Internationalization, Diversification, Information Technology and Productivity in SMEs : A Non Parametric Analysis

Previous literature has suggested that the adoption of Information Technology (IT) can affect the efficiency of multimarket firms. This paper examines the empirical relationship between IT and the efficiency of small and medium enterprises either following diversification strategies or selling their products in foreign markets. We formulate an empirical model to relate the use of information technology in different functional areas of the SMEs to their productivity. This model is tested using a large sample of more than 2,000 Spanish SMEs. Overall, intensive use of IT in operations processes is found to be associated with substantial increases in productivity of firms following both related and unrelated diversification. In addition, export firms with more intensive use of IT in most functional areas have a higher productivity, especially in the case of firms with high levels of computerization of financial processes. These results are consistent with previous theoretical arguments that productivity is increased by IT usage and open future research directions related to the role played by IT on the management control systems of both diversified and export firms