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Factors Affecting The Adoption of Information and Communication Technology in Small and Medium Enterprises: A Perspective From Rural Saudi Arabia
Factors Affecting The Adoption of Information and Communication Technology in Small and Medium Enterprises: A Perspective From Rural Saudi Arabia
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To cite this article: Adnan Mustafa AlBar & Md. Rakibul Hoque (2017): Factors affecting
the adoption of information and communication technology in small and medium enterprises:
a perspective from rural Saudi Arabia, Information Technology for Development, DOI:
10.1080/02681102.2017.1390437
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INFORMATION TECHNOLOGY FOR DEVELOPMENT, 2017
https://doi.org/10.1080/02681102.2017.1390437
ABSTRACT KEYWORDS
Small and medium enterprises (SMEs) can play an important role in ICT; SMEs; rural areas;
the national economy of developing countries. The adoption of developing countries
information and communication technology (ICT) has enabled local
SMEs to participate in the international market. However, little
research has addressed issues related to SMEs adopting ICTs,
especially in rural areas of Middle Eastern developing countries
such as Saudi Arabia. Using the extended technology-organization-
environment framework with personal innovativeness, this study
examined the factors that influence the adoption of ICTs among
SMEs in rural areas of Saudi Arabia. The study found that relative
advantages, top management support, culture, regulatory
environment, owner/manager innovativeness and ICT knowledge
had a significant relationship with ICT adoption among SMEs in
Saudi Arabia, whereas compatibility, complexity and a competitive
environment had no significant relationship with ICT adoption. The
findings of this study will potentially help SME managers/owners
and the Saudi government in the successful adoption and diffusion
of ICT in SMEs located in rural areas in Saudi Arabia.
1. Introduction
With the increasing globalization of the world economy, information and communication
technology (ICT) has transformed business organizations in developing countries in
general and in the Arab world in particular (Alrawabdeh, Salloum, & Mingers, 2012). ICT
plays a crucial role in bridging the gap between business organizations in developing
and developed countries. Moreover, it also plays a vital role in bridging the gap
between business organizations in urban and rural areas in developing countries (ITU,
2011). Business organizations can make more efficient, competitive and innovative
decisions through the use of ICT. Researchers in both developed and developing countries
have revealed the strong positive relationship between ICT and firm performance (Apulu &
Latham, 2011; Rastrick & Corner, 2010). ICT moves other inputs (i.e. labor, capital) in the
production of goods and services and has a positive impact on organizational
CONTACT Adnan Mustafa AlBar ambar@kau.edu.sa Department of Information Systems, King Abdulaziz
University, Jeddah, Saudi Arabia
James Pick is the accepting Associate Editor for this article.
© 2017 Commonwealth Secretariat
2 A. M. ALBAR AND R. HOQUE
performance. Dewan and Kraemer (2000) found a positive and significant relationship
between IT investment and profit.
In recent years, the adoption of ICT in small and medium enterprises (SMEs), which rep-
resent the majority of the world’s companies, has caused a revolution in their businesses
(Consoli, 2012). SMEs worldwide are using ICT to cut costs and improve efficiency. ICT can
provide genuine advantages for SMEs, supporting them so that they can compete with
large firms. It is claimed that ICTs can increase SMEs’ productivity and efficiency in different
ways, including making technical improvements, reducing transaction costs and shifting
the production function (Harindranath, Dyerson, & Barnes, 2008). Therefore, it is essential
for SMEs to employ ICT tactically within their organizations in a manner that enables them
to maximize its benefits.
Nevertheless, although the adoption and diffusion of ICT have a positive impact, ICT has
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acceptance problems among SMEs, particularly in rural areas of Middle Eastern developing
countries such as Saudi Arabia. SMEs are generally slower than large firms to adopt ICT,
rendering rural SMEs vulnerable (Tan, Chong, Lin, & Eze, 2009). The major barriers to
better utilization of ICT for SMEs are a lack of top management support, owners/managers
who lack innovativeness, resistance and a lack of skilled employees (Arendt, 2008). It is also
argued that the digital divide will increase, and consequently organizations in developing
countries, especially SMEs in rural areas, confront greater difficulties than their competitors
both in their own country and in developed countries (Apulu, Latham, & Moreton, 2011).
