Executive Overview

This article is a study of 98 small manufacturing firms (average sales — $5 million; firms'

expenditures —about 1 % of sales; average number of employees — 62), and the effectiveness

of their computer use. Thefindings were applicable not just to small companies but, in large

measure, to small divisions of largercompanies as well. The key findings showed tbat

effectiveness was linked to:

1. Chief executive officer knowledge of computers and active involvement in the

computerization efforts.This was clearly the strongest factor.

2. On-site computers (as opposed to a remote service bureau). The Senior Editor was surprised

by this

item.

3. The coordinated implementation of planning and controls.

Equally interesting, effectiveness was not linked to:

1. The use of external programmers. Internal staff, even in these small companies, was just as

likely to

produce good results.

2. Employees' enthusiasm for computer technology. While a minimal level of acceptance is

needed,

higher levels of acceptance did not improve effectiveness.

3. Length of time of computer use. The passage of time did not, surprisingly, improve

effectiveness.

4. Formal computer training of employees.

5. Planning, unless strong computer controls are also in place.

In summary, many of the issues and findings in large organizations are also present in their

smaller

counterparts.

50 MIS Quarterly/March 1988

Small Business

Determinants of

Success for

Computer Usage in

Smaii Business

By: William H. DeLone

Kogod College of Business

Administration

The American University

4400 Massachusetts Avenue N.W.

Washington, D.C. 20016

Abstract

This field study investigates the factors that

affect the successful use of computer-based information

systems (OBIS) by small business.

The 93 manufacturing firms surveyed had fewer

than 300 employees, less than $30 million in

annual sales revenues, and had been using

computers for at least three months. The principal

findings showed that chief executive

knowledge of computers and involvement in

computerization leads to more successful computer

use in small manufacturing firms. The use

of on-site computers also has a positive effect

on computer success.

Keywords: Small business, IS success, computer

usage

ACM Categories: H.4, J.I, K.4.3, K.6

Introduction

With the widespread availability of microcomputers,

the cost of small business computer systems

has been reduced to a point where nearly

all businesses, no matter how small, can afford

computer power for their information processing

needs. The question for the small firm manager

who is not knowledgeable about computers is:

"How might my firm be able to use computers

successfully?" This study attempts to identify the

factors associated with computer success in

small firms.

Of the 11 million nonfarm businesses operating

in the United States in 1980, 10.8 million firms

(98.2 percent) were considered "small" by the

Small Business Administration (SBA) size standards.

Small businesses accounted for 39 percent

of this country's GNP in 1976 and for 48

percent of nongovernment, nonfarm employment

(U.S. SBA, 1981,1983). The importance of

the small business sector to the United States

economy is clear.

Computerized systems can help solve small

business problems and thereby improve prospects

for success. Although business failure

rates are not reported by firm size, small businesses

are considered to be more risky

(Brigham and Smith, 1967; Walker, 1975) and

subject to higher failure rates than large businesses

(Cochran, 1981; Klatt, 1973). Problems

with receivables collections and with inventory

control were cited as contributing to 17 percent

of the manufacturing business failures studied by

Dun and Bradstreet (1981). Generally, small

businesses have difficulty maintaining adequate

records (Markland, 1972, 1974; Rotch, 1967).

These problem areas can be addressed by computerization.

Small business computers can also

help to improve service and increase sales,

which are important contributions considering

that inadequate sales is involved in 59 percent of

business failures (Dun and Bradstreet, 1981).

Therefore, small business computers have the

potential to make important contributions for

thousands of small firms.

Despite this potential, small businesses should

approach computerization cautiously. Lack of

computer knowledge on the part of the owner/

manager and lack of computer experience have

resulted in all too many misadventures in electronic

data processing (Apcar, 1980; Schollhammer

and Kuriloff, 1979). Small businesses are

financially ill-equipped to absorb such expensive

MIS Quarterly/March 1988 51

Small Business

mistakes (Charlesworth, 1972; Cohn and Lindberg,

1972; Schollhammer and Kuriloff, 1979).

So computers, if managed properly, can contribute

to the success of small business operations,

but the risks are significant. Guidelines for the

successful application of computers are needed.

This study investigates the factors that are

associated with the successful use of computers

in 93 small manufacturing firms in Los Angeles.

