SMEs and IT: Evidence for a Market for "Lemons"

It is well-known that Small- and Medium-sized Enterprises (SME) suffer from a lack of IT proficiency and therefore depend heavily on external IT expertise. The acquisition of a strategic IT artefact by an SME is mainly initiated in a market where Independent Software Vendors (ISV) and customers meet. This complex process is dominated by information asymmetry and leads to the 'Lemons' problem, where low-quality vendors drive out high-quality vendors as predicted by the Lemon Market Theory (LMT). The diversity in quality makes it difficult for prospective buyers to evaluate a product or service with complete certainty and makes the decision to acquire risky.

Provided by: Academic Conferences Topic: SMBs Date Added: Nov 2012 Format: PDF

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