The DiÚ Usion and Adoption of Information Technology

Technology Analysis & Strategic Management, Vol. 13, No.
2, 2001
The DiÚ usion and Adoption of Information Technology

in Small - and Medium-sized Enterprises through IT
Scenarios
W. H. C. KNOL & J. H. M. STROEKEN
A BSTRACT T he rapid economic and technological developments in the globally oriented business world
make the strategic use of information technology (IT) essential. Small and medium-sized enterprises
(SMEs) are running behind regarding the application of IT and therefore it is necessary to stimulate
the diÚusion and adoption of this technology within this group. In this article a so-called IT scenario
model is described, with which communication can be established with entrepreneurs from SMEs
concerning the strategic application of IT. Theoretical approaches and concepts regarding the diÚusion
and adoption of IT are essential components of the model. T he IT scenario model consists of an
environmental aspect, six phases and three aspect areas. The model was put into operation through
various interviews with SMEs in the furnishing sector.
Introduction
Modern society is rapidly developing into a society in which information and knowledge
are of primary importance. The globalization of the economy and the rapid advances in
technological development in the eld of information technology (IT) have increasingly
focused attention on a technology policy involving evolutionary economic growth theories.1
These theories provide advice that is directly related to the importance that is attached to
diÚ usion, adoption and implementation of technology.2 This interest certainly applies to
the diÚ usion, adoption and implementation of IT in small and medium-sized enterprises
(SMEs), as SMEs have such an important position in the national economies and the level
of application of IT in SMEs is relatively lower than in large-scale enterprises.3 The lack of
strategic insight of the entrepreneur regarding altered product options as a result of the
introduction of IT, the alternative market and customer approach, and the desired forms
of co-operation is an important reason why there is such a low level of application of IT in
SMEs.4 The above makes it clear that it is desirable and essential for policy to stimulate the
diÚ usion and adoption of IT in SMEs.5 With respect to this, to improve the utilization of
policy research, attention should be paid to the needs of potential users and to the dissem-
ination and exploitation of the policy research results.6 DiÚ usion can be viewed as ‘the
process by which an innovation is communicated through certain channels over time
among the members of a social system’7 and adoption is ‘the process through which an
individual (or other decision unit) passes from rst knowledge of an innovation to forming
W. H. C. Knol is at the Eindhoven Centre for Innovation Studies (ECIS), Eindhoven University of Technology, The
Netherlands; J. H. M. Stroeken is at TNO dep. Strategy, Technology and Policy (STB), P.O. Box 6030 NL 2600 JA
DELFT, The Netherlands; E-mail: stroeken@stb.tno.nl
ISSN 0953 -7325 print; 1465-3990 online/01/020227-20 © 2001 Taylor & Francis Ltd
DOI: 10.1080/0953732012005246 1
228 W. H. C. Knol & J. H. M. Stroeken
an attitude toward the innovation, to a decision to adopt or reject, to implementation of

the new idea and to con rmation of this decision’.8 Rogers de nes an innovation as ‘an
idea, practice, or object that is perceived as new by an individual or other unit of adoption’.9
The stimulation of diÚ usion and adoption requires the initiation of communication with
SMEs regarding the innovation.10 To this purpose, this article focuses on a discussion of
the so-called IT scenario model as an instrument for shaping the communication process
with regard to the strategic application of IT in SMEs. Matters like the adoption decision
process and implementation, both of which are very relevant for the innovation trajectory,
will not be discussed in this article. Theoretical approaches and concepts concerning
diÚ usion and adoption of IT are the basis for the IT scenario model and these will be given
below. Next, the creation and a business sector-speci c operationalization of the model are
discussed, after which a limited test is described. Finally, some recommendations for further
research are given. The research is explorative and non-longitudinal.
DiÚ usion of an Innovation

The development and application of a technological innovation is a process of focused
accumulation of knowledge and skills. The innovation development process can be
considered from the supply and demand side.11 The supply side focuses on the creation,
production and diÚ usion of an innovation, and the demand side encompasses the
adoption, absorption and application of an innovation. In the transition area between
supply and demand, diÚ usion and adoption are centremost. DiÚ usion generally works at
a higher aggregation level than adoption, being mostly at the macro and meso-economic
levels. The adoption process, however, takes place at the level of the individual adopting
unit and at the micro-economic level the potential adopter of the innovation often is an
enterprise, a division, or an individual. As regards the diÚ usion process, Rogers12
distinguishes four elements: (1) the innovation, (2) the social system, (3) the communication
channels and (4) time. These four elements are brie y discussed below for IT in SMEs.
The Innovation
IT is viewed as an innovation here when it is felt to be relatively new by the potential
adopters.13 Freeman and Soete de ne IT at a high aggregation level as ‘a new techno-
economic paradigm aÚ ecting the management and control of production and service
systems throughout the economy, based on an inter-connected set of radical innovations
in electronic computers, software engineering, control systems, integrated circuits and
telecommunications, which have drastically reduced the cost storing, processing, com-
municating and disseminating information. It comprises a set of rms and industries
supplying new equipment and software, but its development and applications are not
limited to this specialised information technology sector’.14 From a more pragmatic and
technological perspective IT is related to all technologies used to collect, store, process,
graphically display and transport data, and therefore encompasses computer equipment,
system programs, application programs and communication facilities. What is character-
istic of IT is that it is a generic technology that can be applied in many ways in diverse
environments. 15 In this article the emphasis is placed on process innovation through IT,
as process innovation is essential for the professionalization of industry in the long run
and thus is partly responsible for an improvement in the competitive position of industry
compared to foreign industry for example.16 Stroeken provides an overview concerning
the in uence of the strategic application of IT on the supply chain structure of six
business sectors.17
IT in Small- and Medium-sized Enterprises 229
The Social System