Therefore, a better understanding of the factors that influence the adoption of ICTs among
SMEs in rural areas is a critically important policy issue in developing countries such as
Saudi Arabia.
Recently, Saudi Arabia has engaged in the considerable development of its ICT infra-
structure. The government of Saudi Arabia provides extensive support and has invested
in continued growth in the ICT infrastructure (Al-Maliki, 2013). In 2015, ICT investments
in the Kingdom of Saudi Arabia totaled Saudi Riyal (SAR) 17.83 billion. Packaged and in-
house developed software accounted for the greatest share of ICT investments at 47%, fol-
lowed by IT equipment investments at 26% and communications equipment at 27% (CITC,
2015). Saudi Arabia is one of the fastest growing IT markets in the Middle East, represent-
ing 50% of the total ICT investments in the Gulf Cooperation Council (GCC). Statistics show
that more than 80% of Saudi industrial companies use computers and their applications
(ICT Report, 2015). ICT services spending reached SAR 120 billion in 2015, with annual
growth rate of approximately 7% (CITC, 2015). According to Communications and Infor-
mation Technology Commission (CITC) estimates, the ICT sector’s contribution represents
approximately 6% of total GDP. Furthermore, various e-government projects, such as elec-
tronic payment gateways, electronic tax systems and online information exchanges have
been implemented, significantly influencing both individuals and business organizations
in Saudi Arabia (Alshehri, Drew, & Alfarraj, 2012).
Despite these developments in the ICT sectors and ample resources, SMEs in rural Saudi
Arabia have not been able to keep pace with digital development. Indeed, Saudi Arabia is
confronted by a significant risk of digital divide between urban and rural organizations (Al-
Sobhi & Weerakkody, 2010) . The digital divide is considered a significant obstacle that
hinders many rural SMEs from adopting ICT. Until recently, however, very few studies
have been focused on the adoption of ICT among rural SMEs, particularly in the context
of Saudi Arabia. This study is an attempt to fill this identified gap by analyzing the
INFORMATION TECHNOLOGY FOR DEVELOPMENT 3
factors that influence ICT adoption among SMEs in rural Saudi Arabia. The technology-
organization-environment (TOE) framework has been used and extended with owner–
manager innovativeness as the theoretical underpinning of this research.
The remaining sections of this paper are organized as follows. Section 2 contains the
literature review. A brief overview of SMEs in Saudi Arabia is presented in Section
3. Section 4 briefly explains the theoretical framework and Section 5 proposes the research
methodology. We present the research findings in Section 6. Further discussion is pro-
vided in Section 7 and the conclusion is presented in Section 8.
2. Literature review
In most countries, SMEs are sources of economic growth and considered major economic
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players (Ramdani, Chevers, & Williams, 2013). The widely accepted definition refers to
“Small Sized Enterprises with between 1 to 49 employees, while Medium Sized Enterprises
are firms with between 50 to 100 employees” (Berisha-Namani, 2009). The SME sector can
make an important contribution in the transition to a market economy by creating
employment, generating income, fostering technological advancement and promoting
other aspects of social development (Ahmad, Abdul Rani, & Mohd Kassim, 2010). SMEs
can accelerate the pace of social and economic development, especially in rural areas
of developing countries. Furthermore, they can provide an environment in which to
develop employees’ managerial and technical skills.
The Kingdom of Saudi Arabia is the largest and most populated of the GCC states in the
Middle East. It is one of the world’s top 20 most competitive economies and attractive
investment destination in the Middle East (Ahmad & Agrawal, 2012). According to the
Saudi Arabia General Investment Authority, the Kingdom of Saudi Arabia is a fast emerging
economic center and the largest oil-exporting country in the world. It is an economic giant
in its region, with 25% of the world’s proven oil reserves (Samirad, 2014). Various reports,
indices and rankings related to oil reserves, the free market, per capita income, business
climate, fiscal freedom and market reforms, etc., concur.
Over the last few years, business enterprises have witnessed notable growth in Saudi
Arabia. Currently, 93.1% of Saudi Arabia’s firms are individual enterprises, 4.7% are
limited partnerships and 0.6% are joint enterprises (SAMA, 2014). These enterprises are
mainly concentrated in three areas: commerce, construction and building, and manufac-
turing. Most of Saudi Arabia’s organizations are small, based on the number of employees.
