adoption in SMEs: an application of upper echelon theory Ta-Tao Chuang School of Business Administration, Gonzaga University, Spokane, Washington, USA Kazuo Nakatani Lutgert College of Business Administration, Florida Gulf Coast University, Fort Myers, Florida, USA, and Duanning Zhou College of Business and Public Administration, Eastern Washington University, Spokane, Washington, USA Abstract Purpose The paper aims to investigate the effect of compositions of managerial/demographic characteristics of the top management team (TMT) on the extent of information technology (IT) adoption in small businesses (SMEs), where such strategic decisions made by TMT have direct and signicant inuence on all aspects of business operations and its competitive position in a market. Design/methodology/approach Based on the upper echelon theory, the study formulated four hypotheses relating the compositions of TMT characteristics to the extent of IT adoption in different functional areas. Multiple regression analysis was employed to analyze the data. Findings The age average and the education average of TMT in small businesses are signicant predictors of the extent of IT adoption. However, the group heterogeneity (either gender or ethnicity), contrary to the prediction, has negative impact on the extent of IT adoption. Practical implications The research ndings indicate that the age and education composition of managers as current/future top management is critical to facilitate the extent of IT adoption in SMEs. Originality/value The research contributes to the body of knowledge in IT adoption by complementing the results of prior research with the ndings that the characteristic compositions of TMT affect the extent of IT adoption in SMEs, applying the upper echelon theory to examine issues surrounding IT adoption, and suggesting practical implications that SMEs could compose, educate, and rejuvenate their top management teams to achieve a high extent of IT adoption. Keywords Communication technologies, Demographics, Small to medium-sized enterprises, Senior management, Decision making Paper type Research paper Introduction The increasing ratio of performance/cost of information technology (IT) has resulted in wide penetration of IT into different areas of businesses, especially at small and medium-size businesses (SMEs). A survey indicated that 90 percent of small businesses used IT to perform one task or anther (The Federal Reserve Board, 2006). However, the extent to which IT is applied in SMEs varies. Many SMEs use IT to The current issue and full text archive of this journal is available at www.emeraldinsight.com/1741-0398.htm IT adoption in SMEs 183 Journal of Enterprise Information Management Vol. 22 No. 1/2, 2009 pp. 183-196 qEmerald Group Publishing Limited 1741-0398 DOI 10.1108/17410390910932821 perform a single task, while others may use IT to carry out activities across functional boundaries. As 90 percent of all businesses in many economies are small businesses (Longenecker et al., 1994), it is critical to examine factors inuencing the extent of IT adoption in SMEs. This paper aims at answering the question from the perspective of the characteristics of top management teams (TMT). IT adoption has been a traditional research stream in the eld of information systems (IS). The majority of extant research focused on examining the effect of contextual factors (decision makers and organizational characteristics) on the adoption of IT (Caldeira and Ward, 2003; Dwivedi and Lal, 2007; Harrison et al., 1997; Levy and Powell, 2003; Magal and Lewis, 1995; Mirchandani and Motwani, 2001; Riemenschneider et al., 2003; Thong, 1999; Thong and Yap, 1995). The ndings of extant research show that the characteristics of senior managers have signicant impact on the decision to employ IT (Harrison et al., 1997; Riemenschneider et al., 2003; Thong, 1999; Thong and Yap, 1995; Chuang et al., 2007a, Dwivedi and Lal, 2007). Although existing studies provide a glimpse of how characteristics of executives affect the decision of IT adoption, extant research places emphasis on individual characteristics rather than on the characteristics of TMT. Because of its signicant explanatory power of upper echelons, the effect of the aggregate characteristics of TMT on organizational outcomes has received wide interest in the eld of organization behavior (Hambrick and Mason, 1984). The upper echelon theory (UET) (Hambrick and Mason, 1984) suggests that organizational strategic choices are a function of organizational dominant coalitions background compositions. The compositions of top managers observable characteristics inuence the performance of organizational outcomes via their strategic choices. As extant research of IT adoption focuses on individual-level characteristics, we are interested in examining how the characteristics compositions of TMT inuence IT adoption. Because of differences between small and large businesses, ndings of research on IT adoption in large businesses might not be applicable to small businesses (Thong, 1999). For example, because