TECHNOLOGY COMPONENT STATUS IN SMALL AND MEDIUM SIZED

ENTERPRISES: A STUDY OF THE MANUFACTURING SECTOR IN KEDAH

MAZRI YAAKOB
NOR HASNI OSMAN
RUSHAMI ZEIN YUSOF
UUM College of Business
Universiti Utara Malaysia


ABSTRACT

This paper elaborates on four interrelated components of technology, namely
Technoware, Humanware, Infoware, and Orgaware, all of which has its own
unique elements. As many as 51 owners of small and medium sized enterprises (SMEs)
in Kedah were chosen as the main respondents for this study. SMEs were chosen
because SMEs are among the main contributors of the gross national product (GNP).
Information related to SMEs in Kedah was obtained through the SME Corp Malaysia,
FMM, and PKNK directories. The face-to-face interview and postal survey
questionnaire techniques were employed to get the required data. This research
endeavour aimed at establishing the status of technology components in SMEs by using
the technology component weighted measure adopted from Saaty, which is known as
Analytical Hierarchy Process (AHP) as the current technology status indicator of SMEs
in Kedah. The results of the analysis revealed a high tendency toward the adoption of
the Orgaware component, followed by Technoware, Humanware, and Infoware.

Keywords: Technology component; small and medium sized enterprise; manufacturing
sector; Analytical Hierarchy Process


INTRODUCTION

SMEs have given a significant contribution toward the national economy, more
specifically in the context of the Kedah state of Malaysia. This matter can be observed from the
increasing numbers of newly established SMEs every year. According to the Central Bank
Report (Bank Negara Malaysia - BNM) and Enterprise and Establishment Consensus
(Consensus) for 2005, it was shown that 99.2% of the overall establishment of new businesses
had totalled 518,996 SME businesses. The SMEs workforce totalled more than 3 million
workers and this group generated and added value of RM154 billion in 2003 (BNM, 2005).

Small and medium sized enterprises, or better known as SMEs, in Malaysia have
experienced rapid development. This development has been mainly assisted by efforts of the
government through its initiatives and incentives. This matter is obviously highlighted through
the establishment of various government agencies that are directly involved in the in the
development and spread of SMEs, such as Small and Medium Industries Development
Corporation (SMIDEC), National SME Development Council (NSDC), Small and Medium
Enterprise Bank (SME Bank), and many more. To ensure the rapid growth of SMEs is
maintained, several strategic plans are also formed and included in the Third Industrial Master
Plan (2006-2010) and now in the Ninth Malaysia Plan (RMKe-9). The development and use of
science and technology in order to improve productivity is one of the important matters the
government has emphasised upon. In addition to the facilities and financial loans, various
programmes like courses and training has been organised to give exposure, knowledge, and
skills to the SME operators.

However, there are still barriers to have caused some operators to not benefit from all
these golden opportunities. Even though the SME operators are widely aware of the need and
importance of high technology, the lack of financial funds to buy and own certain technologies

has become their main obstacle (Yip, 2007). The selection of suitable products or services that
are capable of giving a positive impact on the business and thus continue to contribute toward
business growth in the mid- and long-term have become major issues with SMEs. However,
without the necessary in-depth skills to use computerised systems or investing in new
technology, then surely the effects of technology procurement or transfer would be very limited.

In finding a business solution, SMEs must be capable of evaluating their options based
on the strategies and requirements of the business in the long-term. Among the factor that
should be considered include those from the financial perspective, relationship management
between the customer and equipment, and also managing the supply chain, all of which would
help the SMEs to automate processes, make profitable decisions, as well as to facilitate
company growth. According to Jantan (2004), other than acting as an agent of change, an
organisation or a firm generally makes the technology as the turning point in making a strategic
decision. Therefore, technology development should not be taken lightly by the SMEs.

Previous studies had proven that technology development is among the most important
factors that can assist in the economic growth of a nation (Hirano, 1985; Choi, 1987;
Subramaniam, 1987; Sharif & Ramanathan, 1991), country development, and also the industry
and organisation directly contributes toward the improvement of the quality of life of the
residents of a country (Sawers, Pretorius & Oerlemans, 2008). Other studies have shown that in
order to ensure that the technology can help in improving the capability of the industry and
firms, the technology needs to be managed effectively and efficiently (Pretorius, 2006). Some
researchers stated that technology is the wealth of [a] nation (Sharif & Ramanathan, 1991).