The social system is the second element in the diÚ usion process and Rogers de nes it as
‘a set of interrelated units that are engaged in joint problem-solving to accomplish a
common goal’.18 In this article part of the SMEs are viewed as being part of a diÚ usion-
oriented social system and for the purposes of this research SMEs are de ned as all
companies with less than 100 employees. The attention is focused on SMEs because
compared to large-scale enterprises they have problems spreading and applying knowledge
concerning new technological innovations such as IT.19 As regards the stimulation of
diÚ usion and adoption of innovation in SMEs, it is important to recognize the hetero-
geneity of these enterprises,20 as the degree of homogeneity of the potential adopters in
the social system in uences the diÚ usion rate of an innovation.21 This implies a sector-
by-sector approach to the diÚ usion issues, since the sector and its business are a clear
and recognizable frame of reference for the parties involved in the social system.
Within the social system various types of actors, such as customers and suppliers,
sector organizations and the national government are interwoven with SMEs in inter-
organizational networks. Alter and Hage de ne networks as ‘(unbounded or bounded
clusters of organisations that) constitute a basic social form that permits inter-organisa-
tional interactions of exchange, concerted actions and joint production’.22 The presence
of organizations or enterprises in inter-organizational networks reduces risks and uncer-
tainty, and provides means, expertise and information, so that the potential adopters
have the ability to learn about new technologies via external contacts.23 This eld is
closely related to terms like supply chain integration and reversal, and horizontal
integration. With respect to this, Dierckx and Stroeken describe the use of techno-
economically oriented scenario methods and the actor-oriented SCOT (Social Construc-
tion of Technology) method to analyze developments regarding the strategic application
of IT in a sector.24 The relations between the various actors in a social system have a
signi cant role in the diÚ usion process when communication takes place about the
innovation.
The Communication
The essence of a diÚ usion process is to break down or reduce uncertainty about an
innovation among the members of the social system by means of communication. In this
context communication can be de ned as ‘the process by which participants create and
share information with one another in order to reach a mutual understanding’25 As
regards the diÚ usion of innovations, Rogers26 distinguishes two kinds of communication
channels, i.e. mass media channels and interpersonal channels. Nilakanta and Scamell
indicate that the eÚ ectiveness of the communication about an innovation depends on the
speci c characteristics of the communication sources and channels used.27 Thus, the
various communication sources and channels in uence the degree to which an innovation
diÚ uses in a social system. Attewell distinguishes two forms of communication, i.e.
communication aimed at the introduction of innovation (signalling information) and
communication focused on content (know-how information).28 Complex innovations make
it necessary for potential adopters to obtain content knowledge about innovations and in
the case of IT this involves knowledge of strategic, technological and organizational
aspects of the innovation.29 The traditional method of content knowledge transfer from
the supply side to the demand side is less eÚ ective for complex technologies, as the time-
consuming learning aspect is of prime importance for the adoption and implementation
of complex innovations.30 Therefore, it is imperative to understand the adoption of IT at
the micro level to stimulate its diÚ usion in SMEs.
Time
The fourth diÚ usion element, time, is expressed by the adoption rate of the innovation
in a particular social system within a particular period. Generally the adoption rate can
be graphically depicted as a sigmoidal curve (s-curve). 31 The increase in the adoption
rate of interactive innovations like the telephone and e-mail does not follow the pattern
of a traditional s-curve, but is more exponential.32 This has to do with the network
externalities that accompany the application of this type of innovation.33
To fathom the diÚ usion process, we conclude from the above, we need to look at four
elements: IT as an innovation, SMEs and their environment as the social system, the
communication between the members of the social system and the aspect of time. IT is
a generic, complex innovation and within SMEs there is a degree of uncertainty
concerning the innovation and focused communication with the potential adopters may
reduce this uncertainty. Therefore it is essential to know how the SMEs are embedded
in the social system. In the rst place, SMEs are a very heterogeneous group, making it
necessary to segment the group of potential adopters for purposes of diÚ usion. This
implies a sector-speci c approach, because the sector and its business are a clear frame
of reference for the parties involved. In the second place, actors like customers and
suppliers, sector organizations and regional training centres play an important role in the
communication process regarding the strategic use of IT. This makes these actors
signi cant in the policy regarding the use of the IT scenario model in a given sector.
Furthermore, communication with entrepreneurs cannot be based on signalling informa-
tion alone for the diÚ usion of a complex innovation like IT. The communication is
imperative of know-how information about the strategic, technological and organizational
aspects of the adoption and implementation of IT.
Adoption of IT
The adoption of an innovation like IT is considered at the level of a single SME in this
research. Many aspects implicitly or explicitly in uence decisions taken with regard to
the adoption of an innovation and these aspects collectively form the context of the
adoption process. The adoption framework of Tornatzky and Fleischer34 can be used as
an analytical model regarding the adoption context of an innovation and in this context
they distinguish three elements: the environment, the technology and the organization.
According to them, the environmental context regarding the adoption is related to the
characteristics of the sector and market structure, the availability and quality of sources
one can consult, and governmental policy. Scenario methods are an instrument for
presenting possible development in the environmental aspect (sector, supply chain and
technology) at the management level.35 Thus, scenarios can support entrepreneurs in
SMEs with the learning processes related to business strategies and innovation.36
For the case of the adoption and implementation of IT, the technological and
organizational context can be described in depth using IT-organization frameworks, such
as the consistency model of Scott Morton37 and the strategic alignment model of
Venkatraman.38 These more business-oriented concepts describe various dimensions and
aspects related to the strategic embedding of IT in the enterprise. The consistency model
of Scott Morton39 contains ve complementary basic aspects (strategy, technology,
structure, individuals and management), which all are continuously subject to or initiate
change. The strategic alignment model of Venkatraman40 consists of a business domain
and a (information) technology domain, in which the following four interacting perspec-
tives meet: business strategy, infrastructure and processes of the organization, IT strategy,
and infrastructure and processes of the information systems. From both concepts we can
deduce that it is essential to unite or even integrate business aspects with IT aspects at
the strategic level. The concepts provide insight from a non-evolutionary perspective into
forces and relations between them that in uence the strategic embedding of IT in an
enterprise. The IT growth-phase models of Nolan,41 Venkatraman,42 Tan43 and Stroeken
and Coumans44 describe the development of the strategic application of IT in an
enterprise from an evolutionary perspective. The development of the adoption context
of IT in an enterprise is presented in phases in these models. The focus of the phases
moves from an internal approach to computerization aiming to improve eÝ ciency and
eÚ ectiveness to an external approach, in which aspects like supply chain integration and
changes in the product-market combination under the in uence of IT are discussed. It is
obvious from the above that an integral and consistent approach to aspects like strategy,
technology and organization are of importance for the application of IT.45 It also means
that the growing IT possibilities, like the Internet, are only eÚ ective by a successful
implementation in the organization and a ne-tuning to the strategy, both being the
main bottlenecks for SMEs.
Below this adoption context in relation to IT will be rendered in an IT scenario
model.
IT Scenario Model
The IT scenario model aims to provide SMEs with insight into the strategic application
of IT from a broader meso perspective. The role of the model is to raise the awareness of
people regarding IT by focussing communication on its strategic application. The IT
scenario model contains three main components: the environment, six phases and three
aspect areas (Figure 1).
The Environment Component

