Doing business in paradise: how small, information intensive firms cope with uncertain infrastructure in a developing island nation (TCI).

ABSTRACT

This article presents findings from a case study of the Turks and Caicos Islands (TCI) in the British West Indies area of the Caribbean. TCI is a tax haven that has worked to attract offshore financial firms such as trust companies, insurance, and financial management companies. All of these firms qualify as "information intensive", are small in size (average 11 employees), engage in business on a global basis, and yet must compete while dealing with local infrastructure challenges. TCI is presented as the developmental context in which small businesses, largely owned or managed by foreigners from other cultures, must interpret and cope with national infrastructure challenges in this very small, young, rapidly growing island nation. Not surprisingly, we found that these firms share similar challenges with those in other developing countries, however, the perceptions of these challenges, and how these small firms cope, provide insights on the importance of small firms, small-scale foreign investment, and cross-national transfer of technology expectations.

Keywords: culture; cross-national research; developing countries; information intensity; infrastructure development; small business and IT

INTRODUCTION

Some organizations, such as financial services firms, have traditionally had high requirements for information processing, while also having high information content in their products and services. More recently, however, the pervasiveness of information and Interact technologies has resulted in many organizations becoming increasingly information intensive and information technology reliant (Glazer, 1991, 1993; Proudlock, Phelps & Gamble, 1998).

The technical challenges for these information-intensive firms are many, even in technologically advanced countries. Although there is recent evidence that the speed of IT diffusion among Latin American and Caribbean countries is "quite high and comparable to other countries," this diffusion is dependent on the country's IT infrastructure and institutional factors such as regulatory policies (Bagchi, Hart & Cerveny, 2002, p. 1519). These challenges increase exponentially when operating as a smaller enterprise in developing countries with uncertain infrastructures (Bingi, Leff & Shipchandler, 2000; Davey & Allgood, 2002; Mansell & When, 1998).

This paper presents findings on how such small, information-intensive firms perceive, and attempt to cope with, these challenges through a case study of organizations in the Turks and Caicos Islands (TCI), one of the lesser-known international financial centers. The next section provides our research design and data collection methods, followed by background on TCI and our findings. The paper closes with a discussion of implications for research and management practice.

RESEARCH DESIGN & INITIAL MODEL

The research for this case study began in 1999. During a visit to TCI, the first author was trying to check email and could not connect to TCI Cable and Wireless, the monopoly firm providing telecommunications and Internet services to TCI. Upon inquiring how long the network would likely be down (and anticipating a response of "fifteen minutes to an hour"), the first author was told, "The server is probably down, and so it could be a few hours or a few days before it comes back up." When clarification was sought, it was explained that the technician who dealt with the server was on the mainland (USA) for holiday celebrations with family. His return would depend on "how good a time he is having and whether he makes the flight back tomorrow." This initiated the formal case study investigation into how local firms coped with this infrastructure uncertainty, especially as many of the firms relied heavily on information and communications technologies to provide products, services, or to process transactions.

Data Collection

As suits case study research, a variety of methods were used to collect and verify data over several years of TCI's history (Lincoln & Guba, 1985; Lee, 1989; Miles & Huberman, 1994; Yin, 1994). This research relied on a combination of: intensive, semi-structured interviews with 12 participants in the Fall of 2001 and Spring and Fall of 2002; informal discussions with locals, residents, tourists, and business owners from Fall 1999 to Fall 2002; periodic direct and participant observations over that same three-year period; and analysis of public documents and research literature.

Three methodological issues were critical to this study: access, discretion, and confidentiality. It should be noted that of the 16 firms approached, three chose not to participate, expressing that they did not want to speak publicly on issues of any challenges, necessity for coping, or anything else that could come back to haunt them. One firm did not return our calls or emails.

TCI is both old and new. It has a history that goes back hundreds of years and yet it really only began its major economic development in the last two decades. Further, its history includes more than a few skeletons that it would like forgotten. TCI is also sensitive to the divide between native "belongers" and their growing population of immigrants, both temporary and permanent residents (both Caucasian and black). The "belonger" status is very important, as only belongers can vote and have unrestricted right to work-as well as reside-in TCI. Given the politics of a developing country, it was very important that we guarantee our discretion not only in how we used information, but also in what we asked. We stressed that we were not seeking to criticize the current government, their policies, or uncover anything outside of exactly what we stated as the research questions provided.

