RFID Technology in the Indian Retail Sector

There is growing interest and investment in the use of radio frequency identification (RFID) technology as a means of greater visibility in supply chains, leading to improved inventory management through improved customer and sales information in retail chains. Retailing is emerging as a technology-intensive industry, and China and India are emerging as potential major retail countries. Given the growing importance of the retail business and application of information and communications technologies (ICTs), particularly RFID, it is important to understand RFID technology per se and its likely benefits in the retail sector in a developing country like India, where even bar codes are still not ubiquitous. We discuss RFID technology and its potential scope in the retail sector briefly, and the Indian retail sector in considerable detail. Thereafter, we discuss the findings of field case studies of three upcoming retail chains, all of which are working on identifying the possibility of switching to RFID from bar codes in the coming future. We attempt to understand how RFID application is likely to impact their operations and supply chains. We develop an adoption and implementation barrier framework and find out where the three retail chains stand in this framework. Finally, we suggest managerial recommendations, as well as directions for future work.

Information Technology in Indias real retail sector October 26, 2007 at 5:06 pm | Posted in Accounting, International business | Leave a comment Having been in IT industry and being based in India for a good part of the last decade we have now got used to relatives and friends with retail outlets small and big asking us about computers and software and our advise on how to go about them. Most of the questions relate to accounting perhaps acc101 can be a place where software for accounting and related items are discussed.

A question that has been generally asked is whether they have to purchase tally, the most popular accounting package in India or ask their relative or somebody in their neighborhood who has done a course from NIIT or similar training institutes to help them create a new software to be used in their shops. We have not had an opportunity to check which of the two is a better option. Our experience in developing, implementing, selling

products and managing software projects and infrastructure for large financial institutions tell us that a standardized product with solution for all has not been developed yet. And a pure service based product where you get what you want has its own set of problems why re-invent the wheel that already exists. The answer is perhaps somewhere in between and it is too early for us to comment about the proportion in which the two should be. On an emotional basis, it is a pleasure to ask somebody to develop something for your business exactly what you want. You will also seed the local IT market. Would you rather buy a custom made bed or buy a standard and get adjusted to it.

Considering the number of queries that we have got from various quarters like shop keepers (mainly), textile units small and medium scale and many others in areas relating to Accounting, Billing, Value Added Tax (VAT), Income tax, Inventory Management and many others; we came to a conclusion that the real Indian retail sector has to be investigated. In the meanwhile we though we will put across out experiences to our folks and other our peers in the industry who face similar questions.

If one has already decided to get that contact of yours to write a new software please keep in mind a few things you may actually be spending your money on it. We have tried to list them here randomly.

1. Purpose: Does it serve the purpose that you wish to solve. Just visualize things like how the solution will look after every thing is done, ask the person to tell you how it will look, whether you, your assistants, your grand father who will sit at the cash box and other be able to use it. Can you generate the reports that you want. Are you complicating your life further and will you have to hire somebody else to work the software while you sell your goods. You will be surprised how much of problem it will be for you if you do not know how to click and where to click. If you are not convinced then do not loose heart, get the correct solution. Ensure that your

requirements are met and at the end of the day you should be doing things better and faster and making more money. 2. Competence: Software may not be rocket science but it is not childs play either. Does the person developing the application have the necessary competence. As it takes experience to run a shop like yours it takes a lot of experience to conceptualize and execute an IT project. This does not mean that you should drop your young friend from the project. The right way would be to assign a mentor, somebody who knows. There could be a few who would want to do consultancy for free out of good will. 3. Organization: I am not speaking about the company here, the person who is developing the product should have the capability to provide solution in organized parts. It is like building a great institution, we need not do everything in one go, but in steps. The organization should be clear. In addition, the trend in technology and also needs change rapidly. The person developing the application should have the capability to envisage all these needs or atleast make provisions for them. You dont want to be stuck with something that is not changeable but your business will. 4. Hardware and other software: Software require a computer to run, you know this. Your relative may be developing something that will require investment to work on. Clearly understand your costs for this. What you will require is not just a computer but many other software that will be required to run on it. These are typically Operating system like Windows and other things on which the software will run. These are not free. Taking the discussion further some of these will become old models so to say. Therefore, your friend should know what is happening in the market. He may use something cheap but tomorrow it may not be available in the market, this is more like your spare parts. Your may not get them. As much as possible get something that is well known. 5. Running Costs: Like your car will require petrol, diesel or other fuel your computer and your new software has running costs. One the one hand there are standards issues but you should also keep in mind that your software also require repairs and you will require a mechanic for it. This could involve costs. 6. Maintenance: Extending the previous point, once you have installed the software your friend will have to be the mechanic. He should not run away or get into some other job. This you should take care.

7. Electricity: In India, electricity is still an issue. What will you do when there is no current. Think about it, will you write it in a book and then input it into the computer. Your friend should answer that question. 8. Backup: Your computer may crash (it does believe me) and what will happen to your data. Your software should make provision for back up and more importantly recovery. The data backed up and recovered should not be out of sync. This is a big subject. 9. Regulations: This relates to government, currently this may not be a big deal in a software, but it will be in the future. 10. Other applications: You may want to data that is created by your software to be fed into other software like tally. This should be possible. Design your requirements appropriately. 11. 12. 13. Language: This is another point that you should consider. For the moment Security: Have a basic security atleast. It is ultimately your data and you User Manuals: If you have a problem or you dont know how to use it let us leave it to English. Do you have a key board in your local language. should not let somebody tamper with it. More the security, the better it is. you will need something to refer to. Get the user manuals preferably in your language preferably. 14. model. Data: This is something more into the software. If you can get a data

Competition is increasing at all levels. Biggies are entering small business in the name of consumption power of the masses. They are well armed. IT is sufficiently powerful ammunition for smaller players to compete with the big fishes. Perhaps, this trend will herald a new era of software product and services in India where IT is not exclusive but instead is a common commodity used by all and sundry whether custom made or productized.

Factors of new technology adoption in the retail sector. In recent years, small manufacturing enterprises have been implementing new computerized technologies at an every-increasing rate (Acs & Audretsch, 1990; Julien, Estime, & Drilhon, 1993), and the trend is being accelerated by international competition, in particular by the opening up of national boundaries. However, the same urgency does not seem to exist in the commercial and service sectors, especially among independent retailers (Robertson & Gatignon, 1986; Treadgold, 1989; Julien & Thibodeau, 1991). Certainly, competitive pressure is relatively less intense in these sectors, or at the very least, certain small businesses have an advantage in terms of location, knowledge of their clients and their merchandise, or profit from niches created by market segmentation (for example, gourmet food stores or high fashion boutiques), They are thus under less pressure to become computerized; they may also be less likely to do so and may not believe new information technologies to be very useful because, for example in merchandise analysis, they know their customers and merchandise intimately. Many small retailers, though, whose ability to differentiate themselves from their competitors is limited, are feeling increasing competitive pressures, especially with the growth of chains and the advent of warehouse stores. A majority of these have neither the experience nor the financial resources required to plan, implement, and operate a computer-based information system (Raymond & Lorrain, 1992). But others have begun to systematically install new point-of-sales (POS) terminals or link up to wholesalers by tele-computing or electronic data interchange (EDI) (Sweeney, Putnam, Brooks, Hyde, Lee, Rubel, Rossiter, Armstrong, & Koenigsberg, 1990; Blili & Raymond, 1993). There may be many reasons for these behavioral differences, even among firms in the same industry facing the same type of market. In the manufacturing sector, macroeconomic factors such as the rate of economic growth and the competitive structure of the industry can be determinant (Bouchut, Cochet, & Jacot, 1984; Julien & Thibodeau, 1991). Researchers have also shown that more "technology-consuming" firms are distinguished from others by: greater profitability, the differential cost of new equipment (Mansfield, 1971, 1975; Khan & Manopichetwattana, 1989); the management profile or