SMEs in Saudi Arabia are primarily located in rural areas. SMEs in developing and Arab
countries such as Saudi Arabia support large organizations in marketing and supplying
materials (Tambunan, 2008). It is widely accepted that SMEs have a greater ability than
large firms to adopt new and innovative ideas and technology.
In recent years, the growth of ICT has had a substantial impact on how SMEs function.
ICTs include technologies such as the Internet, Extranets, Intranets, ERP and other such
technologies that improve an organization’s services and operations. The use of ICT
opens up an opportunity for firms to gain a competitive advantage over their competitors.
It is claimed that “through the use of ICT, SMEs can develop capabilities for managing
resources, and develop capacity for information gathering and dissemination and gain
access to rapid flow of information” (Ndubisi & Kahraman, 2005). Kutlu and Özturan
(2008) argue that SMEs can use ICT as a tool to reduce transaction costs, create innovation,
4 A. M. ALBAR AND R. HOQUE
facilitate market niches and create stronger links with customers and suppliers. ICT helps
SMEs meet the challenges of an ever-changing environment.
ICT can play a significant role in the operations of rural SMEs, which are considered an
important potential area of ICT application. Galloway and Mochrie (2005) found a lag in ICT
uptake by rural SMEs because of a gap in supply and demand. Although ICT access in rural
SMEs has the potential to promote economic development, the latest technologies are not
appropriate because such firms lack the propensity for growth and diversification. Efforts
to adapt technology to rural SMEs may not provide results at the desired or expected rate
(Galloway, 2007). SME firms can achieve above-industry-average returns from IT invest-
ments by creating IT governance structures and managing IT risk.
Because of the numerous benefits of ICT, SMEs are attempting to adopt ICT applications
to support their businesses. SMEs’ adoption of ICT differs from that of larger enterprises
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organizational culture
Canada Compatibility, complexity, relative advantage, 237 Ifinedo (2011)
organizational readiness, partners’ pressure,
government support, competitive pressure,
customers’ pressure
UK ICT skills of owner and manager, business 30 Alshawi et al. (2011)
strategy and objectives, competitive pressure,
customer and supplier pressure, government
regulation, complexity, ICT infrastructure,
management support
Spain ICT support, skilled human resources, training, 297 Lopez-Nicolas and
compatibility Meroño-Cerdán
(2009)
Malaysia ICT adoption benefits, new business 406 Tan et al. (2009)
opportunities, unavailability of ICT, qualified
personnel, lack of confidence, security,
regulatory environment
Australia Lack of strategic vision, managerial and 250 Love and Irani (2004)
technological knowledge, reluctance of
employees to adapt to new technology,
organizational resources and resistance to
technology-related change
Italy Lack of compatibility, lack of sufficient 128 Corrocher and Fontana
information from vendors, supporting plans/ (2008)
strategies
Spain Technology strategy, training and socialization, 25 Bruque and Moyano
size of firm (2007)
Nigeria Lack of financial resources, lack of government 25 Apulu et al. (2011)
support, lack of support from banks, poor
infrastructural facilities, lack of skills
Sweden Business size, suppliers’ pressure, marketing 1170 MacGregor (2004)
strategy, innovativeness of CEO
Germany External pressure, perceived benefits, relative 8 Fink and Disterer (2006)
advantage, competitive pressure, CEO/owner
knowledge of IT, CEO/owner innovativeness
UK Compatibility, complexity, trialability, 102 Ramdani et al. (2013)
observability, relative advantage, top
management support, organizational ICT
readiness, ICT expertise, competitive pressure,
external ICT support
administrative structure and the small amount of capital needed for their initial foundation
and operation.
