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Importance of ICT innovations in small and medium enterprises of Saudi Arabia towards

economic development of the country


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Table of Contents
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................4
Objectives........................................................................................................................................7
Justification of ICT towards Saudi Arabia's Economy....................................................................7
The Importance of ICT to Economic Development......................................................................10
Telecom and Economic Growth.................................................................................................10
Studies of the Impact of ICT......................................................................................................11
Saudi Arabia: ICT Performance in a Comparative Context..........................................................13
ICT Spending.............................................................................................................................13
Web managing an account and e-Commerce.............................................................................13
Correlative Factors.........................................................................................................................15
Work Power Properties..............................................................................................................15
Business Environment................................................................................................................16
Research and Development Execution......................................................................................16
Conclusion.....................................................................................................................................17
ICT AND General Purpose Technologies..................................................................................17
Effect of Interest in ICT by Every Single Financial Part...........................................................18

Introduction
Information and communication advancements (ICT) are a ubiquitous reality in our
everyday lives. In many nations, individuals consider perpetual access to ICT as critical as water
and power. This radical movement has happened in a short space of time, in the course of the
most recent decade truth be told, changing the way we convey by empowering a "worldwide
town" with all inclusive access and steady network. It has likewise fundamentally altered the
way we stare at the TV, purchase books, learn and even mingle (Dwivedi, et al., 2008, p. 98).
These progressions amplify more remote than the private circle and have specifically
molded world economies. In numerous nations, the ICT area has turned into a noteworthy direct
benefactor to monetary development and occupation and in addition an essential wellspring of
financing, in a roundabout way changing the economy by impacting different divisions, for
example, medicinal services and instruction, which have effectively incorporated ICT answers
for accomplish generous profitability picks up, making what market analysts call a multiplier
impact on financial development and work. These aberrant impacts far exceed direct
consequences for the ICT area and are turning into a major part of ICT arrangements around the
world (European Court of Auditors, 2012, p. 89).
In the meantime, business analysts and social researchers are more enthusiastic to break
down the macroeconomic and social effect of ICT. The confirmation that ICT is emphatically
forming our economies is genuinely decisive. The Solow Paradox "You can see the PC age all
over the place yet in the efficiency insights" contended by Nobel Prize champ Robert Solow in
1987, no more applies. Financial research now concentrates on the greatness of ICT's monetary
effect and the ecological conditions required to roll out that improvement happen. The

relationship between ICT ventures and GDP development has obviously been set up by
examination, supporting the prevalent idea that PCs really enhance efficiency. In fact, in 2009,
the World Bank found that a 10 rate point increment in the broadband infiltration rate prompts an
expansion of 1.21 rate focuses in yearly normal GDP development rates per capita for created
nations (Fabjan, et al., 2016, p. 98).
The effect of ICT on the social prosperity of a group is a more historic theme, one that is
outside controllers' customary safe place, yet is currently unmistakably developing as a territory
of critical interest. In its "2010-2011 Trend in Telecommunication Reform" issue, the
International Telecommunication Union (ITU) contended that our information society has turned
into a domain of the "great, the awful and the confounding (Gilaninia & Shahraki, 2011, p.
410)." "Great" in light of the fact that ICT without a doubt conveys various advantages identified
with citizenship, shopper strengthening and individual welfare; "awful" in light of the fact that a
few clients may run over improper and hostile substance on the web, online predators or social
detachment; and "bewildering" in view of the inquiries ICT improvement has raised in regards to
its social repercussions: is the inescapability and assortment of the online experience influencing
the welfare and advancement of kids; is the Internet rivaling or substituting genuine vis--vis
connection; what sway do Internet analysis and political blogging truly have on common and
political talk?
Saudi Arabia, in the same way as other nations, is seeing the financial effect of the ICT
upset. This insurgency has happened in view of the fast improvement of ICT foundation and use
in the Kingdom. Local broadband infiltration has expanded from nothing in 2005 to more than
44% today, while versatile entrance expanded from 60% to 191% over the same time frame
(Gilaninia, et al., 2011, p. 15).