From the literature review, there had not been much empirical research performed to
investigate the importance of each technology component in the industry, including the
manufacturing industry. Smith (2005) stated that in order to conquer a market segment, there
needs to be an organised strategy to compete against rivals, and also the capability and resources
for effective implementation in innovative technology by the firm. Furthermore, Smith (2005)
defined that the resources of a company mentioned here refer to Technoware, Humanware,
Infoware, and Orgaware. It was revealed that there are not many studies that focus on
technology components that contribute toward the success of an organisation in the
manufacturing industry. According to Sharif (1997), the important characteristics of the
relationships of the four technology components have not been highlighted or been given the
due attention.

SMEs should be aware of the importance of these technology components that can help
them to improve their businesses. Therefore, this study aimed at identifying the status or level of
importance of these technology components within the manufacturing industry. This write-up
will discuss the characteristics that define these types of technology components, the
methodology as well as analysis used in investigating the importance of technology components
in the context of the SME manufacturing industry. It is hoped that the finding of this research is
able to assist the related parties in establishing the importance of these technology components
in investment and decision making.


LITERATURE REVIEW

Technology
There are various definitions for technology that has been previously discussed in
academia. The definition or meaning of technology continuously changes from time to time
depending on the advancement of human understanding about technology and the changes that
are observed by a company or organisation (Jantan, 2004). The Webster dictionary defined
technology as the use of practical science for trade or industry; a discipline related to arts or
science using scientific knowledge for solving a practical problem and a branch of knowledge
that involves industrial study, applied science, and engineering (Websters Online Dictionary,






2005). In general, technology is often related to equipment, tools, computers, and electronic
gadgets. However, technology is not limited to just physical machines only (Jantan, 2004).

Technology is defined as an integration of human aspect, knowledge, equipment, and
systems with the ultimate objective of improving the human way of life (Proterious, 2006).
Equipment and systems contain certain procedures for establishing knowledge. Meanwhile,
knowledge creation is through training (Pretorious, 2006). Khalil (2000) and Jantan (2004)
further elaborated that technology is not just about the physical sense like equipment,
machinery, and others, but it is also about the non-physical, such as skills, experience,
knowledge, and wisdom. Table 1 shows the definitions of technology by various researchers.

Table 1.
Technology definition by previous researchers
Penyelidik Definisi Teknologi Tahun
Rousseau An organisational phenomenon that refers to knowledge being used to perform a
task
1979
Zeleny Covers four interrelated components:
- hardware
- software
- brainware
- know-how
1986
Price Know-how used in basic science or products, equipment, and process to achieve
the desired solution
1996
Khalil All knowledge about products, equipment, processes, methods, and systems used
to create goods or services by an organisation
2000
Narayanan A process, invention, method, or procedure where a social group creates
something that is needed by the organisation
2001

Technology Component
Zeleny (1986) used the term technology entity and Bhalla (1987) used technology
element. Both also stated that technology comprises entities/elements that are different from the
views of other researchers. Zeleny (1986) highlighted that each technology contains four
entities, namely hardware, software, brainware, and know-how. Bhalla (1987) defined
technology as having several elements, which are physical things like tools, software aspects
including computer programs and information systems. Other technology components that have
been revealed and agreed upon by other researchers went under different names and terms.
Leonard-Barton (1992) used the term technology dimension, Islam and Hossain (1999) termed it
as technology resource, while Autio (2006) used the phrase technology strategy and
management aspect.

Masum (1992) explained Technoware, including all the physical facilities like
instrument, tools, generators, equipment, structure, and factory. Humanware consists of all the
required needs, such as expertise, capability, agility, creativity, fortitude, hardworking,
perseverance, and wisdom. Infoware comprises all forms of facts, including designs, accounts,
specifications, observations, relations, similarities, charts, and theories. Meanwhile, Orgaware
refers to the framework covering groups, budgeting, systems, organisations, networks,
management, and marketing.

Other characteristics of technology components, for example Technoware, refer to the
manifestation of physical technology, such as the car engine, microchip, and software package
to name but a few. Humanware refers to the individual technology expertise, while Infoware
contributes clearly about the physical manifestation, and finally Orgaware refers to the skills of
the organisation and its manifestation in organisational processes and routines (Parhankangas,
Holmlund, & Kuusisto, 2003).


From another perspective, Autio (2006) stated Technoware refers to the hardware,
combination, and also design and Humanware refers to the human capabilities, capacities, and
practice that influence that application of technology and self development. Infoware refers to
the software related to the hardware, which is the understanding of the task of a technology item
that is given, the knowledge on how to operate the said technology item for example the
manual, understanding the related operational principles like physical science, and also the
technology that has been documented, for example patenting. Finally, Orgaware refers to the
competitiveness and capabilities of the organisation which is related to the development of new
applications and operations as a step for creating value for the customer.

