DOI: 10.2478/V10051-012-0009-1 Usage of Information and Communication Technology in Micro Enterprises in the Last Decade Anja Žnidaršič, Borut Werber University of Maribor, Faculty of Organizational Sciences, Kidričeva c. 55a, 4000 Kranj, Slovenia anja.znidarsic@fov.uni-mb.si; borut.werber@fov.uni-mb.si The paper presents the comparison of Information and Communication Technology (ICT) usage in Slovenian micro enterprises, using data derived from two studies carried out in years 1999 and 2009. Data for the studies were collected via structured interviews with owners or top managers of micro enterprises. We compared hardware and software equipment, business properties, characteristics of the interviewees and their impact on the successful use of ICT. The results show considerable changes in the ICT equipment, but that does not reflect in a better use of software compared to a decade ago. Key factors of successful use of ICT remain the same. The investment in ICT depends on owners' decisions and the most important factors are the owners' formal education and their skills and knowledge in ICT field. It was indicated that in recent years the investment of education in ICT field for both groups, owners and employees, was considerable lowered. Keywords: Micro enterprises, Information and Communication Technology, Research 1 Introduction There is no doubt that micro businesses play an important role in modern economy, especially in times of recession, when we can daily see collapsing of large firms that are not able to cope with changed market conditions. In our first study in 1999 we were focusing on small enterprises. Instead of that we got sample mostly with micro enterprises. We cannot generalize that micro enterprise characteristics are similar to small or medium size enterprises. There are not many researchers dealing with micro enterprises characteristics and that is why we are interested in them. The European Union also recognized micro business importance. On 6 May 2003 the Commission of the European Communities (2003) adopted Recommendation 2003/361/EC regarding the definition of micro, small and medium-sized enterprises (SMS) in Community policies applied within the Community and the European Economic Area. Within the SME category, a micro enterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million (Neuberger and Räthke, 2009). Slovenia accepted this Recommendation as a Member State of EU. According to the findings reported by Matek and Butalič (2009) in Slovenia there were 105.272 enterprises registered in the Standard Classification of Activities (NACE - EU classification of activities) in 2007; 92.8% of them were micro enterprises, 5.7% were small enterprises and 1.5% were medium-sized and large enterprises. The overall share of individual private entrepreneurs was 58.1% and of limited liability companies 35.9%. Enterprises organized in other organizational forms represented only 6.0% of all enterprises. Despite the large difference in the number of enterprises between micro (1-9 total employees), small (10-49 total employees) and medium-sized enterprises (50-249), each of these three size classes generated around one fifth of total turnover. Among them, most persons were employed in micro enterprises (27.4%), followed by medium-sized (20.8%) and small enterprises (18.0%) (Matek and Butalič, 2007). Based on the results from the investigation in 1999 (Zupančič and Werber, 2002), recent Slovenian statistical data and present legislation, we decided in 2009 to focus our attention on micro enterprises. 2 Background Micro enterprises cannot be treated as downscaled versions of large companies (Rohde, 2004), due to differences in organization, management style, business practice and information Received: 28'h December 2011; revised 24'h February 2012; accepted 2°d March 2012 systems (IS). However, the available evidence on the size-efficiency relation seems to strongly indicate that there is a positive association between firm size and technical efficiency, and there are also substantial and persistent productivity differences between SMEs and large firms (Yang and Chen, 2009). Micro enterprises are a major component of all economies and are generally considered to be flexible, adaptive organizations. The influence of micro enterprises in the entire economy is increasing. It is generally accepted that e-commerce contributes to the advancement of SME business in developing countries (Kapurubandara and Lawson, 2007). More people than ever are employed by micro enterprises and many more are starting their own businesses. Micro enterprises sometimes act as incubators for future economic giants. The role of small and medium-sized enterprises (SMEs) in economic development and economic growth for both developed and developing countries has been increasingly recognized (Yang and Chen, 2009). The decision-making process is often more intuitive than based on reliable, precise and unambiguous information. In particular, innovative business ideas require people to make decisions based on very little evidence (Koellinger, 2008; Andersson and Floren, 2008). Small firms generally lag behind medium and large companies in adopting and implementing computerization (Lee et al. 2009; Jungwoo, 2004). This is due to severe constraints on financial resources, lack of in-house expertise, and a short-term management perspective imposed by a volatile competitive environment. Small, young and innovative firms tend to be opaque, because