It is widely believed that it is difficult to establish a common definition of SME that
would be acceptable to the Gulf countries, and in particular, to Saudi Arabia. Indeed,
Saudi Arabia has no official definition of SMEs. Generally, the definition of SMEs in Saudi
6 A. M. ALBAR AND R. HOQUE
Arabia uses various quantitative criteria such as the number of employees. According to
the Saudi Arabian General Investment Authority (SAGIA) micro-enterprises have fewer
than 25 employees, small enterprises have between 25 and 59 employees and medium-
size enterprises have between 60 and 99 employees (Ahmad, 2012). In terms of capital,
small companies are those with 5 million Saudi Riyals (USD 1.3 million) of capital,
whereas medium-size ones have capital between 5 and 20 million Saudi Riyals (USD 5.3
million) (GAN, 2014). The SME sector is composed of micro-enterprises and small and
medium enterprises.
SMEs’ contribution to GDP is the main catalyst of economic activity in Saudi Arabia.
Their contribution to GDP could increase to 37% by the end of 2015. The estimated
investment in SMEs will be more than USD 70 billion by the end of 2015 (Zawya,
2014). Currently, SMEs employ more than 4.5 million people representing more than
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80% of the total workforce, mostly foreign workers (Alsulami, 2014). The government
and banks are providing much-needed funding to SMEs. The Ministry of Finance,
through its Saudi Industrial Development Fund, along with Saudi banks, has established
the “Kafalah” program, a new system for financing SMEs. The program encourages
banks to finance businesses up to SR200 million ($53.3M) with loan guarantees. So
far, the program has benefited approximately 1113 small and medium-sized enterprises.
Other programs have also been implemented by Saudi Credit and Savings Bank, Abdul
Latif Jameel’s “Finance Program” and the Centennial Fund to finance young people,
small enterprises, and training courses for youth. The Prince Sultan Abdulaziz Fund
for women entrepreneurs is another good initiative for the growth of SMEs in Saudi
Arabia.
However, similar to most developing and Arab countries, SMEs in Saudi Arabia also face
various obstacles. SMEs’ main problems and constraints are bureaucracy, a lack of financial
support and a lack of credit options. Inadequate government support, an unfriendly
business environment, unpredictable policy changes, and a lack of training are also con-
sidered important problems hindering SME growth in Saudi Arabia (Ahmad, 2012).
SMEs in Saudi Arabia are also challenged by weak bonds between SMEs and large enter-
prises, the lack of a policy structure and regulation and a lack of government support.
SMEs in Saudi Arabia also face challenges in adopting ICT for their business operations.
The main reasons for the non-usage of ICT among SMEs are their belief that there is no
need to use technology in their work and a lack of training facilities (CITC, 2015).
However, the TOE framework developed by Tornatzky and Fleischer (1990) provides a
holistic and guiding theoretical basis to investigate the adoption of ICT at the organiz-
ational level by addressing a wide variety of perspectives. The TOE framework is an
organization-level framework that explains that three different factors of an organiz-
ation’s context influence adoption decisions. These three factors are the technological
context, the organizational context and the environmental context. The technological
context describes both the internal and external technologies relevant to the firm.
The organizational context is defined in terms of the resources available to support
the acceptance of innovation. The environment context represents the setting in
which a firm conducts its business (Zhang & Wang, 2013). The TOE framework has
been used to explain the adoption of technology (Baker, 2012), the Internet (Martins
& Oliveira, 2009), websites (Oliveira & Martins, 2008), open systems (Chau & Tam,
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1997), e-business (Wen & Chen, 2010) and cloud computing (Borgman, Bahli, Heier, &
Schewski, 2013). The TOE framework is only one comprehensive model in the context
of developing countries that identifies the technological, organizational and environ-
mental factors that affect technology adoption.
Different studies have combined the TOE framework and Roger’s theory of adoption
and diffusion of innovations (ADT) to understand IT adoption. The TOE framework is con-
sistent with the ADT, in which Rogers Everett (1995) emphasized technological character-
istics. Roger’s theory is identical to the technology context of the TOE framework, but the
TOE framework includes a new and important component: the environmental context.
Some authors used the TOE framework together with theories such as the ADT to under-
stand IT adoption (Chong, Lin, Ooi, & Raman, 2009; Wang, Wang, & Yang, 2010; Zhu, Dong,
Xu, & Kraemer, 2006). Chong et al. (2009) add the ADT’s relative advantage, complexity and
compatibility to the TOE framework. Zhu et al. (2006) combined the ADT’s relative advan-
tage and compatibility with the TOE framework. Wang et al. (2010) add the ADT’s relative
advantage, compatibility and complexity to the TOE framework.
