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Internet Technology Use in The Value Chain of Ethiopian SMEs: The Benefits, problems & Prospects.
Linköping University, Department of Management and Engineering, Business Administration. Linköping University, Faculty of Arts and Sciences.
2012 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Background: Major attention in researches within the field of internet technologies andits usage in service providing Small and medium Enterprises has been devoted in thedeveloped countries. Little or almost no attention or studies have been given on most ofthe developing or third world countries specifically, Ethiopia which can be consideredas a black hole in related researches. Recently there are some encouraging signals hereand there, with a hopeful transition to the digital era and utilization of internettechnologies, in the service providing small and medium enterprises businesses. Thearea of attention here is directed to Ethiopia, in the existing internet technologies usagein SMEs with the prospects, benefits and problems of utilization in the businessoperations.

Aim: The purpose of this thesis is to find out the benefits, prospects and utilizationproblems of internet technologies in small and medium size service enterprises inEthiopia. The study discusses the service business operations and their internet usage inthe small and medium enterprises value chain activities theories.

Definitions: The term SME (Small and Medium size Enterprises) generally refers to, inmost developing economies, the following broad categories: For this research purposeUNIDOs quantitative and qualitative SMEs definition criterions will be used:

  • Micro enterprises: employment level below 10; Registered Capital < $ 42,000 
  • Small enterprises: employment level from 10 to 49; Registered Capital > $ 42,000
  • Medium enterprises: employment level from 50 to 249. Registered Capital > $ 42,000

Internet Technology: is all about connectivity, accesses and utilization of internet.

Realization: This study is based on multiple case study of 5 small and medium sizedservice enterprises‘ using internet in their business activities. Unstructured interviewwas handled with managers in the business, for this purpose qualitative research methodis applied with an inductive approach more dominantly.

Completion and Results: A qualitative multiple case studies on SMEs businesses inAddis Ababa, Ethiopia was carried out and the results revealed that:     

The Benefits of Internet Technologies as

  • The falling costs and increasingutility of cutting edge technologies without bearing the high costs of discarding olderlegacy systems and carrying massive cost of technological  R & D,
  • Historicopportunity  for SME‘s to create new information rich industries and competitiveentrepreneurships of global reach with no abstraction/ marketing chains or less capital ,
  • Provided Product/service and Operation / Processes Efficiency for SMEs,
  • Enhancedthe businesses‘ value proposition, quality and flexibility, 
  • SMEs  are better positionedto participate in global value chains, with minimal capital , R&D and Technology cost. 

The Problems of Internet Technologies as: - Poor literacy, both computer basedand formal education, - Lack of good infrastructure, both physical and regulatory - lackof access to technology in rural or remote areas with lack of content in local languagessettings (Language & Diversity Barriers), - Service interruptions in basic infrastructuresuch as telecoms and electricity interruptions, - And lack of expertise in IT.  

The Implications and Conclusion as: The utilization of internet technologies andthe growing number of entrepreneurial firms(SMEs) signals the way forward inEthiopia is  with a lot of  prospects among them are opportunities of  participating in theglobal market arena, strategic alliances with local and foreign firms that creates hugepossibilities of exploring and exploiting information, knowledge and culture industrieson which the country is endowed with, provided that the above mentioned impedimentsare addressed.  The theoretical issues in this research indicates that unlike the developedeconomies perspective on the value activities of firm which states the primary activitiesas a critical and detrimental activity in the value chain, in this research the supportactivity is found to have an equivalent, if not, a greater influence in the value activitiesof Ethiopian or developing country context that challenges the pre-establishedtheoretical concept (Porter, 1985)in the matured and developed economies giving muchof the credit to primary activities.  The underlying conclusion in this research is that, thesupport activities mentioned on Porter (1985) and (Rayport &Sviokla ,1995) as in bothcases (physical and virtual SMEs presence) are found to be equivalentlycritical/determinant as it is analyzed in the cases and shortly portrayed in the conclusivetable, where the support activities are found to be playing a significant role andcontribution  even in the sustenance of the primary value activities   and further to thewhole value system as far as the internet connectivity to business presence/ [VISIBILITY,MIRRORING CAPABILITY& NEW DIGITAL VALUE] (Rayport &Sviokla ,1995)  is takenin to consideration. Therefore an adapted / amended model to the context of developingcountries/Ethiopia is suggested based on the empirical findings and analysis. Search Terms: - Internet Technologies (ICT), Small & Medium Service Enterprises(SMEs), Infrastructure, Human Resources, Primary and Secondary Value Activities,Physical &Virtual Value Chain, Search, Evaluation Problem Solving & Transaction. 

Place, publisher, year, edition, pages
2012. , p. 122
Keywords [en]
SME, Internet Technology, Value Chain
National Category
Business Administration
Identifiers
URN: urn:nbn:se:liu:diva-134578ISRN: LIU-IEI-FIL-A--12/01360—SEOAI: oai:DiVA.org:liu-134578DiVA, id: diva2:1075316
Subject / course
Master's Programme in Business Administration – Strategic
Supervisors
Examiners
Available from: 2017-02-28 Created: 2017-02-17 Last updated: 2017-02-28Bibliographically approved

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