of lack of resources, small businesses usually tend to respond to competitive environment with short-term planning (Welsh and White, 1981). The tendency to adopt a short-term management perspective increases the risk of IT adoption failure. Furthermore, citing Mintzbergs (1979) work, Thong indicated that executive ofcers in small businesses tended to make most of critical decisions because the structure of small businesses were usually centralized and, consequently, the characteristics of top management played a critical role in the decision of IT adoption. Furthermore, it is noteworthy that the object of IT adoption in existing research has mainly been a single particular technology, with a few exceptions (Thong, 1999). Instead of focusing on the diffusion of a single technology, the study focuses on the extent of IT adoption, which is dened as the breadth and depth of applying IT into different aspects of businesses. The results of the present study will further the body of knowledge in IT adoption with an empirical study based on a new theoretical stand. Also, the ndings of the research provide practical implications for companies in an industry that frequently make decisions on IT adoption. Literature review The topic of IT adoption in SMEs has broadly attracted researchers interests. Many studies have been conducted to investigate factors affecting the decision of IT adoption. JEIM 22,1/2 184 Those studies differ with regard to underlying theories and technologies under investigation. Popular theories adopted by existing research include the innovation theory (Thong, 1999; Thong and Yap, 1995; Yao et al., 2002), the theory of organizational demography (Chuang et al., 2007a; Chuang et al., 2007b), the theory of planned behavior (TPB) (Choudrie and Dwivedi, 2006; Harrison et al., 1997), the technology acceptance model (TAM) (Davis et al., 1989; Riemenschneider et al., 2003), and the resource-based theory (Caldeira and Ward, 2003). Information technologies examined in prior research include database management systems (Grover and Teng, 1992), business applications (Thong, 1999; Thong and Yap, 1995; Tye et al., 1995; Caldeira and Ward, 2002; Chuang et al., 2007a), e-commerce (Mirchandani and Motwani, 2001; Chuang et al. 2007b), the internet (Levy and Powell, 2003), and asynchronous transfer mode and broadband network (Yao et al., 2002; Choudrie and Dwivedi, 2006; Dwivedi and Lal, 2007). By synthesizing prior research, Thong (1999) identied four contextual elements that were related to IT adoption: (1) Decision makers characteristics. (2) Technological characteristics. (3) Organizational characteristics. (4) Environmental characteristics. He examined the impact of these factors on the likelihood of and the extent of IT adoption. Thong found that the likelihood of IT adoption was signicantly associated with CEO characteristics, IS characteristics, and organizational characteristics. Also, he found that business size, employees IS knowledge, and information intensity were associated with the extent of IT adoption. Part of Thongs ndings regarding CEOs IT knowledge was supported by other research (Mirchandani and Motwani, 2001). Also, the nding regarding rm size was supported by other research (Thong and Yap, 1995; Yao et al., 2002). Nevertheless, other studies (Seyal and Rahman, 2003, Scupola, 2003) found that the rm size had no impact on the e-commerce adoption. Similar results were found in different contexts. Caldeira and Ward (2002) investigated the impact of enabling and inhibiting factors of IT adoption in Portuguese SMEs in the manufacturing industry. They found that top management perspectives and attitudes toward IT adoption appeared to explain different levels of success of IT adoption. Caldeira and Ward (2003) employed the resource-based theory to interpret the ndings of their prior research (Caldeira and Ward, 2002). They argued that from the resource-based theorys point of view, the rm placed focus on the development of internal skills, competences, and capabilities, which were affected by top management perspectives and attitudes towards the adoption of IT. Levy and Powell (2003) proposed a contingency model, named transporter model, of the Internet adoption based on the evidence of multiple case studies. The model suggests that the major factors of the internet adoption are the SME owners perception of business value of the internet and attitude towards business growth. The theory of planned behavior (TPB) and technology acceptance model (TAM) have been widely employed to examine the issue of IT adoption. Based on TPB, Harrison et al. (1997) investigated executive decision processes of IT adoption in a multiphase eld study. Their ndings indicate that attitude, subjective norms, and perceived control are sufciently explaining the IT adoption decision and that the IT adoption in SMEs 185 effect of those factors is moderated by rm size. Nevertheless, rm and individual executive characteristics had no bearing on the decision of IT adoption. Riemenschneider et al. (2003) argued that TPB and TAM