Firm Size and the Adoption–Awareness Gap: Evidence from Micro, Small, and Medium Enterprises in Delhi NCR

Abstract

Governments in many low income and middle income countries are putting huge commitments on digital public procurement tools to help micro, small and medium firms gain better access to markets. And yet the small firms are an area where the participation level is still weak. This research shows if a firm's size causes a change in the link between awareness about digital procurement platform and its actual use. The Government e-Marketplace (GeM) in India was chosen as an area to study. 450 MSMEs in the Delhi National Capital Region (NCR) were interviewed. The samples were equally distributed among Micro, Small, and Medium segments. The survey includes the knowledge whether firms have adopted GeM, usage density in the platform, what problems they raised, views and the level of their satisfaction.
In terms of the percentage adoption and knowledge changes, two clear patterns can be seen. First, both of them moved higher as the size grows. Adoption figures are 20.0% for Micro, 56.0% for Small, and 52.0% for Medium (χ² = 42.19, p < . 001). Knowledge of GeM likewise increases with size (Micro M = 2.47, Small M = 3.19, Medium M = 3.44; p < . 001). Second, the gap persists even with high knowledge. For Micro, 29.2% adopted GeM. For the Small, nearly 59.7% adopted it. On the other hand, 70.1% are adopted by the Medium firms (χ² = 12, 81, p = . 002). This study also tested the effect of awareness in Micro firms. A base check did not show any clear relationship between awareness and adoption in Micro firms. Nonetheless, after incorporating awareness into a logistic model, size was still the most important matter in adoption. Small-company scale had a greater odds ratio than the Micro scale (OR = 3.52; p < . 001). Similarly, the Medium scale was found to have more odds vis-a-vis the Micro scale (OR = 3.74; p < . 001).
The extent of adoption among Micro firms is typically lesser than GeM. It is lower among Micro with respect to depth of adoption as measured by the adoption scoring (M = 2.70), compared to Medium (M = 3.49; p = . 002). Micro adopters generally maintain an early or trial phase longer. Forty-five percent of Micro firms said this was so, against 17% for medium ones (χ² = 15, 55, p = . 004). Furthermore, they reported barriers much more than other firms in bigger groups. Altogether, results suggest that the gap between awareness and adoption in MSMEs in India is not just about knowing. It appears more as a capacity and execution issue, and it affects the smallest of companies the most. The implications of this for MSME policy, perspectives on the adoption of platforms, and the design of e-governance tools are covered in the article.