Even though there are many different characteristics of Technoware, Humanware,
Infoware, and Orgaware that were described, most are similar with minor differences between
the components of technology and also the characteristics of the technology components
themselves. Table 2 shows that characteristics of each technology component that were
identified and categorised into seven aspects (UN-ESCAP, 1989).

Table 2.
Technology component characteristics category
Component Category
Technoware Manual facilities, powered facilities, general purpose facilities, specific purpose
facilities, automatic facilities, computerised facilities, and integrated facilities
Humanware Operating abilities, setting-up abilities, repairing abilities, reproducing abilities,
adapting abilities, improving abilities, and innovating abilities
Infoware Familiarising facts, describing facts, specifying facts, utilising facts, comprehending
facts, generalising facts, and assessing facts
Orgaware Striving framework, tie-up framework, venturing framework, protecting framework,
stabilising framework, prospecting framework, and leading framework
Source: UN-ESCAP (1989)

METHODOLOGY
Data and Sample

Based on the information that was obtained from SMIDEC, FMM, and PKNK, there were 305
manufacturing companies operating in Kedah. The list of names and addresses obtained from
these organisations became the research population frame. Based on Krejcie and Morgan
(1970), as many as 169 companies need to be chosen as the research sample. A total of 38
owners/managers or those who were involved in the management of the SME companies was
successfully interviewed. The questionnaire was also distributed by post, and only 13
respondents returned sufficiently completed questionnaires. Therefore, the total respondents for
this survey were 51 respondents. According to Lam and Zhao (1998), as well as Cheng and Li
(2002), a large sample size is not mandatory in research that involves the use of AHP.

Research Analysis and Measurement Scale

The scale used in this research is the ratio scale, which is interval data arranged
beginning with the smallest number and ending with the largest (Piaw, 2008). The smallest
number represents the smallest value while the largest number represents the largest value.
According to Piaw (2008), the ratio scale contains the true zero value and the distance between
scales are the same, so mathematical calculation can be performed.

In this research, the ratio scale in the form of percentages was used. The scale
arrangement starts at 0 and ends in 100 (marked at every five intervals). The values marked by
the respondent were adapted to the Saaty scale. The measurement for the technology






components in this research was based on Saatys method, which is also known as the AHP. It
is used for selecting and arranging 24 dimensions placed under four technology component
categories according to the research subjects chosen among the SME operators in Kedah. This
method is flexible because it can conduct subjective evaluation on both qualitative and
quantitative factors. This research had taken the general approach used in AHP, which are
paired comparisons. Before the selection and arrangement of elements according to importance
are performed, the respective technology components following the elements are measured
using the Saaty coupled scale. However, in order to achieve the objectives of this research,
modification of the measurement was performed.

Based on the recommendation by Saaty (1980), an issue or a problem is a complex
system and can be broken down into subsystems and thus be represented in hierarchical form.
The top most hierarchy is the overall aim and below it are several criteria and sub-criteria for
each alternative. There are several phases during the use of Saatys method. Several researchers
had divided it into just two phases, namely the hierarchical design phase and evaluation phase
through the paired comparison (Barker, Shepperd, & Aylett, 1999; Santillo, 2000). There are
also others who divide the method into three phases, which are system structuring, paired
comparison, and main synthesis (Choi, 2000; Shin, 2000). Furthermore, there are researchers
who divide the process into four phases, namely hierarchical construction, paired comparison,
relative and alternative priority estimation (weight) criteria, and finally ranking in order of
importance (Drake, 1998; Frair et al., 1998; Choirat & Seri, 2001; Kinoshita, Sekitani, & Shi,
2001).

During this research, the approach by Liang (2003) was used as reference. Table 3
explains the five main steps for obtaining a weightage score using the AHP approach. These
steps were applied from Liang (2003).

