Determinants of E-Commerce Adoption amongst SMMEs in Durban, South Africa

Abstract

In South Africa, the increasing number of cellphone internet users coupled with the growth of online shopping behaviour indicates that more South Africans are able to access the internet with the prospects of engaging with online businesses. Using the Diffusion of Innovation Theory (DOI), this paper examines the determinants of e-commerce adoption by South African SMMEs in the Durban area. The persuasion variables of the DOI (relative advantage, compatibility and complexity) were tested against four (4) e-commerce options namely, customers payment by credit card through the SMME’s website, customers placing orders through the SMME’s website, providing customer services through the SMME’s website and placing orders with suppliers over the internet. Using convenience sampling, data was collected by means of a survey questionnaires administered to 200 SMME owners/managers. Usable responses were collected from 180 SMME owners/managers. This represents a 90% response rate. A Chi square test of independence was used to test the significance of association between the DOI variables and e-commerce adoption. Findings reveal that relative advantage and compatibility are the only DOI variables that significantly influence the decision to adopt e-commerce in Durban. Specifically, improving information exchange with customers, easier access to international markets, expansion of business reach, reduction of costs of maintaining up to-date company information and improving information exchange with suppliers are significant factors that inform the decision to adopt e-commerce in Durban. In addition, compatibility with existing company’s technology infrastructure and compatibility with company values significantly affect SMMEs’ decision to place orders with suppliers through the internet. Interestingly, the adoption of the other e-commerce options (online payment by credit card, online ordering and online customer services) is not significantly influenced by compatibility. The findings imply that in order to increase SMMEs’ e-commerce adoption, SMMEs need to be better acquainted with the benefits that derive from its adoption. Moreover, a stepwise approach to e-commerce adoption is advised, starting with e-commerce options that are compatible with SMMEs technology infrastructure and values then gradually moving to more sophisticated e-commerce options. DOI: 10.5901/mjss.2014.v5n25p250