The contents of the environment component are mainly deduced from the scenario
planning method and are related to uncertain developments that occur at the macro and
meso levels. This concerns matters such as macro-economic, technological, demographic
and market developments. The communication of relevant environmental developments
increases the awareness of the entrepreneur concerning the contextual environment.
Speci c developments at the sector or supply chain level are dealt with in the phases’
component.
environment
phase 0 phase 1 phase 2 phase 3 phase 4 phase 5
strategy
organisation technology
Figure 1. IT scenario model.

Table 1. The phase division of the IT scenario model

Phase Description
0 No usage of information technology

1 Internal oriented functional integration
2 Internal oriented multifunctional integration
3 External oriented process integration
4 Business process redesign
5 Business scope rede nition under in uence of IT
The Phases
The division of phases is the critical part of the model, as it provides the basis for the
evolutionary nature of the application of IT in relation to external business aspects.
Matters like vertical and horizontal integration and supply chain reversal are dealt with
in this. The IT scenario model encompasses six phases (Table 1) and these are taken
from the IT growth-phase models of Venkatraman,46 Tan47 and Stroeken and Coumans.48
With focused communication of the contents of the phases to entrepreneurs in SMEs,
the recognizability and distinctive capacity of the six phases are of extreme importance.
· Phase zero is related to situations in which no form of IT is used in the enterprise,

with the exception of simple variants like a fax machine. A considerable proportion of
Dutch SMEs can be placed in this category.
· Phase one is aimed at the computerization of existing activities to improve eÝ ciency.
As a result, the emphasis is placed on internally oriented integration of existing
activities. Often programs are used to register part of or all of the information ows
from the primary process. In larger companies this is done by ERP packages (Enterprise
Resource Planning) and in SMEs standard, integrated programs generally are used.
· In phase two the improvement in eÚ ectiveness is realized through internally oriented
multifunctional integration. This lends more depth and breadth to the integration
mentioned in phase one and the programming from phase one is applied in a more
advanced and re ned way.
· Phase three is aimed at the improvement of the present product–market combination
through a type of process integration, in which a greater emphasis is placed on the
externally oriented improvement of business processes. This means that the strategic
position of the enterprise in the market and supply chain is the focal point of attention.
IT is implemented in such a way that it makes a fundamental contribution to the
customer approach and supply chain integration.
· Phase four encompasses the redesign of business processes to extend the external
orientation. As a result, the enterprise has the ability to orient itself towards innovative
product–market combinations. IT functions more as enabling technology in this phase.
· Phase ve is related to the revision of business goals under the in uence of IT, so that
the enterprise undergoes a complete external re-orientation.
Moving through the six phases can be viewed as a cyclical innovation movement. Before
an enterprise can focus on a new innovation cycle, or higher phase, it must meet certain
phase-speci c boundary conditions. These boundary conditions are given in three aspect
areas. It is assumed that the provision of information regarding the three aspect areas
leads to the adoption and implementation of IT in these three areas.
Table 2. The aspect area of strategy

Element Description
Main feature of the strategy · The main feature of the strategy indicates what the essence of the business strategy
is in a particular phase: eÝ ciency improvement, eÚ ectiveness improvement,
improvement of the product-market combination, renewal of the product-market
combination or a totally new business orientation
The function of IT · This point is related to the above point and covers the support of existing functions,
the integration of existing functions, and the redesign or rede nition of functions
The IT plan · An IT plan gives the strategic vision in relation to the use of IT. The degree of
attunement between the IT plan and the business plan can be divided into various
stages
Table 3. The aspect area of technology

Element Description
The business processes · The strategic vision has various implications in each phase for the technical and
organizational structure of the business processes. One important point of
departure is the data structure
The data structure · For each phase we can indicate which information ows can be supported by IT in
the data structure
The IT applications · In relation to above two points, the IT applications are speci cally named
Table 4. The aspect area of organization

Element Description
Organization and tasks, · The implementation of IT brings about changes in the internal and external
authorities and responsibilities organization. This has implications for the relations between business processes.
With this, changes occur in accompanying tasks, authorities, and responsibilities
Training · Training plays an essential part in the acceptance and actual use of IT and
employees must become familiar with the strategy and operational aspects of IT
Management of technology · Once the technology has been adopted, the management of the technology has to
be organized
Management and users · As regards the above points, the attitude of the management is crucial to success.
Clear de nitions have to given of the roles and relations between the management
and the users
The Aspect Areas

The aspect areas are related to the elements of content or boundary conditions that hold
for each phase. The elements are related to three aspect areas in the model: strategy,
technology and organization. They are taken from the consistency model of Scott
Morton,49 the strategic alignment model of Venkatraman,50 the IT growth-phase models
and the concepts from innovation literature described in Tornatzky and Fleischer.51 In
the three tables below the elements are given for each aspect area. The three aspect areas
are complementary, which means that the contents of the aspect areas cannot be clearly
delimited.
Operationalization of the IT Scenario Model for the Furnishing Sector