the owner-manager's personal characteristics (Miller & Toulouse, 1986); organizational complexity, centralization and formalization (Cohn & Turyn, 1980, 1984; Meyer & Goes, 1987; Collins, Hage, & Hull, 1988); strategy type (Garsombke & Garsombke, 1989); and the quality of technological information obtained together with the capacity to process it (Blili & Raymond, 1993; Julien, Carriere, & Hebert, 1988; Gatignon & Robertson, 1989). However, very little research has been done on the reasons for new technology adoption in the service and retail sectors. To our knowledge, only Treadgold (1989) and HogarthScott and Parkinson (1990) have examined the question. Treadgold showed that differences in new technology adoption could be explained by the type of external organization (for example, between independent businesses and businesses belonging to groups) and the industry sector. Hogarth-Scott and Parkinson, for their part, showed that the limited use of EDI technologies among independent businesses stemmed from their fear of losing their independence. Miller, Glick, Yau-De, & Huber, (1991) have also indicated that organizations in the retail and service sectors have narrower ranges than in manufacturing on both technology and structure variables, and thus tend to exhibit weaker technology-structure relationships The aim of this research, using empirical evidence, was to identify organizational, structural, and strategic factors underlying the level of penetration of various management, service, and information technologies among small retailers, including both independent businesses and those affiliated to trade banners or buying combines. Potential factors were identified from the previously cited literature, and in particular from Julien, Carriere, and Hebert's (1988) study done in the manufacturing sector. RESEARCH MODEL The research model is presented in Figure 1. A first set of factors, thought to influence new technology adoption in small retail firms, describes the structural sophistication of the firm in terms of centralization and complexity. In the organization theory literature, structure has often been characterized along these two dimensions or composite factors (Ford & Slocum, 1977; Miller, 1987). This includes prior research on the technologystructure relationship (Miller et al., 1991). Decentralizing and complexifying structure implies more elaborate communication, coordination, and control The aim of this research, using empirical evidence, was to identify organizational, structural, and strategic factors underlying the level of penetration of various management, service, and

information technologies among small retailers, including both independent businesses and those affiliated to trade banners or buying combines. Potential factors were identified from the previously cited literature, and in particular from Julien, Carriere, and Hebert's (1988) study done in the manufacturing sector. RESEARCH MODEL The research model is presented in Figure 1. A first set of factors, thought to influence new technology adoption in small retail firms, describes the structural sophistication of the firm in terms of centralization and complexity. In the organization theory literature, structure has often been characterized along these two dimensions or composite factors (Ford & Slocum, 1977; Miller, 1987). This includes prior research on the technologystructure relationship (Miller et al., 1991). Decentralizing and complexifying structure implies more elaborate communication, coordination, and control Cohn & Turyn, 1984; Miller & Toulouse, 1986; Raymond, Pare, & Bergeron, 1993).

The second set of adoption factors is strategic in nature, identifying the level of assertiveness, rationality, and interaction in business decision processes. These three factors have emerged in the strategy literature as fundamental dimensions or derivative constructs of the strategy concept (Miller, 1987; Venkatraman, 1989). The first dimension refers to the proactiveness of decisions and risk taking. The second one concerns the planning and formulation of strategies. The third one refers to the political/bargaining processes that bear upon decisions. Information technology has become one of the key elements in the definition and realization of strategic objectives (Vitale, Ives, & Beath, 1986). In an increasingly complex environment, organizations must "align" their use of information technology with the implementation of their strategic decisions (Chan & Huff, 1993). Thus, when they are more proactive, more future/planning-oriented, and when more executives interact in strategy making, retailers would be more apt to implement computer-based information systems resulting from or in support of their strategy (Shrivastava & Grant, 1985; Schroeder, Gopinath, & Congden, 1989).

The third set of factors thought to influence new technology adoption in small retail firms are organizational, including size, sector, and status (independent or affiliated). Organization theorists have found the first two contingency variables to consistently play an important role in structure-technology-strategy relationships (Ford & Slocum, 1977; Miller et al., 1991). One expects larger firms to have adopted more sophisticated technologies (Dewar & Dutton, 1986; Raymond, Pare, & Bergeron, 1993). The same can be said of firms in more information-intensive retail sectors, e.g. hardware as opposed to clothing (Kimberly & Evanisko, 1981). Firms who become linked to banners or buying combines, as opposed to remaining independent, would also be greater users of information technology (Tornatsky & Klein, 1982). The greater technological sophistication obtained by retailers who cooperate among themselves would tend to reduce environmental uncertainty in terms of markets and competitors (Huber, 1984). The seven factors of new technology adoption were chosen due to their fundamental nature as descriptors of structure, strategy, and organizational contingencies. These factors have also been identified as fundamental determinants of technology, both theoretically and empirically, and all have been used previously in the small business research context. Note that many of the organization theory and strategic management studies cited here point to the interdependence of strategy and structure, and to the contingent role of size and sector in this regard. However, given the focus and objectives of this study, expected interrelationships between structure, strategy, and organizational contingencies were not made explicit in the research model. No distinction was made between management and production technologies as indicators of technological levels because in retailing, unlike manufacturing (Raymond & Pare, 1992), it is difficult to differentiate the two. In addition, the actual level of independence or involvement in a group was not measured, even though some retailing groups (buying combines, trade banners, coops, franchises) exercise more control over their members than others. However, franchisees were excluded from the study because, in contrast to the other groups, their independence is very restricted (Castrogiovanni, Bennett, & Combs, 1993). In the Canadian province of Quebec, where the survey took place, independent retailers and members of buying groups or coops are responsible for more than 72% of all retail sales, at the expense of chains and megastores, whereas in the rest of Canada and in the U.S.A., their share is much smaller

RESEARCH METHODOLOGY The survey was carried out by collecting data from a sample of small retailers in the food, hardware, and ladies' garment sectors. Their names were obtained from the central business data bank of Quebec's commission on health and safety in the workplace (CSST). The survey was performed in two stages. First, 1,200 letters were sent out to the addresses provided by the CSST, requesting an interview with the owner (4.8% of these were returned due to improper addresses or out-of-business situations). Among the 232 (19.3%) who were willing to cooperate, a total of 79 retailers were selected for semistructured interviews in the field, with the help of a questionnaire. Using CSST data for the entire 1,200-firm population, the 79 firms were chosen on a stratified sampling basis, to be statistically representative of this population in terms of size and regional distribution for each sector. This was verified through chi-square and t tests. The questionnaire included 56 closed questions and six open questions, divided into four sections: the firm's demographics (size, status, etc.), structure, computer hardware and software, and strategy. A pre-test was done using three firms from each of the three sectors. Interviewing was deemed preferable to mailing the questionnaire, due to the technical or open nature of many questions, and to acquire more in-depth information Two main types of technology were distinguished in the survey: hardware for business computing (computers), point-of-sales computing (computerized cash registers, whether or not linked to a central processing unit), and tele-computing (electronic links with outside firms, usually wholesalers); and software, assessed by the nature of the applications portfolio. The measures of hardware and software technology adoption, i.e. the dependent variables, were adapted from previously developed instruments by Julien, Hebert, and Carriere (1988) and by Raymond and Lorrain (1992). Two main dimensions of structure--centralization and complexity--were assessed by measuring the managerial hierarchy (number of managers excluding the owners(s)/all personnel) and the administrative apparatus (clerical workers/all personnel), both measures previously validated and used in a small business context (Paulson & Stump, 1979). Complexity was also ascertained by the presence of a management committee (Julien, Hebert & Carriere, 1988). The same was done with the three principal components of strategy, namely assertiveness, rationality and interaction. Miller's (1987) instrument was used to measure strategic orientation (or proactiveness: reactive-proactive) for the first dimension,

organizational time-frame (or futurity: short-long term) for the second one, and strategic decision making (individual-consensual) for the third one. Table 1 shows the descriptive statistics of the research variables. Thirty-six percent of firms operated in the food sector (grocery stores, butchers, etc.), 40% in the hardware sector and 24% in the garment sector. They employed an average of 14.5 people (excluding owners), including 2.5 office staff. In all, slightly over 50% of the businesses were affiliated to a trade banner or buying combine, and 46% had a management committee. Strategically speaking, they were fairly proactive (4.0 on a scale of 1 to 7), had a medium time-frame (2.7 on a scale of 1 to 5), and shared the decision-making process to a moderate degree (4.0 on a scale of 1 to 7).