Interview Guide and Initial Model

Figure 1 provides the basic interview model, based on early discussions and the literature. Questions were grouped into five categories: demographic, information intensity, technology needs, challenges and coping strategies, and perceived outcomes.

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First, basic demographic and historical information were gathered about the history of the firm and the interviewee. This included questions about why the firm located in TCI, individuals' past experiences in developing countries, education, exposure to IT, and length of time in TCI. There is increasing evidence that firm level and individual level factors will influence computer adoption, IT investment, and satisfaction with systems in a developing country (Abdul-Gader & Kozer, 1995; Ballantine, Levy & Powell, 1998; DeLone, 1988; Montazemi, 1988; Petrazzini & Kibati, 1999; Raymond, 1985; Zinatelli, Cragg, & Cavaye, 1996).

Second, information was gathered to determine the exact nature of information activities and information intensity of the firm. For example, questions focused on the number of transactions, how information was gathered and disseminated, types of information used by the businesses, and the criticality of information for the business. This type of questioning is supported by the view that information intensity addresses the whole "information value chain" (Glazer, 1993), and is reflected in both the products/services, processes, or decision making of the organization (Glazer, 1991, 1993; Proudlock et al, 1998).

Despite Glazer's assertion that truly information-intensive firms are less concerned with technical issues, it was assumed that there was some relationship between the types of technologies the firm would require, the firm's information intensity in terms of transactions and information behaviors, and their specific information needs (Zinatelli et al., 1996; Ballantine et al., 1998). The third area of questioning, therefore, focused on the exact types of technologies that the firm used to gather, store, analyze or disseminate information either internally or to external clients and agencies.

The fourth category of questions related to general infrastructure challenges encountered in TCI and those that were specific to technology. The rationale for this separation was that some people were anticipated to focus on technical issues without considering that skilled labor or weather issues might be equally important to technology infrastructure. There are many challenges faced by developing countries (Bingi et al., 2000; Davy & Allgood, 2000; Agha & Akhtar, 1992). Small island countries may be especially challenged. These issues included cost-justification of IT investment, lack of skilled personnel, economic recession, and the lack of an effective, nationwide infrastructure (power sources, hard currency, telecommunications services). These challenges continued as we moved into more advanced Internet-based electronic commerce (Kaarst-Brown & Evaristo, 2002; Petrazzini & Kibati, 1999; Travica, Johanson & Leon-Pereira, 2000; Van Beveran & Thomson, 2002). Table 1 summarizes some of the key technical and non-technical challenges identified for firms operating in developing countries or for developing countries in general. After identifying challenges, respondents were asked how the firm coped in response to the challenges raised.

The final area of questioning asked respondents about their relative satisfaction with TCI's infrastructure in terms of enabling their firm to be competitive, their perceived ability to satisfy customers' expectations, and their personal efficacy (Zinatelli et al., 1996). This outcome category was divided in this way to allow for expression of comparative outcomes. As an example, perhaps the firm's customers were satisfied, but the individual felt the firm was hampered from future growth.

Intensive Sample: Twelve Firms

In addition to informal discussions over a three-year period, 12 small firms were identified to pursue in greater depth. All of the firms interviewed were located on Providenciales, the most populated and well-developed island. Our sample included a senior manager at TCI Cable & Wireless. For additional validation and perspective (Lincoln & Guba, 1985), we also interviewed the past-president of the Chamber of Commerce, a "belonger" with a long family history on the island spanning over 200 years. Two technical support firms were chosen because of their comprehensive knowledge of the technical history of the islands and their contact with most of the small businesses outside of our sample. The international art gallery was included because it was reported to rely heavily on IT to market to global customers. The owner was also the current president of the Chamber of Commerce, which is very active in lobbying on behalf of small business. The remaining firms were in financial services. Table 2 provides details on the firms interviewed and their owners' status as Belonger, permanent resident with annual work permits, or temporary resident with annual work permits. Other than Interview #12, all of these firms were viewed to be "information intensive" (Glazer, 1993; Proudlock et al., 1998).

Information intensity was initially implied based on the perceived criticality of information for business success, and the expected volume of information seeking or dissemination activities. Nearly all had between 1 and 15 employees. It should be noted that some of the financial firms had assets under management in excess of $100 million USD (source concealed). In the trustee industry, this is considered a small …