Small Business Digital Divide

Poor people and minorities have traditionally been less likely than average to use the web and less likely to have internet access at home. However, there is also a small business digital divide.

Smaller businesses with fewer resources generally make lighter user of information technologies. The same is true for minority-owned businesses. For example, HispanicBusiness.com reports that Hispanic-owned businesses are less likely than average to use the internet; information technology in general; have a website; or have an ecommerce strategy.

Legacy of the Digital Divide

While the digital divide has not disappeared, it has narrowed in the last several years. However, many of today's minority business owners came of age when the digital divide was much deeper than it is today. Consequently, they are not as familiar with the technology as their white counterparts. The Tomás Rivera Policy Institute, which studied the issue for IBM, says this lack of familiarity results in lower levels of technology use by minority-owned businesses.

Closing the technology gap requires increasing entrepreneur's comfort with new technologies. Fortunately many groups are working to do just that. Government agencies and non profits offer technical assistance, while technology vendors work to engage minority-owned businesses.

Hispanic-owned businesses in particular often reason they do not need to make use of internet technologies since their customers are not online. Ironically, it is the lack of Spanish language content that discourages many Spanish speaking Hispanics from going online, according to the Tómas Policy Institute.

Evidence suggests that minority-owned businesses are under-using information technologies. A 2004 study by the Urban Institute concluded that increased use of technology in minority-owned businesses is associated with higher productivity and higher profits.

This Urban Institute study resulted in the creation Biz Tech-Connect, a website that provides technology education geared towards women and minority entrepreneurs. The website was the result of collaboration between technology vendors, like Microsoft and Cisco, the National Women Entrepreneur Council and the minority business development agency (MBDA).

Small Business Technology Gap

The CDW IT Monitor is a survey that tracks trends business and governmental organizations attitudes towards information technology. WTN News reports that the February 2008 CDW monitor suggests small businesses view information technology much less favorably than medium and large businesses.

The report... showed that only 39 percent of small businesses see IT as beneficial to their bottom line. That compares to nearly 80 percent of medium and large businesses that see the value of IT for the bottom line.

"The disparity in perceived IT value between small businesses and medium and large companies is largely reflective of an unsteady economy and how small businesses often bear the brunt of economic swings," said CDW Vice President Mark Gambill, the executive responsible for market insights.

"The survey also shows that small businesses may not appreciate the benefits of technology toward growing their business," he added. "In a number of situations, they do not have IT staff in house to help guide them in their IT investments.

"Another factor is that small businesses do not have a great deal of latitude in downsizing personnel when the economy slows and their business is affected, so they typically turn to delaying costly projects or canceling them altogether, and it's probable that IT projects fall into that mix.

"It's ironic, really, because technology is one thing that can help a small business improve productivity and compete with larger companies," Gambill said. "Yet if they don't have it, their ability to thrive in a tough environment is limited." (WTN News)