ADOPTION OF NEW TECHNOLOGIES The overall survey results show that 63 of the 79 firms questioned (79.7%) used at least one computer-based technology (i.e. electronic cash registers), a higher number TABULAR DATA OMITTED than the 71% forecasted by Collard (1989) for 1993 in the United States. The percentage is higher in the food sector (92.8%) than in the hardware (84.4%) and garment (57.9%) sectors. In all, 36 firms (46.2%) used only stand-alone electronic cash registers, 11 (14.0%) used cash registers linked to a central register, and 16 (20.5%) had a cash register system linked to a computer. Eight firms (10.0%) had only a fax or telex, 31 (39.4%) maintained outside links by modem for batch data transfers or financial transactions (with banks), and 21 (26.9%) maintained systematic outside links through computers or terminals (EDI). The number of business computing applications varied from zero to four. Eight firms (10.1%) indicated using four applications, 16 (20.2%) used three, ten (12.7%) used two, and four (5.1%) used only one application. In all, 41 firms (51.9%) did not use any form of business computing. Overall, the type of technology least used by sample firms turned out to be business computing and related applications. The other two technologies were more widespread, as only 15 firms (19.0%) did not have an electronic cash register (POS computing) and 18 (22.8%) did not have an electronic link with an outside organization (tele-computing). Table 2 summarizes mean adoption rates for each technology (using 5point sophistication scales)

DETERMINANT FACTORS OF NEW TECHNOLOGY ADOPTION

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In recent years, small manufacturing enterprises have been implementing new computerized technologies at an every-increasing rate (Acs & Audretsch, 1990; Julien, Estime, & Drilhon, 1993), and the trend is being accelerated by international competition, in particular by the opening up of national boundaries. However, the same urgency does not seem to exist in the commercial and service sectors, especially among independent retailers (Robertson & Gatignon, 1986; Treadgold, 1989; Julien & Thibodeau, 1991). Certainly, competitive pressure is relatively less intense in these sectors, or at the very least, certain small businesses have an advantage in terms of location, knowledge of their clients and their merchandise, or profit from niches created by market segmentation (for example, gourmet food stores or high fashion boutiques), They are thus under less pressure to become computerized; they may also be less likely to do so and may not believe new information technologies to be very useful because, for example in merchandise analysis, they know their customers and merchandise intimately. Many small retailers, though, whose ability to differentiate themselves from their competitors is limited, are feeling increasing competitive pressures, especially with the growth of chains and the advent of warehouse stores. A majority of these have neither the experience nor the financial resources required to plan, implement, and operate a computer-based information system (Raymond & Lorrain, 1992). But others have begun to systematically install new point-of-sales (POS) terminals or link up to wholesalers by tele-computing or electronic data interchange (EDI) (Sweeney, Putnam, Brooks, Hyde, Lee, Rubel, Rossiter, Armstrong, & Koenigsberg, 1990; Blili & Raymond, 1993). There may be many reasons for these behavioral differences, even among firms in the same industry facing the same type of market. In the manufacturing sector, macroeconomic factors such as the rate of economic growth and the competitive structure of the

industry can be determinant (Bouchut, Cochet, & Jacot, 1984; Julien & Thibodeau, 1991). Researchers have also shown that more "technology-consuming" firms are distinguished from others by: greater profitability, the differential cost of new equipment (Mansfield, 1971, 1975; Khan & Manopichetwattana, 1989); the management profile or the owner-manager's personal characteristics (Miller & Toulouse, 1986); organizational complexity, centralization and formalization (Cohn & Turyn, 1980, 1984; Meyer & Goes, 1987; Collins, Hage, & Hull, 1988); strategy type (Garsombke & Garsombke, 1989); and the quality of technological information obtained together with the capacity to process it (Blili & Raymond, 1993; Julien, Carriere, & Hebert, 1988; Gatignon & Robertson, 1989). However, very little research has been done on the reasons for new technology adoption in the service and retail sectors. To our knowledge, only Treadgold (1989) and HogarthScott and Parkinson (1990) have examined the question. Treadgold showed that differences in new technology adoption could be explained by the type of external organization (for example, between independent businesses and businesses belonging to groups) and the industry sector. Hogarth-Scott and Parkinson, for their part, showed that the limited use of EDI technologies among independent businesses stemmed from their fear of losing their independence. Miller, Glick, Yau-De, & Huber, (1991) have also indicated that organizations in the retail and service sectors have narrower ranges than in manufacturing on both technology and structure variables, and thus tend to exhibit weaker technology-structure relationships. The aim of this research, using empirical evidence, was to identify organizational, structural, and strategic factors underlying the level of penetration of various management, service, and information technologies among small retailers, including both independent businesses and those affiliated to trade banners or buying combines. Potential factors were identified from the previously cited literature, and in particular from Julien, Carriere, and Hebert's (1988) study done in the manufacturing sector. RESEARCH MODEL The research model is presented in Figure 1. A first set of factors, thought to influence new technology adoption in small retail firms, describes the structural sophistication of the firm in terms of centralization and complexity. In the organization theory literature, structure has often been characterized along these two dimensions or composite factors (Ford & Slocum, 1977; Miller, 1987). This includes prior research on the technology-

structure relationship (Miller et al., 1991). Decentralizing and complexifying structure implies more elaborate communication, coordination, and control mechanisms; this in turn requires an infrastructure that can be better enabled through information technology (Huber, 1984; Leifer, 1988). Hence, more decentralized management and complex administrative structures should lead to greater adoption of information technologies by retailers (Cohn & Turyn, 1984; Miller & Toulouse, 1986; Raymond, Pare, & Bergeron, 1993). The second set of adoption factors is strategic in nature, identifying the level of assertiveness, rationality, and interaction in business decision processes. These three factors have emerged in the strategy literature as fundamental dimensions or derivative constructs of the strategy concept (Miller, 1987; Venkatraman, 1989). The first dimension refers to the proactiveness of decisions and risk taking. The second one concerns the planning and formulation of strategies. The third one refers to the political/bargaining processes that bear upon decisions. Information technology has become one of the key elements in the definition and realization of strategic objectives (Vitale, Ives, & Beath, 1986). In an increasingly complex environment, organizations must "align" their use of information technology with the implementation of their strategic decisions (Chan & Huff, 1993). Thus, when they are more proactive, more future/planning-oriented, and when more executives interact in strategy making, retailers would be more apt to implement computer-based information systems resulting from or in support of their strategy (Shrivastava & Grant, 1985; Schroeder, Gopinath, & Congden, 1989). The third set of factors thought to influence new technology adoption in small retail firms are organizational, including size, sector, and status (independent or affiliated). Organization theorists have found the first two contingency variables to consistently play an important role in structure-technology-strategy relationships (Ford & Slocum, 1977; Miller et al., 1991). One expects larger firms to have adopted more sophisticated technologies (Dewar & Dutton, 1986; Raymond, Pare, & Bergeron, 1993). The same can be said of firms in more information-intensive retail sectors, e.g. hardware as opposed to clothing (Kimberly & Evanisko, 1981). Firms who become linked to banners or buying combines, as opposed to remaining independent, would also be greater users of information technology (Tornatsky & Klein, 1982). The greater technological

sophistication obtained by retailers who cooperate among themselves would tend to reduce environmental uncertainty in terms of markets and competitors (Huber, 1984). The seven factors of new technology adoption were chosen due to their fundamental nature as descriptors of structure, strategy, and organizational contingencies. These factors have also been identified as fundamental determinants of technology, both theoretically and empirically, and all have been used previously in the small business research context. Note that many of the organization theory and strategic management studies cited here point to the interdependence of strategy and structure, and to the contingent role of size and sector in this regard. However, given the focus and objectives of this study, expected interrelationships between structure, strategy, and organizational contingencies were not made explicit in the research model. No distinction was made between management and production technologies as indicators of technological levels because in retailing, unlike manufacturing (Raymond & Pare, 1992), it is difficult to differentiate the two. In addition, the actual level of independence or involvement in a group was not measured, even though some retailing groups (buying combines, trade banners, coops, franchises) exercise more control over their members than others. However, franchisees were excluded from the study because, in contrast to the other groups, their independence is very restricted (Castrogiovanni, Bennett, & Combs, 1993). In the Canadian province of Quebec, where the survey took place, independent retailers and members of buying groups or coops are responsible for more than 72% of all retail sales, at the expense of chains and megastores, whereas in the rest of Canada and in the U.S.A., their share is much smaller. RESEARCH METHODOLOGY The survey was carried out by collecting data from a sample of small retailers in the food, hardware, and ladies' garment sectors. Their names were obtained from the central business data bank of Quebec's commission on health and safety in the workplace (CSST). The survey was performed in two stages. First, 1,200 letters were sent out to the addresses provided by the CSST, requesting an interview with the owner (4.8% of these were returned due to improper addresses or out-of-business situations). Among the 232 (19.3%) who were willing to cooperate, a total of 79 retailers were selected for semistructured interviews in the field, with the help of a questionnaire. Using CSST data for the entire 1,200-firm population, the 79 firms were chosen on a stratified sampling basis,

