Information Technology and Management

, Volume 16, Issue 2, pp 79–95 | Cite as

Information technology and survival of SMEs: an emprical study on Malaysian manufacturing sector

  • Mohammad Ali Jamali
  • Hatra Voghouei
  • Nor Ghani Mohd Nor


This study focuses on the impact of information technology on the survival rate of small and medium enterprises (SMEs) in the manufacturing sector in Malaysia. It analyses the effects of information technology on survival of SMEs in 2000 and 2005, based on two separate groups of firms. It sets out to show that information technology has positive and significant effect on survival of the firms, besides other factors such as minimum efficient size, market and firms attributes, transaction cost, uncertainty, opportunism, information asymmetry and atmosphere, profitability and learning have impact on the survival of SMEs. With using Cox proportional hazard regression model, we found that factors such as profits, R&D, location, ownership, market size, entry rate, industry growth and capital–labor ratio affect the survival of SMEs. Of equal importance is the expenditure on information technology, which is said to have an impact on the viability of firms. The results further demonstrate that being in certain stage of maturity of firms could be important in the effect of information technology on survival of SMEs.


Information technology Survival Malaysian manufacturing sector SMEs Cox regression model 


  1. 1.
    Agarwal R, Gort M (1996) The evolution of markets and entry, exit and survival of firms. Rev Econ Stat 78(3):489–498CrossRefGoogle Scholar
  2. 2.
    Alcorta L (1992) The impact of new technologies on scale in manufacturing industry: issues and evidence, UNU/INTECH working paper 5, Maastricht: UNU/INTECHGoogle Scholar
  3. 3.
    Audretsch DB (1991) New firm survival and the technological regime. Rev Econ Stat 73:441–450CrossRefGoogle Scholar
  4. 4.
    Audretsch DB (1995) Innovation and industry evolution. MIT Press, CambridgeGoogle Scholar
  5. 5.
    Audretsch DB, Mahmood T (1994) The rate of hazard confronting new firms and plants in US. Manuf Rev Ind Organ 9:41–56CrossRefGoogle Scholar
  6. 6.
    Bain J (1956) Barriers to new competition. Harvard University Press, CambridgeCrossRefGoogle Scholar
  7. 7.
    Baldwin JR (1995) Turnover and productivity growth. In: Baldwin JR (ed) The dynamics of industrial competition. Cambridge University Press, Cambridge, pp 208–238CrossRefGoogle Scholar
  8. 8.
    Barney JB (1991) Firm resources and sustained competitive advantage. J Manag 17(1):99–122Google Scholar
  9. 9.
    Bernard BA, Sjoholm F (2003) Foreign owners and plant survival, NBER Working Papers 10039. National Bureau of Economic Research Inc.Google Scholar
  10. 10.
    Bharadwaj A (2000) A resource based perspective on information technology and firm performance: an empirical investigation. MIS Quarterly 24(1):169–196Google Scholar
  11. 11.
    Bharadwaj A, Bharadwaj S, Knosynski B (1999) Information technology effects on firm performance as measured by Tobin’s q. Manage Sci 45(6):1008–1024Google Scholar
  12. 12.
    Breslow NE (1974) Covariance analysis of censored survival data. Biometrics 30:89–99CrossRefGoogle Scholar
  13. 13.
    Bresnahan TF, Trajtenberg M (1995) General purpose technologies: engines of growth. J Econ 65:83–108CrossRefGoogle Scholar
  14. 14.
    Cefis E, Marsili O (2005) A matter of life and death: innovation and firm survival. Ind Corp Change 14(6):1–26CrossRefGoogle Scholar
  15. 15.
    Chow SC, Jun S, Hansheng W (2003) Sample size calculation in clinical research. Marcel Dekker Inc, New YorkGoogle Scholar
  16. 16.
    Clark DP (2010) Scale economies and intra-industry trade. Econ Lett 108:190–192CrossRefGoogle Scholar
  17. 17.
    Cleves MA, Gould WW, Gutierrez RG (2004) An introduction to survival analysis using Stata. Stata Press, College StationGoogle Scholar
  18. 18.
    Coase RH (1937) The nature of the firm. Economica 4:386–405CrossRefGoogle Scholar
  19. 19.
    Collett D (2003) Modelling survival data in medical research, 2nd ed. edn. Chapman & Hall/CRC, LondonGoogle Scholar
  20. 20.
    Cordella A, Simon K (1997) Decreasing returns to infrastructures, IRIS proceeding, Oslo, August 1997, pp 821–834Google Scholar
  21. 21.
    Cox DR (1972) Regression models and life tables (with discussion). J R Stat Soc B 34:187–220Google Scholar
