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Top1. Introduction
Small and Medium Enterprises (SMEs) play a key role in the development of the economy of any country. SMEs are estimated to account for 80 percent of global economic growth (Jutla, Bodorik, & Dhaliwal, 2002). The relative importance of SMEs in many economies has been long recognized as different from large businesses (Gengatharen & Standing, 2005). It is stated that about 90% of all businesses in Australia (Mason, Castleman, & Parker, 2008), 96% in Malaysia (Alam et al., 2008) and 85% in US (Levenburg & Klein, 2006) are characterized as SMEs. The contribution to generation of employment and distribution of economic power has always put SMEs in focus of national economic planning of most nations. In spite of this, SMEs continue to suffer from scarcity of resources and high degree of competition from their larger counterparts. However, with the advent of Internet, it was thought that SMEs would be greatly benefited by adoption of e-commerce technologies. Internet provided an opportunity to SMEs to enter the e-commerce environment at lower and affordable prices and thereby reduce transaction costs and expand the scope of marketing, by reaching new markets and partnering with suppliers and other collaborators (Payne et al., 2003).While anecdotal evidence and empirical results give the impression that e-commerce adoption among SMEs is expanding fast, the fact remains that many SMEs are still sitting on the sidelines (Daniel & McInerney, 2005; Teo, Wei, & Benbasat, 2003).
Most commonly, economists and information systems researchers view the spread of e-commerce as one of the main factors contributing to globalization by virtue of the speed with which it allows communication, information, and transactions to flow across large distances, thereby reducing coordination and search costs that formerly inhibited such trade (Bakos, 1997, 1998; Cairncross, 1997; Choi, Stahl, & Whinston, 1997). E-commerce has not only helped in reducing the cost of trading among SMEs but also has helped them to strengthen their relationships and collaboration among their trading partners for “just in time production” and “just in time delivery” (Ngai & Wat, 2002). Since SMEs do not have a well-established brand name, the participation of SMEs in e-commerce is more common than in B2C e-commerce (Deelmann, 2002). For SMEs, Internet and e-commerce are viewed as a means to overcome the barrier of distance and size in accessing global markets and building long-term relationships (Daniel & McInerney, 2005; Gengatharen & Standing, 2005). Many SMEs are using e-commerce to restructure operations, streamline processes, reduce costs, improve sales and service, reach new markets, and distribute information. Most studies indicate that although there are growing levels of awareness and enthusiasm for e-commerce, only a small proportion of SMEs are realizing substantial benefits (Gengatharen & Standing, 2005). It has often been often cited that even though SMEs are adopting the e-commerce technologies, they are unable to fully exploit the potential, due to the high set up costs involved. Another barrier in the growth of e-commerce among SMEs is the lack of trust (Deelmann, 2002).