to be statistically representative of this population in terms of size and regional distribution for each sector. This was verified through chi-square and t tests. The questionnaire included 56 closed questions and six open questions, divided into four sections: the firm's demographics (size, status, etc.), structure, computer hardware and software, and strategy. A pre-test was done using three firms from each of the three sectors. Interviewing was deemed preferable to mailing the questionnaire, due to the technical or open nature of many questions, and to acquire more in-depth information. Two main types of technology were distinguished in the survey: hardware for business computing (computers), point-of-sales computing (computerized cash registers, whether or not linked to a central processing unit), and tele-computing (electronic links with outside firms, usually wholesalers); and software, assessed by the nature of the applications portfolio. The measures of hardware and software technology adoption, i.e. the dependent variables, were adapted from previously developed instruments by Julien, Hebert, and Carriere (1988) and by Raymond and Lorrain (1992). Two main dimensions of structure--centralization and complexity--were assessed by measuring the managerial hierarchy (number of managers excluding the owners(s)/all personnel) and the administrative apparatus (clerical workers/all personnel), both measures previously validated and used in a small business context (Paulson & Stump, 1979). Complexity was also ascertained by the presence of a management committee (Julien, Hebert & Carriere, 1988). The same was done with the three principal components of strategy, namely assertiveness, rationality and interaction. Miller's (1987) instrument was used to measure strategic orientation (or proactiveness: reactive-proactive) for the first dimension, organizational time-frame (or futurity: short-long term) for the second one, and strategic decision making (individual-consensual) for the third one. Table 1 shows the descriptive statistics of the research variables. Thirty-six percent of firms operated in the food sector (grocery stores, butchers, etc.), 40% in the hardware sector and 24% in the garment sector. They employed an average of 14.5 people (excluding owners), including 2.5 office staff. In all, slightly over 50% of the businesses were affiliated to a trade banner or buying combine, and 46% had a management committee. Strategically speaking, they were fairly proactive (4.0 on a scale of 1 to 7), had a medium time-frame (2.7 on a scale of 1 to 5), and shared the decision-making process to a moderate degree (4.0 on a scale of 1 to 7).

ADOPTION OF NEW TECHNOLOGIES The overall survey results show that 63 of the 79 firms questioned (79.7%) used at least one computer-based technology (i.e. electronic cash registers), a higher number TABULAR DATA OMITTED than the 71% forecasted by Collard (1989) for 1993 in the United States. The percentage is higher in the food sector (92.8%) than in the hardware (84.4%) and garment (57.9%) sectors. In all, 36 firms (46.2%) used only stand-alone electronic cash registers, 11 (14.0%) used cash registers linked to a central register, and 16 (20.5%) had a cash register system linked to a computer. Eight firms (10.0%) had only a fax or telex, 31 (39.4%) maintained outside links by modem for batch data transfers or financial transactions (with banks), and 21 (26.9%) maintained systematic outside links through computers or terminals (EDI). The number of business computing applications varied from zero to four. Eight firms (10.1%) indicated using four applications, 16 (20.2%) used three, ten (12.7%) used two, and four (5.1%) used only one application. In all, 41 firms (51.9%) did not use any form of business computing. Overall, the type of technology least used by sample firms turned out to be business computing and related applications. The other two technologies were more widespread, as only 15 firms (19.0%) did not have an electronic cash register (POS computing) and 18 (22.8%) did not have an electronic link with an outside organization (tele-computing). Table 2 summarizes mean adoption rates for each technology (using 5point sophistication scales). DETERMINANT FACTORS OF NEW TECHNOLOGY ADOPTION Shown in Table 3 is the intercorrelation matrix of the independent variables. Given its highly significant relationship with five other factors, size was removed from further data analysis to reduce problems due to multicollinearity (Huang, 1970). The same was done with the decision-making variable, as it is strongly correlated with the other two strategy variables. Note that after removal of these two variables, two intercorrelations TABULAR DATA OMITTED greater than 0.3 remain, that is, firms in the clothing sector and firms with a larger bureaucracy (administrative apparatus) are less likely to have an affiliated status (r = -0.52, r = -0.35). As hypothesized, differences in levels of hardware and software technology adoption by retailers are due to a number of organizational, structural, and strategic factors.

TABULAR DATA OMITTED Shown in Table 4 are the results of stepwise regression analyses on the four technology variables, revealing the determinant factors in each case. Retailers who adopt business computing are less likely to be in the food sector and tend to be affiliated to a buying combine or trade banner. They are more decentralized, i.e. show a higher ratio of managers (managerial hierarchy), and are more likely to have a management committee. Strategic factors do not seem to come into play here. The adoption of POS computing is determined by a different set of factors. Clothing merchants are less apt to employ this technology, as are firms with a larger ratio of clerical personnel (administrative apparatus). In addition, firms with POS technology have a longer organization time-frame. The use of tele-computing is mostly determined by the retailer's status as member of a combine or banner, as expected. Firms who have implemented EDI are also more future-oriented than others, confirming Blili and Raymond's (1993) conjecture. Not surprisingly, hardware stores, with their greater information needs (e.g. for inventory management), are the ones with the more extensive applications portfolio (software), while more decentralized firms implement a more sophisticated management information system. These results are in line with the technology-structure relationships found by Raymond, Pare, and Bergeron (1993). Also, more proactive and future-oriented retail firms implement a more extensive applications portfolio. This confirms the mutually determining impact of strategy and information systems in the context of SMEs (Blili & Raymond, 1993). Table 4 Regression Analyses on the Four Technology Variables Standardized betas(a) Related Articles Let Small Businesses Lead the Telecom Revolution Companies Lighting Candles in the Economic Darkness How the Digital Revolution (and Uncle Sam) Can Revive the Economy

In recent years, small manufacturing enterprises have been implementing new computerized technologies at an every-increasing rate (Acs & Audretsch, 1990; Julien, Estime, & Drilhon, 1993), and the trend is being accelerated by international competition, in particular by the opening up of national boundaries. However, the same urgency does not seem to exist in the commercial and service sectors, especially among independent retailers (Robertson & Gatignon, 1986; Treadgold, 1989; Julien & Thibodeau, 1991). Certainly, competitive pressure is relatively less intense in these sectors, or at the very least, certain small businesses have an advantage in terms of location, knowledge of their clients and their merchandise, or profit from niches created by market segmentation (for example, gourmet food stores or high fashion boutiques), They are thus under less pressure to become computerized; they may also be less likely to do so and may not believe new information technologies to be very useful because, for example in merchandise analysis, they know their customers and merchandise intimately.

Many small retailers, though, whose ability to differentiate themselves from their competitors is limited, are feeling increasing competitive pressures, especially with the growth of chains and the advent of warehouse stores. A majority of these have neither the experience nor the financial resources required to plan, implement, and operate a computer-based information system (Raymond & Lorrain, 1992). But others have begun to systematically install new point-of-sales (POS) terminals or link up to wholesalers by tele-computing or electronic data interchange (EDI) (Sweeney, Putnam, Brooks, Hyde, Lee, Rubel, Rossiter, Armstrong, & Koenigsberg, 1990; Blili & Raymond, 1993).