In the interim, arrangements concentrating on ICT foundation develop and utilization


uptake ought to proceed or increment later on. One of the financial improvement destinations in
the nation's ninth monetary arrangement is to develop into a learning economy, of which ICT is a
pivotal segment as it empowers the practical stockpiling, transmission and preparing of
boundless measures of information around the globe. Nonetheless, to roll out the improvement, it
is crucial to build up a general domain good to ICT reception. The studies specified in this report
highlight that the ICT part's commitment to the Saudi economy could be enhanced and brings up
the natural hindrances to its advancement in the nation. This accentuates the requirement for a
top to bottom national ICT arrangement audit to assess its financial effect and how more
advantages can be harvested (Gilaninia, et al., 2012, p. 835).
Crucial inquiries could help us comprehend ICT change:

What exactly degree is ICT forming financial development in the Kingdom?

How would we contrast and different nations?

Are there ecological boundaries that keep ICT from enhancing Saudi society?

By what method would we be able to scaffold potential holes?


As the officeholder administrator in Saudi Arabia, STC is focused on adding to the

national ICT plan and is excited to comprehend ICT's effect on the Kingdom. To that end, STC
has dispatched unmistakable global specialists to lead a complete evaluation of ICT's financial
effect on Saudi Arabia (Indian Institute of Science, 2012, p. 85).

Objectives
This report embarks to highlight the part that interest in, and utilization of, information
and communications technology (ICT) has played in the advancement of the Saudi Arabian
economy lately. ICT can be characterized as containing the accompanying components:

Information technology (IT) gear, for example, PCs and different types of information
preparing hardware

Programming

IT-related administrations (e.g. administrations gave by firms that introduce and


manufacture redid programming and repair IT gear, among others)

Communications administrations and communications gear.

Justification of ICT towards Saudi Arabia's Economy


The Ninth Saudi Development Plan addresses some basic financial difficulties
confronting Saudi Arabia and distinguishes some key ranges of change in the economy.
Strikingly, Theme 4 of the arrangement examines the need "to boost the part of information as a
wellspring of quality and riches development and to shape the essential motor of monetary
development. Theme 5 concentrates on "raising the intensity of the national economy and
national items," contending that aggressiveness "is of extraordinary significance especially under
the developing pattern of globalization and the coordination of the Saudi economy into the
worldwide economy ( Information Resources Management Association, 2013, p. 85)."
It is not hard to perceive how ICT is a vital segment of the information economy to which
the Ninth Plan alludes. The change in the abilities of PCs, supported by the capacity of cutting

edge broadband telecom systems to transmit incomprehensible measures of information around


the globe in almost no time, have on a very basic level changed the courses in which learning is
procured, utilized and transmitted. This unrest in ICT has additionally changed the very way of
worldwide exchange and speculation streams, on the grounds that there are today couple of
geological boundaries to the spread and securing of profitable information. The minimal effort
and high dependability levels of present day communications systems have assumed an
immediate part in encouraging global exchange, outsourcing and the trading of thoughts
crosswise over outskirts (Khosrow-Pour, 2013, p. 89).
Moreover, prove from numerous different nations proposes that ICT one of the key
empowering agents of the information economy has for sure been a wellspring of quality and
riches development in numerous economies that have been broad adopters of ICT. Case in point,
information demonstrate that in the period 2005-2008, ICT contributed at times considerable
measures of development in numerous countries, incorporating into some rising ones. In this
sense, ICT ought to be seen as a demonstrated empowering influence of financial development
and a demonstrated key part of an information based economy (Lille & Prause, 2009, p. 121).
There is an additional earnestness to the Ninth Plan's topics of building up an information
economy and utilizing learning as a critical premise for riches creation in Saudi Arabia going
ahead. The nation confronts challenges in enhancing work and work power support over the
economy. Demonstrates that there is space for critical change in labor power cooperation in
Saudi Arabia, as it is underneath levels of other territorial countries and well beneath the 60%
rate average of most progressive Western and Asian economies (McMaster, 2007, p. 14).
These monetary truths are driven by quick populace development and a reliance on Saudi
Arabia's fundamental fare, oil. The cost of oil has seen tops and troughs in the course of the most

