2 Theoretical framework
2.5 Information and communications technology
Developments in ICT have been welcomed as an opportunity for LRRs to overcome their main disadvantages – peripherality and remoteness (Grimes 2000). Cornford et al.
(1996) refer to the possibility of ICT releasing LRRs from the “tyranny of geography”
as, previously, literature had indicated that distance and remoteness would no longer be an issue. However, a contrary view suggests that ICT developments could be to the detriment of LRR development. They could help to further concentrate economic activity in the core regions, and thus intensify the control and domination of these core regions over LRRs (Cornford et al. 1996).
In the context of the SUPPLIERS study, it was important to see ICT from both sides of the ‘digital divide’. Miles and Thomas (1990), in considering a typology of ICT, arrive at three general classifi cations:
• Informational – ICT which would provide information (mostly as remote accessible databases),
• Communication – ICT used specifi cally for interacting with other participants, for example, voice mail or email, and
• Transactional services – this category included the more advanced services such as EDI (electronic data interchange), remote banking, and remote reservations (e.g.
the tourism industry).
The SUPPLIERS study recognised all types of ICT and considered their use, recognising that the technology is not always very complex. Often, the more simplistic approaches favour SME operations within LRRs.
The review also considered ICT adoption, the role of ICT in supply chain operation and ICT in LRRs. The main review fi ndings for each are summarised below.
2.5.1 ICT adoption
Adoption of ICT by members of a supply chain may be directed by forces or specifi c enterprises internal to the chain (usually the retailers), or by forces external to the chain (particularly the consumer). Adoption of ICT may also be strategic or operational and thus serve different market conduct needs. A range of factors determines adoption of ICT.
These are classifi ed as follows.
• Supply factors: The supply of ICT depends greatly on the telecommunications infra-structure available for the dispersal of the technologies. Infrainfra-structure development typically happens fi rst in the core regions, due to the high intensity of demand and the potentially high level of use (Cornford et al. 1996).
• Business specifi c factors: These refer mainly to the fi nancial capabilities of fi rms and the availability and capabilities of human capital.
• Demand factors: Many customers (either retailers or consumers) may demand greater adoption of specifi c ICT services, and may even make it a condition of trading (Mitchell and Clark 1999). SMEs that cannot respond are marginalised and effectively excluded from increasingly integrated supply chains, thus adding to the uneven development of the LRR.
2.5.2 ICT in supply chain operation
The adoption (or non-adoption) of ICT directly affects the operation of SMEs in a supply chain. In particular, ICT affects supply chain competitiveness (e.g., the ability to increase or maintain sales and profi tability), supply chain formation (e.g., the infl uence of ICT on
the character of supply chains), supply chain selection/entry (e.g., the extent to which ICT facilitates or inhibits an SME’s ability to join a particular supply chain), supply chain functioning (e.g., how ICT infl uences the operational conduct of a chain) and supply chain management (e.g., how ICT infl uences the strategic development of a chain).
2.5.3 ICT and lagging rural regions
As noted previously, the potential of ICT in the development and positioning of LRRs has been greeted with positive and negative responses. The following fi ve points are signifi cant here.
First – access to supply chains. The most attractive opportunity which ICT offers to SMEs in LRRs is the ability to enter into supply chains which may have been previ-ously inaccessible. The technology enables SMEs to interact and communicate with suppliers and customers, despite the remote and peripheral nature of their location, and to potentially participate in the supply chain as fully as an actor based in the core region.
SMEs therefore can be considered on a par with other businesses, and their ability to react speedily and effi ciently is greatly enhanced. Second – increasing competitiveness.
The issue of competitiveness for LRRs is a major consideration and the importance of enabling lagging regions to reach a level of competitiveness comparable to that of core regions has been identifi ed (Gilmore et al. 2001). Third – food SMEs and ICT. Research fi ndings have indicated that business size is an important factor in infl uencing the adop-tion and use of ICT (e.g. Mitchell and Clark 1999). Resource availability and allocaadop-tion is a key component, and is often the main restriction identifi ed in attempts to increase the penetration of ICT into SMEs in LRRs. The orientation of the business has also proved infl uential, with regards to the type of product produced, the strategic objectives of the business, and the management style and culture that prevails. Fourth – ICT and the food supply chain. The need for downstream customers to secure supplies has resulted in a number of ventures to increase vertical and horizontal co-operation and co-ordination along the supply chain (see Hughes 1995). The fl uidity of this integration has been greatly assisted by ICT, thus increasing effi ciency and competitiveness and creating what has become known as ‘lean’ supply chains. Fifth – food SMEs, ICT and institutional involve-ment. SMEs in LRRs are in a diffi cult position. Increasing competitiveness in the market environment demands that ICT becomes a crucial component in business development, yet certain high-level forms of ICT provision can be inappropriate for SMEs and a huge drain on resources, both fi nancial and human. Where SMEs have made efforts to move with market demands, ICT has on occasion been inadequately introduced and installed.
It then becomes an issue for the institutional environment to play a facilitating role in the adoption and use of appropriate ICT.