The IT scenario model is operationalized for the furnishing sector, as a part of the retail
trade, because the retail trade represents a considerable share of the total number of
companies in the Dutch economy, the level of computerization of retail trade SMEs is
relatively low and the furnishing sector largely produces to order and therefore informa-
tion and knowledge exchange in the supply chain is essential.52 From this we can deduce
that the smaller furnishing shops with less than 10 employees are in phase zero and the
medium-sized shops (with between 10 and 100 employees) can more often be categorized
in higher phases. The furnishing sector focuses on the sale of living room and bedroom
furniture, cupboards, kitchens, oor coverings, wallpaper and lights. Within the Dutch
furnishing sector we can distinguish ve types of companies: furniture stores, bedroom
furnishing stores, wall and oor furnishings, mixed businesses and other businesses like
kitchen stores, and cork and parquet ooring businesses.
The furnishing market is growing and consumer expenses increase comparatively on
a yearly basis. However, there is a real threat for the small furnishing retail shop caused
by the growing scale of the sector (furnishing centres). This concentration of points of
sale weakens the competitiveness of the SME retailer. One of the answers could be the
implementation and use of IT in the retail shop.
The operationalization of the IT scenario model was realized through interviews with
the following bodies:
· The trade organization of the furnishing sector. This organization is an association of

entrepreneurs in the furnishing sector that protects the collective and individual interests
of entrepreneurs in the elds of product liability, shopping hours, certi cation and
supply chain-oriented computerization protocols.
· Two large retail organizations in the Netherlands. Core activities of these organizations
include being a supplier, retail trade activities, and commercial and business services to
independent entrepreneurs in the elds of market research, sales concepts, promotional
activities and computerization services.
· Some IT suppliers who develop, install and maintain hardware and software products
speci cally for the furnishing sector.
· Two regional training centres that provide information to SMEs about computerization
through their so-called knowledge-transfer points.
· Some small and medium-sized enterprises in the furnishing sector.
As not all of the operationalized parts of the model can be given in this paper, we have
opted to ignore the environmental component. In addition, the phases zero to ve are
only summarized, which means that matters like tasks, authorities and responsibilities,
schooling and management, and user aspects are only brie y discussed. For a complete
and detailed representation of the operationalized model, see Stroeken and Knol.53 The
term computerization compared to the term IT seems to better match the frame of
reference of the entrepreneur in the furnishing sector and therefore computerization is
used consistently in the phases below.
Phase zero is related to the situation in which the furnishing shop does not make use
of computerization. This means the entrepreneur has made an implicit or explicit
strategic choice not to professionalize the enterprise through computerization. Phase one
entails mostly small enterprises that pay limited attention to the strategic position of the
enterprise in relation to the application of forms of computerization, due to their limited
knowledge, lack of complexity, lack of co-ordination and limited means.
Phase 1: Computerization Aimed at a Functional, Internally Oriented

Integration
Strategy
The strategy of the enterprise in this phase is focused on raising the eÝ ciency within the
furnishing shop. The function of computerization is especially focused on the support of
existing functions. One example is the structural registration of order data with an order-
processing program. The role of the IT plan generally is limited in this phase. If there is
an IT plan, it is not tuned to the business plan or the business strategy.
Technology
The computerization in this phase is especially related to the internal data structure of
the following business processes: management, personnel process, administration, service,
sales, purchasing, stock and supply. The following computer applications can be men-
tioned for this phase: an order processing program, accounting program, word processing
program, ATM machine (Automated Teller Machine), electronic cash register (not in all
types of companies), a CAD system (i.e. Computer Aided Design; not for all types of
businesses), a fax and spreadsheet program. The hardware consists of separate computers
with accompanying peripherals. There are hardly any or no data links between the
computer applications mentioned above. Figure 2 gives an overview. For each relevant
business process, information is given about the computerized data and the accompanying
type of computerization.
Organization
The use of computerization has implications for the organization of the furnishing shop
(structure, functions and schooling). The structure of the organization changes because
the application of computerization alters the shape of the business processes. In the sales
process, for example, the order processing program is used to register matters like product
data, orders and customers, and therefore this program holds an important position
within the business process. This means that tasks, authorities and responsibilities have
to be organized regarding regular activities and activities related to the use of computers.
The same applies to the technical operational maintenance of the computers (installing,
updating, copying and making back-up copies). The management of computers is an
important subject and is nearly always organized by the entrepreneur in this phase. The
role of the user in the adoption process of computerization in this phase is limited and
management in particular needs to gain insight into the strategic role of computerization.
The following schooling is required: an introductory course in business science (business
strategy, organization, business processes and customer services), an introductory and
general course about the strategic use of computerization, a course about the operational
use of computerization and a course about speci c applications (order processing program,
accounting program, CAD program, etc.). For more information, the following parties
can be consulted: the accountant, the sector organization, the purchasing combinations,
regional training centres and IT suppliers.
Phase 2: Computerization Aimed at a Multifunctional, Internally Oriented

