Studies of EDI Adoption in SME

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Few EDI adoption studies in the SME context have been conducted. A notable one is Iacovou et al. (1995), which proposed a theoretical model consisting of three contextual factors: (1) perceived benefits of EDI, (2) organizational readiness, and (3) external pressures, which determine EDI adoption in SME. Perceived benefit refers to Rogers' (1983) characteristics of innovation. Organization readiness refers to "availability of the needed organizational resources for adoption." External pressure refers to influences from the organizational environment.

Seven organizations, which were selected from a list of suppliers to the British Columbia government, were investigated by using case studies. The findings indicated that the external pressure from EDI initiators had the strongest explanatory power to influence EDI adoption in SME, followed by perceived benefits. Also, non-adopters had lower levels of awareness of EDI benefits and focused on direct benefits rather than on indirect benefits from adoption. The relationship between organizational readiness and adoption was not strong but the cost of the investment and the lack of technical knowledge were important in the adoption decision.

Iacovou et al.'s study provides preliminary empirical findings on the adoption of EDI in SME. The insights obtained also help to formulate hypotheses and provide theoretical background for further confirmatory investigation. However, the small sample size and the lack of reliability and construct validity tests restrict the validity of the overall findings, suggesting that a large-scale study might be needed to ensure greater reliability.

Raymond and Bergeron (1996) surveyed 39 SME to examine EDI adoption from another perspective. They proposed a model of success factors of EDI in SME. Six factors, namely, organizational support, the implementation process, the control process, internal and external integration and imposition levels were used to study how they affect the advantages to be obtained from using EDI. The results suggest that more benefits from adopting EDI are obtained if more organizational supports such as training for employees are provided. This implies that lack of resources is an important inhibitor for SME to realize the potential benefits of adopting EDI. Also, the imposition level was found to have an adverse effect on obtaining EDI benefits in SME.

The findings of Raymond and Bergeron's study were also compared with those obtained in another study in which the same research model was applied to large organizations. The comparison indicated that factors affecting EDI advantages might be different between large organizations and SME in terms of strengths and directions. One significant difference is the degree of influence of the organizational context on both large organizations and SME. The organizational context, which includes organizational support, the implementation process and the control process, plays a significant role in successful use of EDI in SME, while the impact of the organizational context is not so great for large organizations.

This comparison provides a valuable insight into studying IT adoption or implementation in large organizations and SME. It suggests that large organizations and SME have different issues to face when making the same adoption decision. This is consistent with DeLone (1988) and Harrison et al. (1997), who discuss different considerations in large organizations and SME in IT adoption and implementation. More importantly, the study validates the need for further studies on SME.

Tuunainen (1998) investigated EDI usage by SME in the automotive industry where large partners are dominant. The author found that SME did not actively integrate their systems with EDI systems, although they were aware of the benefits that could be obtained from EDI integration. The reasons for using EDI were to maintain business relationships, because using EDI was a prerequisite to doing business in an industry like the automotive industry. Major barriers that inhibited EDI adoption for SME were the lack of EDI awareness, confounding standards, high costs and technical complexity, indicating that sufficient technical and financial support were essential for EDI adoption and diffusion in SME.

Chen and Bernard (1998) studied the impact of EDI in eight British SME using the case study approach. A major finding is that a positive attitude of the owner or managers towards EDI might result in further development of EDI, and more benefits would thus be obtained. Another finding indicates that the influence of trading partners, especially important partners with a significant proportion of trade, is crucial in adopting EDI. Most organizations follow requests from important partners to adopt EDI but with limited integration. In other words, the main purpose of a SME to adopt EDI is to maintain a business relationship. This finding shows that the influence of trading partners consistently plays an important role in EDI adoption.

Mullins et al. (2001) investigated the training needs of SME on the use of EDI in the United Kingdom, Poland, Slovak Republic, Germany and Portugal. Using case studies, surveys and focus groups, they found that most managers lack training on the business and technical issues associated with the implementation of EDI.

Kuan and Chau (2001) proposed a perception-based small business EDI adoption model using data collected from 575 SMEs in Hong Kong, based on a technology-organization-environment framework. Their findings indicate that the perception of adopter firms differs from that of non-adopters in a number of ways. Adopters perceive higher direct benefits, lower financial costs, higher technical competence, higher government pressure and lower industry pressure than non-adopters.

Stefanson (2002) conducted case studies with over 20 SME on EDI adoption in view of the growing importance of supply chain management. The author pointed out that the SME assumed the risk of being permanently excluded from the integration of supply chain if they did not adopt EDI after its existence for 3 0 years. The advancement in the Internet technologies and the proliferation of electronic business, however, should open up new opportunities for adoption in the SME.

These studies contribute significantly to our understanding of factors that influence EDI adoption in SME. However, most studies are case studies, which, on the one hand, help to capture 'reality' in greater detail and provide preliminary and useful findings for further exploration of this research area, but, on the other hand, this method makes it difficult to generalize the results to a large population. Therefore, a large sample study is deemed necessary to provide statistical validity and generalizability. Our study provides such a large-scale empirical investigation.

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