Research Variables and

Hypotheses

MIS success

As an initial step, this study attempts to develop

a meaningful measure of a successful computer-

based information system (CBIS) that is

appropriate for small businesses. A review of

the MIS literature suggests several measures

of success for large organizations. Among

the suggested measures are management use

of the information system and the impact of

the information system on organizational

performance.

A frequently suggested measure of success is

the extent to which the information system (or

MS/OR system) is used by management (Cerullo,

1980; Ginzberg, 1981; King and Rodriquez,

1978; Lucas, 1975, 1978; Zmud, 1979). Ein-Dor

and Segev (1978,1981) claim that different measures

of computer success are mutually dependent

and they choose system use as the primary

criterion variable for their proposed research

framework. If use is the success measure of

choice, the issue then becomes "use how and by

whom?" (Huysmans, 1970). Actual use as a

measure of MIS success only makes sense for

voluntary users, as opposed to required users

(Lucas, 1978; Weike and Konsynski, 1980).

Another way to measure success is to determine

the impact of an MIS on individual or organizational

performance (Cerullo, 1980; Ein-Dor and

Segev, 1978; Hamilton and Chervany, 1981;

Kriebel, 1979; Lucas, 1975). Attempts have been

made to determine the effect of computer systems

on a firm's profits and to compute the firm's

return on computer investment (Garrity, 1963;

McKinsey, 1978). A more appropriate success

measure for a small business might be the effect

of information systems on cash flow (Seibt,

1979; Williams, 1978). The impact of information

systems characteristics on profit and/or performance

can be isolated in tightly controlled experiments

but is difficult to determine in field studies.

As Hanes and Ramage (1983, p.84) state: "The

problem is that too many other uncontrollable

and unmeasurable factors influence organizational

performance."

The researcher thus needs to determine the extent

to which a firm's MIS contributes to the firm's

critical business areas or to the firm's "life

stream" systems (Couger and Wergin, 1974;

Ein-Dor and Segev, 1978; Greenwood, 1981;

Rockart, 1979; Senn and Gibson, 1981). MIS benefits

to the firm could be represented by the

range of meaningful computer applications

(McKinsey, 1968; VanLommel and DeBrabander,

1975).

Based on previous research conducted in larger

organizations and based on field responses from

small businesses (DeLone, 1981), two measures

were selected as appropriate for the small manufacturing

firms in this study. These measures are

1) actual use of computer-generated reports by

top management, and 2) the impact that the

computer applications are having on the business.

The composite impact measure is based

on importance and success ratings given to the

firm's applications by the chief executive officer.

Success factors

The proposed factors to influence CBIS success

are chosen on the basis of their perceived importance

in the context of a small business setting.

The success factors (independent variables)

selected for this study are discussed

below.

Small businesses typically lack specialized

knowledge and technical expertise (Charlesworth,

1972; Deeks, 1976; Klatt, 1973; Schollhammer

and Kuriloff, 1979). This shortcoming

applies equally to knowledge about computers.

Lack of understanding about computers is a frequently

cited reason for failure of small business

computer endeavors (Raysman, 1981) and for

failure to consider computer opportunities

(Neidleman, 1979; Weber and Tiemeyer, 1981).

However, there are ways to overcome these

shortcomings. Computer experience, top management

involvement (Bourke, 1979; Couger

and Wergin, 1974; Greenwood, 1981; Newpeck

and Hallbauer, 1981), company-supported EDP

52 MIS Quarterly/March 1988

Small Business

training (Bevis, 1979; Heise, 1980; Vazsonyi,

1981; Weber and Tiemeyer, 1981), and the use

of external computer expertise (Briggs, 1980;

Couger and Wergin, 1974; Greenwood, 1981;

Senn and Gibson, 1981) can increase computer

knowledge or compensate for lack of knowledge

and thereby improve the chances of successful

computer use by small firms.

Personnel acceptance of computer systems

(Heise, 1980; Newpeck and Hallbauer, 1981),

formal planning of computer efforts (Hansen,

1980; Senn and Gibson, 1981), and the implementation

of computer controls (Couger and

Wergin, 1974) are other factors which are said to

affect the success or failure of small business

computer systems. Finally, the firm's maturity regarding

computer use and, more specifically,

type of computer use (in-house, service bureau,

etc.) are situational factors that are also likely to

affect the success of computer operations.