Table 3
Explanation of steps to obtain weightage
Steps Explanation
Step 1:
Build hierarchical structure

Hierarchical structure in AHP is used to confirm the element and
alternative that are involved in decision making, or in other words, to
attain the objective. The built hierarchy depends on the complexity of the
problem that is being analysed and the elements, which should not be too
numerous in the hierarchy.
Step 2:
Perform paired comparison
in matrix form
Paired comparison is performed to obtain the relative importance values
for each element involved. The nominal scale introduced by Saaty
(starting from 1/9 to 9) is used to measure the relative importance value.
Step 3:
Obtain eigen vector and
maximum eigen value
Significance is obtained from the eigen vector from the paired comparison
matrix, which measures the degree of importance for each element and at
the same time, the value of the maximum eigen value (1) can be obtained.
This value is used to establish the consistency toward the comparison
being made.
Step 4:
Calculate the consistency
index (CI)
If the paired comparison matrix is consistent, the maximum eigen value
(1) should equal the number of elements being compared (n). Thus, the
difference can indicate the degree of consistency. The consistency ratio
(CR) is calculated to confirm the degree of consistency. The CI that is
presented in this research used the following formula:
CI = (
max
n)/(n 1)
If CI 0.1, the level of consistency is accepted. Otherwise, another
evaluation has to be performed.
Step 5:
Obtain overall weightage
score
In AHP analysis, paired comparison is used to establish the importance
values for each element. By multiplying the eigen vector (criteria and sub-
criteria in the hierarchical structure), the overall wieghtage score can be
obtained.
Source: Liang (2003)

Decision Hierarchy
The first phase of the Saaty method is to present the problem in a hierarchical form that
contains certain elements. Normally, the overall objective for a problem is placed on the top of
the hierarchy, as shown in Figure 1. At level 1, the elaboration of the problem into several main
criteria is performed, which is followed by further explanation if there exists at level 2 several
sub-criteria. In the final level 3, all involved alternatives are listed. A decision hierarchy can
change and follow various forms following its suitability with the problem at hand.








Rajah 4.2: Hierarki keputusan

Figure 1. Phase 1 of the decision hierarchy

Comparison of each Element in Pairs (Coupled)
All elements found in the decision hierarchy at levels 1, 2, and 3 are measured using the
paired comparison (pc). The use of the Saaty scale, as explained in Table 4, aimed at evaluating
the importance rate trend between two elements at the same level.


Table 4
Explanation of Saaty scale
Importance Definition Description
1

3

5

7

9

2,4,6,8
Same importance

Moderate domination

Strong domination

Stronger domination

Strongest domination

Mediating values
Elements i and j contributes equally to the objective

Element i is more important than element j

Element i is of strong importance compared to element j

Element i is of stronger importance compared to element j

Element i is of strongest importance compared to element j

There is give and take between the two scales
1
9
,
1
8
,..,
1
2

If there is an occurrence where element j is more important
than element i, then follow the importance as stated above
Source: Saaty (1980)
After all elements were compared pair-wise, the evaluation matrix of dimension d x d
form. For example, if the elements at the second level consist of four criteria, then the matrix is
a 4 x 4 matrix.
Then the comparison values between two different elements under the same criteria are
compared using the ratio concepts. Assume that element i has a value of 5 and element j equals
7, then the paired comparison value of element i toward j is 5/7. The same goes for when
Objective


Criteria
Sub-criteria
Alternative
Level 1
Level 2
Level 3






element j is compared to i, thus its value is 7/5, which is equal to 1/(5/7). This method still
maintains the interval concept like the Saaty scale.

Calculation of Relative Weightage for each THIO Component and Elements

The calculation of the weightage is through paired comparison matrices, which is A =
(a
ij
) = (w
i
/w
j
), where w
i
and w
j
are the ith and jth relative importance separately. Each entry A is
positive and fulfils a
ji
= 1/a
ij
= w
j
/w
i
. Matrix A is shown below:

A =
1,2 1,
2,1 2,
,1 , 1
1
1
1
n
n
n n n
a a
a a
a a

(
(
(
(
(


If matrix A is consistent, meaning that a
ij
= a
ik
/a
kj
for each i, j, and k, then A is the
arrangement unit because each row is a permanent multiple to the first row. This causes the
eigen value to cevome zero ((A n1)w = 0) except one eigen value only, that is n because Aw =
nw where w = (w
1
, w
2
..., w
n
)
kT
. The consistency formula is given as shown below (Saaty, 1990,
1999; Santillo, 2000).

Aw =
1
1 1
1 1 1
1
1
n
n
n n n
n n
n
A A
w w
A w w
w w
n nw
A w w
w w
w w
(
(
(
( (
(
( (
= =
(
( (
(
( (

(
(



If the values for each w
i
/ w
j
cannot be obtained, then an estimation needs to be
performed. Therefore, matrix A can become inconsistent even though there exist intervals. This
matter can be explained through the eigen value theory by Wilkinson (1965), which is often
referred to by users of AHP, including Saaty (1990) and Choi (2000) who stated that small
errors in concise eigen values can lead toward problems in eigen value in the form of Aw =

max
w where
max
is the main eigen value to A that is no longer consistent but still has intervals.
Meanwhile, Shin (2000) refers to this matter as fuzzy nature that cannot be avoided.