There may be many reasons for these behavioral differences, even among firms in the same industry facing the same type of market. In the manufacturing sector, macroeconomic factors such as the rate of economic growth and the competitive structure of the industry can be determinant (Bouchut, Cochet, & Jacot, 1984; Julien & Thibodeau, 1991). Researchers have also shown that more "technology-consuming" firms are distinguished from others by: greater profitability, the differential cost of new equipment (Mansfield, 1971, 1975; Khan & Manopichetwattana, 1989); the management profile or the owner-manager's personal characteristics (Miller & Toulouse, 1986); organizational complexity, centralization and formalization (Cohn & Turyn, 1980, 1984; Meyer & Goes,

1987; Collins, Hage, & Hull, 1988); strategy type (Garsombke & Garsombke, 1989); and the quality of technological information obtained together with the capacity to process it (Blili & Raymond, 1993; Julien, Carriere, & Hebert, 1988; Gatignon & Robertson, 1989).

However, very little research has been done on the reasons for new technology adoption in the service and retail sectors. To our knowledge, only Treadgold (1989) and HogarthScott and Parkinson (1990) have examined the question. Treadgold showed that differences in new technology adoption could be explained by the type of external organization (for example, between independent businesses and businesses belonging to groups) and the industry sector. Hogarth-Scott and Parkinson, for their part, showed that the limited use of EDI technologies among independent businesses stemmed from their fear of losing their independence. Miller, Glick, Yau-De, & Huber, (1991) have also indicated that organizations in the retail and service sectors have narrower ranges than in manufacturing on both technology and structure variables, and thus tend to exhibit weaker technology-structure relationships.

The aim of this research, using empirical evidence, was to identify organizational, structural, and strategic factors underlying the level of penetration of various management, service, and information technologies among small retailers, including both independent businesses and those affiliated to trade banners or buying combines. Potential factors were identified from the previously cited literature, and in particular from Julien, Carriere, and Hebert's (1988) study done in the manufacturing sector.

RESEARCH MODEL

The research model is presented in Figure 1. A first set of factors, thought to influence new technology adoption in small retail firms, describes the structural sophistication of the firm in terms of centralization and complexity. In the organization theory literature, structure has often been characterized along these two dimensions or composite factors (Ford & Slocum, 1977; Miller, 1987). This includes prior research on the technology-

structure relationship (Miller et al., 1991). Decentralizing and complexifying structure implies more elaborate communication, coordination, and control mechanisms; this in turn requires an infrastructure that can be better enabled through information technology (Huber, 1984; Leifer, 1988). Hence, more decentralized management and complex administrative structures should lead to greater adoption of information technologies by retailers (Cohn & Turyn, 1984; Miller & Toulouse, 1986; Raymond, Pare, & Bergeron, 1993).

The second set of adoption factors is strategic in nature, identifying the level of assertiveness, rationality, and interaction in business decision processes. These three factors have emerged in the strategy literature as fundamental dimensions or derivative constructs of the strategy concept (Miller, 1987; Venkatraman, 1989). The first dimension refers to the proactiveness of decisions and risk taking. The second one concerns the planning and formulation of strategies. The third one refers to the political/bargaining processes that bear upon decisions. Information technology has become one of the key elements in the definition and realization of strategic objectives (Vitale, Ives, & Beath, 1986). In an increasingly complex environment, organizations must "align" their use of information technology with the implementation of their strategic decisions (Chan & Huff, 1993). Thus, when they are more proactive, more future/planning-oriented, and when more executives interact in strategy making, retailers would be more apt to implement computer-based information systems resulting from or in support of their strategy (Shrivastava & Grant, 1985; Schroeder, Gopinath, & Congden, 1989).

The third set of factors thought to influence new technology adoption in small retail firms are organizational, including size, sector, and status (independent or affiliated). Organization theorists have found the first two contingency variables to consistently play an important role in structure-technology-strategy relationships (Ford & Slocum, 1977; Miller et al., 1991). One expects larger firms to have adopted more sophisticated technologies (Dewar & Dutton, 1986; Raymond, Pare, & Bergeron, 1993). The same can be said of firms in more information-intensive retail sectors, e.g. hardware as opposed to clothing (Kimberly & Evanisko, 1981). Firms who become linked to banners or buying

combines, as opposed to remaining independent, would also be greater users of information technology (Tornatsky & Klein, 1982). The greater technological sophistication obtained by retailers who cooperate among themselves would tend to reduce environmental uncertainty in terms of markets and competitors (Huber, 1984).

The seven factors of new technology adoption were chosen due to their fundamental nature as descriptors of structure, strategy, and organizational contingencies. These factors have also been identified as fundamental determinants of technology, both theoretically and empirically, and all have been used previously in the small business research context. Note that many of the organization theory and strategic management studies cited here point to the interdependence of strategy and structure, and to the contingent role of size and sector in this regard. However, given the focus and objectives of this study, expected interrelationships between structure, strategy, and organizational contingencies were not made explicit in the research model.

No distinction was made between management and production technologies as indicators of technological levels because in retailing, unlike manufacturing (Raymond & Pare, 1992), it is difficult to differentiate the two. In addition, the actual level of independence or involvement in a group was not measured, even though some retailing groups (buying combines, trade banners, coops, franchises) exercise more control over their members than others. However, franchisees were excluded from the study because, in contrast to the other groups, their independence is very restricted (Castrogiovanni, Bennett, & Combs, 1993). In the Canadian province of Quebec, where the survey took place, independent retailers and members of buying groups or coops are responsible for more than 72% of all retail sales, at the expense of chains and megastores, whereas in the rest of Canada and in the U.S.A., their share is much smaller.

RESEARCH METHODOLOGY

The survey was carried out by collecting data from a sample of small retailers in the food, hardware, and ladies' garment sectors. Their names were obtained from the central business data bank of Quebec's commission on health and safety in the workplace (CSST). The survey was performed in two stages. First, 1,200 letters were sent out to the addresses provided by the CSST, requesting an interview with the owner (4.8% of these were returned due to improper addresses or out-of-business situations). Among the 232 (19.3%) who were willing to cooperate, a total of 79 retailers were selected for semistructured interviews in the field, with the help of a questionnaire. Using CSST data for the entire 1,200-firm population, the 79 firms were chosen on a stratified sampling basis, to be statistically representative of this population in terms of size and regional distribution for each sector. This was verified through chi-square and t tests. The questionnaire included 56 closed questions and six open questions, divided into four sections: the firm's demographics (size, status, etc.), structure, computer hardware and software, and strategy. A pre-test was done using three firms from each of the three sectors. Interviewing was deemed preferable to mailing the questionnaire, due to the technical or open nature of many questions, and to acquire more in-depth information.

Two main types of technology were distinguished in the survey: hardware for business computing (computers), point-of-sales computing (computerized cash registers, whether or not linked to a central processing unit), and tele-computing (electronic links with outside firms, usually wholesalers); and software, assessed by the nature of the applications portfolio. The measures of hardware and software technology adoption, i.e. the dependent variables, were adapted from previously developed instruments by Julien, Hebert, and Carriere (1988) and by Raymond and Lorrain (1992). Two main dimensions of structure--centralization and complexity--were assessed by measuring the managerial hierarchy (number of managers excluding the owners(s)/all personnel) and the administrative apparatus (clerical workers/all personnel), both measures previously validated and used in a small business context (Paulson & Stump, 1979). Complexity was also ascertained by the presence of a management committee (Julien, Hebert & Carriere, 1988). The same was done with the three principal components of strategy, namely assertiveness, rationality and interaction. Miller's (1987) instrument was used to measure strategic orientation (or proactiveness: reactive-proactive) for the first dimension,

organizational time-frame (or futurity: short-long term) for the second one, and strategic decision making (individual-consensual) for the third one.

Table 1 shows the descriptive statistics of the research variables. Thirty-six percent of firms operated in the food sector (grocery stores, butchers, etc.), 40% in the hardware sector and 24% in the garment sector. They employed an average of 14.5 people (excluding owners), including 2.5 office staff. In all, slightly over 50% of the businesses were affiliated to a trade banner or buying combine, and 46% had a management committee. Strategically speaking, they were fairly proactive (4.0 on a scale of 1 to 7), had a medium time-frame (2.7 on a scale of 1 to 5), and shared the decision-making process to a moderate degree (4.0 on a scale of 1 to 7).