Based on these criteria, the success factors (independent

variables) chosen for this field study

are:

1. the use of external programming support (EXTERNAL),

2. the level of CBIS planning (PLAN),

3. top management knowledge of computers

(EDPKNOW),

4. top management involvement in computerization

(INVOLVE),

5. personnel acceptance of computers

(ACCEPT),

6. the sophistication of computer controls (CONTROL),

7. the age of computer operations (AGE),

8. the level of computer training (TRAINING),

9. the type of computer use (TYPE).

Hypotheses

The nine success factors discussed above are

formulated into hypotheses. The hypotheses test

whether small manufacturing firms realize a

higher level of CBIS success when they have:

HI: greater use of external programming

support

H2: higher levels of CBIS planning

H3: a chief executive with greater computer

knowledge

H4: a chief executive who is more deeply

involved in the computerization of

applications

H5: higher levels of computer acceptance

by employees

H6: more sophisticated computer controls

H7: used their computers for a longer

period of time

H8: higher levels of computer training for

their employees

H9: on-site computers (vs. use of computer

services)

Methodology

The hypotheses listed were tested against data

collected from small manufacturing firms. The

sample of small business computer users was

randomly selected from the population of all

firms listed in the California Manufacturers Register

(1981). These firms were located in the city

of Los Angeles, employed less than 300 persons,

and earned less than $30 million in sales

revenues. The sample for this study was limited

to the broad industry category of manufacturing

in order to eliminate industry as a source of

variation.

This study involved two questionnaires as its

data collection instruments. A telephone survey

was conducted to determine which randomly selected

manufacturing firms had been using computers

for at least three months. Both questionnaires

were sent to the chief executive of each of

the selected manufacturing firms who were

found to be using computers. The first questionnaire,

the "Chief Executive Ouestionnaire," was

to be completed by the company's top executive.

It included questions about the success of the

firm's computer-based MIS and items relating to

computer understanding and experience. The

second questionnaire, entitled "Computer Use

Ouestionnaire," involved questions pertaining to

the success factors under investigation. It was

completed by the employee who was administratively

responsible for the company's computer

processing.

The two questionnaires were mailed to 191

firms. Ninety-three firms returned both questionnaires

for a response rate of 48.7 percent. The

questionnaire responses indicate that these

firms averaged 62 employees and $5 million in

annual sales revenues, and had been using

computers for an average of 48 months. (Medians

were used as the measure of average due

to positive skewness in most data items.)

MIS Quarterly/March 1988 53

Small Business

An abbreviated version of the Chief Executive

Questionnaire was sent to the companies that

did not respond to the survey. Forty-one of the

nonrespondents returned this shorter questionnaire.

These questionnaires were used to determine

whether there were any significant differences

in the characteristics of the respondent

and nonrespondent firms. Difference tests on

each of six items (firm size, type of computer

system, age of computer operations, executive

computer experience, overall success rating for

the computer system, and organizational level of

respondent) proved to be nonsignificant. Therefore,

a reasonable assumption is that the respondent

data is representative of the entire population

of small manufacturers which are using computers.

Additionally, since 72 percent of the Chief

Executive Questionnaires were actually completed

by the chief executive, and the remaining

28 percent were completed by the next level of

top management (such as controllers and vicepresidents),

the responses reflect the opinions

of the top executives of the surveyed

manufacturers.

The two CBIS success measures for this study

are entitled USE and IMPACT and are presented

in Table 1 as they were measured from the responses

on the Chief Executive Questionnaire.

Table 1 indicates a brief description of relevant

questionnaire items and the average value for

each item from the 93 questionnaires that were

returned. The median was selected as the measure

of average because many of the variables

were positively skewed. For analysis purposes.

USE and IMPACT measures which were positively

correlated (at the .05 level) were later combined

into a single success index.

The success factors are presented in Table 2 as

they were measured from questionnaire responses.

Table 2 includes a brief description of

the relevant questionnaire items and the average

value for each item over the 93 questionnaires

received.

