The Use of Information Technology in SMEs: Advantages and Main Challenges

Abstract From the beginning of the 20 th century, a lot of research has been conducted on how SMEs contribute to the development of innovative activities and vice versa, on how new technologies and innovation have the potential to influence small and medium-sized enterprises (SMEs). Nowadays, given the highly competitive and dynamic business environment, SMEs are constantly and actively trying to find ways to keep up with the latest developments, which is not always an easy task. Digital technologies and innovation in business administration and other related fields are key attributes that can be seen as essential elements in the field of entrepreneurship. Thus, digitization has become a crucial factor in the business world, and its impact on SMEs cannot be neglected. Nonetheless, company size, capital and resources seem to limit SMEs’ ability to adopt digital technologies. However, countless studies argue that a smaller firm size allows SMEs to be more flexible to change. Therefore, both digital progress and innovation have become highly relevant tools for businesses to improve their performance, reduce their costs and increase their efficiency, and are seen as key factors for competitiveness, development and economic growth. With this paper we understand how Romania, with its expanding economy and support for entrepreneurs, has the potential to be a relevant player in the digital economy, although its current ranking on the level of digitization and innovation is considerably lower than the EU average.