Effect of Information and Communication Technologies(ICT) as Innovation Tool on Business Performance: Evidence from Pakistan

Abstract

With the increase in innovation and competition among different businesses, Importance of ICT cannot be denied in the modern age. The objective of this study is also to evaluate the importance of ICT in business performance of Small and Medium Enterprises (SMEs) especially as an innovative tool for the business. Most of the studies in literature review suggest that ICT has played very effective role in enhancing business performance of SMEs. Most of the firms have grown innovatively due to the implementation of ICT. . For reliability and validity, the evaluating scales used were exposed to the Confirmatory Factor Analysis (CFA) with Maximum Likelihood Technique. Different tests were applied like the Structural Equation Model (SEM) on 186 Punjab-based SMEs. Results indicate that ICTs facilitate innovation favourably and substantially. Business performance was also significantly impacted by innovation and the usage of ICTs. This means that those in charge of making decisions ought to put special consideration to how they handle these critical factors for business performance. This study also recommends that firms must implement ICT as their innovative tool to compete with other firms.