Since one purpose of this paper is to develop

new theory related to small business computer

use, a number of variables have not been previously

validated; therefore, nominal scale analysis

(multivariate cross-classification analysis) is

used to test the hypothesized associations. All

variables which are not categorical by nature are

classified into two or three categories (low. moderate

and high) in preparation for analysis. The

category boundaries are set on the basis of variable

distributions with the goal of balancing the

frequencies in each category. As discussed earlier,

the SUCCESS variable (S) is a composite

measure of computer report USE by the chief

executive and the IMPACT of computer applications

in the view of top management. The computer

knowledge variable (K) is also a composite

measure which combines chief executive exposure

to computers with chief executive formal

computer training.

Results

Multivariate cross-classification analysis was

performed to test the research hypotheses. Multivariate

cross-classification analysis, or the

analysis of multidimensional contingency tables,

was based on loglinear models — models which

are linear in the logarithms of the expected cell

Table 1. CBIS Success Measures

Success Area

USE

IMPACT'

Questionnaire Item

Computer Report Usage (time spent)

Computer Report Usage (frequency)

Number of Application Systems

Application Importance Score

Application Success Score

Median

4 hours/mo.

10 times/mo.

5

3.57^

3.25=

For analysis. IMPACT was computed as the product of the application importance score and the

application success score, summed over all applications (^ Importance; x Successi where N =

No. of

Applications). "'

These scores range from one (lowest) to four (highest).

54 MIS Quarterly/March 1988

Small Business

Table 2. Success Factors

FACTOR

EDPKNQW (K)

AGE (G)

TRAINING (R)

INVOLVE (1)

ACCEPT (A)

PLAN (P)

CONTROL (C)

EXTERNAL (E)

TYPE (T)

Questionnaire Item

Years of Computer Experience

Executive Computer Training

(for 44 execs receiving training)

Age of Computer Operations

Overall Computer Training for Employees

(for 28 firms with training)

Chief Executive Interaction

with D.P. Manager

Number of Computer-related Complaints

Planning Score (scale from 0 to 10)

Control Score (scale from 0 to 18)

Percentage of Applications

Developed Externally

(55 of 93 firms totally dependent

on external software)

On-site vs. Service Bureau

Median

4 yrs.

30 hrs.

48 mos.

3 hrs/mo.

2 hrs/mo.

1 per mo.

7

12

100%

70% on-site

values (Bishop, et al., 1975). The statistical calculations

were performed by the BMDP4F computer

program (UCLA, 1979). Since only 93 complete

responses were received, and since most

of the variables were classified to include three

categories (low. moderate, high), three-way

cross-classification analysis was the highest

order analysis that could be performed while

avoiding the analysis problems associated with

zero and low expected cell frequencies.

For each hypothesis, the two-way association of

interest was tested in the presence of other independent

variables taken one at a time, so that

each hypothesis was tested by more than one

three-way cross-classification test. The loglinear

model was the basis for constructing and performing

tests of association between categorical

variables. The strategy was to test various simple,

restricted models against the general, "saturated"

model.

This study compared a restricted model to the

general loglinear model by comparing goodnessof-

fit statistics for each. The goodness-of-fit statistic

that was used for the analysis of the research

hypotheses was the likelihood ratio chisquare

(Feinberg. 1980) expressed as:

G= = 2 = 2 (Observed) log

(summation is over all cells)

In order to test the significance of an association,

the difference between the G= for the 3 variable

model without that association and the G^ for the

3 variable model which includes that association

was tested over the difference in degrees of freedom

for those models. For the associations proposed

in this study, the null hypothesis assumed

independence (no association) and the independence

model was compared to the general

loglinear model. If no significant difference was

found, the independence model was accepted

and the proposed association was thereby rejected.

All null hypotheses were rejected at an

alpha level of .100.

Summaries of the three-way tests for each

hypothesis are included below. For the first

hypothesis. H1, the "ES" notation indicates that

External Support (E) and CBIS Success (S) are

associated, while the "E,S" notation implies that

External Support and CBIS Success are independent.

For all of the rejected models (confirmed

associations), the direction of association

is also given. The direction of association is determined

from the estimates of the loglinear pa-

MIS Quarterly/March 1988 55

Small Business

rameters. For each confirmed hypothesis, the results

of the relevant two-way classification test

are also included as the last test in the list.

Hypothesis HI: Greater use of external programming

support is positively associated with

small business computer-based information system

(CBIS) success (ES).

