Tuesday, May 04, 2004

Information seeking for Small- and Medium-Sized Enterprises

I imagine that the information requirements for small businesses are profoundly different from those of large organizations. Unfortunately, it seems like many of the case studies we read are from organizations like Boeing or Microsoft. I’m sure that the information reality of small organization—less than 50 employees—is profoundly different from that of a behemoth. So what can we say about these small organizations?

The relevance of the practices of small organizations is particularly high due to their predominance in the economy. In Canada, for example, 94.7% of businesses have fewer than 50 employees (Key small business statistics, 2003). Of these small firms, there is a profound bulge in the size range from 5-19 employees particularly in the sectors of professional services, retail trade, and accommodation and food. The majority of these firms (68%) have Internet access.

The information requirements of these small organizations were recently assessed by Industry Canada (Compas Inc., 2001). While this study has a number of methodological limitations from an information science perspective [i.e., a strong “information-as-thing” bias (Buckland, 1991)], it is interesting to note that most small firms preferred “informal” sources of information such as clients (66%), suppliers (73%), and business managers and colleagues (56%). In line with low Internet use (55%), the managers of these firms expressed a clear preference for printed material (40%) to receive business correspondence.

In sum, we have an important sector of the economy that largely eschews formal information sources and relies on informal information. One explanation of this situation could be “cognitive authority”. Due to the costs of acquiring and vetting information, managers have to rely on information from others. As noted by Wilson, “All I know of the world beyond the narrow range of my own personal experience is what others have told me. It is all hearsay. But I do not count all hearsay as equally reliable.” (1983, pg. 13) It this case, it seems obvious that the managers of SMEs count the hearsay of their colleagues, suppliers, and clients as more reliable than other information sources including formal sources such as government agencies.

The IT buying behaviour of small firms supports this model. A Forrester research report (Child, 2003), for example, demonstrated that SMEs rely largely on word of mouth to evaluate vendors (78%) while other concerns such as ROI models (58%), prototypes (53%), or case studies (48%) were less important.

In moving from the Industry Canada needs and uses study of SMEs to the discussion of cognitive authority, we are beginning to speculate about the internal processes of firms. It should be noted that a number of studies have been conducted related to the information practices of professionals potentially working in a small business environment (e.g., engineers and lawyers). I am more interested, however, in the particular affordances of working within a small firm. A small firm, for example, has particular attributes that are distinct from larger organizations i.e., they are probably contained in a single physical setting, the communication chains are necessarily short, and each individual probably has contact with external actants like clients and suppliers. Given Coase’s concept of transaction costs, perhaps the small firm is in constant danger of devolving from an organization to a loosely associated market of individuals. Indeed, Industry Canada’s information needs document reveals that finding and maintaining the appropriate human resources is a key concern of many small firms. As Brown and Duguid claim: “These are the costs of using the marketplace, of searching, evaluating, contracting, and enforcing. When it is cheaper to do these as an organization than as an individual, organizations will form. Conversely, as transaction costs fall, this glue dissolves and firms and organizations break apart... if transaction costs become low enough, there will be no formal organizations, but only individuals in market relations.” (2000, pg. 23)

So, if there is a loose structure of individuals within the small firm that depends largely on informal information and hearsay, what concepts can we bring to the study of SMEs? Perhaps the first concept [because a paper is sitting on the top of the pile in my office] is the notion of actor networks. With respect to SMEs, the network is quite loose. This looseness can be the result of power roles or even the necessarily dynamic nature of many small organizations; the interactions between actants—human or otherwise—are messy but the messiness is contained within the tacit knowledge of the firm. Basically, there’s a whole lot of bricolage happening as it has to due to the nature of the organization. Since the physical space of the firm is small, there is little need to “act-at-distance” (Kaghan & Bowker, 2001) and therefore notions such as “black boxing” are lax or possibly non-existence. Perhaps this notion explains why small firms are much keener on demonstrable ROI and demos than large firms. As noted by Ciborra (2002): “The power of bricolage, improvisation, and hacking is that these activities are highly situated; they exploit, in full, the local context and resources at hand, while often pre-planned ways of operating appear to be derooted, and less effective because they do not fit the contingencies of the moment.” (pg. 50)

