Capacity building goes beyond the notion of using training to build business know-how. From a small business viewpoint it is about the use of informal and formal networks to help overcome the barriers they face in adding to their understanding.

For purposes of this paper that understanding is related to how best to build capacity to know how to effectively employ their information systems. This paper examines, through a series of research studies conducted by the authors, how some small businesses have tackled the task of capacity building to enhance the use of IT.


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Small Business

When studying the use of Information Systems (IS) in small business, the definitions used to describe ‘small business’ varies across international boundaries. This range can make it extremely difficult for researchers to ‘match up’ different small business studies.

A 2003 study by worldwide members of the Information Resources Management Association Special Research Cluster on Small Business and Information Technology (Burgess, 2003) found that definitions of ‘small business’ ranged from less than 20, 50 and 100 employees (with some definitions including requirements for annual tumor and asset levels). In this study we will treat any organisation with 20 employees or less as a small business.

Information Systems

Comprise hardware, software, people, procedures and data, integrated with the objective of collecting, storing, processing, transmitting and displaying information. Such a system does not require use of a computer.

Capacity Building

There are many definitions of capacity building. The Australian Government (2004) suggests that it is about increasing the abilities and resources of individuals, organizations and communities to manage change. Capacity building can occur at an organisational, local, regional and even national level. The important thing is that it is about building knowledge and understanding through avenues such as training and social networks: in this case for the use of IS within small businesses.


In 1994, a study of 358 small business in New Zealand suggested that many small businesses cannot afford to employ speciahsed IS staff The authors concluded that potential system users should be made aware of its functionality, and that this can occur through internal training, management support and external support. Although the computing environment has altered since the study the premises still appear to be applicable today. In fact, the literature contains what is now a fairly accepted list of ‘barriers’ to the successful implementation of IS in small businesses.


The next section describes the nature of capacity building adopted by different types of small businesses in a number of recent studies by the authors. For each study a short description of the research method will be provided, followed by a description of how the study participants faced the challenge of capacity building for their IS.


What we find in each of these (quite distinct) situations is reliance by small businesses on formal and informal networks that they have set up to support their capacity building. In the case of the bed and breakfasts much of their IS support came from consultants and friends. In the winery case they Knowledge Acquisition in Small Businesses


The task of capacity building in small business is not an easy one. This paper has shown three research studies into the use of IS by small businesses and discussed the various ways in which they approached their capacity building.

Although each of the situations involved small businesses that seemed to be entrepreneurial in nature and keen to grow, there was still quite a healthy reliance on the informal networks that had been a traditional source of knowledge (but perhaps not skilled in the use of IS) as the major source of advice for the use of IS within their businesses.

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