Next, Saaty (1990) proved that
max
n for each positive interval matrix. Equilibrium
only occurs when matrix A is consistent. Therefore, relative importance depend on the relative
amplitude to component vector w, thus we need to normalise w by resolving the equality below
(Fogliatto & Albin, 2001; Saaty, 1999; Shin, 2000; Triantaphyllou & Shu, 2001):
1
1
n
i
i
w

Measurement of Consistency Degree for Validating Decision

In order to measure the extent of consistency for each criterion that is compared, Saatys
method has produced CR values according to the following:
CR = CI/RI
CI = consistency index
= (
max
n)/(n 1)
n = number of elements being compared
RI = random index
= average CI toward random interval matrix for the dimension from the scale
{
1
9
,
1
8
,..
1
2
, 1, 2,..., 8, 9}


The value of each RI for each n is shown in Table 5.

Table 5
RI values for each different n value
N 1 2 3 4 5 6 7 8 9
RI 0 0 0.58 0.90 1.12 1.24 1.32 1.41 1.45
Source: Saaty (1990)

If matrix A is consistent, then both CR and CI are zero because
max
n = 0. In other
words, as A becomes more inconsistent, the values of CR and CI become larger. Thus,
comparisons performed paired-wise in each evaluation matrix are considered consistent if the
CR value is less than or equal to 10% or 0.1 (Saaty, 1980; Saaty & Vargas, 1984).

A research performed by UN-ESCAP (1989) on the metal industry stated seven levels
of complexity with regard to the technology components. Other studies had not established
these seven levels. Therefore, this research has adapted from UN-ESCAP (1989) by using the
relevant information in the context of SMEs.

As many as 24 elements (starting from T1-T7 for Technoware, H1-H3 for Humanware,
I1-I7 for Infoware, and finally O1-O7 for Orgaware) have been categorised according to the
respective technology components, which are as follows:
i) Technoware
T1: Operations performed manually for example using screw drivers, hammers,
hacksaws (manual facilities)
T2: Mechanical energy is used to add strength and operational control is performed fully
by operators for example portable drills, hand-held polisher (powered facilities)
T3: Certain operations are performed using facilities and the operator controls operations
fully for example lathe, grinder (general purpose facilities)
T4: Facilities are used for specific activities and the operator controls operations fully
for example weaving machines (specific purpose facilities)
T5: Facilities are used for operations with minimum control by the operator where
corrective measures are performed by the operator for example automatic
distribution machines (automated facilities)
T6: Computer control used for analysis of environmental and adaptation characteristics in
order to achieve objectives before operations are started, so operator involvement is
at the very minimum for example Computer Numerical Control (CNC)
(computerised facilities)
T7: The entire operation is integrated through the use of computer facilities where there is
virtually no involvement by the operators for example using robots (integrated
facilities)

ii) Humanware
H1: Workers are able to handle Technoware without requiring high level skills low-
skilled and semi-skilled workers (operating abilities)
H2: Workers having capabilities in performing operations skilled workers and
technicians (setting-up abilities)






H3: Workers with the expertise, skills, and capabilities in repairing, modifying, and
complementing all operations for example technicians, engineers, and experts
(repairing, reproducing, adapting, improving and innovating abilities)

iii) Infoware
I1: All facts that explain the operation of facilities for example models, pictures,
general brochures (familiarising facts)
I2: Facts that give understanding on the basic principles behind the operational modules
for example description of tools and processes (describing facts)
I3: Facts to aid in the selection and setup of facilities for example tool specifications,
flowcharts (specifying facts)
I4: Facts that help in using facilities effectively for example standard operating
procedure (SOP), work safety guides (utilising facts)
I5: Facts that give deep knowledge and understanding about the operating facilities for
example process elaboration, planning, manufacturing management specifications
(comprehending facts)
I6: Facts that help in improving planning and facility usage actions for example output
reverse engineering output, R&D in the form of product development information
and process improvement (generalising facts)
I7: State-of-the-art information about facility usage for specific aims for example
complete information about the latest development in the improvement of facility
design, performance, and usage (assessing facts)

iv) Orgaware
O1: Small business managed using small capital and small number of workers (striving
framework)
O2: Becomes a sub-contractor to a larger business (tie-up framework)
O3: Able to produce and market own product on a large scale (venturing framework)
O4: The organisation is able to introduce new products and find new market (protecting
framework)
O5: The organisation is able to defend its market by increasing total products and improve
output quality (stabilising framework)
O6: The organisation continues to find new market space (prospecting framework)
O7: Dominates the market in certain fields and becomes the exemplary to rivals (leading
framework)