most potential lenders have little information on the managerial capabilities or investment opportunities of such firms. They benefit most from being monitored in a close house bank relationship (Neuberger and Räthke, 2009). On the other hand, micro enterprises demonstrate a high level of ability to adapt to changes in the environment. They use IT for automation of existing processes, rather than for decision support, or to increase flexibility of the firm and gain competitive advantage. While large firms are typically capital and equipment intensive, labor-intensive micro enterprises may be able to increase productivity and provide value added services through increased computerization and digitization (Lee et al., 2009). In the research (Burke et al., 2008) we can also find results that confirm personal characteristic of the owner (father) as important for die-hard entrepreneur. For men, inheritance encourages persistence, and facilitates initial self-employment. Having a self-employed father as a role model makes sons persist longer. Similarly, higher levels of education tend to be associated with entrepreneur persistence among both males and females. However, somewhat surprisingly, early experience of unemployment does not affect the probability of self-employment, while reducing persistence. Slovenia started investing in ICT later than the leading developed countries, just as other new EU member states (NMS). A more dynamic push in ICT investment occurred in 1999, reflecting increased concerns associated with Millennium bug on one hand and the prospects of the introduction of value-added tax in second half of 1999. But while other NMS are increasing their ICT investments in recent years, Slovenia has not followed such dynamics. The share of investments in GDP in Slovenia is lower than the average in EU 15, as well as lower than in most NMS. Trend performance of Slovenia regarding ICT expenditure in GDP during the period 2001-2004 was also negative (Bučar et al., 2006). International communications technologies such as the World Wide Web have created an environment that presents advantages to individual firms (Jungwoo, 2004). The Internet is gaining commercial viability and is particularly suited to small businesses, because it enables them to keep doors open 24 hours a day, at minimal cost, to customers all over the world. With access to increasing markets throughout the world, businesses, including those in rural areas, have a unique opportunity to expand from the traditional and local to the global. Whether a firm trades online with customers or not, however, the Internet can give firms the advantage of increased profile, in that it can allow companies to present information to potential customers and provide another channel for the purposes of brand building, advertising, and marketing (Galloway, 2007; Davies et al, 2006). We tried to determine how ICT was used in Slovenian micro businesses 10 years ago and nowadays. We also compare the factors that have an effect on micro businesses successful use of ICT and their income. 3 Research approach After having reviewed the literature on small enterprises, a structured interview framework was developed to help address the research objectives. Implementation and operation of IT in small enterprises was investigated by several authors (e. g. DeLone, 1988; Yap 1992; Verber and Zupančič, 1993; Winston and Dologite, 1999; Seyal et al. 2001; Hunter, 2001; Antlova, 2009, _). These studies focused on issues related to IT, and considered success factors such as number of PCs, number of programs and/or software tools used by the company, number of users, history of use of IT in the company, security and safety, and computing knowledge and skills of managers and employees. We expected that successful use of ICT (Chan et al., 2009; Wiklund et al. 2009^) will depend upon characteristic of business (Yang and Chen, 2009; Lee et al. 2009; Rodhe, 2004 ^), characteristics of the owner (Koellinger, 2008; Andersson and Floren; 2008; Jeon, 2006^) and use of Internet (Jungwoo, 2004; Galloway, 2007, ^). Successful use of ICT was defined as the number of different groups of programs used in enterprises. Enterprises chose among ten groups of programs: sale, purchase, general ledger, salary (leave and illness), business specific programs (e.g. graphics, mechanical engineering, designing), general programs (e.g. text editors, tables and data editors), internet browsers, programming tools, decision support programs, and other types of programs (Zupančič and Werber, 2002). In 2009 successful use of ICT was also measured with the level of internet use (Werber and Žnidaršič, 2010). Data for first study was collected via structured interviews with owners or top managers in 1999, and represents a sample of 94 businesses. Among them 15 business were defined as small, because they employed more than 9 employees, therefore final sample has 79 enterprises. Data for the second study was collected via structured interviews with owners or top managers of micro enterprises between October and December 2009. In total, 134 interviews were conducted. Interviews took place at the headquarters of enterprises with owners or top managers. Several studies (e. g. Burke et al., 2008; Wiklund et al., 2009; Lee et al., 2009; Koellinger, 2008; Jeon, 2006) emphasized that this group plays a dominant role in decision-making in small enterprises. The duration of an interview was approximately half an hour. Mostly closed-response