ICT Usage and Business Performance of SMEs in Sri Lanka: The Mediation Effect of Bounded Rationality

Abstract

The study examined empirically how Information & Communication Technology (ICT) usage affects the bounded rationality and business performance of Small & Medium Enterprises (SMEs) in Sri Lankan. Data were collected from 400 of SMEs employing structural questionnaire having the face to face interviews. The Partial Least Squares-Structural Equation Modelling (PLS-SEM) was utilized to analyze the data. The results discovered that ICT usage in the organization perfectly makes a significant positive impact on business performance as well as negatively influenced the bounded rationality. Simultaneously, the study uniquely found that bounded rationality makes a negative impact on business performance. Meanwhile, bounded rationality plays a dominant role in the relationship between ICT usage and business performance. The study strongly recommends SMEs to strengthen the usage of ICT especially, mobile technology with applications that play a leading role to develop the SMEs by enhancing the decision-making power.