Each SME research evaluates these elements according to degree of importance using a
scale as mentioned above. Element evaluation is performed to observe the important elements
based on the business that is performed. Using the Saaty method, this study can find a relative
weightage value for each element as well as rank them in order of importance. The initial steps
of using the Saaty method are shown as a hierarchy system, as shown in Figure 2.

1,1 1,2 1,3 1,24
2,1 2,2 2,3 2,24
3,1 3,2 3,3 3,24
24,1 24,2 24,3 24,24
Element 1 = T1
Element 2 = T2
Element 3 = T3
Element 24 = O7
a a a a
a a a a
a a a a
a a a a
(
(
(
(
(
(
(






















Figure 2: Hierarchical structure of this research

Information According to Levels
Figure 2 points toward two types of elements needed by SMEs Studies, which are level
1 (THIO components) and level 2 (THIO elements). However, the main focus of the study is the
elements in level 2 consisting of 24 elements. Using the Saaty approach, paired-wise
comparisons need to be performed. If comparisons are performed for each element without
considering the information in level 2, then we can get a paired comparison matrix as shown
below:

T1 T2 T3 O24





a
i,j
= relative importance value of dimension i over j; i,j = 1,2,3,...,24
a
1,1
, a
2,2
, a
3,3
, ... , a
24,24
= 1; (i=j)


Numerical Illustration of Paired-wise Comparison Matrix

The following are the numerical illustrations of the paired-wise comparison matrix
using the research data from the 3
rd
SME Study, as shown below.
SME Study
1
SME Study
rth SME Study
r = number of SME
Level 1
Level 2
To establish the current technology status of SMEs in Kedah
Technoware Humanware Infoware Orgaware
T1
T2
T3
T4
T5
T6
T7
H1
H2
H3
I1
I2
I3
I4
I5
I6
I7
O1
O2
O3
O4
O5
O6
O7






i. THIO component hierarchy


T H I O
( )
( ) ( )
1 2 1/ 2 1/ 2 T
1/ 2 1 1 1/ 2 H
A =
1/ 1/ 2 1 1 1 I
1/ 1/ 2 1/ 1/ 2 1 1 O
(
(
(
(
(




ii. THIO element hierarchy

a. Paired-wise comparison matrix for Technoware (T)

T1 T2 T3 T4 T5 T6 T7
T
T1 1 9/ 2 9/ 9 9/ 9 9/ 2 9/1 9/1
T2 1/(9/ 2) 1 2/ 9 2/ 9 2/ 2 2/1 2/1
T3 1/(9/ 9) 1/(2/ 9) 1 9/ 9 9/ 2 9/1 9/1
A T4 1/(9/ 9) 1/(2/ 9) 1/(9/ 9) 1 9/ 2 9/1 9/1
T5 1/(9/ 2) 1/(2/ 2) 1/(9/ 2) 1/(9/ 2) 1 2/1 2/1
T6 1/(9/1) 1/(2/1) 1/(9/1) 1/(9/1) 1/(2/1) 1 1/ 1
T7 1/(9/1) 1
=
/(2/1) 1/(9/1) 1/(9/1) 1/(2/1) 1/(1/1) 1
(
(
(
(
(
(
(
(
(
(




b. Paired-wise comparison matrix for Humanware (H)

H1 H2 H3
H
H1 1 9/1 9/1
A H2 1/(9/1) 1 1/1
H3 1/(9/1) 1/(1/1) 1
(
(
=
(
(




c. Paired-wise comparison matrix for Infoware (I)

I1 I2 I3 I4 I5 I6 I7
I
I1 1 1/ 2 1/ 9 1/ 9 1/ 4 1/ 4 1
I2 1/(1/ 2) 1 2/ 9 2/ 9 2/ 4 2/ 4 2
I3 1/(1/ 9) 1/(2/ 9) 1 1 9/ 4 9/ 4 9
A I4 1/(1/ 9) 1/(2/ 9) 1 1 9/ 4 9/ 4 9
I5 1/(1/ 4) 1/(2/ 4) 1/(9/ 4) 1/(9/ 4) 1 1 4
I6 1/(1/ 4) 1/(2/ 4) 1/(9/ 4) 1/(9/ 4) 1 1 4
I7 1 1/ 2 1/ 9 1/ 9 1/ 4 1/ 4 1
(
(
(
(
(
=
(
(