possessed complementary advantages and disadvantage in predicting the adoption of IT. Consequently, they asserted that combining these two theories would offer a better explanation of IT adoption. They found that the more integrated both TPB and TAM became, the better they explained the phenomenon of IT adoption. Many previous studies in IT adoption were conducted mainly from the perspective of innovation diffusion. Whether one technology is innovative to a rm is predicated on the rms knowledge and capacity of IT. Grover and Teng (1992) took into account the rms sophisticated level of using IT and examined how organizational characteristics (the rm size and the industry) and the IS/IT maturity differentiated adopters from non-adopters of DBMS. They found that the adoption of DBMS was positively associated with the rm size and most components of IS maturity. The effect of organizational demographical factors, such as gender, age, and education of executives, on the adoption of IT has recently become the interest of research in this area (Chuang et al., 2007a, b; Dwivedi and Lal, 2007). Chuang et al. (2007a) found that the CEOs gender and education were signicant predictors of the extent of IT adoption, while the CEOs work experience was not. Dwivedi and Lal (2007) found that except for gender, all other socio-economic factors, including age, education, occupation and income, were signicant predictors of broadband adoption. In summary, no study examining the relationship between characteristics composition of TMT and the extent of IT adoption was found in the extant literature of IT adoption. This study tries to ll this void using the UET (Hambrick and Mason, 1984). Theoretical foundation: upper echelon theory The UET (Hambrick and Mason, 1984) suggests that organizational strategic outcomes and processes are a function of managerial characteristics of top managers as shown in Figure 1. The main notion of the UET is that strategic choices are more of the outcome of behavioral factors than that of mechanic calculation for economic optimization. As a result, strategic choices generally own a great deal of behavioral components and reect decision makers idiosyncrasies, such as cognitive base and value preferences. The idiosyncrasies frame the decision situation that executives face and create their perceptions of the situation. The UET suggests that because cognitive base, values and perception are unobservable, measurable managerial characteristics could be adequate surrogates for and provide reasonable indicators of those latent constructs. Hambrick and Mason (1984) suggested an unexhausted list of observable managerial characteristics, including age, functional tracks, career experiences, education, socioeconomic roots, nancial position and group characteristics. They proposed 21 propositions relating those characteristics to strategic choices and the performance of organizational outcomes. Research model and hypotheses In the application of the UET to the present study, we are interested in answering the following questions: JEIM 22,1/2 186 . How does the age composition of TMT affect the extent of IT adoption in SMEs? . How does the education composition of TMT affect the extent of IT adoption in SMEs? . How does the group heterogeneity of TMT affect the extent of IT adoption in SMEs? The inquiry into the above questions is summarized in the research model as shown in Figure 2. The extent of IT adoption is dened as the breadth and depth of using IT in different aspects of businesses. Businesses might use IT to support its operations or improve the decision quality. Business operations can be a single task within a functional area or a process consisting of a series of activities. The extent of IT adoption varies from one rm to another. One company might use IT (e.g. productivity suite) to improve clerical productivity in the form of ofce automation. Another might use IT in several functional areas. The UET suggests that youthful managers are more appealing to fresh and unique ideas, and more willing to take risks than older managers (Hambrick and Mason, 1984). Hambrick and Mason proposed several possible reasons for this phenomenon: First, older managers might not be able to grasp new ideas or do not have physical or mental strength as strong as younger managers (Child, 1974). Even though managerial age has positive impact on the information evaluation accuracy, it is negatively related to the ability to integrate information and the efciency of making decisions. Second, Hambrick and Mason suggested that older executives have greater psychological commitment to the organizational status quo. (Hambrick and Mason, 1984, p. 198). Figure 2. Research model Figure 1. Upper echelon perspective of organization IT adoption in SMEs 187 Because of the commitment to the status quo, an older TMT may be more reluctant to attempt new ideas or take risks, such as new technologies, because IT adoption might involve radical changes in existing practices. Third, older managers have already established their social networks, lifestyles, and