questions were asked in the interviews. Except for demographic data, respondents either rated statements on scale 1 to 5 or responded to multiple choice questions. During the interview the respondents were asked how previous experience would influence their new purchase of ICT and why, and about proposals for the improvement of use of ICT in small businesses. The appropriate sample size was calculated with Cochran's sample size formula for continuous data (Bartlett et al., 2001): where an estimate of standard ^ in the population was calculated as 5 (range of scale) divided by 4 (number of standard deviations that include 95% of possible values in range and is equal to 1.25 according to the 5-point scale. According to the value for selected alpha level of 0.05 t is 1.96 and acceptable margin of error for mean d was estimated as 0.25 (number of points on primary scale times acceptable margin of error;). Because the calculated sample sizes do not exceed 5% of population, no correction of sample size is needed. Sample sizes in comparable international studies are similar to our samples. Chuang et al. (2009) had a sample of 97 enterprises in study of the extent of information technology adoption in SMEs. 126 enterprises were used to measure ERP adoption of small and medium enterprises (Shiau et al., 2009). Gutierrez et al. (2009) used 104 surveys from enterprises around the world in order to find out factors affecting IT and business alignment. Ng & Keasey (2010) studied success and failure of small, closely held firms in Singapore with 45 interviews with board directors, senior and middle managers. Research study in case of Slovenian middle sized and large enterprises about innovations and lifelong learning has 67 complete responses (Žnidaršič & Jereb, 2011). Roblek and Zajec (2011) investigate 24 small family companies in order to establish important differences in success and in organizational culture between family companies in production and service sector in Slovenia. According to the above examples we think that our samples (79 micro enterprises for 1999 and 134 for 2009) used in the study are adequate for our purpose. Based on this premise, we proposed the following null hypotheses: H1: There are no differences among micro businesses according to their equipment with ICT in 1999 and 2009. H2: There are no differences among the key factors of successful use of ICT among the studied micro businesses in 1999 and 2009. 4 Results 4.1 Characteristics of the enterprises in 1999 and 2009 Enterprises organized in other organizational forms represented only 4% of the sample. In the sample from 1999 the overall share of individual private entrepreneurs was 38% and limited liability companies 61%. Among 134 enterprises 44% were family owned. The largest share of enterprises in the research performed in 2009 came from service sector (28%), manufacturing (13.4%), construction (12.7%) and retail (10.4%). Others were from tourism (8.2%), repair and servicing (6.7%), agriculture (6.7%), wholesale (6.0%), transportation (4.5%) and other (2.7%). In 1999 our sample was also represented by micro enterprises from diverse industry sectors (Table 1.). Table 1. Enterprise by industry sectors in 1999 and 2009 1999 2009 Manufacturing 16.5% 13.4% Agriculture 1.3% 6.7% Tourism 6.3% 8.2% Construction 5.1% 12.7% Retail 26.6% 10.4% Wholesale 15.2% 6.0% Transportation 1.3% 4.5% Service 20.3% 28.7% Repair and servicing 3.8% 6.7% Other 3.8% 2.7% Table 2 presents a comparison of enterprise characteristics from our findings in 1999 and 2009. Respondents who supplied data came from a wide variety of business backgrounds and sizes. Table 2. Enterprise characteristics in 1999 and 2009 Year of research 1999 2009 Sample 79 134 Individual private entrepreneurs 38.0% 56.0% Limited liability companies 60.7% 40.0% Joint stock companies 1.3% 0.0% Other organizational forms 0.0% 4.0% Average number of total employees 3.8 3.4 Average age of business 7.6 12.33 Average years of computer use 4.6 8.9 Owner IS related training in last three years (percent) 43.0% 28.0% Owner IS related training in last three years (hours) 30.5 9.3 Employees IS related training in last three years (%) 40.5% 25.0% Employees IS related training in last three years (hours) 18.5 9.9 Business as cooperation partner 27.8% 21.8% Outsourced accounting and bookkeeping 67.1% 80.0% In 2009 the overall share of individual private entrepreneurs was 56% and of limited liability companies 40%. The average number of employees in 1999 was 3.8, while the average number of total employees in 2009 was 3.4, including the owner of the enterprise. The average estimation (in 2009) of total number of employees three years ago was 3.2. From the data we can conclude that micro businesses on average employ more employees than three years ago despite the economic crises. We can confirm our results with the statistical data of employment in micro enterprises in 2008, 2009 and 2010 on the website of Statistical Office of Slovenia under the option "Enterprises by activities" (SI-STAT Data Portal, Economy), where the growth in number of employees among micro business is also evident. In 2008 there were 217874 persons employed in micro businesses. In 2010 the number increased from 226638 in 2009 to 227225. The average existence time of micro enterprises has increased from 7.6 in 1999 to 12.3 years in 2009, and average years of computer use increased from 4.6 (in 1999) to 8.9 years (in 2009) as well. There are evident