recent 30 years, yet one mainstream pattern ought to be conveyed to consideration. The vitality
power of GDP has been falling in created nations. In the United States, for instance, the quantity
of barrels of oil required to create $1,000 of GDP tumbled from 1.5 in 1977 to 0.8 in 2000. Some
European economies, for example, France, Germany and the United Kingdom, are considerably
less vitality serious than the US. Dependence on the oil asset has subsequently not been
satisfactory to keep pace with the livelihood needs of a youthful and quickly developing
populace (Zafar, et al., 2015, p. 8-10).
More financial broadening would unmistakably advantage the Saudi economy, and in this
sense, the center of the Ninth Plan to utilize the information economy as a noteworthy motor to
drive quality and riches creation forward appears to be fitting. ICT is maybe the key part of
building an information economy, given its part in learning generation and learning transmission.
From an exact point of view, ICT has plainly been a noteworthy motor of financial development
in the course of recent years in numerous countries that are ostensibly definitely learning
economies. On the off chance that Saudi Arabia is searching for monetary expansion, then ICT
would give off an impression of being a conspicuous attempted and tried zone whereupon to
center (World Bank, 2010, p. 125).
In this light, the Ninth Development Plan incorporates references to the part of the
communications area in Saudi Arabia, however does not understandable a point by point
timetable and arrangement for expanding the part of ICT in the nation's economy. This in itself
recommends that ICT could be given more prominent need in the national advancement
motivation. Building up a superior comprehension of the status of ICT selection and utilization in
Saudi Arabia and also a superior comprehension of the effect of ICT on the Saudi economy
would speak to an exceptionally profitable beginning stage for a rational project to empower ICT

reception and augment the social returns of putting resources into ICT. Such a comprehension of
the status of ICT would frame the premise for creating solid arranges that distinguish ranges
where strategy creators can have any kind of effect. For instance, understanding the obstructions
of ICT appropriation in little organizations can help policymakers in distinguishing sensible,
focused on strategies, for example, charge credits and preparing for specialists, which will
overcome them. Such a definite seeing likewise minimizes the potential misuse of rare
speculation assets (Warda, 2010, p. 89).
The Importance of ICT to Economic Development
Telecom and Economic Growth
There have been various studies demonstrating that telecom settled and portable
substantially affects financial development. Adam (2010), and Ayyagari, et al. (2007) were two
critical studies that affirmed the effect of telecom (settled lines back then) on monetary
development. These studies were econometric, including relapse investigations. Such
examinations can give misdirecting derivations if the specialist does not control precisely for an
assortment of impacts that may clarify results. For instance, wealthier nations have more
telecom, and quicker financial development has had a tendency to decipher into speedier rates of
expansion in its utilization. This opposite causality impact was handled by Rathakrishnan (2010),
who found that even in the wake of controlling for this impact, the effect of telecom on monetary
development in 21 OECD countries over the 1970-1990 era was to a great degree high. In this
way, as much as 33% of financial development in some OECD nations could be ascribed to the
spread of telecom. This is on the grounds that telecom systems lower exchange costs and
significantly expand the stream of information (Swinburne University of Technology, 2010, p.
59).

