Technology–Organization–Environment (TOE) Framework for its Adoption in MSMEs: An Empirical Study of Kalyana Karnataka

Abstract

Purpose: The study aims to examine the level of Information Technology (IT) adoption among Micro, Small, and Medium Enterprises (MSMEs) in Kalyana Karnataka and to analyze its impact on operational efficiency using the Technology–Organization–Environment (TOE) framework. It also evaluates the influence of technological, organizational, and environmental factors on IT adoption.

Methodology: A quantitative research design was adopted, and primary data were collected from 150 MSMEs across manufacturing (42%), service (34.7%), and trading (23.3%) sectors using a structured questionnaire. Analytical tools included descriptive statistics, reliability analysis (Cronbach’s alpha > 0.85), factor analysis (KMO = 0.852), Pearson correlation, and multiple regression analysis.

Findings: The results indicate that 50% of MSMEs exhibit moderate IT adoption, while 30% demonstrate high adoption. Regression analysis shows that TOE factors significantly influence IT adoption (R² = 0.590, p < 0.01), with environmental factors (β = 0.42) being the strongest predictor, followed by technological (β = 0.38) and organizational factors (β = 0.31). Further, IT adoption has a strong positive impact on operational efficiency (β = 0.718, R² = 0.516, p < 0.01), improving productivity, process optimization, and turnaround time. Correlation analysis also confirms a strong association between IT adoption and operational efficiency (r = 0.718, p < 0.01).

Implications: The study highlights that both internal readiness and external pressures drive IT adoption, which in turn enhances operational efficiency. Policymakers should focus on digital infrastructure, financial support, and skill development programs to accelerate MSME digitalization.