The relevant three-way cross-classification tests

involve models in which EXTERNAL is independent

of SUCCESS. The results of these tests are

summarized below.

Summary of related three-way tests for external

(HQ: E,S):

Models

Tested

TE, TS

KE, KS

PE, PS

IE, iS

E, S

G'

1.14

6.50

5.08

5.03

0.24

df

46

662

Descriptive

Level

.888

.370

.534

.540

.888

Conclusion

Accept E, S

Accept E, S

Accept E, S

Accept E, S

Accept E, S

The models are rejected for a probability value

below .100.

Conclusion: All five tests indicate that use of

external programming is not associated with

computer success (E, S).

Hypothesis H2: Higher levels of CBIS planning

are positively associated with CBIS success

(PS).

Summary of related three-way tests (Hg: P,S);

Conclusion: Chief executive knowledge of computers

is associated with computer success

(KS).

Hypothesis H4: Top management involvement

is positively associated with success (IS).

Summary of related three-way tests (HQI I,S):

Models

Tested

IK, KS

IP, PS

lA, AS

IC, CS

I, S

27.93

31.87

36.25

30.80

27.89

df

12

12

12

12

4

Descriptive

Levei

.006

.001

.000

.002

.000

Conclusion Direction

Reject I, S +

Reject I, S +

Reject I, S +

Reject I, S +

Reject I, S +

Conclusion: All five tests confirm that chief executive

involvement in computer operations is

associated with the success of those computer

operations (IS).

Hypothesis H5: Personnel acceptance of computer

systems is positively associated with success

(AS).

Models

Tested

lA, IS

PA, PS

RA, RS

A, S

13.36

7.63

7.72

3.80

df

12

12

84

Descriptive

Levei

.343

.813

.461

.434

Conciusion

Accept A, S

Accept A, S

Accept A, S

Accept A, S

Conclusion: All four tests indicate that employee

acceptance of computers is not associated

with the success of computer operations

/ A Q\

Hypothesis H6: Greater use of computer con-

Models

Tested

TP, TS

KP, KS

IP, IS

AP, AS

PC, CS

P. S

G=

4.56

4.27

8.59

6.90

19.99

3.04

df

8

12

12

12

12

4

Descriptive

Levei

.803

.978

.737

.864

.067

.551

Conciusion Direction

Accept P, S

Accept P, S

Accept P, S

Accept P, S

Reject P, S +

Accept P, S

trois IS

Models

Tested

KC, KS

iC, IS

PC, PS

c, s

positivi

G^

8.35

11.02

24.22

4.36

eiy <

df

12

12

12

4

associatea

Descriptive

Levei

.757

.528

.019

.359

witn success ^u&).

Conciusion Direction

Accept C, S

Accept C, S

Reject C, S +

Accept C, S

Conclusion: Accept no association between

computer planning and computer success excepf

in the presence of computer controls (P, S;

PCS).

Hypothesis H3: Chief executive knowledge of

computers is positively associated with CBIS

success (KS).

Summary of related three-way tests (HQI K,S):

Conclusion: The tests indicate that the use of

computer controls is not associated with CBIS

success exoept in the presence of computer

planning (C,S; PCS).

Hypothesis H7: Longer use of computers is

positively associated with success (GS).

Models

Tested

IK, IS

KP, PS

KC, CS

GK, GS

RK, RS

K, S

18.38

18.66

18.52

27.25

18.43

12.95

df

12

12

12

12

84

Descriptive

Levei

.105

.097

.101

.007

.018

.012

Conciusion Direction

Accept K, S

Reject K, S +

Accept K, S

Reject K, S +

Reject K, S +

Reject K, S +

Models

Tested

GK, KS

GR, RS

GA, AS

Gl, iS

GT, TS

GE, GS

G^

16.30

10.22

14.81

10.35

11.96

7.75

df

12

8

12

12

8

8

Descriptive

Level

.1778

.2499

.2522

.5856

.1526

.4582

Conclusion

Accept G, S

Accept G, S

Accept G, S

Accept G, S

Accept G, S

Accept G, S

Conclusion: Length of computer use is not

associated with success.

56 MIS Quarterly I Maroh 1988

Small Business

Hypothesis H8: More computer training tor employees

is positively associated with success

(RS).