Having an all-around created telecom arrange likewise makes conceivable the capacity to
lead business over long separations and, therefore, builds linkages crosswise over districts and
even nations and landmasses. After some time, the straightforward voice phone system has been
expanded by such advancements as digitalization, the approach of ISDN, DSL, link broadband
and portable telephony. The fundamental telecom plant bolsters a steadily developing number of
monetary exercises and, in the broadband age, is an inexorably focal stage over which a gigantic
measure of exchange and financial movement is led (Ragaini & Zichichi, 2012, p. 45).
In the creating scene, the advantages of telephony have surfaced as a consequence of the
striking improvement of portable telephony. In a significant part of the creating and rising
universes, altered line systems created at an agonizingly moderate rate. Indeed, even in more
well-to-do Saudi Arabia, settled line entrance developed from two lines for each 100 occupants
in 1975 to 16 lines for every 100 tenants in 2010.13 By differentiation, cell phone infiltration
developed from two lines for each 100 occupants to more than 150 lines for each 100 tenants, in
spite of the fact that this number is contorted by the way that numerous clients have various SIM
cards and some portable telecom firms tend to check latent endorsers long after they have left the
system (McMaster, 2007, p. 65).
Studies of the Impact of ICT
The writing on ICT is excessively voluminous, making it impossible to give a lot of an
itemized rundown in this segment. We take note of that until the late 1990s, no scientist had
possessed the capacity to catch the effect that PCs by then in across the board use had made
on the economies of created countries. In fact, the inability to distinguish the commitment of PCs
to financial development had been named the Solow Paradox after the Nobel Laureate market
analyst, Robert Solow, who had commented that the effect of PCs was clear all over the place,

aside from in efficiency insights. In the late 1990s, be that as it may, the decades-long stoppage
in efficiency development in the US arrived at an awesome end. Efficiency development
quickened keenly in the late 1990s. The Internet started to diffuse generally, speaking to a
marriage between telecom systems and PCs. In the 2000s, an expansive number of studies
developed that found that this US efficiency renaissance was driven by abnormal amounts of
interest in ICT. The studies introduced in Table 1 propose that there was a significant
commitment of ICT to financial development all over the place in the 1995-2000 period, yet
particularly in the US. In supreme terms, ICT was particularly impactful in the US, Canada and
the UK, which all accomplished quick financial development amid that period; in relative terms,
ICT contributed an expansive piece of monetary development in a generally moderate
developing Japanese economy (Bhagwat & Sharma, 2006, 99).
For instance, Becker & Global (2008), found that 59% of US work profitability
development somewhere around 1995 and 2000 was owing to ICT speculation and utilization, as
was 38% of US work efficiency development somewhere around 2000 and 2006. Be that as it
may, different nations did not appear to encounter an incredible same level of profitability
increment from ICT, despite the fact that the commitment of ICT capital was still huge. As per
Bhagwat & Sharma (2006), in the European Union over the period from 1995-2004, increment in
the load of ICT capital contributed 0.5 rate indicates every year the development of aggregate
GDP, contrasted with 0.8 rate focuses in the US. Notwithstanding, in the UK and Denmark, the
expansion in the load of ICT capital contributed as much as 1 rate point a year overall. Given that
by and large, GDP in the EU nations concentrated on by Dwivedi, et al. (2008), developed by
2.2% a year over the 1995-2004 period and that 0.5 rate purposes of this development were
essentially in light of development in hours worked, work profitability expanded by around 1.7

rate focuses a year, of which 0.5 rate focuses, or almost 33%, was contributed by the immediate
capital extending impact of more interest in ICT. Notwithstanding, the commitment of ICT was
more prominent than this in light of the fact that ICT utilization added to aggregate variable
profitability development (an idea clarified later in this report). This was most professed in some
northern European countries and the US. It is trusted that rigidities in the European economy, for
example, challenges in building up new organizations or procuring and terminating laborers,
make it more troublesome for organizations to utilize ICT as an instrument to rebuild their
organizations, contrasted with the US.
Saudi Arabia: ICT Performance in a Comparative Context
ICT Spending
ICT spending alludes to spending by purchasers, organizations and government on all
types of IT. Spending is not the same as ICT venture, but rather incorporates it. Along these lines,
spending by buyers on telecom administrations and also speculation made by telecom firms in
communications gear will all consider communications spending. Different exercises included
are spending on IT equipment (some of which is included as business speculation IT gear),
spending on programming (once more, some of which is considered venture) and spending on
PC administrations (which is not delegated a venture).
Web managing an account and e-Commerce
The late CITC study likewise manages a few examinations amongst KSA and different
nations with respect to the uptake of administrations, for example, Internet keeping money and etrade. The European Commission's Europe's Digital Competitiveness overview takes a gander at
people (not family units) between the ages of 16 and 74, and considers whether these people