However, only a few studies have applied the TOE framework to investigate technology
adoption in the context of the Arab world. Therefore, the TOE framework has been used
and extended with personal innovativeness as the theoretical underpinning of the
research (Figure 1). This study extended the TOE model by including the individual
context considering the fact that adoption of ICT relies heavily on the individual decision
of owners/managers of SMEs in Arab countries such as Saudi Arabia (Almoawi &
Mahmood, 2011).
significantly influence the adoption of ICT among SMEs in developing countries such as
Saudi Arabia (Grandon & Pearson, 2004).
Compatibility is defined as “the degree to which an innovation is perceived as consistent
with the existing values, past experiences, and needs of potential adopters” (Rogers, 2003,
p. 240). It is one of the most important determinants of SMEs’ adoption of ICT (Premkumar,
2003). If ICTs are compatible with existing work practices, SMEs will be more likely to adopt
them (Chang, Park, & Chaiy, 2010). Grandon and Pearson (2004) found that compatibility
involves statistically significant factors that influence SMEs’ adoption of ICT. Complexity is
defined as “the degree to which an innovation is perceived as relatively difficult to under-
stand and use” (Rogers, 2003, p. 257). The faster, more immediate adoption of ICT depends
on easy-to-understand and easy-to-use technology. Several studies found complexity as a
determinant factor of ICT adoption by SMEs (Thong, 1999); most such studies found that
complexity is negatively associated with the organizational adoption of ICT (Grover,
1993). Based on the above discussion, this study proposes the following hypotheses.
H1: Relative advantage will have a direct and positive effect on the adoption intention of ICT
within Saudi SMEs.
H2: Compatibility will have a direct and positive effect on the adoption intention of ICT within
Saudi SMEs.
H3: Complexity will have a direct and negative effect on the adoption intention of ICT within
Saudi SMEs.
been reported (Alam & Noor, 2009). The ICT decision maker is very likely to be in an
SME’s top management team in developing countries such as Saudi Arabia and the ICT
adoption process is directly affected by his or her decision and support (Bruque &
Moyano, 2007).
The adoption of ICT in the Arab world is not only challenging but also risky for business
organizations such as SMEs because of the strong influence of cultural and social bound-
aries (Aldraehim, Edwards, Watson, & Chan, 2013). Research has shown that the effective
adoption of ICT in an organization depends on the organization’s culture and countries
that will communicate with that organization (Westrup, Liu, El Sayed, & Al Jaghoub,
2003). Lopez-Nicolas and Meroño-Cerdán (2009) showed that diverse organizational cul-
tures such as clan, hierarchy and market have an impact on an organization’s use of
ICT. Twati and Gammack (2006) found a strong relationship between organizational
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culture and an SME’s adoption of ICT. Based on the above discussion, this study proposes
the following hypotheses.
H4: Top management support will have a direct and positive effect on the adoption intention
of ICT within Saudi SMEs.
H5: Saudi organizational culture will have a direct and positive effect on the adoption inten-
tion of ICT within Saudi SMEs.
H7: A competitive environment will have a direct and positive effect on the adoption intention
of ICT within Saudi SMEs.
10 A. M. ALBAR AND R. HOQUE
personal experience with ICT positively influence the adoption of ICT (Carson & Gilmore,
2000). Dubelaar, Sohal, and Savic (2005) found that the owner/manager’s ICT knowledge
can influence the adoption of ICT. Almoawi and Mahmood (2011) revealed that an owner/
manager’s lack of ICT knowledge is the main barrier to SMEs’ adoption of ICT. Similarly,
Chang (2006) acknowledged the positive relationship between the owner/manager’s tech-
nological knowledge and an SME’s adoption of ICT. Based on the above discussion, this
study proposes the following hypotheses.
H8: Owner/manager innovativeness has a direct and positive effect on the adoption intention
of ICT within Saudi SMEs.
H9: Owner/manager ICT knowledge has a direct and positive effect on the adoption intention
of ICT within Saudi SMEs.
