The Role of Technology in Predicting Business Analytics Adoption in SMEs

Abstract

Research shows that data-driven decision making using business analytics can create competitive advantages for organisations. However, this can only happen if the organisations successfully accept and use the business analytics effectively. Many studies reported business analytics implementation in large organisations, and fewer studies focus on Small and Medium Enterprises (SMEs). Furthermore, SMEs are scoring lower scores in technology absorption. Therefore, it is essential to examine the business analytics adoption among SMEs. Previous research has reported that relative advantage and compatibility were the most highlighted factors under the technology dimension in adopting innovative technologies. However, the literature reported inconsistent findings on the significance of relative advantage and compatibility in adopting various technologies. Therefore, this research conducted a quantitative survey-based study to examine the significance of relative advantage and compatibility in predicting business analytics adoption among SMEs. The sample was selected using systematic random sampling from a Malaysian national entrepreneurs database. There were 241 SMEs that responded to the online survey sent by email. The analysis using the partial least squares structural equation modelling (PLS-SEM) informed that relative advantage was significantly related to business analytics adoption; however, compatibility did not influence the business analytics adoption by SMEs in Malaysia. This finding shows that the better the relative advantage of business analytics SMEs know, the higher the possibility of adoption. In addition, less compatibility of the SMEs in Malaysia hindered the business analytics adoption. This study contributes to the theoretical aspect, which statistically informed the finding out of inconsistent gaps in technology adoption. Furthermore, this study also contributes to the practical aspect, in which managers, owners, vendors, and policy-makers can use these findings to spur and facilitate business analytics adoption among SMEs in developing countries.