Government Intervention in SMEs E-Commerce Adoption

Abstract

Innovation and technological change has been considered an important factor for economic development. Information technology has been among the fastest growing innovations in both production and use in the second half of the last century. In the last decade, a particular type of information technology, the Internet, has been changing business processes, organizational and industrial structures and given form to new communication and business forms as for example e-commerce. The institutional environment created by governments in the form of policies and interventions is very important for the economic development of developed as well as developing nations (e.g., North, 1990). The external environment, and especially the role of government, has been very important in the adoption and diffusion of technological innovations such as telecommunications and more recently e-commerce (e.g., Tornatzky & Fleischer, 1990). Government intervention is and has been especially important at sustaining technological development in SMEs (Rothwell, 1994). Recently, many governments and international organizations are taking initiatives to foster the adoption of electronic commerce in small and medium size enterprises (OECD, 1999). For example the American government has set up a set of guidelines to foster the diffusion of electronic commerce in SMEs and the European Union has approved a series of “Directives” aiming at guaranteeing free availability of products and services for electronic signatures, copyright protection, taxation policy, and so forth (http://europa. eu.int/). This study provides insights into small and medium size enterprises’ perception of government intervention in e-commerce adoption in Southern Italy. The research question addressed is: “How do SMEs perceive government intervention in adoption and diffusion of e-commerce and what do they believe government intervention should focus on?” This study does not however differentiate between different types of governments, such as local, regional and national governments. The research was designed as a case study (Yin, 1994) and was conducted in Southern Italy. The chapter is structured as follows. The next section provides a background of the institutional roles in adoption and diffusion of IT. The following section presents the research methodology. This is followed by the main thrust of the chapter that presents the major findings. Finally the last two sections discuss future trends and give some concluding remarks and suggestions for further research respectively.

Key Terms in this Chapter

Government Intervention: Here it includes the set of policy measures and other actions and initiatives that governments and international organizations are taking to foster the adoption of electronic commerce in SMEs.

Innovation: It is characterized by three stages: invention, innovation and diffusion. An invention is a new idea or product, which becomes an innovation when it starts diffusing in the society or move into a usable form.

Diffusion: It is the spread of the capacity to produce and/or use an innovation, and its use in practice.

Small and Medium Size Enterprises (SMEs): There are many definitions of SMEs. Here they are defined as companies with up to 500 employees according to the OECD (1999) definition.

E-Commerce: Is here defined as “the sharing of business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks. Here e-commerce is equivalent to Internet commerce.

Adoption: E-commerce adoption is here defined as the decision to use Internet technologies and the Web to share business information, maintain business relationships, and conduct business transactions.

Institutions: It is any standing, social entity that exerts influence and regulation over other social entities by outlasting the social entities it influences and regulates.