  22. 22.
    Cox DR, Oakes D (1984) Analysis of survival data. Chapman and Hall, LondonGoogle Scholar
  23. 23.
    Doms M, Dunne T, Roberts MJ (1995) The role of technology use in the survival and growth of manufacturing plants. Int J Ind Organ 13:523–542CrossRefGoogle Scholar
  24. 24.
    Dunne T, Roberts MJ, Samuelson L (1989) The growth and failure of US manufacturing plants, Q J Econ 104:671–698. Econometrica 71:1695–1725Google Scholar
  25. 25.
    Esteve PS, Manez CJA (2008) The resource-based theory of the firm and firm survival. Small Bus Econ. doi: 10.1007/s11187-006-9011-4 Google Scholar
  26. 26.
    Fotopoulos G, Louri H (2000) Location and survival of new entry. Small Bus Econ 14:311–321CrossRefGoogle Scholar
  27. 27.
    Geroski P (1991) Market dynamics and entry. Blackwell, OxfordGoogle Scholar
  28. 28.
    Geroski P (1995) What do we know about entry? Int J Ind Organ 13:421–440CrossRefGoogle Scholar
  29. 29.
    Gibrat R (1931) Les Inégalités Économiques. Sirey, ParisGoogle Scholar
  30. 30.
    Goodman PS, Darr ED (1998), Computer-aided systems and communities: mechanisms for organizational learning in distributed environments. In: MIS Quarterly 12Google Scholar
  31. 31.
    Gort M, Klepper S (1982) Time paths in the diffusion of product innovations. Econ J 92(367):630–653CrossRefGoogle Scholar
  32. 32.
    Hall B (1987) The relationship between firm size and firm growth in the US manufacturing sector. J Ind Econ 35:583–606CrossRefGoogle Scholar
  33. 33.
    Hannan MT, Carroll GR (1992) Dynamics of organizational populations. Oxford U. Press, NewYorkGoogle Scholar
  34. 34.
    Harrell FE (1989) Survival and risk analysis. Duke University Medical center, DurhamGoogle Scholar
  35. 35.
    Hosmer DW, Lemeshow S (2008) Applied survival analysis: regression modeling of time to event data. Wiley, MassachusettsCrossRefGoogle Scholar
  36. 36.
    Huang JH, Kim MS, Chun SH (2013) The role of R&D and corporate governance in Korea: IT firms versus non-IT firms. Inf Technol Manage 14(1):29–41CrossRefGoogle Scholar
  37. 37.
    Information Technology for Development of Small and Medium-sized Exporters in Latin America and East Asia (2005) UNIDO. UN press, Santiago, ECLACGoogle Scholar
  38. 38.
    Jamali MA, Norghani MN (2012) Growth of firms in manufacturing sector: a panel data analysis in Iran. Glob Bus Rev 13(1):51–68CrossRefGoogle Scholar
  39. 39.
    Johnson D, Turner C (2003) International business: themes and issues in the modern global economy. Routledge, LondonCrossRefGoogle Scholar
  40. 40.
    Jovanovic B (1982) Selection and evolution of industry. Econometrica 50:649–670CrossRefGoogle Scholar
  41. 41.
    Jovanovich B, MacDonald GM (1994) The life cycle of a competitive industry. J Polit Econ 102:322–347CrossRefGoogle Scholar
  42. 42.
    Kemme DM, Mukherjee D, Nikolsko-Rzhevsky A (2009) Foreign direct investment and export performance in emerging economies: evidence from Indian IT firms, working paper, University of MemphisGoogle Scholar
  43. 43.
    Klein JP, Moeschberger ML (2003) Survival analysis. Techniques for censored and truncated data, SpringerGoogle Scholar
  44. 44.
    Kleinbaum DG, Klein M (2005) Survival analysis: a self-learning text, 2nd edn. Springer, BerlinGoogle Scholar
  45. 45.
    Komiak XS, Banbasat I (2004) Understanding customer trust in agent-mediated e-commerce, web-mediated e-commerce, and traditional commerce. Inf Technol Manage 5(1–2):181–207CrossRefGoogle Scholar
  46. 46.
    Kotelnikov V (2007) Small and medium enterprises and ICT. UNDP, ThailandGoogle Scholar
  47. 47.
    Le C (2003) Introductory biostatistics. Wiley, HobokenCrossRefGoogle Scholar
  48. 48.
    Lin PC, Huang DS (2006) Technological regimes and firm survival: evidence across sectors and over time. Small Bus Econ 30(2):175–186CrossRefGoogle Scholar
  49. 49.
    Lopez-Garcıa P, Puente S (2007). A comparison of the determinants of survival of Spanish firms across economic sectors. In: Arauzo JM, Manjo´n MC (eds) Entrepreneurship, industrial location and economic growth. Edward Elgar, Cheltenham, forthcomingGoogle Scholar
  50. 50.
    Mahmood T (1992) Does the hazard rate for new plants vary between low- and high-tech-industries. Small Bus Econ 4(3):201–209CrossRefGoogle Scholar
  51. 51.
