) SMEs was moderate with a few SMEs indicating low (17.2%) adoption. The study established that technological context, organizational context and environmental context have a positive effect on innovation in Service Sector SMEs in the County. Further, the study revealed that small and medium enterprises utilize the following ICT tools and applications in their operations; personal computers, email, internet, websites, intranet, credit card facilities, business software, and data storage and security facilities. Results also revealed that SMEs use ICT tools majorly for internal and external communication with customers, suppliers and employees; sharing files/information; tracking orders, supplies and customer enquiries; financial accounting; and carrying out internet banking. The study concludes that most SMEs use ICTs mainly to support changes in the business model. Based on the findings of this research, it is recommendable that the Service Sector SMEs adopt ICTs in their business operations. However, in adopting these uses a cost-benefit analysis needs to be carried out to ensure that the SMEs’ primary objective of making profit is not overshadowed. This research was a descriptive survey and was also limited by the use of questionnaires as the only research instrument. A case study is therefore recommended for an extensive study on the research variables, possibly on the subject of ICT utilization using additional research tools like interviews as well as focus group discussions.