(
(
(









d. Paired-wise comparison matrix for Orgaware (O)

O1 O2 O3 O4 O5 O6 O7
O
O1 1 9/ 5 1 1 9/ 3 9/ 4 9
O2 1/(9/ 5) 1 5/ 9 5/ 9 5/ 3 5/ 4 5
O3 1 1/(5/ 9) 1 1 9/ 3 9/ 4 9
A O4 1 1/(5/ 9) 1 1 9/ 3 9/ 4 9
O5 1/(9/ 3) 1/(5/ 3) 1/(9/ 3) 1/(9/ 3) 1 3/ 4 3
O6 1/(9/ 4) 1/(5/ 4) 1/(9/ 4) 1/(9/ 4) 1/(3/ 4) 1 4
O7 1/ 9 1/ 5 1/ 9 1/ 9 1/ 3 1/ 4 1
(
(
(
(
(
=
(
(
(
(
(




Arithmetic Mean Weight and Consistent Values

The weight calculations for each THIO component and THIO element are based on
arithmetic mean. This method is appropriate when the decision criteria have the same
measurement unit (Triantaphyyllou & Sanchez, 1997). This method is performed by changing
the comparison matrix
f
ij
a with each subject to the weight
f
i
w . The following shows how the
weight values are obtained for each comparison matrix.

i) Obtain totals for each column
n
1,1 1,2 1,
n ,1 ,2 ,
,1 ,2 ,
1 1 1
A1 A2 A
A1
A
Total
coloum
n
n n n n
n n n
i i i j
i i i
Function f
a a a
a a a
a a a
= = =


The j
th
column total j =
,
1
n
i j
i
a
=

i = (1, 2, 3,..., n)
ii) Divide the matrix value in each cell with the respective column total. The result is a
normalised comparison matrix.

n
1,1 ,1 1,2 ,2 1, ,
n
,1 ,1 ,2 ,2 , ,
A1 A2 A
A1
/ / /
A
/ / /
i i n i n
n i n i n n i n
Function f
a a a a a a
a a a a a a











iii) Obtain the weight factor through means of each row (eigen value)
n
1,1 ,1 1, ,
1, ,
n
,1 ,1 , ,
, ,
A1 A Means of each row
A1
/ /
/
A
/ /
/
n n
i n i n
j i j
j i
n n
n i n n i n
n j n j
j i
Function f
a a a a
w a a
a a a a
w a a
| |
=
|
\ .
| |
=
|
\ .





Weight value is
, ,
/
n n
i i j i j
j i
w a a
| |
=
|
\ .


row 1, ..., n i =
Using the paired comparison matrix, the weight values obtained are as follows:
3 r
wA
=
= (0.869,0.732,1.206,1.384)

The paired-wise comparison matrix weight value calculation is repeated according to
steps i) to iii) for all SME Studies. Generally, the values are as follows:

( )
{ }
( )
{ }
[ , , , ]
1 7 1 3 1 7 1 7
, , , ;
,..., ; ,..., ; ,..., ; ,..., ;
kT
r T H I O
kT
T H I O T T H H I I O O
r A A A A A A A A
wf w w w w r
wA w w w w w w w w r
=
=

Next, the paired-wise comparison of consistency level that is performed for each SME Study at
level 1 (THIO components), is tested using formula. Using the paired-wise comparison matrix,
the following shows the weight values and consistency multipliers for the 3
rd
SMEs Study:
3 r
wA
=
= (0.869,0.732,1.206,1.384)

max
= 4.187; CI = 0.062; CR = 0.069

Meanwhile, for level 2 (THIO elements), the elements of the paired-wise comparisons are
consistent, because the researchers follow the concept emphasised by Saaty (1999) during the
process of comparing, which is:
When
ij jk ik
a a a = , then the paired-wise comparison matrix dimension
f
ij
a is consistent
and the principle eigen value,
max
equals
f
n , that is, the number of dimensions for each
function, (
max
=
f
n ). Otherwise, it is an interval, (
ij
a =1/
ji
a ).
Comparisons performed by r = 3 is consistent because the consistency ratio value (CR)
< 0.1.

