The Impact of Risks and Challenges in E-Commerce Adoption Among SMEs

Abstract

E-commerce provides different opportunities to small businesses as it overcomes part of their technical, environmental, organizational, and managerial inadequacies (Bergeron, Raymond, & Rivard, 2001; Hussin, King, & Cragg, 2002). According to Forrester Research, e-commerce in the US will grow at 19% reaching $230 billion by 2008. Further, the Internal Revenue Service (IRS) estimated that in 2003, there were 27 million small business tax returns. Small businesses are an important and integral part of every nation’s economy (Hambrick & Crozier, 1985). The US Small Business Administration (SBA) defines a small business as “an independent business having fewer than 500 employees or is independently owned and not dominant in its field of operation.” Small firms play an increasingly crucial role in US economy. They employ more than one half of the US private sector work force, are responsible for about one-half of the GDP, and generate more than one half of all sales in the US create 60%-80% of net new jobs annually (Ibrahim, Angelidids, J. & Parsa, 2004). Alternatively, small businesses are often more challenged than larger firms by resource constraints, such as lack of fi- nancial capital, and technical or managerial skills, knowledge and expertise that significantly reduce the number and types of options available to management (Hodgetts & Kuratko, 2001). Previous research suggests that although most small businesses were connected to the Internet, the potential use of the Internet in their business was rarely explored. Security concerns has a direct impact on every critical part of the small business including reputation, productivity, and business continuity, as they need to adhere to the legal requirement for information management. The research question thus designed for this study is what factors inhibit or pose challenges for e-commerce adoption among small businesses? We discuss the findings of an exploratory case study with four firms, across a section of different industries, on the risks and challenges they encountered when adopting e-commerce. The study contributes to managerial and theoretical implications by increasing the importance and awareness of small businesses in e-commerce adoption.