The Value of Information Systems to Small and Medium-Sized Enterprises: Information and Communications Technologies as Signal and Symbol of Legitimacy and Competitiveness

Small and medium-sized enterprises (SMEs) face more serious challenges to their survival than do larger firms. To succeed, SMEs must establish and maintain credibility in the marketplace to attract the resources required for survival. Most co-opt legitimacy by mimicking the cues that signal credibility to convince potential stakeholders that something stands behind their promises. This research examines the role of information and communications technology (ICT) in legitimacy-building from the perspective of both SME founders and customers. In-depth, semi-structured interviews were conducted in a variety of industries to determine whether the ICT-related legitimacy schema from the customers’ perspective differs substantially from that of firm founders. Results indicate that customers compare the ICT information provided in SME’s sales pitches to pre-existing ICT expectations about the nature of desirable sales transactions. We describe the relationship between violations of ICT expectations, legitimacy, and purchase decisions. Implications for theory and practice are discussed.