Summary and Conclusions

Chapter 11 - SME Barriers to Electronic Commerce Adoption: Nothing Changes-Everything is New
Managing IT in Government, Business & Communities
by Gerry Gingrich (ed)
Idea Group Publishing 2003

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In this chapter we have analyzed e-commerce adoption and diffusion barriers in SMEs discussed in previous literature, with the intention to find similarities and differences between the barriers associated with the adoption of different technologies: ICT/IS in general, EDI, and Internet-based e-commerce. After having discussed the importance of small companies in any country's economy, the chapter has presented different definitions of SMEs and advantages and disadvantages of being small. The chapter has then touched upon some benefits that e-commerce can bring to SMEs and posed the question of why SMEs still are reluctant to adopt e-commerce. This leads to the second part of the chapter that looks in depth at e-commerce adoption and diffusion barriers.

We do not claim to have conducted an exhaustive literature review on barriers to e-commerce for SMEs. We believe, however, that we have produced a representative sample of a wide range of often-cited pieces of research on the topic. We divided the barriers or inhibitors found in earlier empirical studies into internal and external issues. Barriers created or maintained by external factors, such as weak industry influence, poor promotion campaigns, lack of critical mass, lack of security or perceived security hazards, as well as lack of standards are essentially areas where ICT vendors, industrial partners or associations, as well as authorities and policy makers can have an impact. Nevertheless, much more factors were found to fall into the internal or organizational category, including issues such as lack of awareness or understanding, lack of knowledge and skill, and lack of financial resources to invest into the ICT technologies. External players can influence the level of awareness. Furthermore, it could be expected that the significance of many organizational problems will diminish as the more computer literate generations take over the SMEs; but then again, the pace of technological development is unlikely to slow down, creating all new possibly hurdles particularly for non-IT professionals. Furthermore, the same factors that are hindering the adoption seem to go on being problematic once the SMEs have implemented e-commerce. Factors such as lack of IT expertise, limited resources, and lack of support have been found to also inhibit SMEs' ability to derive benefits when using e-commerce (Chau and Turner, 2002).

What can be deduced from our analysis is that whether we are talking about ICT in general, EDI, or lately Internet-based e-commerce, the barriers to adoption and use of them for SMEs have mostly remained the same. This is to some extent confirmed by a recent empirical study (Mehrtens, Cragg, and Mills, 2001). Both similarities and differences between EDI adoption and Internet adoption seem to exist (ibid.). In Internet adoption as in EDI adoption perceived benefits, organizational readiness, and external pressure were found to have impact on the adoption decision. However, the internal factors of these categories varies to some extent between EDI adoption and Internet adoption (ibid.) At the adoption of the Internet it is the level of knowledge of the non-IT professional, often the owner/manager, that is important rather then the knowledge of IT professionals. While the perceived benefits of EDI for example might include reduced inventory levels, the benefits expected from Internet adoption consist of cheap and effective customer interaction and information gathering as well as image building (ibid.) In EDI the external pressure often comes from major customers. According to Mehrtens et al. (2001) external pressure has an impact on Internet adoption too. This time the pressure comes from a wide group of Internet users, not only customers, but also suppliers and potential employees (ibid.).

What are the implications of this study? Certainly not that industry players, authorities, and researchers should drop the topic of looking into barriers of e-commerce for SMEs. The implication is, rather, that we have to stop reinventing the wheel, so to speak, in form of creating new lists of old barriers. What we have to do is to move on, and develop new tools for SMEs to bring them into a mutual information society. Researchers for example could develop normative research to help SMEs overcome some of the internal barriers, such as lack of knowledge and ability to manage technology as a strategic weapon, while policy makers could develop more and better programs to make it easier for SMEs to embrace e-commerce.

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