Adoption of Information Communication Technology and Performance of Micro and Small Enterprises in Nairobi Central Business District

Abstract

Information communication technology (ICT) adoption in an important phenomenon that is radically changing how businesses operate. With the recent developments in information technology in form of increased capacity, improved performance, accessibility to information and lower technological costs, every business must take advantage of this opportunity and invest in ICT. The Micro and Small Enterprises (MSEs) are the backbone of the Kenyan economy and provide huge opportunities for employment and economic growth. Adopting ICT would help these MSEs to grow, develop, increase market share and provide competitive advantage. This study aimed at establishing the extent of ICT adoption among MSEs in Nairobi Central Business District (CBD), to find out whether ICT adoption affects MSE performance and identify the barriers that limit ICT adoption. The study used Technology Acceptance Model (TAM),Technology Organisation and Environment (TOE) framework and Balanced Scorecard models. The research used descriptive research design and the data was collected through questionnaires. The sample size for the research was 120 MSEs based in Nairobi Central Business District (CBD).The questionnaires were distributed randomly to these MSEs who are in retail, wholesale, manufacturing and service industries.The data was then cleaned and sorted and captured in SPSS for analysis. The data was analysed through descriptive statistics and regression analysis used to establish the rate of ICT adoption, whether ICT adoption affects MSE performance and the barriers to ICT adoption. The study found that the mode of 43 out of the possible 60 scale of always using ICT, showing a good number of MSEs have adopted ICT but much more needs to be done to encourage ICT adoption. The study further observed that with the significance level of 0.000, the ICT adoption rate is a significant factor in MSE performance and an increase in the level of adoption increases the monthly revenue of MSEs by Kshs 13,144.31.The study also observed the number of employees have a positive relationship with the average monthly revenue. Furthermore, there are key ICT barriers that limit the level of ICT adoption such as high internet costs, high power costs, high hardware and software costs and lack of government support. The research provides a good background for further research on ICT adoption and the effects to MSE performance in Nairobi CBD