The Growth and Formalisation of Information Systems in Developing Country SMEs

The purpose of this paper is to improve understanding of how small and medium enterprises (SMEs) in developing countries move from informal to formal information systems (IS). Formalisation of IS for SMEs implies greater use of sources and channels of formal information and upgrading of internal and external information systems, including use of information and communication technologies (ICTs). This study provides an exploratory model that assesses the factors that influence formalisation of IS, supported by data from a developing country environment. The study finds that formalisation of IS is important because it leads to improvements in the internal and external business processes that influence enterprise growth and development. Although there is a strong reliance on informal information practices amongst SMEs, there is also widespread unmet demand for formal information. Overall, successful enterprise development requires optimum use of both formal and informal IS. Evidence suggests this is achieved through developing the necessary internal competencies and skills for information handling and by forging key external market linkages - a duality of factors that provide the key drivers for formalisation.