How does this all factor into the notion of cognitive authority? One idea is that information technologies impose a type of structure on interactions within the organization. Bowker and Star (1999) have made this argument for classification and organizational structures while Lawrence Lessig (1999) has made similar statements about the role of programming code. This structure so inhibits or intimidates the organizations that they have to look elsewhere. Or perhaps, the transaction costs involved with interpreting this information are so high that they look to whom they know. Hence the role of the information network. As Wilson (1983) notes: “As the old boy network, it has a bad name, but as the principle that one can trust those that are trusted by those one trusts, it is a central and ineradicable feature of social life. We cling to this rule to find our way through the confusion of life.” (pg. 23)

If individuals are using informal information sources—regardless of why—we have to consider how they’re communicating. Social Network Analysis obviously provides a valuable framework for exploring this concept. Based on a review article by Carol Haythorthwaite (1996), some important concepts include relationships, network types, and network principles. Relationships between actors include the content, direction, and tie strength of the connection. This aspect of social networks is quite relevant given the context of supplier and customer relationships that SMEs revealed as being so important. Some of the network principles introduced by Haythornthwaite include cohesion, structural equivalence, prominence, range, and brokerage. Cohesion involves “grouping actors according to strong common relationships with each other” while structural equivalence groups “actors according to similarity in relationships with others.” These two principles may be pertinent to issues such as trade organizations or buying circles. Prominence indicates who is “in charge” thereby introducing a very interesting discussion of power relationships within the social network that could be very pertinent to customer/client relationships. A paper by Fox (2000) that introduces Foucault’s concept of power relations to actor networks and communities of practice may be particularly relevant in this context. Range is a measure of the extent of a network while brokerage refers to “bridging connections to other networks.” In these two concepts we see another reason why SMEs depend on informal information sources: they provide a means of extending range and brokering across networks. Perhaps the information seeking has a performative role related to business outcomes.

Two other concepts that seem related to this discussion of SMEs are Collaboratories and Communities of Practice. While collaboratories—virtual infrastructure for supporting distributed academic work—may seem nothing like an SME, we can learn some lessons in why they don’t necessarily work. Collaboratories have met limited success due to issues like the lack of face-to-face communication opportunities and rigid communication networks (Finholt, 2002). Again, we see this notion of rigidity and bricolage becoming an issue.

The final concept is communities of practice. I’ve only briefly thought of this concept although a recent review article by Davenport and Hall (2002) provides some insight that may be relevant to SMEs. According to the authors, sharing environments should support: 1- situated learning, 2- situated action, 3- distributed cognition, and 4- shared discourse. In general, knowledge sharing infrastructures must include: 1- technologies for communication and representation, 2- “boundary objects”, 3- “social infrastructure”, and 4- “discursive infrastructure.” For online communities--including telework arrangements--they provide a checklist of features: accelerated apprenticeship, micro-level situated action, boundary objects, social infrastructures, track records, and brokers. Of course, I’m not sure how to integrate all of this into the study of SMEs. Perhaps later.

References

Bowker, G. C., & Star, S. L. (1999). Sorting Things Out: Classification and Its Consequences. Cambridge, MA: MIT Press.
Brown, J. S., & Duguid, P. (2000). The social life of information. Boston, MA: Harvard Business School Press.
Buckland, M. K. (1991). Information as thing. Journal of the American Society for Information Science, 42(5), 351-360.
Child, M. (2003). How SMBs govern IT (No. 16874). Cambridge, MA: Forrester Research Inc.
Ciborra, C. (2002). The labyrinths of Information : challenging the wisdom of systems. Oxford ; New York, NY: Oxford University Press.
Compas Inc. (2001). Small business information needs assessment survey. Ottawa, ON: Industry Canada.
Davenport, E., & Hall, H. (2002). Organizational knowledge and communities of practice. Annual Review of Information Science and Technology, 36, 171-227.
Finholt, T. A. (2002). Collaboratories. Annual Review of Information Science and Technology, 36, 73-107.
Fox, S. (2000). Communities of practice, Foucault and actor-network theory. Journal of Management Studies, 37(6), 853-867.
Haythornthwaite, C. (1996). Social network analysis: an approach and technique for the study of information exchange. Library & Information Science Research, 18, 323-342.
Kaghan, W. N., & Bowker, G. C. (2001). Out of machine age?: complexity, sociotechnical systems and actor network theory. Journal of Engineering and Technology Management, 18(3-4), 253-269.
Key small business statistics. (2003). Ottawa, ON: Industry Canada.
Lessig, L. (1999). Code and other laws of cyberspace. New York: Basic Books.
Wilson, P. (1983). Second-hand knowledge : an inquiry into cognitive authority. Westport, Conn.: Greenwood Press.

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