    Malone T, Rockart J (1991) Computers, networks and the corporation. Sci Am 265(3):128–136CrossRefGoogle Scholar
  52. 52.
    Mata J, Portugal P (1994) Life duration of new firms. J Ind Econ 42:227–246CrossRefGoogle Scholar
  53. 53.
    Mata J, Portugal P (2002) The survival of new domestic and foreign owned firms. Strateg Manag J 23:323–343CrossRefGoogle Scholar
  54. 54.
    Mata J, Portugal P, Guimaraes P (1995) The survival of new plants: start-up conditions and post-entry evolution. Int J Ind Organ 35:607–627Google Scholar
  55. 55.
    Melville N, Kraemer K, Gurbaxani V (2004) Review: information technology and organizational performance: an integrative model of IT business value. MIS Q 28:2Google Scholar
  56. 56.
    Mithas S, Tafti AR, Bardhan IR, Goh JM (2012) Information technology and firm profitability: mechanisms and empirical evidence. MIS Q 36(1):205–224Google Scholar
  57. 57.
    Organization for Economic and cooperation and Development, OECD (1997) Globalization and small and medium enterprises (SMEs), Vol.1: Synthesis report, OECD publication, ParisGoogle Scholar
  58. 58.
    Organization for Economic and cooperation and Development, OECD (2000) Enhancing the competitiveness of SMEs through innovation. OECD publication, BolognaGoogle Scholar
  59. 59.
    Organization for Economic and cooperation and Development, OECD (2000) OECD Science, technology and industry outlook. OECD publication, ParisGoogle Scholar
  60. 60.
    Ozler S, Tyamaz E (2004). Does foreign ownership matter for survival and growth? Dynamic of competition and FDI, ERC Working papers 0406, ERC—Economic Research Center, Middle East Technical UniversityGoogle Scholar
  61. 61.
    Porter M (1985) Competitive advantage: creating and sustaining superior performance. Free Press, New York Google Scholar
  62. 62.
    Porter M (2001) Strategy and the internet. Harvard Business Review 79(3):63–78Google Scholar
  63. 63.
    Segarra A, Callejon M (2002) New firms’ survival and market turbulence: new evidence from Spain. Rev Ind Organ 20:1–14CrossRefGoogle Scholar
  64. 64.
    SMI Development Plan [2001–2005] (2002). SMIDEC, Kuala LumpuGoogle Scholar
  65. 65.
    Stiroh KJ (1998) Computers, productivity, and input substitution. Econ Inq XXXVI(2):175–191CrossRefGoogle Scholar
  66. 66.
    Strotmann H (2006) Entrepreneurial survival, small business economics, Springer. doi: 10.1007/s11187-005-8859-z
  67. 67.
    Strotmann H (2007) Entrepreneurial survival, small business economics, Springer, vol 28(1), pp 87–104Google Scholar
  68. 68.
    Thatcher M, Oliver J (2001) The impact of technology investments on a firm’s production efficiency, product quality, and productivity. J Manag Inf Syst 18(2):17–43Google Scholar
  69. 69.
    Ting OK (2004). SMEs in Malaysia: pivot points for change,
  70. 70.
    UPS (2005) Reveals Asia business monitor survey findings. United Parcel Services, UPS.
  71. 71.
    Varian HR, Farrell J, Shapiro C (2004) The economics of information technology. Cambridge Books, Cambridge University PressCrossRefGoogle Scholar
  72. 72.
    Venturini F (2007) ICT and productivity resurgence: a growth model for the information age, BE J Macroecon, De Gruyter, vol 7(1), pp 1–26Google Scholar
  73. 73.
    Wagner J (2001) A note on firm size: export relationship. Small Bus Econ 17:229–237CrossRefGoogle Scholar
  74. 74.
    Wagner J (1994) The post-entry performance of new firms in german manufacturing industries. J Ind Econ 42:141–165CrossRefGoogle Scholar
  75. 75.
    Wang SD (2003) The implications of E-financing: implications for SMEs. Bull Asia Pac Perspect 2003–2004, United NationsGoogle Scholar
  76. 76.
    Williamson OE (1975) Markets and hierarchies: analysis and antitrust implications. The Free Press, New YorkGoogle Scholar
  77. 77.
    Zainuddin AA (2005) Determinants of entry and exit in the Malaysian manufacturing sector, PhD thesis, University Putra MalaysiaGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Mohammad Ali Jamali
    • 1
  • Hatra Voghouei
    • 2
  • Nor Ghani Mohd Nor
    • 3
  1. 1.Department of Management, Qazvin BranchIslamic Azad UniversityQazvinIran
  2. 2.Faculty of Law, Political Science and Economics, South Tehran BranchIslamic Azad UniversityTehranIran
  3. 3.Faculty of Economics and ManagementUniversity Kebangsaan MalaysiaBangiMalaysia

Personalised recommendations