Information and communication technology (ICT) connectivity (PCs and Internet) is very
widespread in businesses of all sizes. As is the case with all technologies, small businesses are slower than
large ones to adopt new ICTs. Potential small business benefits and firm and sector-specific strategies
drive the adoption and use of ICTs. Furthermore, sectors are increasingly global and dominated by large
firms and the structure of their values chains and operations shape opportunities for small and medium size
enterprises (SMEs). Principal reasons for non-adoption are lack of applicability and little incentive to
change business models when returns are unclear. SMEs also face generic barriers to adoption including
trust and transaction security and IPR concerns, and challenges in areas of management skills,
technological capabilities, productivity and competitiveness. The issues for governments are to foster
appropriate business environments for e-business and ICT uptake (e.g. to diffuse broadband, enhance
competition), and target programmes to overcome market failures to the extent that they are needed in
particular areas (e.g. skill formation, specialised information). Governments have a range of SME ebusiness
and Internet use programmes. However commercial considerations and potential returns are the
principal drivers of small business adoption and profitable use. The following points summarise the main
policy directions derived from the analysis in the attached report.