EU E-Business and Innovation Policies for SMEs

EU E-Business and Innovation Policies for SMEs

Anne Wiggins (London School of Economics and Political Science, UK)
Copyright: © 2008 |Pages: 13
DOI: 10.4018/978-1-59904-857-4.ch011
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Abstract

This paper provides an overview of the current UK situation of e-business adoption and implementation, and outlines the primary UK government policies and initiatives that have been introduced since 2000 in order to stimulate e-business adoption and implementation by SMEs. Companies of all sizes that have adopted e-business believe that it contributes to improved performance in four main ways: • The development of new products and services. • The generation of new customers and business channels. • A reduction in costs. • Improved productivity (HM Treasury, 2001c).

Key Terms in this Chapter

Business-to-Business (B2B): Commercial activity between two or more organizations, or the use of ICTs to facilitate payment management, inventory management and distribution management. The B2B model has become the most significant form of e-procurement, in terms of growth, volume, and financial impact of the e-business models (Addo et al., 2003). The B2B sector provides the most opportunity for exploitation, especially in the supply chain, where B2B activity is concentrated.

Purchasing in the E-Marketplace (E-Procurement): The e-procurement process involves the following steps,• Search: such as the ability to search online for appropriate suppliers, contacts, brochures, etc.• Qualify: such as online research of company background, credit history, comparisons with competitors, etc.• Negotiate: such as negotiating the price, credit terms, quality, timing, etc.• Purchase: such as ordering the product, initiating the purchase order and entering the information into the system.• Invoicing: such as receiving the invoice and matching the purchase order, entering the information into the financial and production systems.• Shipping: such as the shipping and delivery of goods, entering the information into the shipper’s tracking system. • Remittance Payment: such as receiving goods, verifying and correcting invoices, sending payment(s), entering the record into the system, and providing online after-sales support (Laudon & Traver, 2001).

Intra-Business: The use of ICTs to share information internally within an organization.

Electronic Data Interchange (EDI): The computer-to-computer exchange of data (e.g., invoices) in a structured format that enables the automatic processing of data without manual intervention. EDI is based on a trust relationship between an organization and its partners or between an organization and a value-added network (VAN) provider that handles the access, security, and other issues related to EDI transmissions. Certain inherent characteristics of EDI discourage unauthorized access into the network by non-EDI partners, including the stringent data formatting requirements for specific industries and the secure, dedicated nature of EDI transmissions between specific trusted partners.

Consumers-To-Business (C2B): The banding together of consumers who present themselves as a buyer group to businesses (Rayport & Jaworski, 2001).

E-Government: The use by government agencies of ITs that have the ability to transform relations with citizens, businesses and other arms of government. These technologies can serve a variety of different ends: better delivery of government services to citizens, improved interactions with business and industry, citizen empowerment through access to information, or more efficient government management. The resulting benefits can be less corruption, increased transparency, greater convenience, revenue growth, and/or cost reductions (World Bank, 2002).

Consumer-to-consumer (C2C): Electronic exchanges between and among consumers (e.g., auctions mediated by third parties such as eBay.com).

E-Commerce: Those business activities related to the actual buying and selling of goods and services among organizations over the Internet. E-commerce has been defined as “the buying and selling of information, products and services via computer networks” (Kalakota & Whinston, 1996, p. 1) or the application of ICTs with the aim of increasing the effectiveness of the business relationships between trading partners (Kalakota & Whinston, 1997). E-commerce systems can be divided according to whether or not it is internally and externally integrated (Kalakota & Whinston, 1996). Internal integration refers to processes and systems within an organization, while external integration refers to the integration of processes and systems with other organizational partners. Types of external integration have previously included EDI systems, but the advent of the Internet has created new systems for B2B and B2C e-business.

BUSINESS-TO-CONSUMER (B2C): Commercial activity between businesses and consumers, or the use of e-business to enable customer information interaction, personal finance management, purchasing products and the dissemination of after-sales information (Rayport & Jaworski, 2001).

E-Business: Those business activities related to the business operations of an organization over the Internet. E-business encompasses all commercial activities. The definition of e-business that was agreed by the Organization for Economic Co-operation and Development (OECD) and the EU is the method by which the order is placed which determines whether a transaction is e-business, not the payment or delivery channels. Shifting business activities from paper-based, local, face-to-face and manual processes to electronic, dispersed, mediated and automatic processes is the essence of e-business, whether in dealing with customers or suppliers (Wilkins et al., 1999). E-business activities include, but are not limited to,• Web site • E-mail order confirmation

E-Distribution: A critical component of the supply chain for most organizations.

Information Systems (IS): An information system has been described as “a system to collect, process, store, transmit, and display information” (Avison & Wood-Harper, 1990, p. 3).

Small- and Medium-Sized Enterprises (SMEs): In February 1996, the EU adopted a single definition of SMEs to be applied across all EU programs and proposals dating from December 31, 1997. The Communication recommended that member states, the European Investment Bank and the European Investment Fund adopt the definitions. However, the communication permits the use of lower threshold figures, if desired. The EU recommended definition for a “micro” business is that it must have a maximum of nine employees. A “small” business must satisfy the following criteria• A maximum number of 49 employees, • A maximum annual turnover of seven million euros, • A maximum annual balance sheet total of five million euros, and • The maximum percentage of 25 percent owned by one, or jointly by several, enterprise(s) not satisfying the same criteria. The EU recommendation states that a “medium-sized” business must satisfy the following criteria • A maximum number of 249 employees • A maximum annual turnover of 40 million euros, • A maximum annual balance sheet total of 27 million euros, and • The maximum percentage of 25 percent owned by one, or jointly by several, enterprise(s) not satisfying the same criteria.

E-marketplace: The arena within which businesses conduct Internet-mediated B2B trade. Within this arena, suppliers can advertise and market their products and services.

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