5. Methodology
5.1. Research setting
The unit of analysis for this study is SMEs because the research objective is to examine the
factors that influence the adoption of ICT among SMEs in rural areas of Saudi Arabia. The
research population was SMEs in Jeddah, an important commercial hub in Makkah Pro-
vince, Saudi Arabia. This study examined Jeddah for several reasons. First, Jeddah is an
important thriving business center in Saudi Arabia. Second, Jeddah enterprises are
showing a readiness to adopt the latest technologies. Third, rural areas of Jeddah
depend on SMEs, and most of the area’s SMEs have access to ICT. Two rural areas from
the northern part of Jeddah (Asfan and Thuwal) and two rural areas from the southern
part of Jeddah (Bahra and Hadda) were selected as the sample frame. To obtain some
measure of generalizability, a random sampling of businesses listed in the Council of
Saudi Chambers of Commerce and Industry (CSCCI) directory was used (Saunders, 2009).
The size of the sample is an important factor to ensure both the representativeness of
the sample and its suitability for executing the appropriate statistical tools. Various sample
sizes have been recommended in the past, and different theories for reaching an ample
sample size have been suggested (Hulland, Oliveira, Rodrigues, & Ruegg, 2011) .
However, sample-size requirements may vary according to the type of statistical analysis,
and a variety of opinions are also observed in the literature, even when the same tools are
applied (Tabachnick & Fidell, 1996). Nunnally (1978) recommends a sample size equivalent
INFORMATION TECHNOLOGY FOR DEVELOPMENT 11
to 10 observations per model variable. In this study, there are 10 variables for multivariate
data analyses. Based on the above-mentioned examples and notions from previous
studies, this study must adopt a sample size at least 100 or more because structural
equation modeling (SEM) was the main tool used for data analysis. A quantitative,
cross-sectional survey was used to collect data. The survey questionnaire method was
selected in this study for its utility in collecting primary data (Saunders, 2009). The respon-
dents were SMEs’ IS managers. If an SME had no IS manager, the respondents were CEOs
or owners. These individuals generally have extensive knowledge about the organization,
have access to the organization’s information and have the ability to complete the survey
questionnaire.
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5.2. Measurements
All of the measure’s items within the proposed model were developed from prior studies
and modified to fit the research context of our study. The items for Relative Advantages,
Complexity and Compatibility were adapted from Premkumar and Roberts (1999); Top Man-
agement Support was adapted from Thong, Yap, and Raman (1996); Organizational Culture
and ICT Adoption Intention were adapted from Elbeltagi, Al Sharji, Hardaker, and Elsetouhi
(2013); Regulatory Environment was adapted from Ramsey and McCole (2005); Competitive
Environment was adapted from Thong (1999) and Al-Qirim and Corbitt (2002); Owner/
manager Innovativeness was adapted from Agarwal and Prasad (1998); and Owner/
manager ICT Knowledge was adapted from Thong and Yap (1995). Most of the variables
were scored on a 5-point Likert scale (from “1” = strongly disagree to “5” = strongly agree),
with high scores representing greater standing on the variables of interest. Age was
measured in years. Gender was measured as a dichotomous variable (i.e. 1 = male, 0 =
female). Table 2 lists the variable, item and associated references for each variable.
would be collected. Two hundred surveys were distributed among SMEs in rural areas of
Jeddah, Saudi Arabia. One hundred and fifty-three were returned, 137 of which were
usable.
6. Findings
6.1. Demographics
The demographic characteristics of the respondents and their firms are presented in
Table 3. The overwhelming majority of respondents were male (89%) and held the position
of CEO (62%). There is no large gap between manufacturing and service organizations.
Most of the respondents (70%) are more than 30 years old and had more than 3 years
of IT experience (64%).
reliability. Composite reliability and Cronbach’s alpha values of 0.60–0.70 are acceptable in
exploratory research. Composite reliability and Cronbach’s alpha values below 0.60 indi-
cate a lack of internal reliability (Hair et al., 2013). Table 4 shows that all the constructs
have Cronbach’s alpha and composite reliability values of more than 0.68, which is
higher than the recommended value. Thus, the constructs were deemed to have adequate
reliability.
Validity was assessed by considering both convergent and discriminant validity. Con-
vergent validity is considered satisfactory when measurement constructs have an
average variance extracted (AVE) of at least 0.50 and the items loading are well above
0.50 (Hair et al., 2013). Table 4 presents AVE and Table 5 shows the item loading. The
AVE ranged from 0.61 to 0.88 and item loading ranged from 0.70 to 0.97, both of which
are greater than the recommended level. Therefore, the conditions for convergent validity
were met.