Models

Tested

RK, KS

RA, AS

RT, TS

GR, GS

IR. IS

G^

4.92

7.87

4.20

7.80

7.97

df

6646

6

Descriptive

Level

.5535

.2481

.3798

.2528

.2400

Conclusion

Accept R, S

Accept R, S

Accept R, S

Accept R, S

Accept R, S

Conclusion: All five tests agree that the level of

computer training for employees is not associated

with success (R, S).

Hypothesis H9: On-site computer use is associated

with CBIS success (TS).

Models

Tested

TE, ES

TC, CS

TR, RS

TA. AS

GT, GS

T, S

G^

7.15

12.56

8.14

10.27

13.70

5.36

df

4

6

46

6

2

Descriptive

Level

.1283

.0505

.0867

.1139

.0332

.0684

Conclusion

Accept T, S

Reject T. S

Reject T, S

Accept T, S

Reject T, S

Reject T, S

Conclusion: On-site computer use is associated

with CBIS success (TS).

The results of the three-way cross-classification

tests for each hypothesis are presented in

Table 3.

Table 3. Results of Cross-Classification

Tests of Hypotheses

Hypotheses supported by tests Direction

H2 PLAN with SUCCESS

(only in presence of CONTROL) +

H3 EDPKNOW with SUCCESS +

H4 INVOLVE with SUCCESS +

H6 CONTROL with SUCCESS

(only in presence of PLAN) +

H9 TYPE with SUCCESS N/A

Hypotheses not supported by tests

HI EXTERNAL with SUCCESS

H5 ACCEPT with SUCCESS

H7 AGE with SUCCESS

H8 TRAINING with SUCCESS

Discussion

The small manufacturers in this study were

found to be making significant use of computers.

These firms had been using computers for an

average of forty-eight months, with an average of

five different computer applications. They spent

an average of $4,120 per month on their computer

operations, a figure equal to nearly 1 percent

of their sales revenues. Twenty percent of the

employees were involved with the computer applications,

and the chief executives used the

computer-generated reports an average of 10

times per month. Thus, the potential impact of

these firms' computer operations appears to be

great.

The primary finding of this study is that the chief

executive is the key to the realization of that

potential impact. In firms where the chief executive

is familiar with computers and is involved in

computerization, the computer operations are

more successful. External computer expertise is

no substitute for chief executive knowledge and

involvement because the CEO is the person who

understands the factors which are critical to the

business' success and the areas where the computer

will have the best payoff. In most cases (73

out of 93), the small manufacturers did solicit

outside the company for technical assistance

(software development), yet chief executive

knowledge and involvement were still significantly

related to computer success. In small firms the

CEO is the principal information user since he or

she assumes responsibility for many of the operational

decisions due to lack of managerial staff

(Cohn, and Lindberg, 1972); thus the CEO must

be involved in decisions as to which systems

should be computerized and how they should be

computerized. If the small business is to succeed

in its computer use, the chief executive must be

willing to commit substantial personal energy to

the realization of that aim.

The association of chief executive knowledge

and involvement with success is not affected by

the length of computer use. Therefore, chief executive

knowledge and involvement are not only

important for initial decisions regarding computerization,

but also for ongoing computer decisions

because computerization is a continuous

and evolving process. It is worth noting that chief

executive knowledge as measured in this study

was a combination of experience with computers

and formal training. In the fast growing field of

small business computers, continued formal

training will be important to computer success.

On-site computer use was significantly related to

computer success. Apparently, in-house computers

stimulate top management involvement

which in turn leads to the application of that resource

to higher impact areas. Although on-site

MIS Quarterly!March 1988 57

Small Business

computers are not necessarily the best way to

initiate a firm's computerization, small

businesses should develop a plan which specifies

a future commitment to acquire computer

equipment. With the low cost of small business

computer systems, there is a temptation to purchase

computers prematurely. This study has

shown that low cost computers are no substitute

for chief executive knowledge of computers.

The practice of planning computer applications

and the existence of basic computer controls are

important to computer success as well. Small

manufacturers should be concerned about implementing

and refining computer planning and

controls from the moment they begin using

computers.

Several of the hypothesized associations were

not confirmed by the survey results. The length

of computer use (AGE) was not associated with

CBIS success. A small business should not

assume that the successfui use of computers is

something that wili come in time with increased

computer maturity. Apparently, the mere passage

of time is not sufficient to guarantee more

successful computer use but rather it is the energies

(involvement, planning, and controls) which

are applied to computerization over time that

affect CBIS success. Similarly, the level of external

support was not associated with success.