ADOPTION OF NEW TECHNOLOGIES

The overall survey results show that 63 of the 79 firms questioned (79.7%) used at least one computer-based technology (i.e. electronic cash registers), a higher number TABULAR DATA OMITTED than the 71% forecasted by Collard (1989) for 1993 in the United States. The percentage is higher in the food sector (92.8%) than in the hardware (84.4%) and garment (57.9%) sectors. In all, 36 firms (46.2%) used only stand-alone electronic cash registers, 11 (14.0%) used cash registers linked to a central register, and 16 (20.5%) had a cash register system linked to a computer. Eight firms (10.0%) had only a fax or telex, 31 (39.4%) maintained outside links by modem for batch data transfers or financial transactions (with banks), and 21 (26.9%) maintained systematic outside links through computers or terminals (EDI).

The number of business computing applications varied from zero to four. Eight firms (10.1%) indicated using four applications, 16 (20.2%) used three, ten (12.7%) used two, and four (5.1%) used only one application. In all, 41 firms (51.9%) did not use any form of business computing. Overall, the type of technology least used by sample firms turned out to be business computing and related applications. The other two technologies were

more widespread, as only 15 firms (19.0%) did not have an electronic cash register (POS computing) and 18 (22.8%) did not have an electronic link with an outside organization (tele-computing). Table 2 summarizes mean adoption rates for each technology (using 5point sophistication scales).

DETERMINANT FACTORS OF NEW TECHNOLOGY ADOPTION

Shown in Table 3 is the intercorrelation matrix of the independent variables. Given its highly significant relationship with five other factors, size was removed from further data analysis to reduce problems due to multicollinearity (Huang, 1970). The same was done with the decision-making variable, as it is strongly correlated with the other two strategy variables. Note that after removal of these two variables, two intercorrelations TABULAR DATA OMITTED greater than 0.3 remain, that is, firms in the clothing sector and firms with a larger bureaucracy (administrative apparatus) are less likely to have an affiliated status (r = -0.52, r = -0.35).

As hypothesized, differences in levels of hardware and software technology adoption by retailers are due to a number of organizational, structural, and strategic factors.

TABULAR DATA OMITTED

Shown in Table 4 are the results of stepwise regression analyses on the four technology variables, revealing the determinant factors in each case. Retailers who adopt business computing are less likely to be in the food sector and tend to be affiliated to a buying combine or trade banner. They are more decentralized, i.e. show a higher ratio of managers (managerial hierarchy), and are more likely to have a management committee. Strategic factors do not seem to come into play here.

The adoption of POS computing is determined by a different set of factors. Clothing merchants are less apt to employ this technology, as are firms with a larger ratio of clerical personnel (administrative apparatus). In addition, firms with POS technology have a longer organization time-frame. The use of tele-computing is mostly determined by the retailer's status as member of a combine or banner, as expected. Firms who have implemented EDI are also more future-oriented than others, confirming Blili and Raymond's (1993) conjecture.

Not surprisingly, hardware stores, with their greater information needs (e.g. for inventory management), are the ones with the more extensive applications portfolio (software), while more decentralized firms implement a more sophisticated management information system. These results are in line with the technology-structure relationships found by Raymond, Pare, and Bergeron (1993). Also, more proactive and future-oriented retail firms implement a more extensive applications portfolio. This confirms the mutually determining impact of strategy and information systems in the context of SMEs (Blili & Raymond, 1993).

Table 4

Regression Analyses on the Four Technology Variables

Standardized betas(a)

HARDWARE

SOFTWARE

ENTERPRISE TYPOLOGY AND NEW TECHNOLOGY ADOPTION To typify the sampled firms in terms of overall technology adoption, a hierarchical cluster analysis on the four technology (dependent) variables was used to divide the sampled firms into three groups: 45 firms using very few or no hardware and software technologies (type 1: LOW TECHNOLOGY); 18 favoring technology for administrative

and managerial purposes (type 2: MANAGEMENT TECHNOLOGY); and 16 using technologies to enhance organizational value and performance (type 3: VALUE TECHNOLOGY). Business computing is used equally by the firms in types 2 and 3; these two groups also exhibit the same level of sophistication in their applications portfolio. However, POS and tele-computing are used significantly more by type 3 than type 2 retailers. Type 1 firms use some POS and tele-computing but almost no business computing or applications. Table 5 presents a breakdown of the adoption factors (independent variables) for the TABULAR DATA OMITTED three types. Type 3 merchants (those seeking value) have the greater size, operate more in the hardware sector, and are generally affiliated. Management is often the responsibility of more than one person, but is less bureaucratic than in the other two types. More than two-thirds of businesses in type 3 have a management committee, and most tend to have more proactive and long-term strategies. The strategic decision-making process is usually shared. Type 2 firms (those favoring technological management) are evenly spread over the three retail sectors, but are more bureaucratic than type 3 firms. Their strategies are as proactive and the decision-making process is shared to a similar degree, but their timeframe tends to be shorter. Type 1 businesses (those making little or no use of technologies) have the fewest employees and are least likely to be affiliated to trade banners or buying combines. They operate mainly in the food sector. Management is generally the responsibility of one person, but these organizations are more bureaucratic than the other two types, and little use is made of management committees. They tend to be reactive, have a shorter time-frame, and the decision-making process is rarely shared. Overall, the more value- or performance-oriented the business, the more it will adopt many different technologies. In contrast, small retailers favoring technological management will favor business computing and implement a larger number of applications. The remaining majority (type 1) will opt mainly for POS and telecomputing (EDI). discriminant analysis was performed to establish the importance of each factor in determining a firm's being categorized as one of the three types. The results are presented in Table 6. The first variable to enter is the firm's managerial hierarchy (decentralization), followed by the firm's being in a less information-intensive sector (clothing or food).

Differences between types 1, 2, and 3 can also be explained by the firm's status, by the presence or not of a management committee, and by the administrative apparatus (structural complexity). The retailer's strategic orientation and time-frame are the last factors to enter in the analysis. These results are in line with the preceding ones and confirm the overall validity of the research model as eight variables display significant explanatory power. Table 6 Discriminant Analysis of the Three Types of Firms Type 1: LOW TECH. TECH. Variable Step 1 2 3 4 entered Man. hierarchy Clothing (sector) Food (sector) Status 3.8 F to enter 6.0 3.4 2.5 Wilks' lambda .856 .781 .728 p .004 .002 .001 Min. D(a) 0.2 0.8 1.0 D.f. coef.(b) .442 -.397 -.542 Type 2: MANAGEMENT TECH. Type 3: VALUE

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Let Small Businesses Lead the Telecom Revolution Companies Lighting Candles in the Economic Darkness How the Digital Revolution (and Uncle Sam) Can Revive the Economy

In recent years, small manufacturing enterprises have been implementing new computerized technologies at an every-increasing rate (Acs & Audretsch, 1990; Julien, Estime, & Drilhon, 1993), and the trend is being accelerated by international competition,

in particular by the opening up of national boundaries. However, the same urgency does not seem to exist in the commercial and service sectors, especially among independent retailers (Robertson & Gatignon, 1986; Treadgold, 1989; Julien & Thibodeau, 1991). Certainly, competitive pressure is relatively less intense in these sectors, or at the very least, certain small businesses have an advantage in terms of location, knowledge of their clients and their merchandise, or profit from niches created by market segmentation (for example, gourmet food stores or high fashion boutiques), They are thus under less pressure to become computerized; they may also be less likely to do so and may not believe new information technologies to be very useful because, for example in merchandise analysis, they know their customers and merchandise intimately. Many small retailers, though, whose ability to differentiate themselves from their competitors is limited, are feeling increasing competitive pressures, especially with the growth of chains and the advent of warehouse stores. A majority of these have neither the experience nor the financial resources required to plan, implement, and operate a computer-based information system (Raymond & Lorrain, 1992). But others have begun to systematically install new point-of-sales (POS) terminals or link up to wholesalers by tele-computing or electronic data interchange (EDI) (Sweeney, Putnam, Brooks, Hyde, Lee, Rubel, Rossiter, Armstrong, & Koenigsberg, 1990; Blili & Raymond, 1993). There may be many reasons for these behavioral differences, even among firms in the same industry facing the same type of market. In the manufacturing sector, macroeconomic factors such as the rate of economic growth and the competitive structure of the industry can be determinant (Bouchut, Cochet, & Jacot, 1984; Julien & Thibodeau, 1991). Researchers have also shown that more "technology-consuming" firms are distinguished from others by: greater profitability, the differential cost of new equipment (Mansfield, 1971, 1975; Khan & Manopichetwattana, 1989); the management profile or the owner-manager's personal characteristics (Miller & Toulouse, 1986); organizational complexity, centralization and formalization (Cohn & Turyn, 1980, 1984; Meyer & Goes, 1987; Collins, Hage, & Hull, 1988); strategy type (Garsombke & Garsombke, 1989); and the quality of technological information obtained together with the capacity to process it (Blili & Raymond, 1993; Julien, Carriere, & Hebert, 1988; Gatignon & Robertson, 1989). However, very little research has been done on the reasons for new technology adoption in the service and retail sectors. To our knowledge, only Treadgold (1989) and Hogarth-