careers planning and tended to become risk aversive. Since IT projects involve risks, an older TMT might be less likely to widely adopt IT. Based on the above reasoning, we develop the following hypothesis: H1. The age average of TMTis negatively associated with the extent of ITadoption. Prior research has consistently shown that managers education level is positively related to their receptivity to innovation (Hambrick and Mason, 1984). The impact of education in IT adoption can be twofold: rst, the more education the TMT receives, the more likely they are exposed to IT, and more likely to better understand the value of IT. The understanding may be translated to the acceptance of IT into their business. Second, education may foster self-efcacy. That is, the more education the TMT receives, the more condence they develop that they are capable of mastering IT. Igbaria et al. (1998) empirically found that education played an important role on the number of adopted applications and the number of tasks supported by IT. Based on the above discussion, we propose: H2. The average amount of formal education of TMT received is positively related to the extent of IT adoption. Prior research in organization sciences shows that when a group of decision makers with homogeneous background faces a non-routine problem, it often brings on groupthink, which in turn might restrict the generation and assessment of alternatives and result in inferior decisions (Hambrick and Mason, 1984). This implies that a heterogeneous group might take advantage of diverse backgrounds of members to openly generate and evaluate alternatives. Thus, a TMT with diverse backgrounds (such as ethnicity) might be more receptive to innovation and more willing to introduce IT to its organization. Furthermore, organizational demography (Korac-Kakabadse et al., 1998) suggests that the gender composition of top managers plays an important role in organizational processes, including decisions on IT adoption. This view is supported by the ndings of research (Igbaria et al., 1998). Gender composition might affect the decision on IT adoption in two manners: One is the number and kinds of software applications that are adopted, and the other is the type of tasks that are supported with IT. Igbaria et al. (1998) found that males used more software packages than females did, while females used more application packages than did males. Thus, a TMT consisting of mix of males and females may adopt more different types of IT in different areas in business in order to accommodate their respective needs. Based on the above discussion, we hypothesize: H3. The heterogeneity of TMT is positively associated with the extent of IT adoption. H3a. The gender diversity of TMT is positively associated with the extent of IT adoption. H3b. The ethnic diversity of TMT is positively associated with the extent of IT adoption. JEIM 22,1/2 188 It is noteworthy that while it is possible to include age and education in the heterogeneity of TMT, their relationships with the extent of IT adoption are separately hypothesized. The reason is because, according to the UET, the younger the TMT is, the more likely the TMT tends to adopt IT. With the same reasoning, the higher the education average the TMT is, the more likely the team will widely adopt IT. Thus, the inclusion of age and education in the heterogeneity of the TMT may diminish the effect of gender and ethnic diversity on the extent of IT adoption. Methodology Sample The data came from the 2003 National Survey of Small Business Finances (NSSBF) (USA), which contained information of 21,200 observations of small businesses in operation as of December 2003 (National Opinion Research Center, 2005). The population was for-prot, nongovernmental, nonnancial, and nonagricultural businesses that had fewer than 500 employees. Each business was veried whether it met the target-population denition. Those businesses qualied were surveyed and interviewed by the National Opinion Research Center. For the purpose of the study, a sample of 97 observations from the SBBF data set was drawn. Those cases were chosen based on the following criteria, following the suggestions of UET and US Small Business Administration (The US Small Business Administration, 2007): . companies in a single industry, the whole trade industry; . businesses with 100 employees or fewer; . companies with three or more owners; . companies in urban areas; and . companies using computers one way or another. Measurement instruments Extent of IT adoption. Following the convention used by Thong (1999) and Chuang et al. (2007a, b), we developed a composite measure of the extent of IT adoption that was composed of eight items used in the NSSBF, each of which asked whether the respondent business used IT to perform one particular task. As a whole, these eight items measured how widely businesses had used IT in their businesses. These eight items are: (1) Uses computers to do online banking. (2) Uses computers for an e-mail or internet connection. (3) Uses computers to purchase