Discriminant validity was assessed by the square root of the AVE and the cross-loading
matrix. The square root of the AVE of a construct must be larger than its correlation with
other constructs for satisfactory discriminant validity (Henseler, Ringle, & Sinkovics, 2009).
The square roots of AVE, shown in Table 6, were greater than their corresponding corre-
lation, indicating that our data had good discriminant validity.
15
16
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7. Discussion
Although numerous studies have examined the factors of ICT adoption, few studies have
tested those factors on SMEs. This study is one of the first to examine ICT adoption in rural
Saudi Arabian SMEs using an extended TOE framework. Based on the results of this study,
some factors were identified as being responsible for Saudi Arabian SMEs adopting ICT.
This study found a positive relationship between environmental factors such as the regu-
latory environment and ICT adoption among SMEs in rural areas of Saudi Arabia. It seems
that the government regulation and Saudi law provide sufficient protection regarding the
use of ICT by SMEs. Regulatory environment is very important for ICT adoption as it can
facilitate or hinder the enterprises to adopt ICT (Cavalcanti, 2006; Dholakia & Kshetri,
18 A. M. ALBAR AND R. HOQUE
2004). Conversely, this study did not find any significant relationship between competitive
environment and ICT adoption. This finding is consistent with previous studies. Thong
(1999) concludes that there is no relationship between competitive environment and
SMEs’ adoption of ICT. Premkumar and Roberts (1999) also did not find any relationship
between competitive environment and SMEs’ adoption of ICT.
This study revealed that the relationship between the owner/manager’s ICT knowledge
and ICT adoption was statistically significant. This result is consistent with the results of
Elbeltagi et al. (2013). They have shown strong support for the association between
owner/manager ICT knowledge and innovativeness in ICT adoption. In SMEs, the
primary decision maker is the owner/manager, whose knowledge determines the level
of support for ICT adoption (Ramdani et al., 2013). In the Arab world, innovativeness
and the owner/manager’s ICT knowledge played a critical role in ICT adoption (Elbeltagi
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et al., 2013). In Saudi Arabia, the owner–manager makes the majority of decision including
ICT adoption decision in their organization. The owner-manager of SMEs in Saudi Arabia
usually has full control of financial resources and active participation in IT investment.
As a consequence, the owner/manager’s ICT knowledge and their innovativeness are
necessary for ICT adoption in SMEs of Saudi Arabia.
Organizational factors such as top management support and culture are also regarded
as the important factors that affect the adoption of ICT. The result of this research shows
that top management support could partly explain the adoption of ICT in Saudi Arabia. The
IT adoption literature has provided evidence that top management support positively
influences higher levels of ICT adoption and use in SMEs (Ghobakhloo, Hong, Sabouri, &
Zulkifli, 2012; Hoque, Saif, AlBar, & Bao, 2015). Top management’s opinion carries more
weight in the Arab world, where top managers’ roles are undoubtedly very important,
especially in SMEs. This study also revealed a positive relationship between organizational
culture and ICT adoption. Baker, Al-Gahtani, and Hubona (2011) confirmed the impact of
culture on the adoption of IT in developing countries such as Saudi Arabia. Saudi Organ-
ization is responsive to the Saudi government use of ICT in businesses and government
organizations. Currently, the private and public sectors of Saudi Arabia are rapidly increas-
ing their spending on ICT. SMEs have also nurtured an organizational culture to adopt ICT.
However, technological factors such as complexity and compatibility have no signifi-
cant impact on ICT adoption among rural SMEs in Saudi Arabia. Al-Ghaith, Sanzogni,
and Sandhu (2010) found no association between complexity, compatibility and ICT adop-
tion in Arab countries. Owner/managers are uninformed about the importance of com-
plexity and compatibility because the adoption of technology in Arab firms primarily
depends on the government-sanctioned technology adoption policy. This study found
the strongest relationship between relative advantage and ICT adoption in SMEs. This
result is consistent with research on technology innovation. Mohr, Sengupta, and Slater
(2009) found that relative advantage is a driving force for the adoption of ICT. Peltier
et al. (2012) revealed that relative advantage is the key predictor of ICT adoption. Al-
Ghaith et al. (2010) explored the significant effect of relative advantage on ICT and e-
service adoption in Saudi Arabia. In Saudi Arabia, organization needs to see relative advan-
tage so that they allocate resources for adoption of ICT. The advantages SMEs get from
using ICT were perhaps one of the main reasons for adoption.