Scott and Parkinson (1990) have examined the question. Treadgold showed that differences in new technology adoption could be explained by the type of external organization (for example, between independent businesses and businesses belonging to groups) and the industry sector. Hogarth-Scott and Parkinson, for their part, showed that the limited use of EDI technologies among independent businesses stemmed from their fear of losing their independence. Miller, Glick, Yau-De, & Huber, (1991) have also indicated that organizations in the retail and service sectors have narrower ranges than in manufacturing on both technology and structure variables, and thus tend to exhibit weaker technology-structure relationships. The aim of this research, using empirical evidence, was to identify organizational, structural, and strategic factors underlying the level of penetration of various management, service, and information technologies among small retailers, including both independent businesses and those affiliated to trade banners or buying combines. Potential factors were identified from the previously cited literature, and in particular from Julien, Carriere, and Hebert's (1988) study done in the manufacturing sector. RESEARCH MODEL The research model is presented in Figure 1. A first set of factors, thought to influence new technology adoption in small retail firms, describes the structural sophistication of the firm in terms of centralization and complexity. In the organization theory literature, structure has often been characterized along these two dimensions or composite factors (Ford & Slocum, 1977; Miller, 1987). This includes prior research on the technologystructure relationship (Miller et al., 1991). Decentralizing and complexifying structure implies more elaborate communication, coordination, and control mechanisms; this in turn requires an infrastructure that can be better enabled through information technology (Huber, 1984; Leifer, 1988). Hence, more decentralized management and complex administrative structures should lead to greater adoption of information technologies by retailers (Cohn & Turyn, 1984; Miller & Toulouse, 1986; Raymond, Pare, & Bergeron, 1993). The second set of adoption factors is strategic in nature, identifying the level of assertiveness, rationality, and interaction in business decision processes. These three factors have emerged in the strategy literature as fundamental dimensions or derivative constructs of the strategy concept (Miller, 1987; Venkatraman, 1989). The first

dimension refers to the proactiveness of decisions and risk taking. The second one concerns the planning and formulation of strategies. The third one refers to the political/bargaining processes that bear upon decisions. Information technology has become one of the key elements in the definition and realization of strategic objectives (Vitale, Ives, & Beath, 1986). In an increasingly complex environment, organizations must "align" their use of information technology with the implementation of their strategic decisions (Chan & Huff, 1993). Thus, when they are more proactive, more future/planning-oriented, and when more executives interact in strategy making, retailers would be more apt to implement computer-based information systems resulting from or in support of their strategy (Shrivastava & Grant, 1985; Schroeder, Gopinath, & Congden, 1989). The third set of factors thought to influence new technology adoption in small retail firms are organizational, including size, sector, and status (independent or affiliated). Organization theorists have found the first two contingency variables to consistently play an important role in structure-technology-strategy relationships (Ford & Slocum, 1977; Miller et al., 1991). One expects larger firms to have adopted more sophisticated technologies (Dewar & Dutton, 1986; Raymond, Pare, & Bergeron, 1993). The same can be said of firms in more information-intensive retail sectors, e.g. hardware as opposed to clothing (Kimberly & Evanisko, 1981). Firms who become linked to banners or buying combines, as opposed to remaining independent, would also be greater users of information technology (Tornatsky & Klein, 1982). The greater technological sophistication obtained by retailers who cooperate among themselves would tend to reduce environmental uncertainty in terms of markets and competitors (Huber, 1984). The seven factors of new technology adoption were chosen due to their fundamental nature as descriptors of structure, strategy, and organizational contingencies. These factors have also been identified as fundamental determinants of technology, both theoretically and empirically, and all have been used previously in the small business research context. Note that many of the organization theory and strategic management studies cited here point to the interdependence of strategy and structure, and to the contingent role of size and sector in this regard. However, given the focus and objectives of this study, expected interrelationships between structure, strategy, and organizational contingencies were not made explicit in the research model.

No distinction was made between management and production technologies as indicators of technological levels because in retailing, unlike manufacturing (Raymond & Pare, 1992), it is difficult to differentiate the two. In addition, the actual level of independence or involvement in a group was not measured, even though some retailing groups (buying combines, trade banners, coops, franchises) exercise more control over their members than others. However, franchisees were excluded from the study because, in contrast to the other groups, their independence is very restricted (Castrogiovanni, Bennett, & Combs, 1993). In the Canadian province of Quebec, where the survey took place, independent retailers and members of buying groups or coops are responsible for more than 72% of all retail sales, at the expense of chains and megastores, whereas in the rest of Canada and in the U.S.A., their share is much smaller. RESEARCH METHODOLOGY The survey was carried out by collecting data from a sample of small retailers in the food, hardware, and ladies' garment sectors. Their names were obtained from the central business data bank of Quebec's commission on health and safety in the workplace (CSST). The survey was performed in two stages. First, 1,200 letters were sent out to the addresses provided by the CSST, requesting an interview with the owner (4.8% of these were returned due to improper addresses or out-of-business situations). Among the 232 (19.3%) who were willing to cooperate, a total of 79 retailers were selected for semistructured interviews in the field, with the help of a questionnaire. Using CSST data for the entire 1,200-firm population, the 79 firms were chosen on a stratified sampling basis, to be statistically representative of this population in terms of size and regional distribution for each sector. This was verified through chi-square and t tests. The questionnaire included 56 closed questions and six open questions, divided into four sections: the firm's demographics (size, status, etc.), structure, computer hardware and software, and strategy. A pre-test was done using three firms from each of the three sectors. Interviewing was deemed preferable to mailing the questionnaire, due to the technical or open nature of many questions, and to acquire more in-depth information. Two main types of technology were distinguished in the survey: hardware for business computing (computers), point-of-sales computing (computerized cash registers, whether or not linked to a central processing unit), and tele-computing (electronic links with outside firms, usually wholesalers); and software, assessed by the nature of the

applications portfolio. The measures of hardware and software technology adoption, i.e. the dependent variables, were adapted from previously developed instruments by Julien, Hebert, and Carriere (1988) and by Raymond and Lorrain (1992). Two main dimensions of structure--centralization and complexity--were assessed by measuring the managerial hierarchy (number of managers excluding the owners(s)/all personnel) and the administrative apparatus (clerical workers/all personnel), both measures previously validated and used in a small business context (Paulson & Stump, 1979). Complexity was also ascertained by the presence of a management committee (Julien, Hebert & Carriere, 1988). The same was done with the three principal components of strategy, namely assertiveness, rationality and interaction. Miller's (1987) instrument was used to measure strategic orientation (or proactiveness: reactive-proactive) for the first dimension, organizational time-frame (or futurity: short-long term) for the second one, and strategic decision making (individual-consensual) for the third one. Table 1 shows the descriptive statistics of the research variables. Thirty-six percent of firms operated in the food sector (grocery stores, butchers, etc.), 40% in the hardware sector and 24% in the garment sector. They employed an average of 14.5 people (excluding owners), including 2.5 office staff. In all, slightly over 50% of the businesses were affiliated to a trade banner or buying combine, and 46% had a management committee. Strategically speaking, they were fairly proactive (4.0 on a scale of 1 to 7), had a medium time-frame (2.7 on a scale of 1 to 5), and shared the decision-making process to a moderate degree (4.0 on a scale of 1 to 7). ADOPTION OF NEW TECHNOLOGIES The overall survey results show that 63 of the 79 firms questioned (79.7%) used at least one computer-based technology (i.e. electronic cash registers), a higher number TABULAR DATA OMITTED than the 71% forecasted by Collard (1989) for 1993 in the United States. The percentage is higher in the food sector (92.8%) than in the hardware (84.4%) and garment (57.9%) sectors. In all, 36 firms (46.2%) used only stand-alone electronic cash registers, 11 (14.0%) used cash registers linked to a central register, and 16 (20.5%) had a cash register system linked to a computer. Eight firms (10.0%) had only a fax or telex, 31 (39.4%) maintained outside links by modem for batch data transfers or financial transactions (with banks), and 21 (26.9%) maintained systematic outside links through computers or terminals (EDI).