business products and services. (4) Uses computers to sell business products and services. (5) Uses computers to apply for loans or other forms of credit. (6) Uses computers to manage inventory. (7) Uses computers for administrative functions such as word processing. (8) Uses computers to manage the rms accounts/bookkeeping. IT adoption in SMEs 189 The composite measure was created by summing up the yes answers to the eight items to generate a scale ranging from 1 to 8, with one being the least extent of adoption and eight being the strongest level of adoption. Independent variables (managerial characteristics of TMT). The characteristics of TMT that were examined in the study were age, education, gender, and ethnicity. Age was measured in years. Education was measured with the scale: . Less than high school degree (grade 11 or less). . High school graduate or equivalent (GED). . Some college but no degree granted. . Associate degree occupational/academic program. . Trade school/vocational program. . College degree (BA, BS, AB, etc.). . Postgraduate degree (MBA, MS, MA, Ph.D., JD, MD, DDS, etc.). The measurement of gender is self-explanatory. Ethnicity was measured with ve categorical questions (yes/no), each of which asked whether the owner/manager had one of the following ethnical background: Hispanic, African-American, Asian, Hawaiian/Pacic Islanders, and Native-American. Independent variables of interest are the weighted averages of age, education, gender, ethnicity of TMT, as shown in Table I. Since the consequence of an IT investment might have bearing on nancial results, owners/managers might be concerned with return of such an investment. Thus, owners/managers who have greater ownership share might exercise greater inuence. As a result, the impact of ownership on the dependent variable should be taken into account. The independent variables were calculated with weights of ownership to account for the inuence of ownership. The formula is as follows (The Federal Reserve Board, 2006): Percentage of firm owned by individuals with characteristic Y {Owner1s characteristic Owner1s share Owner2s characteristic Owner2sshare Owner3s characteristic Owner3s share=owner1s share Owner2s share Owner3s share 100} All weighted percentages were rounded to the nearest percentage point. The scale of diversity of ethnicity and gender was further transformed, because a TMT consisted of dominantly a single ethnicity or gender would have the diversity value of 100 percent, which happened to be the least diverse case. Theoretically, the most diverse state Independents Denitions Age Weighted average age of owners Education Weighted average education of owners Gender composition Weighted average of female proportion in TMT Ethnic composition Weighted average of minority proportion in TMT Table I. Managerial characteristics of TMT JEIM 22,1/2 190 should be 50 percent. Thus, we convert the diversity scale for ethnicity and gender as follows: Diversity scale 50 2absolute value of weighted average 250 Data analysis and results The descriptive statistics and the correlations of the variables are listed in Tables II and III, respectively. Multiple regression analysis was employed to examine the hypotheses regarding the extent to which the characteristics compositions of TMT inuenced the extent of IT adoption. The regression model is as follows: Extent of IT adoption a b 1 Age b 2 Education b 3 Gender b 4 Ethnicity 1 The regression module of SPSS was used to t the model with the enter method. The result of the regression analysis is shown in Tables IV and V. Overall, the model explained a relatively large portion of the variance in the extent of IT adoption (R 2 0:601, p , 0.01). The three independent variables, age average, education average, and group heterogeneity composition, together explained 60.10 percent of the variation of the extent of IT adoption. This seems to support the Correlations Extent of IT adoption Age Education Gender Ethnicity Extent of IT adoption 1 Age 20.393 * * 1 Education 0.487 * * 0.050 1 Gender 20.302 * * 0.073 0.085 1 Ethnicity 20.218 * 0.067 0.117 20.120 1 Notes: * Signicant at the 0.05 level (two-tailed); * * signicant at the 0.01 level (two-tailed) Table III. Pearson correlation of variables Descriptive statistics n Min Max Mean SD Extent of IT adoption 97 1 8 5.3505 2.00542 Age 97 24 72 49.9897 11.15935 Education 97 2 7 4.5361 1.60768 Gender 97 0 50 6.8351 14.59786 Ethnicity 97 0 34 1.6392 6.47139 Table II. Descriptive statistics of variables Model R R 2 Adjusted R 2 Std error 1 0.775 a 0.601 0.583 1.29457 Note: a Predictors: (constant), ethnicity, age, education, gender Table IV. Result of regression analysis: model summary IT adoption in SMEs 191 proposition that the characteristics compositions of TMT have impact on how widely a business might adopt information technologies. The correlations and the regression coefcients showed mixed results regarding H1, H2, H3a and H3b. Since the extent of IT adoption and the age composition were negatively and signicantly correlated at the level of 0.001 (r 