Business Value of ICT for Small Tourism Enterprises: The Case of Sri Lanka

Abstract

Researchers and practitioners believe that Information and Communication Technologies (ICTs) create business value in organisations. However in practice, organisations often struggle to demonstrate the benefits of ICTs. This difficulty in demonstrating the value of ICTs to organisations is not related to the technology itself, but rather the ways in which technology is used, and how it creates business value. There is an extensive body of literature which focuses on these issues. However, it is predominantly centred on large organisations in the context of developed countries. There is a lack of research on how ICTs create business value in small enterprises particularly in relation to developing countries. Hence, the business value of ICTs remains an important research topic for information systems researchers.

The tourism industry is highly information intensive and the use of ICTs in tourism has become so widespread it is almost obligatory. While the benefits that larger tourism organisations gain from ICTs have been well researched, little is known about how ICTs can be utilised to maximise the business value of Small Tourism Enterprises (STEs). Understanding the value of ICTs for STEs is important as they have gained widespread recognition as a major source of employment, income generation and poverty alleviation in developing countries. Therefore, the purpose of this study is to explore how ICTs can contribute to the business value of STEs.

Using a combination of Barney’s Resource Based View of the firm (RBV) and an integrated model developed by combining the Business value of IT framework by Melville et al. and the tourism production system by Poon and Alford, this study examines how ICTs contribute to the business value of STEs. A post-positivist qualitative multi-case study was carried out using 35 STEs which represent the major tourist regions of Sri Lanka. Semi-structured interviews were the main method of data collection supported by document and website analysis. Data analysis was guided by template coding. The initial template developed using the dimensions identified from the literature was further analysed by integrating the themes which emerged from the research data. Data was analysed across cases, using a cross tabular design to compare categories and analyse within-group similarities and inter-group differences.

The use of technological and human ICT resources alongside complementary resources in key business processes was examined in order to identify how ICTs were being utilised to gain business value for STEs in Sri Lanka. The combination of internal and external factors derived from the focal firm and the external environment proved to have a significant role in determining STEs’ ability to gain business value from ICTs. Further analysis of cases across four major tourism clusters revealed that business motives, strategies, and location were the main reasons for the varying levels of business value gained by small businesses in the country.

The findings of this study indicated that ICTs do contribute to the business value of STEs in Sri Lanka by improving organisational performance in terms of both financial and non-financial gains. In accordance with the claims of RBV, the findings further confirmed that in order to gain business value, ICT resources need to be combined with complementary resources. The findings also identified the significance of strategic integration of online travel agents’ resources in order for STEs to gain the optimum business value from their own ICT resources.

A key outcome of this study is the development of an integrated model of the business value of ICTs for STEs. In addition, this study contributes to the theoretical understanding of IT business value research in the context of small tourism businesses, particularly in developing countries. It also has implications for business owners and governments in terms of effective utilisation of firm resources, prioritization and allocation of resources to key projects and processes.