Does access to business relevant information through networked devices enhance the internal efficiency and business growth of urban MSMEs in low- and middle-income countries?

What do we want to know?

The objective of this systematic review is to examine the evidence as to whether access to business-relevant information through networked devices enhances the internal efficiency and business growth of urban micro-, small and medium enterprises (MSMEs) in low- and middle-income countries (LMICs).

Who wants to know and why?

In the developmental-policy domain, MSMEs are treated as significant sources of employment and livelihood for the poor in LMICs. Rapid advancements in Information and Communications Technology (ICTs) have made it possible for MSMEs to reach previously inaccessible goods and services, as well as the labour market. Networked ICT devices, such as mobile phones, have resulted in positive outcomes for MSMEs in these countries. This systematic review attempts to validate the above assumptions.

What did we find?

The period of work is 2007-2014; the location of studies is split between India and the African continent. Five studies have followed the probability sampling method, with sample size ranging from 100 to 560 (except one study, with 3,691). All but one of the studies used self-reported data pertaining to the use of ICTs. The review showed that the volume of business calls has increased with the increased use of mobile phones. ICT usage and possession predict the labour productivity of MSMEs. Operational support, strategic development and process improvement and operational performance are enhanced by the use of networked devices. With increased purchase of mobile phones, there is an increase in the number of customers. The higher ICT expenditure results in greater turnover of the enterprises. The profits of the enterprises have increased with use of mobile money.

The meta-analysis shows that networked devices have a very small positive trend on the growth of MSMEs. The meta-analysis results did not support the premise that the communication of business-relevant information through networked devices as an intervention led to improved internal efficiency.

What are the implications?

The review showed that the impact of ICTs on the growth of MSMEs is small. The ICTD domain and the information-systems domain still lack adequate causal studies that link ICTs and access to business-relevant information to growth of MSMEs. Any theory of largescale policy interventions of ICTs for MSMEs is in need of further evidences. The review highlights the gaps for future researchers to explore and underlines the policy relevance of the empirical research. The suggestions include: undertaking causal studies with rigorous methodology and reporting, including randomized control trials (RCTs); adapting probability-sampling techniques in order to avoid biases; moving beyond India- and Africa based studies to improve understanding; considering networked devices other than mobile phones; testing for recursive relationships between ICTs and business growth; and performing disaggregated analysis of subgroups in relation to different business-relevant information.

How did we get these results?

Using a set of keywords, electronic databases and grey literature were searched for the period 2000 onwards. From the initial results of more than 24,000, ten research studies were included for the final analysis. The following inclusion criteria were used: whether the study was conducted in urban localities; whether the study was conducted in the listed low- and middle-income countries; whether the study contributes to understanding of MSMEs (maximum of 250 employees and annual turnover of less than €50m for an enterprise); whether the study includes numeric data; whether the MSMEs studied use at least one networked device; whether the MSMEs studied process business-relevant information; and whether the study is published in English.

All the studies that used experimental and non-experimental designs were included. Access to business-relevant information by the MSMEs for business-related activities through networked devices was used as the intervention for inclusion. The review also considers as the outcomes causal linkage between ICT and the internal efficiency or the business growth of MSMEs. Studies also met inclusion criteria if they were conducted in low- and middle-income countries. For synthesis, meta-analysis was conducted using the Stata software, where subgroup analysis was performed based on the outcome, internal efficiency or business growth of MSMEs.

This report should be cited as:

Ilavarasan PV, Otieno A, Huang Y, Cabotaje C, Sahai G (2017) Does access to business relevant information through networked devices enhance the internal efficiency and business growth of urban MSMEs in low- and middle-income countries? International Development Research Centre, Ottawa, Canada, and the Department for International Development, UK.