ICT Investments and Growth of Small and Medium Firms: A Study of Food Processing Industry in India

Small and medium enterprises (SMEs) cover a wide range of industries and play a major role in both developed and developing economies. They are considered as significant sources of entrepreneurship. Information and communication technology (ICT) is a gener al purpose technology that can help these firms in improving their operations, and thereby positively affecting their growth and competitiveness. However, there are hardly any empirical studies that have analyzed the effect of adoption of ICT on the perfor mance of SMEs. Hence, the objective of the present study is to examine the effect of ICT investments on the sales growth of SMEs from the food processing industry in India. Secondary data is collected from the Prowess database provided by Centre for Monitoring Indian Economy (CMIE) for the period of five years from 2010 to 2014. Panel data regression technique is used for the analysis. The result shows that ICT investments in the previous year has a favorable effect on the sales growth of SMEs. Other variab les like size of the firm and age of the firm are also statistically important in explaining sales growth of SMEs in the food processing industry.