This result indicates that it is not the source (internal

or external) of technical support (software

development) which is important but rather how

that support is directed toward critical management

decision areas through the direct involvement

of the CEO.

Greater levels of employee acceptance were not

associated with higher levels of CBIS success. A

minimum level of employee acceptance is a prerequisite

for any level of success, but levels of

acceptance higher than a threshold value do not

necessarily generate higher levels of success. In

this study, there were few examples of "poor"

employee accepfance and no examples of complete

computer failure, so the possible relationship

between the lack of employee acceptance

and small business computer failure could

not be tested. This relationship remains an interesting

topic for future research.

Only 29 of 93 responding firms engaged in formal

training. Formal training alone did not result

in greater CBIS success. Presumably, the key

computer personnel in the 64 firms without formal

training acquired the necessary computer

skills before they were hired or through informal

on-the-job training — such as one employee

showing another how to execute a specific fask.

Finally, the association between planning and

success was weak since the association was

confirmed only in the presence of computer controls.

Further analysis suggests that computer

planning has its principal impact on success

through the involvement of the CEO. Statistical

tests revealed that higher levels of planning were

associated with higher CEO involvement and

that higher CEO involvement led to greater CBIS

success. Therefore, the positive impact of computer

planning is exerted primarily through the

involvement of the CEO in key computer

decisions.

This is the second major field study of computer

success in small manufacturing firms. Raymond

(1985) studied computer use in 464 small manufacturing

firms in Ouebec and found that in

house operations, a greater number of administrative

applications, interactive applications, and

a higher ranking MIS function were associated

with higher levels of user satisfaction and higher

levels of system utilization. The present study

and the Raymond study involved similar populations

and yielded some consistent results where

similar variables were tested, as summarized in

Table 4.

Each study considers variables which the other

did not and each had different approaches to

measuring small business CBIS success. Future

research can build upon these results in order to

test the findings.

Limitations of the Study

The findings of this study apply only to small

manufacturing firms. Whether the results can be

extended to small business in other industries is

a matter of speculation.

For the 93 cases collected, some of the success

factor measures did not include enough cases in

certain categories. For example, there were too

few examples of: 1) significant ongoing employee

training (64 out of 93 firms had no

ongoing training), 2) in-house program development

(16 out of 93 firms), 3) poor or fair employee

acceptance (16 our of 93 firms had poor

or fair acceptance), and 4) off-site computer services

(17 out of 93 firms). The low number of

cases in these categories reduced the power of

the statistical tests.

58 MIS Quarterly/March 1988

Small Business

Table 4. Comparative Findings

Average Sample Firm Characteristics

Size

Age of Computer Use

Use of External Support

Type (in-house)

Associations with Computer Use (SUCCESS)

AGE

EXTERNAL

TYPE

This Study

62 employees

48 months

83%

70%

This Study

NONE

NONE

YES

Raymond

80 employees

72 months

70%

74%

Raymond

NONE

NONE

YES

The study was not able to determine which of the

factors are significant in distinguishing between

successful and failing computer operations because

there were too few examples of computer

failure in the sample.

Finally, additional success factors such as software

characteristics, hardware alternatives, and

vendor relationships could be added to the variables

already studied. A single valid and reliable

measure of small business computer success

should be developed and be applied consistently

to all studies in this field.

Summary

Small manufacturing firms wbich choose to use

computers for their information processing requirements

need chief executives who are

knowledgeable about computers and who are

committed to participating in the strategic decisions

concerning computers. These small firms

should design and implement computer planning

and control systems from the start. Furthermore,

they should plan on acquiring their own computer

equipment at some point in the computerization

process. On tbe otber band, they do not

bave to be concerned about developing an inbouse

programming staff, since sucb expertise is

available externally.

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About the Author

William H. DeLone is Assistant Professor of

Management and Information Systems at the

Kogod College of Business Administration, The

American University in Washington, D.C. He received

his Ph.D. in Computers and Information

Systems from UCLA. His current research interests

include the use of computers in small

business and the measurement of MIS

effectiveness.

MIS Quarterly/March 1988 61