The number of business computing applications varied from zero to four. Eight firms (10.1%) indicated using four applications, 16 (20.2%) used three, ten (12.7%) used two, and four (5.1%) used only one application. In all, 41 firms (51.9%) did not use any form of business computing. Overall, the type of technology least used by sample firms turned out to be business computing and related applications. The other two technologies were more widespread, as only 15 firms (19.0%) did not have an electronic cash register (POS computing) and 18 (22.8%) did not have an electronic link with an outside organization (tele-computing). Table 2 summarizes mean adoption rates for each technology (using 5point sophistication scales). DETERMINANT FACTORS OF NEW TECHNOLOGY ADOPTION Shown in Table 3 is the intercorrelation matrix of the independent variables. Given its highly significant relationship with five other factors, size was removed from further data analysis to reduce problems due to multicollinearity (Huang, 1970). The same was done with the decision-making variable, as it is strongly correlated with the other two strategy variables. Note that after removal of these two variables, two intercorrelations TABULAR DATA OMITTED greater than 0.3 remain, that is, firms in the clothing sector and firms with a larger bureaucracy (administrative apparatus) are less likely to have an affiliated status (r = -0.52, r = -0.35). As hypothesized, differences in levels of hardware and software technology adoption by retailers are due to a number of organizational, structural, and strategic factors. TABULAR DATA OMITTED Shown in Table 4 are the results of stepwise regression analyses on the four technology variables, revealing the determinant factors in each case. Retailers who adopt business computing are less likely to be in the food sector and tend to be affiliated to a buying combine or trade banner. They are more decentralized, i.e. show a higher ratio of managers (managerial hierarchy), and are more likely to have a management committee. Strategic factors do not seem to come into play here. The adoption of POS computing is determined by a different set of factors. Clothing merchants are less apt to employ this technology, as are firms with a larger ratio of clerical personnel (administrative apparatus). In addition, firms with POS technology have a longer organization time-frame. The use of tele-computing is mostly determined

by the retailer's status as member of a combine or banner, as expected. Firms who have implemented EDI are also more future-oriented than others, confirming Blili and Raymond's (1993) conjecture. Not surprisingly, hardware stores, with their greater information needs (e.g. for inventory management), are the ones with the more extensive applications portfolio (software), while more decentralized firms implement a more sophisticated management information system. These results are in line with the technology-structure relationships found by Raymond, Pare, and Bergeron (1993). Also, more proactive and future-oriented retail firms implement a more extensive applications portfolio. This confirms the mutually determining impact of strategy and information systems in the context of SMEs (Blili & Raymond, 1993). Table 4 Regression Analyses on the Four Technology Variables Standardized betas(a) HARDWARE Business Point-of-sales Application Variable computing portfolio computing SOFTWARE Telecomputing

ORGANIZATION Size (removed initially) Sector Food Hardware Clothing -.22 -----.32 ----.22 --

Status STRUCTURE Managerial hierarchy Administr. apparatus

.36

--

.42

--

.30 -.21

--.24 --

----

.28 -.23

Management committee STRATEGY Orientation Time-frame Decision-making (removed initially) R square F (p) 6.6 (.000) .27 ---

-.23

-.26

.24 .26

.27 8.8 (.000)

.31 15.7 (.000)

.42 10.0 (.000)

a For variables having entered in the stepwise regression. ENTERPRISE TYPOLOGY AND NEW TECHNOLOGY ADOPTION To typify the sampled firms in terms of overall technology adoption, a hierarchical cluster analysis on the four technology (dependent) variables was used to divide the sampled firms into three groups: 45 firms using very few or no hardware and software technologies (type 1: LOW TECHNOLOGY); 18 favoring technology for administrative and managerial purposes (type 2: MANAGEMENT TECHNOLOGY); and 16 using technologies to enhance organizational value and performance (type 3: VALUE TECHNOLOGY). Business computing is used equally by the firms in types 2 and 3; these two groups also exhibit the same level of sophistication in their applications portfolio. However, POS and tele-computing are used significantly more by type 3 than

type 2 retailers. Type 1 firms use some POS and tele-computing but almost no business computing or applications. Table 5 presents a breakdown of the adoption factors (independent variables) for the TABULAR DATA OMITTED three types. Type 3 merchants (those seeking value) have the greater size, operate more in the hardware sector, and are generally affiliated. Management is often the responsibility of more than one person, but is less bureaucratic than in the other two types. More than two-thirds of businesses in type 3 have a management committee, and most tend to have more proactive and long-term strategies. The strategic decision-making process is usually shared. Type 2 firms (those favoring technological management) are evenly spread over the three retail sectors, but are more bureaucratic than type 3 firms. Their strategies are as proactive and the decision-making process is shared to a similar degree, but their timeframe tends to be shorter. Type 1 businesses (those making little or no use of technologies) have the fewest employees and are least likely to be affiliated to trade banners or buying combines. They operate mainly in the food sector. Management is generally the responsibility of one person, but these organizations are more bureaucratic than the other two types, and little use is made of management committees. They tend to be reactive, have a shorter time-frame, and the decision-making process is rarely shared. Overall, the more value- or performance-oriented the business, the more it will adopt many different technologies. In contrast, small retailers favoring technological management will favor business computing and implement a larger number of applications. The remaining majority (type 1) will opt mainly for POS and telecomputing (EDI). A discriminant analysis was performed to establish the importance of each factor in determining a firm's being categorized as one of the three types. The results are presented in Table 6. The first variable to enter is the firm's managerial hierarchy (decentralization), followed by the firm's being in a less information-intensive sector (clothing or food). Differences between types 1, 2, and 3 can also be explained by the firm's status, by the presence or not of a management committee, and by the administrative apparatus (structural complexity). The retailer's strategic orientation and time-frame are the last factors to enter in the analysis. These results are in line with the preceding ones and

confirm the overall validity of the research model as eight variables display significant explanatory power. Table 6 Discriminant Analysis of the Three Types of Firms Type 1: LOW TECH. TECH. Variable Step 1 2 3 4 5 6 7 8 entered Man. hierarchy Clothing (sector) Food (sector) Status Man. committee Admin. apparatus Orientation Time-frame 2.1 1.0 3.8 F to enter 6.0 3.4 2.5 4.2 2.8 Wilks' lambda .856 .781 .728 .655 .582 .536 .504 .488 p .004 .002 .001 .000 .000 2.0 2.0 .000 1.2 1.3 1.6 Min. D(a) 0.2 0.8 1.0 D.f. coef.(b) .442 -.397 -.542 .492 .456 -.287 .339 .261 Type 2: MANAGEMENT TECH. Type 3: VALUE

.000

.000

a Mahalanobis D-squared distance between groups. b Standardized discriminant (primary) function coefficients eigenvalue = 0.75; canonical correlation = 0.654 (p = .000); % of cases correctly classified = 75.6%. Of particular significance is the early entry of both the clothing and food sector variables, as opposed to hardware which did not enter. The negative coefficients of the first two confirm sectorial differences within retailing regarding new technology adoption, which could be attributed to lesser information requirements as mentioned previously, or to different organizational cultures and managerial habits. Also significant is the presence of the status variable, indicating the importance of cooperation and networking to enhance the value of new technology for small retailers.

Conclusion

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