The use of IT in a firm can vary depending on a number of factors such as atop executive's perceptions and the firm's industry. In this study, variables representing the organization's external and internal characteristics were examined to determine whether they affect the firm's progressive use of IT and, if so, which has the strongest effect. A questionnaire was mailed to the Chief Executive Officers and Chief Financial Officers of 300 small and medium-sized publicly-traded companies. Results indicate that internal factors (Chief Executive Officer's perception of IT importance and the information intensity of the product), more than the external factors, influenced the firm's progressive use of IT.