Adoption of E-Commerce in SMEs

Adoption of E-Commerce in SMEs

Arthur Tatnall (Victoria University, Australia) and Stephen Burgess (Victoria University, Australia)
DOI: 10.4018/978-1-60566-026-4.ch008
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Just because e-commerce technologies seem like useful tools that may assist a small to medium enterprise (SME) do its business better, it does not necessarily follow that these technologies will be adopted by this business. The implementation of an e-commerce system in an SME necessitates change in the way the business operates, and so it should be considered as an innovation and studied using innovation theory. Electronic commerce (e-commerce) is concerned with how computers, information systems and communications technologies can be used by people to improve the ways in which they do business. As e-commerce necessarily involves interactions of people and technology, any study of how it is used by a small business must be considered in a socio-technical context. Although there is no universal consensus on what constitutes e-commerce, it must be considered to contain elements of information systems, computer hardware technology, business processes, communications technologies, and people. The complexity of studies in e-commerce is due, to a considerable degree, to the interconnected parts played by human actors and by the multitude of non-human entities involved. Small business managers, sales people, staff involved in procurement and warehouse operations, computers, software, Web browsers, Internet service providers (ISP), modems, and Web portals are only some of the many heterogeneous components of an e-commerce system.
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Background: Adoption Of E-Commerce By An Sme

In this article we will argue that the decision to adopt, or not to adopt a new technology is not a straightforward one and has more to do with the interactions and associations of both human and non-human actors involved in the project than with the characteristics of the technology itself (Tatnall, 2005). Information systems are complex socio-technical entities, and research into their implementation needs to take account of this complexity, which will only be seen if it is reported in all its “messy reality” (Hughes, 1983). Research into the implementation and operation of these systems needs to take this heterogeneity into account and to find a way to give due regard to both their human and non-human aspects.

One view of the adoption of an electronic commerce innovation by a small to medium enterprise suggests that decisions are made primarily based on perceptions, by business managers, of the characteristics of the technology concerned. Such an “essentialist” approach (Haslam, 1998) involves consideration of the “essential” characteristics of the technology. Innovation diffusion (Rogers, 1995) uses this approach and is based upon the following elements:

  • characteristics of the innovation itself,

  • the nature of the communications channels,

  • the passage of time,

  • and the social system.

Another approach that has recently gained prominence is the Technology Acceptance Model (TAM), formulated by Davis and his colleagues (Davis, 1986, 1989; Davis, Bagozzi, & Warshaw, 1989). Davis identifies three major determinants of technology acceptance (or adoption) suggested by previous research studies that relate to cognition and effectiveness:

  • perceived usefulness and

  • perceived ease of use

to which are sometimes added attitude toward using technology and behavioral intention. TAM then attempts to use these factors to explain technology adoption.

Using approaches of this sort, the researcher would probably begin by looking for characteristics of the specific e-commerce technology to be adopted, and the perceptions, attitudes, advantages, and problems associated with its use. The next step would be to suggest that the adoption, or rejection, of this technology by an SME was due largely to these characteristics. We contend that while there may be some validity in such an approach, it is unlikely to provide the complete explanation as it would miss other influences due to inter-personal and intra-business interactions, and to the backgrounds of the people involved.

Key Terms in this Chapter

Technology adoption: The decision, by an organization or individual, to utilize and implement a technology.

Actor: An entity that can make its presence individually felt by other actors. Actors can be human or non-human, non-human actors including such things as computer programs, portals, companies, and other entities that cannot be seen as individual people. An actor can be seen as an association of heterogeneous elements that constitute a network. This is especially important with non-human actors, as there are always some human aspects within the network.

Small to Medium Enterprise (SME): For the purpose of this article, SMEs are considered to be those businesses that have from 1-20 employees—small—and 21-50 employees—medium.

Innovation Translation: A theory of innovation in which, instead of using an innovation in the form it is proposed, potential adopters translate it into a form that suits their needs.

Technology Acceptance Model (TAM): A theory of innovation developed by Davis (1986) in which the main elements are perceived usefulness, perceived ease of use, attitude toward using technology, and behavioral intention.

Innovation Diffusion: A theory of innovation in which the main elements are characteristics of the innovation itself, the nature of the communication channels, the passage of time, and the social system through which the innovation diffuses. The main proponent of Innovation Diffusion is Rogers (1995) .

E-Commerce Systems: Contain elements of information systems, business processes, and communications technologies.

Technological Innovation: The introduction or alteration of some form of technology (often information technology) into an organization.

Actor-Network Theory (ANT): An approach to research in which networks’ associations and interactions between actors (both human and non-human) are the basis for investigation.

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