| Summary: | ICT has become an interesting phenomenon, specifically in the business
world. It has contributed significant changes in many parts of the world where
new SMEs emerged and challenged the domination of established corporations.
However, although many SMEs have been able to seize its benefit, others are not
so successful. Therefore, it draws curiosity as to how exactly ICT can give impact
on the performance of the SMEs. This is the main concern of this research. To
engage with it, the research came up with a question: How can SMEs utilize ICT
to improve their business performance? The research pursued the answer to the
question by devising a descriptive-case study, utilizing in-depth interviews,
secondary data collection and field observation. The interviews were conducted
with eleven respondents, consisting ten SME owners and the neighbourhood
leader, in a neighbourhood in Yogyakarta City, called RT 36 of Patehan.
The research found out that the residents of RT 36 are able to build a
computer-internet network providing a 24-hour-a-day internet connection which
they call �Kampoeng Cyber� network. It enables the SMEs in the kampung to
integrate ICT into their business. As the result, most of them are able to increase
their business performance. However, there are also some discrepancies in which
the respondents with more extensive ICT intervention have less performance
improvement than other respondents with less extensive ICT. It implies that
having ICT interventions doesn�t automatically improve the SMEs� performance.
Further enquiries showed that the performance improvement relates to the
Absorptive Capacity of the SMEs. Absorptive Capacity has four dimensions,
namely Acquisition, Assimilation, Transformation and Exploitation. Of the four
dimensions, significant distinction among the respondents can be spotted in terms
of Transformation. The SMEs that manage to significantly improve their
performance are able to combine the new innovation with their old knowledge,
put ICT into the context of their existing work system and properly merge the new
innovation into their work mechanism. The research also found out that
Absorptive Capacity has a strong relationship with entrepreneurship, social capital
and networking of the SMEs. These aspects help the SMEs to break the barriers
toward ICT absorption.
The research finally concluded that SMEs can properly utilize ICT to
improve their business performance by having adequate and proportional
dimensions of Absorptive Capacity. Although all dimensions should be present,
Transformation holds a significant role since it relates to placing ICT into the
specific context of the SME. SMEs should also possess entrepreneurial capital,
adequate networking and appropriate purpose of ICT intervention. Mere
investment on ICT without full understanding of its own condition may make it
difficult for an SME to integrate ICT into its work system and hamper its
optimum utilization for performance improvement.
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