have utilized a specific Internet administration as a part of the previous three months. These
overviews are not by any stretch of the imagination practically identical to those in Saudi Arabia,
regardless they demonstrate that Internet saving money infiltration is prone to be far higher in the
vast majority of northern Europe than in Saudi Arabia. This is on the grounds that the extent of
people who utilize an administration is more likely than not beneath the extent of family units
that utilization an administration (since every individual has a place with a family, and there
might be numerous clients inside one family). Strangely, Saudi Arabia's execution on Internet
managing an account uptake is by all accounts aggressive with at any rate a few nations in
southern Europe, despite the fact that this area of Europe is itself viewed as a slouch with regards
to ICT. Additionally, information on Internet retail demonstrate that it is generally less created in
Saudi Arabia contrasted with a lot of Europe. Around 2% of respondents in the CITC's late field
study said that they had purchased an item on the web. The extent of online overview
respondents who said that they had purchased an item online was 35%. In any case, this online
study is a less illustrative specimen of the whole populace. Indeed, even the extent of online
Saudis making utilization of Internet obtaining is really underneath the level of the whole
populace (not only the individuals who are web) utilizing Internet buying as a part of European
countries, for example, Norway and the UK (European Court of Auditors, 2012, p. 59).
In the fast voyage through Saudi Arabia's similar execution on ICT in general, we find
that by and large the nation performs in accordance with what one may expect given its wage
level. In any case, we find that the nation out-performs in the communications division, however
that spending levels on different types of ICT are unassuming. Though in the communications
field, the nation gives off an impression of being contributing and spending almost as much (or
more, on account of speculation by telecom administrators) than created nations, this is not the

situation with ICT overall, where Saudi Arabia's execution is significantly nearer to that of Chile,
Malaysia or Mexico than to OECD countries. As far as selection rates of key ICTs at the
undertaking level and the utilization of e-business administrations (saving money and retail) by
shoppers, we find that Saudi Arabia still has critical space to grow further. The essential
broadband base to backing such administrations exists as confirm by the expanding reception
rate of broadband among family units yet no doubt organizations have been moderate in
understanding the maximum capacity of broadband foundation. This is reflected in low selection
rates of broadband among SMEs and additionally dreary levels of appropriation of Internet
managing an account and Internet retail. This recommends Saudi Arabia has taken after generally
powerful strategies in the telecom segment, however that there are conceivably profound situated
boundaries to ICT appropriation, especially by organizations. These obstructions could
incorporate work market direction, parts of the business, the legitimate and administrative
environment, and the accessibility of gifted work (Dwivedi, et al., 2008, p. 35).
Correlative Factors
Work Power Properties
The nature of the Saudi work power and also the general business populace proportion
has been enhancing fundamentally after some time. Amid the most recent quite a long while, the
Conference Board assesses that changes in labor quality contributed around 0.2 rate focuses to
GDP development. This contrasts positively and created countries, where the commitment of
enhanced work quality has been around 0.14 rate focuses every year as of late in the UK and US,
and 0.2 rate focuses in Canada. Be that as it may, these nations as of now began with abnormal
amounts of auxiliary school and tertiary enlistment, and consequently have less space to develop
(Fabjan, et al., 2016, p. 76).

