Contextual factors and performance impact of e-business use in Indonesian small and medium enterprises (SMEs).

Abstract

This study proposes an integrated framework that investigates interrelationships between contextual factors that influence e-business use and consequently its impact on enterprise performance among small and medium enterprises (SMEs). This study starts with an extensive systematic review of e-business use factors that are contextualized in the technology, organization and environment (TOE) framework and conceptualized using resource-based view (RBV). Data are obtained through a survey of 325 Indonesian SMEs. The partial least square structural equation modeling technique is used to analyze the data and test the hypotheses. The organizational context emerges as the most significant predictor of e-business use, followed by technological and environmental contexts respectively. In addition, e-business use has stronger positive influence on enterprise performance at operational level, rather than managerial and strategic levels. However, e-business use's influence on performance impact at strategic level is indirect, mediating through operational and managerial levels. While the study has attempted to explain the contextual factors that influence the use of e-business as a whole, it is deficient in explaining contextual factors that influence each of e-business applications being used. This study could help SMEs identify contextual areas that may guide them to successfully use e-business and realize its potential benefits.