Integration
Phase two is a deepening and broadening of the contents of phase one, aimed at the
improvement of the eÚ ectiveness of the enterprise.
Figure 2. Computerized data and computerization in phase 1.
Strategy
The strategic attention in this phase is focused on the eÚ ectiveness of the enterprise
through the use of computerization. Among other things, this is realized by obtaining
more insight into turnover per product, product group, manufacturer, period, or oor
surface. The accompanying function of computerization is to support, improve and
integrate existing business functions. The possible presence of an IT plan mainly consists
of the applications of computerization within the enterprise, in which it will only be
partially related to the business plan.
Technology
The use of computerization is related to nearly all the business processes in this phase,
but the degree of use will diÚ er from process to process. In the last phase some business
processes were mentioned that are related to the use of computerization. In this phase
some new business processes are added and some processes are extended or renewed
regarding the use of computerization. We are dealing with the following new and renewed
business processes: management, personnel process, marketing, administration and sales.
The following extra computer applications can be mentioned in this context: a more
extensive application of the order-processing program and tele-banking facilities. The
programs and equipment now have closer links, e.g. with ERP (Enterprise Resource
Planning)—software the purchasing policy can be determined on the basis of the number
of sold articles and the present stock supply. Integration with the electronic cash register
gives a current gure of the supply in stock. The customer accounting module of the
ERP-software may be used to approach regular customers with special oÚ ers, e.g. in
combination with a digital customer card.
In Figure 3 the computerized data and accompanying types of computerization are
depicted per relevant business process (bold and italics). Types of computerization from
the previous phase are given in normal typeface.
Organization
The structure of the organization changes through the application of computerization in
the four business processes mentioned earlier. Tasks, authorities and responsibilities
concerning the regular and computer-related activities must be adapted to the new
situation. The computer management often is in the hands of the entrepreneur, though
it can also be in the hands of a close employee, the IT supplier (via leasing and other
contracts), or a part-time manager (a costly option). Considering the increasing complexity
of the computerization to be used, training becomes increasingly important. The following
types of training are needed in this phase: a follow-up course in business science (business
strategy, organization, business processes and customer service), a follow-up course
concerning the strategic role of computerization in and around the enterprise, and speci c
courses aimed at the use of speci c computer applications, such as the order processing
program and tele-banking.
Phase 3: Computerization Concerning an Externally Oriented Process

Integration
Phase three is related to enterprises that have advanced applications of computerization.
The smaller enterprises have to strongly reconsider their strategic position in this phase.
Strategy
Compared to the previous phases, phase three and higher are more related to the external
orientation of the enterprise, in which forms of integration in the business sector
(intensi cation of the relations with suppliers and customers) in relation to the sector and
market developments are of major importance. As a result, the strategic attention is
focused on the creation of an advantage with the present product-market combination
and raising the eÚ ectiveness of the external communication with customers and suppliers,
among others. A strategic option relevant in this phase is the franchise construction. In
addition, it is wise for the smaller furnishing shops to reconsider their strategic position,
in which options like scale enlarging, segmentation and specialization can be important
points of attention. The function of computerization is to support and improve existing
business functions for the creation of added value within the present products and service
package. The IT plan is largely based on the business plan.
Technology
The computerization is aimed at practically all business processes and in comparison
with the previous phase, the degree of computerization per business process is intensi ed
in this phase. Some business processes are extended or undergo renewal. The following
new business processes are of importance: management, personnel process, marketing,
administration, sales, purchasing, stock and supply. In this phase we deal with the external
data structure in relation to parties like present customers, prospects, suppliers, the
accountant and tax oÝ ce. This can be realized by EDI (Electronic Data Interchange).
With EDI, customer-speci c orders can be sent electronically to the producer in a
relatively simple, quick and reliable way. For the home furnishings retail sector it is very
important to be able to communicate data about delivery times by EDI or e-mail between
producer and consumer. The furnishing retailer may oÚ er product and services to the
customer by his personal website in combination with e-mail. The hardware consists of
linked computers in a LAN con guration (Local Area Network). The following extra
computer applications can be mentioned: Internet and e-mail, EDI, barcode scanner
and a portable ATM machine.
Organization
In this phase we can assume that the organization of the enterprise has been reasonably
adapted to the use of computerization and that tasks, authorities and responsibilities are
reasonably organized. The computer management is mainly in the hands of the entrepre-
neur, though it can also be in the hands of a close employee, the IT supplier (via leasing
contracts and other contracts), or a part-time manager (a costly option). Training is
strongly oriented towards supply chain developments and speci c computer application
of an external nature, such as forms of electronic communication via EDI, e-mail and
the Internet. It is very important for the entrepreneur to know something about the
management of Internet and e-mail, e.g. employee capacity has to be organized to answer
e-mail adequately—unanswered e-mail means losing customers.
Phase 4: Computerization and the Externally Oriented Redesign of

Business Processes
Phases four and ve focus on the larger furnishing stores with possible outlets. For smaller
shops phases four and ve are less relevant, with the exception of innovative enterprises.
Strategy
The strategic attention in this phase focuses on the creation of extensions to the product-
market combination. This mainly entails the creation of new forms of service through
the application of computerization among other things. The marketing aspect is extremely
important; entering into a franchise construction can be a strategic option in this phase.
The function of computerization is to realize added value to the one-to-one service to be
created. So it would be possible for customers to place several articles from the portfolio
of the furnishing retailer to a virtual room enabling the visualization of customers desired
room. In this phase purchasing articles via the Internet (electronic commerce) could be
a complete new service.
In this phase the IT plan must be derived from or integrated with the business plan.
Technology
The applicable computerization is aimed at all business processes and in comparison
with the previous phases the degree of computerization is extended further. The following
new and renewed business processes are of importance: personnel process, marketing,
sales and purchasing. The attention is strongly focused on the externally oriented data
structure. The hardware consists of linked computers in a LAN con guration and there
are many software links between business processes within and outside the enterprise
(suppliers, customers, service industries, etc.). The following extra computer applications
can be mentioned: learning applications via CD-ROM and/or the Internet, a strategically
designed website on the Internet, an information terminal, multimedia computer for the
visualization of products and PDI-like structures. Product Data Interchange (PDI) enables
the retailer to communicate product data with the producer.
Organization
In this phase the organization of the enterprise is adapted to the use of computerization.
The tasks, authorities and responsibilities concerning regular and computer-related
activities usually are organized. The computer management is in the hands of the
entrepreneur or an expert employee, in which the IT supplier or part-time manager can
lend support. Considering the increasing complexity of the computerization required,
schooling remains essential: a course about the strategic use of speci c forms of
computerization, such as a website, multimedia computer and PDI-related matters.
Phase 5: Revision of Business Goals Under the In uence of