20:393), the H1 hypothesis that the higher the age average of TMT, the less likely the business would broadly adopt IT was supported. The standardized coefcients indicated that the impact of the weighted age average of TMT on the extent of IT adoption (beta 2 0.3748) was slightly weaker than that (beta 0.5720) of the weighted education average. The hypothesis (H2) that the education average of TMT received was positively related to the extent of IT adoption was supported at the signicance level of 0.001. This suggested that the more education the TMT received, the more broadly the rm would employ IT. Furthermore, the standardized coefcient of the education composition (beta 0.5720) indicated that the education composition had the greatest impact on the extent of IT adoption among the independent variables. Since the correlation between the gender heterogeneity of TMT and the extent of IT adoption was negatively signicant at the level of 0.01, the hypothesis (H3a) that the gender heterogeneity of TMT was positively associated with the extent of IT adoption was not supported. The standardized coefcient of the gender diversity (beta 2 0.3599) showed that the magnitude of impact of the gender heterogeneity on the extent of IT adoption was about the same as that of the weighted age average. Similarly, the hypothesis (H3b) that the ethnicity composition of TMT was positively associated with the extent of IT adoption was not supported since the correlation was negatively signicant at the level of 0.05. The standardized coefcient of the ethnicity composition (beta 2 0.3028) showed that the ethnicity diversity had slightly less impact on the extent of IT adoption than did the gender diversity. Consequently, the hypothesis that the group heterogeneity of TMT was positively related to the extent of IT adoption was not supported. Discussion and implications Based on the UET, the study is intended to examine the impact of characteristics composition of TMT on the extent of IT adoption in small enterprises. The major nding of the study was that overall, the three characteristics (age composition, education composition, and group heterogeneity) explained a signicant amount of the variation of the extent of IT adoption. Specically, more than 60 percent of variance in Coefcients a Unstandardized coefcients Standardized coefcients Model B Std error Beta t Sig. 1 (Constant) 5.9732 0.6985 8.5513 0.0000 Age 20.0674 0.0119 20.3748 25.6540 0.0000 Education 0.7135 0.0832 0.5720 8.5731 0.0000 Gender 20.0494 0.0092 20.3599 25.3796 0.0000 Ethnicity 20.0938 0.0208 20.3028 24.5135 0.0000 Note: a Dependent variable: extent of IT adoption Table V. Result of regression analysis JEIM 22,1/2 192 the extent of IT adoption could be explained by the three variables. This nding appeared to support the main thesis of the UET: the composition of demographic and managerial characteristics of TMT in small enterprises signicantly affected the width and breadth of IT applications. Additionally, this result is in accordance with the ndings of prior research (Thong, 1999; Thong and Yap, 1995; Chuang et al., 2007a, b; Dwivedi and Lal, 2007) that the characteristics of decision makers inuenced the decision over IT adoption, even though prior research was focused on individuals. The nding regarding the relationship between the age composition of TMT and the extent of IT adoption is critical and signicant because even though such a relationship is intuitively valid and theoretically sound as suggested by the UET and empirically validated in consumer sectors (Choudrie and Dwivedi, 2005; Dwivedi and Lal, 2007), prior research (e.g. Chuang et al., 2007b) failed to conrm the proposition at the aggregate-level in organizational setting. Prior research in management indicated that managerial youth was related to corporate growth; however, the causal relationship between corporate growth and managerial youth was indeterminate. The nding might add our understanding about the relationship as the benet of wider IT use might induce greater corporate growth. The result of previous research indicated that decision makers education level was positively related to receptiveness toward innovation (Kimberly and Evanisko, 1981; Dwivedi and Lal, 2007); thus, it is not surprising that the hypothesis (H2) regarding the positive relationship between the education composition of TMT and the extent of IT adoption was supported. In the context of IT, this nding is consistent with that of prior research (Igbaria et al., 1998). Nevertheless, it is noteworthy that another study by Choudrie and Dwivedi (2005) showed that educational attainment did not have impact on the adoption of broadband services. The disparity between Choudrie and Dwivedis nding and that of present study might be attributed to the differences in subjects (individual consumers vs TMTs) and in the dependent variables (the adoption of broadband services vs the extent of IT adoption). The use and adoption of broadband services was mainly driven by relative advantages and utility outcomes perceived by direct users as well