Strategic use of the Internet by small- and medium-sized companies: an exploratory study

Abstract

The paper investigates the extent to which the adoption of Internet software and services in small- and medium-sized enterprises (SMEs) has been strategic, i.e. based upon the exploitation of the network characteristics of the new technology. Within SMEs, it seems that opportunistic motivations towards the adoption of the Internet, i.e. until cost-effectiveness of adoption becomes apparent to managers, are predominate. In applying a modified strategic use model, the paper considers strategic use as the ability of business users to recognize the strategic elements in the usage of the Internet and to relate them to network formation in the specific user environment. The extent of strategic use is linked to communication requirements, competitive pressure and the support and incentives in the adoption process of the Internet by SMEs. The empirical analysis employs a large data set on 264 Dutch SMEs that provided detailed information on their adoption of Internet services and software. The research shows that the communication requirements have been a motivating factor of Internet adoption by SMEs. Other strategic determinants derived from the diffusion literature such as competitive pressure or support and incentives for adoption hardly stimulate SMEs to adopt the Internet.