Business Environment
Significant step that Saudi Arabia has made lately were changing remote interest in 2000
and joining the WTO in 2005. Since these occasions, the nation has encountered a surprising
turnaround in its capacity to pull in remote direct venture. Notwithstanding the worldwide
retreat, remote direct venture into Saudi Arabia expanded from around $22 billion in 2007 to $35
billion in 2009. It went from positioning 55th among all nations in 2007 to positioning
seventeenth in 2009 as a beneficiary of outside speculation. Outside firms can be a noteworthy
wellspring of information exchange and best practices. With regards to ICT appropriation, some
of these organizations are at the bleeding edge of utilizing ICT to change and rebuild their
organizations. By and large, Saudi Arabia's foundations perform respectably well, and the nation
is currently among the most effortless spots on the planet (positioning ninth) to begin a business.
However, stricter work and occupation laws can be a boundary to doing this effectively. Remote
speculators will be especially worried by high repetition costs the World Economic Forum's
Global Competitiveness Report positioned Saudi Arabia 102nd on this measure. By and large,
Saudi Arabia positioned 66th on work market proficiency in the Global Competitiveness Report
(Gilaninia, et al., 2011, p. 14).
Research and Development Execution
Use on R&D is one pointer of the imaginative environment inside a nation. An
organization's capacity and ability to participate in R&D is often obliged by the same variables
that may compel ICT selection eminently, control and imperviousness to change can decrease
the profits from improving, pretty much as they can lessen the profits from receiving ICT in the
Saudi case, one may believe that in light of the part petroleum extraction and creation plays in
the economy R&D endeavors would not be especially solid. In reality the information

demonstrate that Saudi Arabia's current R&D consumptions are the least among the nations for
which we discovered information. This is genuine whether one takes a gander at R&D uses as a
rate of GDP, or takes a gander at these uses in dollars per capita. Norway, which is generally
asset driven, does not look particularly not quite the same as other similarly created nations as far
as R&D consumption, however Saudi Arabia posts a weaker execution than all different nations.
This may show that Saudi firms are compelled, or not adequately incented, towards burning
through cash on R&D (Ayyagari, et al., 2007, p. 430).
Conclusion
ICT AND General Purpose Technologies
ICT PCs, programming, telecom gear and the different bits of information technology
that we are all acquainted with is the thing that market analysts and financial students of
history call a universally useful technology, or GPT. A GPT is a technology that when executed,
affects all segments of the economy. Exemplary case of GPTs incorporate steam power, railways,
electric force and, obviously, telecom and figuring. These advances changed the working of the
whole economy and in addition the central personal satisfaction for people. ICT is comparable.
Most workplaces and organizations use PCs. Numerous assembling forms depend on ICT-driven
mechanization. All buyers and organizations use altered or cellular phones. Vast larger parts of
the populace in most created nations, and huge however quickly developing minorities in rising
nations, utilize the Internet. As examined in the writing audit, ICT makes conceivable major
changes in business forms. These key changes may happen in light of the fact that goliath
organizations, for example, Walmart, use complex venture programming and frameworks
administrations, or they may happen at a significantly more modest level, as on account of Indian
anglers. So also, the achievement of portable managing an account in numerous African nations

gives a striking case of how the accessibility of another stage (the versatile telecom system)
prompted the rise of altogether new items and administrations.
Effect of Interest in ICT by Every Single Financial Part
A standard and generally utilized strategy to decide the commitment of ICT to financial
development is to ascertain the impacts of interest in PC programming, equipment and telecom
hardware (the segments of ICT speculation) on GDP. This is done through a system called
development bookkeeping. Quickly, the development bookkeeping system breaks down
aggregate monetary development (i.e., GDP development) into
(a) Development because of expanded work exertion,
(b) Development because of expanded utilization of (capital extending) and
(c) Development because of the expanded productivity with which capital and work are

utilized.

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