The findings of this study can be used to develop strategies and policies to increase
the rate of ICT adoption among SMEs in Saudi Arabia. ICT Sustainability plan and
INFORMATION TECHNOLOGY FOR DEVELOPMENT 19
financial support may encourage SMEs in Saudi Arabia to adopt ICT. In addition, effec-
tive coordination among all agencies and ministries is essential to inspire SMEs to
adopt ICT. This study suggests that the government should establish technology
resource centers to educate owners and managers about the potential of new technol-
ogies. Moreover, the government should organize conferences or workshops to
enhance the knowledge of SME owners and managers in Saudi Arabia. The business
organizations and business support agencies should play a role in providing technical
support for greater ICT adoption among SMEs in Saudi Arabia. The CSCCI can act as a
link between SMEs and those organizations that will serve that sector. They can identify
the ICT training needs of SMEs and can arrange training program for them. The CSCCI
can facilitate the financing of SMEs to buy the latest technology. The findings can give
ICT service providers an insight about the factors that influence the ICT adoption and
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support for decision-making and marketing. Finally, this study’s findings are important
to the policy-makers and managers who are likely to assist in increasing the adoption
of ICT.
8. Conclusion
SMEs play a vital role in Saudi Arabia’s economy. Business organizations in Saudi Arabia,
particularly SMEs, have been significantly influenced by advances in ICT. This study’s
primary contribution is to extend the TOE framework for examining the factors that influ-
ence the adoption of ICTs among SMEs in rural areas of Saudi Arabia. The result from PLS-
SEM analysis has shown that the TOE model is truly a robust tool for ICT adoption in SMEs.
Moreover, the theoretical model provides us with the factors that influence the adoption
of ICT by SMEs in Saudi Arabia. If these factors have a significant effect, then SMEs in Saudi
Arabia will be more willing to adopt ICT.
This study has some limitations. We surveyed only rural areas in Saudi Arabia, which
may raise concern about the generalizability of the findings. Future research should
devote more attention to SMEs in urban areas. This research is cross-sectional. Unless infor-
mation is gathered for different time frames, the contingent and causality effects of users’
level of experience with the system cannot be confirmed. Further research can use longi-
tudinal data to address this limitation. Finally, this study follows only quantitative research
approaches. Future research can follow both quantitative and qualitative research
approaches. Despite some of these limitations, this study represents a milestone that
will help future researchers in Arab countries to understand the factors that enable ICT
adoption in SMEs.
Disclosure statement
No potential conflict of interest was reported by the authors.
Funding
This work was supported by the Deanship of Scientific Research (DSR), King Abdulaziz University,
Jeddah [Grant No. 611-830-D1435]. The authors, therefore, gratefully acknowledge the DSR technical
and financial support.
20 A. M. ALBAR AND R. HOQUE
Notes on contributors
Adnan Mustafa AlBar is an Associate Professor at the Department of Information Systems, Faculty of
Computing and Information Technology, King Abdulaziz University, Saudi Arabia. He was appointed
as the first IS chairman where he lead team who prepared the IS undergraduate curriculum. He was
then appointed as the vice dean for students affairs deanship for development for two years. Dr.
Adnan had supervised the team who implemented the University SAP ERP project for three years.
He has attended training programs inside the University and overseas. He teaches enterprise archi-
tecture course at the undergraduate level and enterprise modelling course at master program. He is
the founder and managing director of IT Expert House where he lead a team of consultants to
provide consultation for the private sectors. Dr. AlBar is a senior member of IEEE and member of
the executive committee of the IEEE Western Saudi Arabia Section, a member of ACM and ISACA.
His main research is in enterprise information systems, Mobility in the enterprise, enterprise architec-
ture, business process management and technology adoption at the organizational level. You can
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