Internet of Things (IoT) Capability Index for Technology-Based Small and Medium Enterprises (SMEs) in Malaysia

The Internet of Things (IoT) is a new technology paradigm where it is estimated that a worldwide network of machines and devices is able to interact with each other. It offers numerous benefits for Small and Medium-sized Enterprises (SMEs), including enhanced operational efficiency through automation, real-time monitoring, and cost savings via resource optimization. However, there still exist some barriers and challenges in implementing IoT among SMEs in Malaysia. In view of these issues, the current research explores a new perspective by employing an integrated indexing method to quantify IoT capability in measuring the level of IoT implementation among SMEs. A suitable weightage for each IoT capability component is estimated by considering the significant contribution to the IoT capability index. The estimated level and weightage of IoT are applied in computing the IoT capability index for technology-based SMEs in Malaysia. A survey questionnaire was used to collect primary data from 97 technology-based SMEs under the Malaysian Technology Development Corporation (MTDC) incubator programme. The respondents consist of general managers or core members of the managerial team who have a good understanding of the firm’s IoT implementation. The analysis includes Analytic Hierarchy Process (AHP), eigenvalues, and eigenvectors via MATLAB, SPSS, and Microsoft Excel. The findings of the AHP analysis regarding the IoT implementation among SMEs demonstrated the following four main results: 41.03% are still researching materials related to IoT, 33.33% have started planning to implement IoT, 20.51% are in early implementation of IoT, and only 5.13% are extensively implementing IoT in their firm. The IoT capability index also identifies bottlenecks and improvement opportunities for the SMEs and subsequently increases productivity and expands the number of high-growth and innovative firms in Malaysia.