Investigating the Impact of ICT Investment on Performance: Insights from MSME Manufacturing Firms

Purpose This study argues that ICT Investments positively and significantly improve the Indian MSME Manufacturing firm's performance. Design/methodology/approach We employed Partial Least Squares Structural Equation Modelling (PLS-SEM), a statistical technique for testing and estimating complex relationships, to examine the impact of ICT on the firm performance paradox. Specifically, how internal and external factors influence ICT investment decisions concerning firm performance. Findings ICT investments positively impact Return on Assets (ROA). Our analysis shows a surprising downside: ICT investment negatively mediates the relationship between short-term borrowing and ROA. The New-age firms are cautious about adopting ICT. MSMSs need robust Government support for digitalisation. Research limitations/implications This paper is limited to the Indian context. Practical implications This research does more than fill a gap; it breaks the ICT performance paradox in the emerging market. On a practical level, MSME stakeholders can use these results to fine-tune their ICT strategies, even when capital is tight. Because these findings act as a realistic benchmark for Indian MSMEs, they benefit from replication in similar economies. This study offers a roadmap for scalability. Social implications When MSMEs make informed ICT investments, the ripple effects improve broader economic growth and productivity within the geography. Originality/value This paper presents original work not previously studied in the Indian context, examining the complex relationship between ICT and other influential factors and their impact on firm performance.