Computerization
Phase ve indicates that entirely new product-market combinations can be created under
the in uence of computerization. Numerous combinations are possible and two examples
are given in the phase description below. Phase ve is less applicable for small, specialized
furnishing shops, with the exception of innovative enterprises.
Strategy
The strategic attention in this phase is focused on the creation of new product-
market combinations by using computerization among other things. The function of
computerization is to create new products and services and to this purpose the IT plan
has to be integrated with the business plan. Below two examples are given of new
product-market combinations:
1. An enterprise completely oriented towards the Internet, in which the products and/
or services are oÚ ered and sold exclusively on the Internet. This means that business
processes like sales, purchasing, marketing and services are mainly dealt with through
the Internet. This example is less suitable for the furnishing sector in principle, as the
purchase of furnishings is based on emotions; potential customers want to touch and
feel the papers.
2. The enterprise as ‘turn-key furnishing co-ordinator’. This type of enterprise is
specialized as a kind of project integrator and turns customer demands regarding the
complete furnishing of a house into projects for the products and service industries,
such as interior decorators, plasterers, furniture manufacturers, carpenters and lighting
experts. Computerization supports the structural co-ordination of the projects in which
PDI-like communication protocols are used.
Technology
Computerization plays a considerable role in the example businesses mentioned and
supports the integration of the business processes. There are many links present with the
business processes of other organizations (suppliers, partners, customers, third parties and
others). As regards the rst example company, the following integrated computer
applications are relevant: interactive website in which the relevant business processes are
present and integrated (front oÝ ce), back-oÝ ce software to control and manage the many
business processes through databases and on-line communication lines with suppliers. As
regards the second example company, the following integrated computer applications are
relevant: database applications to determine the assortment of the various suppliers,
multimedia software for the sales process (advice, tender and order), on-line communi-
cation lines with the many suppliers and software to co-ordinate the project management.
Organization
In this phase the organization of the enterprise is completely tuned to computerization,
as computerization is the enabler for the business strategy. Computerization has a
strongly integrative function in the enterprise, which means the tasks, authorities and
responsibilities must be clearly agreed upon. The computer management is in the hands
of a very expert employee, in which the IT supplier or part-time manager can oÚ er
support. Training must focus on the way to operate in new markets, the rede nition and
design of new business processes and functions, and strategic application and use of
speci c computer applications.
From Model to Instrument

The IT scenario model can serve as a structure to communicate with entrepreneurs from
SMEs about the strategic application of IT. So, our model can play an essential role in the
rst two stages of the adoption process of Rogers,54 i.e. knowledge and persuasion. From a
cognitive perspective, it is necessary to rst raise the awareness of the entrepreneur regard-
ing the innovation to stimulate its adoption.55 This means in uencing the stages of know-
ledge and persuasion through focused communication in an attempt to reduce uncertainty
about the innovation. The essence of communication is to reach a converging level of
knowledge via mutual understanding and the most eÚ ective communication occurs
between two individuals, in which a degree of homogeneity is present regarding back-
ground, education, social status, religion, etc.56 The above can be related to the bounded
rationality of the individual with regard to rounded arguments in the adoption process,57
the diÝ culty to make tacit knowledge explicit or to move it to focused awareness,58 and the
absorptive capacity of the organization adopting an innovation.59 Nooteboom et al.60 list
two reasons why knowledge in small enterprises is more tacit than in large enterprises. In
the rst place the internal and external communication generally is informal and oral and
secondly the formal and abstract knowledge of entrepreneurs in SMEs generally is limited.
Tacit knowledge is obtained through learning by doing.61 IT is a complex innovation,
which makes it hard to in uence rm-speci c learning processes and routines concerning
strategic innovation. Stroeken and Knol62 give an overview of the relation between learning
processes and innovation in the eld of IT in SMEs. In essence learning processes con-
cerning strategy and strategic innovation can be supported and in uenced through the
articulation of information via scenarios. For IT this implies making available information
in the eld of the aspects of strategy, technology and organization.63 The available informa-
tion is communicated via communication channels and it is found that the various channels
(e.g. interpersonal or mass media channels) have diÚ erent degrees of in uences on the
adoption phases of knowledge and persuasion in the adoption process of an innovation.64
Due to the relatively restricted interaction options, mass media channels have less in uence
on the persuasion phase than interpersonal means of communication, but they do oÚ er
ample means to provide signalling information to potential adopters in the knowledge
phase.65 However, Nooteboom et al.66 indicate that due to the high degree of tacit know-
ledge in SMEs, the adoption phase is better served by interpersonal contacts.
For a rst test the operationalized model was used as a frame of reference in part of
the enterprises in question within the Rotterdam project ‘Haal meer uit je computer’
(‘Get more from your computer’). This pilot project was focused on raising awareness of
entrepreneurs concerning the application of IT through (1) advice from teachers and
the regional training centres involved, (2) modules about sector and computerization
developments, and (3) a sector-speci c, informative CD-ROM with a diagnostic compo-
nent that can generate a brief IT plan. So, the communication concept was arranged as
a balanced combination of multimedia–mass media (CD-ROM or website) and an
interpersonal communication channel (advisor). The project was aimed at a group of
about 30 entrepreneurs in the hairdressing, clothing and furnishing sector. Stroeken and
Knol give an extensive description of the project.67 The IT scenario model was used as
a frame of reference in four furnishing shops to analyse to what extent the contents of
the phases matches the actual situations the enterprises in question are in. No research
was done to see whether the IT scenario model really in uences awareness. All things
considered, the IT scenario model seems to provide insight into the strategic application
of IT in companies and supply chains for each phase and can depict these concretely.
This would mean that the communication of general sector developments and company
speci c matters for the aspect areas of strategy, technology and organization, raise the
knowledge level of the entrepreneur and therefore also stimulate the diÚ usion and
adoption of the strategic application of IT in the long run.
Future Research
With the IT scenario model it seems possible to communicate with individual companies
within a speci c sector through for example information brochures and consultation,
therefore in uencing diÚ usion and adoption processes for the strategic application of IT.
In this capacity the model is signi cant for the diÚ usion and adoption policy of IT in
SMEs as planned by bodies like the national government, umbrella organizations for
SMEs and individual sector organizations.
Future research should rst focus on the transformation of the model into a concrete,
interactive application on CD-ROM or on a website, so that entrepreneurs can obtain
speci c information. With this the implications of the application of the model to the
strategic innovation behaviour of SMEs can be evaluated and tested. To optimize this
process, it would be desirable to broaden the research to several sectores, because more
viewpoints can be gathered about the role of sector-speci c IT scenarios in the diÚ usion
and adoption process of IT in SMEs.
Notes and References

