Information technology in the small business: establishing the basis for a management information system

This paper reports on the importance and use of information technology in a sample of 150 new small firms. It provides statistical evidence to show that the greater the use of IT, the higher the firm’s performance. By contrast, the owner manager’s belief in the importance of IT to the management of their business is not correlated with performance. Empirical evidence is then presented to confirm that IT use is increasing, in general, year on year, and is being implemented as a management information tool. Finally, a profile is presented of the typical components of a young management information system, within the context of a management accounting framework. It is suggested that, given the proven importance of IT to the new small firm, a management information system should be developed that takes advantage of the opportunities offered by new technology, and that this, in turn, should lead to enhanced performance.