differences in amount and time spent for IS related training of owner and employees. The number of owners and employees that attended some kind of IS related education in last three years decreased from 43% in 1999 to 28% in 2009 for owners and from 41% to 25% for employees. Similarly, a decrease of spent hours of IS related education is evident. In 1999 the average number of hours spent for owner's IS training in last three years was 30.5 hours, while in 2009 the number decreases to 9.3 hours. We can discuss what the reasons for such differences are. It is true that a decade ago Windows graphic system replaced all sign based computer programs and consequently the emergency for IS education was higher. On the other hand we are witnesses of new releases and novelties in software every year, so we can argue this view. Maybe it is more likely that recent crisis did have an effect on micro business financial capital, and because of that the investment in education was considerably lower. A lot of big companies collapsed in recent years because of financial and stocks machinations. We detected a decrease of micro businesses that work as a cooperation partner. From 31.1% in 1999 the number of businesses functioning as a cooperation partner reduced to 21.8% in 2009. Of course we can assume that the number also depends on the sample selected in 2009. The majority of enterprises (80%) in 2009 outsourced accounting and bookkeeping to an external partner who specialized in selling accounting services to small companies. The share of such enterprises in 1999 was 70.4%. 4.2 Characteristics of the respondents The majority of respondents in 2009 (76%) was owner of the business, 10% were executive directors, 7 % owner relatives and 7% were other employees. There was a lower proportion of owners (61%) in study from 1999 and a higher number of directors (20%). The age of most of them (45%) was between 31 and 45 years in 2009, while in 1999 the percentage of the same age group was 50.6%. In 2009 33.6% were between 46 and 55 years of age. The same group was in 1999 represented by 13%, so we can conclude that they became older. In 2009 only 2% were between 21 and 25, 9% between 26 and 30 years and 10% were older than 55 years. There were no owners younger than 21 years in both studies. There were 72% male and 28% female respondents in 2009, while in 1999 we had 20% of female respondents. Formal education (in 2009) in most cases was secondary school (50%), 12% vocational level, 11% higher, 23% graduate and 4% postgraduate. The majority of respondents (40%) self-estimated their computer knowledge (Figure 2) as neither good, neither bad. Twenty-one percent of respondents estimated their computer knowledge as poor and 10% as very poor. We can conclude that respondents estimate their computer knowledge as higher than it was in 1999. When we asked the respondents where they mostly get information for ICT purchase, they answered that they ask friends or relatives in 1999. In 2009 the answer was different, they would mostly ask an ICT seller or service personal. In second place they selected the option "I find the information myself^' in both researches. Figure 1: Respondents self-estimation of their computer kno'wl-edge While we were talking with business owners several times, we could conclude that they are unaware of software they have on the computers. Many of them told us that they use PC for e-mail and internet search. Software was prein-stalled when they purchased a PC. If we simplify, we can say that they do not care about computer business support, their primary thought is how to survive and earn enough money for the next day. We were especially disappointed while interviewing owners of newsstands that told us their employers forced them to self-employ as private entrepreneurs or to become unemployed. To lower the costs, large newspaper firms managers decided to separate newsstands from their business and consequently also the social payments for employees. On the other hand they dictate the subcontractors what and how to do. The use of ICT in such conditions is irrelevant. Out of 134 micro-enterprises from the sample in 2009, 38 (28.4%) have expressed the interest in collaboration with our faculty in form of students work developing computer programs for their business support. 4.3 Computer use related issues It is reasonable to expect that businesses make backup copies of their business data at one time or another. The question now was what type of backup media was used? The results are shown in Figure 1. Some businesses used two different backup procedures (backup on external HD and CD). Due to this, the percentage sum in Figure 2 is greater than a hundred. It is obvious that the famous floppy discs mostly used for business data backup in 1999 (63%) were replaced with CDs and external Hard Drives (35%) in year 2009. In most cases (61%) CD, ZIP, other backup specialized tools were used for backup copies In third place in both cases backup copies were made on a second hard drive, second computer or server (22% in 1999 and 20% in 2009). Recently also memory sticks are popular as business data backup store (10% in 2009). The most frightening results in 2009 came from the 3% total of businesses where no backup copies were made at all! Luckily the number is lower than in 1999 when 6 % of businesses made no copies. Floppif disc CD.ZIP,tape.... Extern a I Haid Drive Second Hard Drive or on otlier PC/Server Otl^er{memory stick....) We don'l mal