1. R. Nelson & S. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA, Harvard
University Press, 1982); G. Dosi, C. Freeman, R. Nelson, G. Silverberg & L. Soete (Eds), Technical
Change and Economic Theory (London, Pinter Press, 1988).
2. P. Saviotti, Technological Evolution, Variety and the Economy (Cheltenham, Edward Elgar, 1996).
3. OECD, Small and Medium-sized Enterprises: Technology and Competitiveness (Paris, Organisation for
Economic Co-operation and Development, 1993); OECD, Information Technology (IT): DiÚusion
Policies for Small and Medium-sized Enterprises (SMEs) (http://www.oecd.org/dsti/sti/it/infosoc/prod/
e—95–76.pdf ), (Paris, Organisation for Economic Co-operation and Development, 1995).
4. J. Stroeken & J. Coumans, ‘The Actual and Potential Use of Information Technology in Small and
Medium Sized Enterprises’, Prometheus, 16 (4), 1998, pp. 469–483.
5. Cf. OECD, op. cit., Ref. 3; R.M. La Rovere, ‘IT DiÚ usion in Small and Medium-sized Enterprises:
Elements for Policy De nition’, Information Technology for Development, 7 (4), 1996, pp. 169–181.
6. E.C.C. Faber, J.H.M. Stroeken & M.J. de Vries, ‘The Missing Link: An evaluation of the Utilization
of the Monitor Studies in the Netherlands’, Technology Analysis & Strategic Management, 9 (1), 1997,
pp. 85–96.
7. E.M. Rogers, DiÚusion of Innovations (New York, The Free Press, 1995), p. 5.
8. Ibid., p. 20.
9. Ibid., p. 11.
10. Cf. B. Nooteboom, C. Coehoorn & A. van der Zwaan, ‘The Purpose and EÚ ectiveness of
Technology Transfer to Small Businesses by Government-sponsored Innovation Centres’, Technology
Analysis & Strategic Management, 4 (2), 1992, pp. 149 –166; J. Bessant & H. Rush, ‘Building Bridges
for Innovation: The Role of Consultants in Technology Transfer’, Research Policy, 24, 1995,
pp. 97–114.
11. Cf. L.G. Tornatzky & M. Fleischer (Eds), The Process of Technological Innovation (Lexington, MA,
Lexington Books, 1990).
12. Rogers, op. cit., Ref. 7.
13. Ibid.
14. C. Freeman & L. Soete, Information Technology and Employment: An Assessment (Brighton, University of
Sussex, 1985), p. 46.
15. OECD (1995), op. cit., Ref. 3.
16. W.J. Abernathy & J.M. Utterback, ‘Patterns of Industrial Innovation’, Technology Review, 80, 1978,
pp. 40–47; Barras, R., ‘Interactive Innovation in Financial and Business Services: The Vanguard
of the Service Revolution’, Research Policy, 19, 1990, pp. 215 –237.
17. J. Stroeken, ‘Information Technology, Innovation and Supply Chain Structure’, International Journal
of Technology Management, special issue on Technology Management in a Post-Fordist Environment,
vol. 20, No. 112, pp. 156 –175, 2000.
18. Rogers, op. cit., Ref. 7, p. 23.
19. Cf. Nooteboom et al., op. cit., Ref. 10; OECD (1995), op. cit., Ref. 3; La Rovere, op. cit., Ref. 5;
Stroeken & Coumans, op. cit., Ref. 4.
20. M.R. Kelly & H. Brooks, ‘External Learning Opportunities and the DiÚ usion of Process Innovations
to Small Firms: The Case of Programmable Automation’, Technological Forecasting and Social Change,
6, 1991, pp 103 –125; Nooteboom et al., op. cit., Ref. 10.
21. S. Davies, The DiÚusion of Process Innovations (Cambridge, Cambridge University Press, 1979).
22. C. Alter & J. Hage, Organizations Working Together (Newbury Park, Sage, 1993), p. 46.
23. M. Robertson, J. Swan & S. Newell, ‘The Role of Networks in the DiÚ usion of Technological
Innovation’, Journal of Management Studies, 33 (3), 1996, pp. 333 –359.
24. M.A.F. Dierckx & J.H.M. Stroeken, ‘Information Technology and Innovation in Small and
Medium-Sized Enterprises’, Technological Forecasting and Social Change, 60, 1999, pp. 149 –166.
25. Rogers, op. cit., Ref. 7, pp. 5–6.
26. Ibid.
27. S. Nilakanta & R.W. Scamell, ‘The EÚ ect of Information Sources and Communication Channels
on the DiÚ usion of Innovation in a Data Base Development Environment’, Management Science, 36
(1), 1990, pp. 24–40.
28. P. Attewell, ‘Technology DiÚ usion and Organizational Learning: The Case of Business Computing’,
Organization Science, 3 (1), 1992, pp. 1–19.
29. Stroeken & Coumans, op. cit., Ref. 4; J. Stroeken & W.H.C. Knol, ‘IT Scenarios for Small and
Medium-sized Enterprises’, Paper presented at the conference ‘Technology Policy and Innovation’,
Austin, TX, 31 August–2 September, 1999.
30. Attewell, op. cit., Ref. 28.
31. Cf. Rogers, op. cit., Ref. 7.
32. M.L. Markus, ‘Toward a Critical Mass Theory of Interactive Media: Universal Access, Interdepend-
ence and DiÚ usion’, Communication Research, 14, 1987, pp. 491–511; M.L. Markus, ‘Toward a
Critical Mass Theory of Interactive Media’, in: J. Fulk & Ch. Stein eld (Eds), Organizations and
Communication Technology (Newbury Park, Sage, 1990), pp. 194 –218.
33. M.L. Katz & C. Shapiro, ‘Network Externalities, Competition, and Compatibility’, American
Economic Review, 75, 1985, pp. 424–440; M.L. Katz & C. Shapiro, ‘Technology adoption in the
Presence of Network Externalities’, Journal of Political Economy, 94 (4), 1985, pp. 822 –841.
34. Tornatzky & Fleischer, op. cit., Ref. 11.
35. Cf. K. van der Heijden, Scenarios: The Art of Strategic Conversation (Chichester, Wiley, 1996);
J. Gausemeier, A. Fink & O. Schalke, ‘Scenario Management: An Approach to Develop Future
Potentials’, Technological Forecasting and Social Change, 59, 1998, pp. 111–130.
36. R.P. Bood & T.J.B.M. Postma, ‘Scenario Analysis as a Strategic Management Tool’, SOM Research
Report 9805, Groningen, University of Groningen, 1998; Stroeken & Knol, op. cit., Ref. 29.
37. M.S. Scott Morton (Ed.), The Corporation of the 1990s: Information Technology and Organizational
Transformation (Oxford, Oxford University Press, 1991).
38. N. Venkatraman, ‘IT-induced Business Recon guration’, in: M.S. Scott Morton (Ed.), The Corporation
of the 1990s: Information Technology and Organizational Transformation (Oxford, Oxford University Press,
1991), pp. 122 –158.
39. Scott Morton, op. cit., Ref. 37.
40. Venkatraman, op. cit., Ref. 38.
41. R.L. Nolan, ‘Managing the Crisis in Dataprocessing’, Harvard Business Review, 57 (2), 1979,
pp. 115 –126.
43. D.S. Tan, ‘IT Management Plateaus: An Organizational Architecture for IS’, Information Systems
Management, Winter, 1995, pp. 44–53.
44. Stroeken & Coumans, op. cit., Ref. 4.
45. Ibid.; Stroeken & Knol, op. cit., Ref. 29.
47. Tan, op. cit., Ref. 43.
48. Stroeken & Coumans, op. cit., Ref. 4.
49. Scott Morton, op. cit., Ref. 37.
51. Tornatzky & Fleischer, op. cit., Ref. 11.
52. OECD (1995), op. cit., Ref. 3.
53. J. Stroeken & W.H.C. Knol, ‘The Stimulation of the DiÚ usion and Adoption of Information Techno-
logy in Small and Medium-sized Enterprises through IT Scenarios’, Research Report, Eindhoven,
Eindhoven Centre for Innovation Studies (ECIS), http://www.tm.tue.nl/ecis/repStroeknol. PDF,
Eindhoven University of Technology, 1999.
55. Ibid.; Nooteboom et al., op. cit., Ref. 10; Bessant & Rush, op. cit., Ref. 10.
57. H.A. Simon, ‘A Behavioural Model of Rational Choice’, Quarterly Journal of Economic, 69, 1955,
pp. 99–118; H.A. Simon, ‘Theories of Decision-Making in Economics and Behavioural Science’,
American Economic Review, 49, 1959, pp. 253 –283.
58. M. Polanyi, Personal Knowledge: Towards a Post-Critical Philosophy (London, Routledge & Kegan Paul,
1962); M. Polanyi, The Tacit Dimension (London, Routledge & Kegan Paul, 1966); M. Polanyi,
Knowing and Being (London, Routledge & Kegan Paul, 1969).
59. W.M. Cohen & D.A. Levinthal, ‘Absorptive Capacity: A New Perspective on Learning and
Innovation’, Administrative Science Quarterly, 35, 1990, pp. 128 –152.
60. Nooteboom et al., op. cit., Ref. 10.
61. Op. cit., Ref. 58; I. Nonaka, ‘The Knowledge-Creating Company’, Harvard Business Review,
November–December 1991, pp. 96–104.
62. Stroeken & Knol, op. cit., Ref. 29.
63. Ibid.; Stroeken & Coumans, op. cit., Ref. 4.
64. Nilakanta & Scamell, op. cit., Ref. 27; Rogers, op. cit., Ref. 7.
65. Attewell, op. cit., Ref. 28.
66. Nooteboom et al., op. cit., Ref. 10.
67. Stroeken & Knol, op. cit., Ref. 53.

