Antecedents and patterns of e-Business adoption among small and medium enterprises (SMEs)

Abstract

In many developing countries, small and medium enterprises (SMEs) serve as key drivers for economic growth. Despite SMEs' economic significance, their collective adoption of information and communication technology (ICT) for business activities, commonly known as e-Business, among them is generally limited. SMEs' diversity poses practical challenges to both government agencies and industry consultants looking to prescribe appropriate strategies in order to address the lack of eBusiness adoption issue for SMEs. This study attempts to establish patterns of e-Business adoption as a potential basis for future personalized strategies for SMEs. The study began by reviewing the literature for factors that might influence eBusiness adoption. A theoretical e-Business adoption model was developed based on the identified factors with which relevant hypotheses were then formulated. A questionnaire was then administered to SMEs with the objectives of measuring the influencing factors and the extent of their e-Business adoption. Data analysis was conducted in two phases. In the first phase, using SmartPLS, we conducted factor analysis to ensure reliabilities of measurement items and subsequently tested the theoretical e-Business adoption model. From the results, the factor of e-Business expertise emerged as a significant predictor or antecedent of e-Business adoption. In the second phase, the identified adoption factors were used as a basis for cluster analysis using TwoStep algorithm. In our analysis, we argue that SMEs may be better served if their adoption problems are addressed in accordance to respective adoption patterns instead of the traditional annual-turnover-based classifications. In addition, SMEs that score high on the adoption factors tend to use more extensive e-Business applications across their value chain.