Average Weight for each Technology Component Dimension

The listing of the technology components is performed according to the highest scores
obtained from the multiplication of the average function weight wf THIO component with the
average element THIO weight wA. Among the previous research studies that use this approach

to obtain the final weight/score for each level are by Cheng and Li (2001), Dey and Gupta
(2001), as well as Jackson (2001). The average weight for each wf and wA is obtained using
geometric mean, and the technology component score is shown by the following formula:
Technology Component Score, kT =
4 28
1 1
x
i j
wK wD
[ [

where K
i
= (T, H, I, O)
D
j
= (D1,,D7)

Note: D refers to the dimension for each criterion, which are THIO

FINDINGS
SME Studies in Technology Component Hierarchical Analysis












Firgure 3: Decision hierarchy for all 51 SME Studies

Figure 3 illustrates that decision hierarchy for the 51 SME Studies. It was observed that the
Orgaware component is the most important component, followed by Technoware, Humanware,
and Infoware. This research supports other previous studies by Jantan, Ismail, Ramayah, and
Hikmat (2001a), who found that much of the technology used in SMEs focuses on
administrative technologies. In this research, administration is one of the elements included in
the Orgaware component.

SME
Study
Ranked in Order of Importance
Technology Component THIO Component Element
1. Orgaware
2. Technoware
3. Humanware
4. Infoware
(O-T-H-I)
1.H1
2.H2
3.T1
4.T2
5.T3
20.I1
21.I7
22.O2
23.T6
24.T7



To establish current technology status of SMEs in Kedah
Technoware: 0.261
T1: 0.050

T3: 0.049

T4: 0.047

T2: 0.050

T5: 0.034

T6: 0.017

T7: 0.014

Humanware: 0.238
H1: 0.120
H2: 0.069
H3: 0.049
Infoware: 0.225
I1: 0.026
I2: 0.032
I3: 0.032
I4: 0.039
I5: 0.037
I6: 0.034
I7: 0.025
Orgaware: 0.276
O1: 0.038
O2: 0.023
O3: 0.042
O4: 0.044
O5: 0.047
O6: 0.047
O7: 0.035






For the elements of technology component, the H1 element that is the unskilled and semi-skilled
workforce is in the first position, followed by H2, which is the skilled worker like technicians.
This illustrated that the SMEs own and use a workforce that is unskilled, or semi-skilled, and
skilled for handling the facility, maintenance work, and the like. Without Humanware, each
organisational path and operations cannot be performed.

DISCUSSION

From this research, the involvement of Technoware component in SME studies is
dependent on the type of business that is performed, and also the financial source that is
accessible. For example, SMEs get a lot of machine assistance from SMIDEC. This process is
known as hire-purchase. There are also organisations that like to use traditional methods,
based on the products that are manufactured. For the Humanware component, some SMEs
Studies did not have technicians because they get technical assistance from external parties or
from the machinery suppliers. In relation to Infoware, information or facts used are not
widespread. For example, the flowchart for generating products is rarely documented and
shown. Finally relating to the Orgaware component, the framework for many organisations is
influenced by location as well as the marketing strategy adopted. Since SMEs are still at the
early stages which use small capital, more complex facilities for making their work easier are
not affordable. They are forced to use traditional or manual methods.

The phenomenon that is revealed through this research is related to the involvement of
technological components and elements in SMEs. The involvement of technology components
can be viewed from the weightage calculation perspective which illustrates the trend of SMEs in
giving attention to a technology component. This trend may be different depending on the SME
status or category where the SMEs are placed. It is hoped that the results obtained can help give
benefit to several parties. Among them are the owners or SME operators, agencies that aid
SMEs like KEDA and SMIDEC (no known as SME Corp Malaysia), financial institutions that
provide assistance like SME Bank, and last but not least the academicians who can further
investigate this field of knowledge.

For the SME owners or operators, the technology status of the organisation can be
explored further. A comparison can also be made with SMEs with different status levels that
have been established. This comparison can improve the competitive levels among the SMEs
where they continue to improve their productivity from time to time. The obtained technology
status of SMEs can also help the assisting organisation like KEDA and SME Corp Malaysia in
forming their strategies more effectively toward fulfilling the needs of SMEs from time to time.


CONCLUSION

This research aimed at establishing the technology component status of SMEs in Kedah. Based
on the data obtained from an analysis using the method by Saaty, which is also known as AHP,
several strong trends were observed in the use of Orgaware, followed by Technoware,
Humanware, and Infoware. Therefore, it can be concluded that the organisational skills and their
manifestation in daily routines and processes are important factors that need to be addressed
critically in SMEs.








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Websites

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