Information Technology Capabilities and Organisational Performance of Small and Medium Enterprises in Uganda
TL;DR
It is concluded that IT capabilities significantly enhance organisational performance among SMEs by improving operational efficiency, customer satisfaction, and productivity.
Abstract
The increasing integration of information technology (IT) into business operations has transformed organisational processes and enhanced competitiveness globally. However, many Small and Medium Enterprises (SMEs) in developing economies continue to experience low adoption of IT capabilities, which may hinder organisational performance. This study examined the relationship between IT capabilities and organisational performance among SMEs in Mbarara City and Bushenyi District, Uganda. The study adopted a cross-sectional quantitative research design and collected data from 364 SMEs using structured questionnaires. Descriptive statistics, Pearson correlation analysis, hierarchical regression analysis, and Structural Equation Modelling (SEM) were used for data analysis. The findings revealed a significant positive relationship between IT capabilities and organisational performance (r = 0.473, p < 0.01). Regression results showed that IT capabilities significantly predict organisational performance (β = 0.307, t = 13.083, p < 0.001), contributing 23.2% additional explanatory power to organisational performance (ΔR² = 0.232). The measurement model demonstrated acceptable goodness-of-fit indices (CFI = 0.968; TLI = 0.930; RMSEA = 0.051), confirming construct validity. The study concludes that IT capabilities significantly enhance organisational performance among SMEs by improving operational efficiency, customer satisfaction, and productivity. The study recommends increased investment in digital infrastructure and ICT adoption among SMEs to improve competitiveness and sustainability.