The DiÚ Usion and Adoption of Information Technology

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Technology Analysis & Strategic Management, Vol. 13, No.

The DiÚ usion and Adoption of Information Technology

W. H. C. KNOL & J. H. M. STROEKEN

an attitude toward the innovation, to a decision to adopt or reject, to implementation of

DiÚ usion of an Innovation

The Social System

The Environment Component

phase 0 phase 1 phase 2 phase 3 phase 4 phase 5

Figure 1. IT scenario model.

Table 1. The phase division of the IT scenario model

0 No usage of information technology

· Phase zero is related to situations in which no form of IT is used in the enterprise,

Table 2. The aspect area of strategy

Table 3. The aspect area of technology

Table 4. The aspect area of organization

The Aspect Areas

Operationalization of the IT Scenario Model for the Furnishing Sector

· The trade organization of the furnishing sector. This organization is an association of

Phase 1: Computerization Aimed at a Functional, Internally Oriented

Phase 2: Computerization Aimed at a Multifunctional, Internally Oriented

Figure 2. Computerized data and computerization in phase 1.

Figure 3. Computerized data and computerization in phase 2.

Phase 3: Computerization Concerning an Externally Oriented Process

Figure 4. Computerized data and computerization in phase 3.

Phase 4: Computerization and the Externally Oriented Redesign of

Phase 5: Revision of Business Goals Under the In uence of

Figure 5. Computerized data and computerization in phase 4.

From Model to Instrument

Notes and References

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Phase 5: Revision of Business Goals Under the In uence of