Smes In Information Technology Investment Analysis

Tremendous technological progress of IT system and its diffusion into economy have played more and more important role in economic growth in countries. New economy productivity lead economic growth in the Information Age can be found. More firms still study how to use internet to make more profits, also more countries still learn how to use new information and communication technology into business based on the report of UNCTAD in 2001. If developing countries can't catch the chance, they should not enjoy the benefit from electronic business. However, economic impact of IT in developing countries has not been investigated very much in firms, especially in Small and Medium sized Enterprises. (SMEs)When we talk about how to reform traditional economy by using IT tool, we should clearly realize that reforming does not replacing. Although more and more demands will be produced as IT influence dilating fast, the basic needs for human living on would still being existed long period of time. They can only be solved and satisfied by traditional industry. Therefore, although we come into information economic society now, the traditional industry will still being the foundation of national economy.The article analyzes series of national policy and documents and investigated data, believed that the informatization problem of SMEs would be the key point to push national informatization going step further. At the present, the demand of informatization in SMEs has been running high. What we should do is to create an environment where SMEs can benefit from informatization. The article analyzes the present condition of national informatization, considered that informatization in SMEs in our nation is still in the initial phase.Although the basic informatization on core competitive ability has accomplished in Big and Super-big sized enterprises by government pushing on and enterprises putting into in more than ten years, the condition of mass SME's informatization is just in a beginning stage. They need practice experience and to be guided by out-strengths.The market competitive pressure and the superiority of earlier decision have impelled SMEs to accelerate their steps on IT investment. IT has become a main factor for firms living. In order to realize economic gains from IT investment, a firm must have a good incentive to improve its operational efficiency, and to introduce new business processes or models, which can be applied by using IT. So the informatization problem in SMEs now is not"will or not", but is"how to do". The author believes that to analyze IT investment in SMEs would be helpful to clear up their diffusion, and strengthen their confidence and determination in IT investment.There are few studies working on the impact of IT on firm's performance, especially on SMEs, although some papers are addressing the relationship between R&D and productivity. The paper is attempted to analyze the impact of IT on firm level productivity. The paper first thinks over macroscopic condition variables, especially the public policy, how to affect IT investment in SMEs based on government perspective. The paper deduced the"draw water benefit"in public investment affecting informatization investment, believed that the government can achieve the benefit through tax policy and credit policy, and the effect of tax policy is better than credit policy.Therefore, it is important to investigate the impact of economic reform as a necessary condition that Chinese firms can gain superior performance by IT investment. The article traduces the general situation and problems about IT investment in SMEs, and then explored how capital structure affects IT investment in SMEs. The author makes a concrete evidence model to analyze IT investment benefit, and then discussed the strategy management problems of IT investment. The author deems that we should hold a dynamic view on informatization investment strategy in SMEs.Enterprises are the cells of national economy. Informatization in enterprises is the foundation for national informatization. So the paper gave some policy proposes based on the above analysis at the end. In addition, the author discussed the problems what will do in future and give the future research agenda.