The effects of ict adoption on marketing capabilities and business performance of indonesia smes in fashion industry

This study analyzes factors contributing to ICT adoption among SMEs in fashion industry and examines the impacts of the adoption on marketing capabilities and business performance. To identify the ICT adoption determinants, this study uses the Technology, Organization, and Environment (TOE) framework developed by Tarnatzky and Fleischer (1990), based on this framework, technological factors are examined using five factors namely relative advantage, compatibility, complexity, trialability, and observability. Meanwhile, the marketing capabilities are derived from marketing capability that was developed by Vorheis and Morgan (2001, 2005) and further modified by several researchers such as Morgan et al., (2003), Theoharakis and Hooley (2003). Furthermore, business performance is analyzed by using SMEs’ owners/managers perception on their business performance including revenue growth, profit growth, as well as number of employee growth. The findings confirmed that technological, organizational, and environmental factors play essential roles in the adoption of ICT among SMEs operating in the fashion industry. All technological factors namely relative advantage, compatibility, complexity, trialability, and observability are found to significantly influence the ICT adoption positively. Moreover, both owner/manager knowledge and owner/manager innovativeness were two organizational factors that contributed to ICT adoption. In regards to the environmental factors, this study shows that competitive pressure, market turbulence, and institutional intervention were important environmental factors influencing ICT adoption among SMEs. However, market turbulence shows significant but negative relationship to the adoption. This study further indicates that ICT adoption significantly and positively influences marketing capabilities namely planning flexibility, marketing implementation, product development, pricing, and communication. It also shows that among five dimensions of marketing capabilities, marketing implementation has the highest contribution, it seems that ICT adoption help SMEs to better and faster execute marketing strategies. Finally, this research reveals that marketing capabilities namely planning flexibility, marketing implementation, product development, pricing, and communication have significant influence toward firm’s business performance. Marketing implementation is found to be one of marketing capabilities that have highest contribution to the business performance, marketing implementation is marketing activities associated with the ability of SMEs to allocate marketing resources, translate and execute marketing strategies into action quickly and monitor marketing performance. Furthermore, this current research has provided important theoretical contributions into the body of knowledge related to the technology adoption theory by adding new understanding on how this theory can be adopted in the firm level in fashion industry context, secondly, the resource-based view of the firm theory by strengthening and confirming how organizational capabilities enhance firm performance, and finally, linkage of technology adoption theory and resource based view of the firm theory by providing a new holistic perspective that relates the consequences of technology adoption model to the development of organizational capabilities and business performance. Moreover, the results provides several managerial and policy implications on how to increase the adoption of ICT among SMEs. There is a need to educate and train SMEs owners, employees, and business partners, such initiatives provide an opportunity to try various applications, and to use and leverage ICT for their businesses. Access to any formal/informal training seems to be crucial to improve SMEs knowledge, skill, and competency. One of the strategies is to offer proper ICT training with competency building training for SME owners and employees. Involvement in any networks, cooperation (third party such as companies and academic institutions), and cluster activities also enables SMEs to engage in informal training and development. Also, it is important that ICT benefits have to be believable and apparent for SME owners. Mentorship program can be one solution to support SMEs where successful adaptors can act as role models for other SME owners and allow them to transfer experience and expertise to other fellow SME owners. While this current study provides useful empirical insight, it has several limitations that must be acknowledged. This study employs a nonprobability sampling that limits the generalizations of the findings. Moreover, business performance measurements namely, sales and profit are based on respondent perception