as their hedonic purpose (Choudrie and Dwivedi, 2006), while adopting IT in a variety of businesses usually needed a greater amount of knowledge about benets of IT and business needs in order to generate expected benets. The hypothesis that group heterogeneity of TMT was positively associated with the extent of IT adoption was not supported. Instead, the signicant, negative standardized coefcients (beta 2 0.3599) and correlation between gender diversity and the extent of IT adoption (r 20:302) seemed to suggest that the more predominantly a single gender the TMT was, the more likely the rm would broadly apply IT. The result of previous research (Igbaria et al., 1998) showed that males and females had different uses of and preferences for IT. Ideally, a TMT consisting of both genders would be more likely to broadly apply different technologies to business. However, such a proposition was not supported. There are several possibilities: One is that the type of IT (e.g. applications packages, system packages or productivity suite) might moderate the effect of gender heterogeneity on the extent of IT adoption. Research by Igbaria et al. (1998) suggested that females would use more applications than their male counterparts, while males used more productivity packages than females did. It is possible that a TMT consists of predominantly a single gender might broadly adopt one particular type of IT. For example, a IT adoption in SMEs 193 female-dominating TMT might determine to widely use applications packages, while a male-dominating TMT might use productivity packages. Under both circumstances, the less diverse the gender composition of TMT was, the more broadly the extent of IT adoption was. Another explanation is a methodological issue. The data of characteristics of TMT and of IT use were collected at the same time. It is possible that the gender composition of the TMT that made decision over IT adoption was different from that of the TMT using IT. In such a case, the relationship between the extent of IT adoption and the gender diversity could be negative. The hypothesis that the ethnicity diversity was positively associated with the extent of IT adoption was not supported. To the contrary, the relationship was negatively signicant. The explanations for negative relationship between gender diversity and the extent of IT adoption might be applicable to explain for the negative relationship between the ethnicity diversity and the extent of IT adoption. That is, the relationship between the ethnicity diversity and the extent of IT adoption was moderated by the type of technologies. Another explanation is a methodological issue. That is, it is possible that the ethnicity compositin of the TMT that made decision on IT adoption was different from that of the one using it. Research limitations There are several research limitations in the study. First, the study chose one single industry, the wholesale trading industry. While the choice of a single industry followed the suggestion of the UET, it might limit the generalizability of the ndings. One possible way to improve external validity is to conduct similar research within different industries. Second, the study did not consider the effect of rmsize among small organizations due to the relatively small sample size (97 rms). Levenburg et al. (2005) found that size effect on internet technology adoption diminished somewhere between micro- (0-10 employees) and small- (11-50 employees) organizations. The effect of rm size, especially on micro-size rms, deserves further research. Third, because of unavailability of data, the study didnt differentiate owners from managers in data analysis. However, the effect of failure to differentiate owners from managers could be mitigated if we consider IT adoption as a capital investment and ownerships might play a role in such investment decisions. Fourth, the TMT responsible for introducing IT into its company might be different from the one using it and the characteristics compositions of both teams are different. Further research should be conducted to investigate a relationship between the characteristics of TMT and decisions of adopting or not adopting IT. Conclusion The eld of IS has long tradition in examining issues surrounding the decision of adopting IT. Many research studies based on different theories have been conducted to examine factors affecting IT adoption. The results of extant research have greatly facilitated our understanding of IT adoption. While the impact of CEOs characteristics on the IT adoption has been examined in existing research, such research is rarely based on a sound theory. One research objective of the study was to ll the void. Based on the UET, the study examined the impact of the age compositions, the education composition, and group heterogeneity of a TMT on the extent of IT adoption in SMEs. The results of the study generally conrmed the propositions of the UET that organizational strategic decision was a function of idiosyncracies of a TMT. 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