Strategic alliances and perceived barriers to electronic commerce adoption in SMES
| Published date | 01 June 2003 |
| Date | 01 June 2003 |
| DOI | https://doi.org/10.1108/13287260380000772 |
| Pages | 27-48 |
| Author | |
| Subject Matter | Information & knowledge management |
Journal of Systems & Information Technology 7
27
STRATEGIC ALLIANCES AND PERCEIVED BARRIERS TO
ELECTRONIC COMMERCE ADOPTION IN SMES
R. C. MacGregor
Department of Information Systems
University of Wollongong, Australia
ABSTRACT
A number of recent studies have suggested that many small businesses are opting to
become members o f strategic alliances with other firms in order to minimise the
perceived ba rriers to adoption of e lectronic commerce (E-commerce). This study
compares the perception of barriers to E-commerce adoption between a sample of
Swedish small to medium enterprises (SMEs) that have become members of some form
of strategic alliance and those that h ave remained outside such arrangements. The
results show that, in general, SMEs that are part of a strategic alliance perceive
barriers as less applicable than their counterparts that are not part of a strategic
alliance.
INTRODUCTION
The adoption and diffusion of electronic commerce (E-commerce) in small to
medium enterprises (SMEs) remains a critical area of investigation in the information
systems literature. Studies pointing to a technologically uncertain and globally focussed
economy have examined both the adoption of E-commerce by SME s as well as
perceived barriers preventing adoption. A number of studies (Miles et al. 1999, Overby
& Min 2001) have suggested that in order to accommodate these changes brought on by
electronic commerce, many small businesses are turning towards some form of stra tegic
alliance. These authors suggest that through involvement in a strategic alliance small
businesses not only find a ready source of technical a nd marketing expertise, but that the
very nature of the strategic alliance ‘buffers’ the impact of global market turbulence.
Despite the view of these studies that developing str ategic alliances is vital to the
successful adoption of E-commerce, a recent study of Swedish SMEs that compared
both SMEs that were part of a strategic alliance and those that were not, and their
adoption of electronic commerce, found that it was the SMEs that remained outside
alliances that seemed more ready to adopt the technology (MacGregor 2 003). The study
involving 300 SMEs (124 within a strategic alliance, 176 not) found that while 65% of
the non-alliance group had adopted E-commerce, less than 50% o f the alliance gro up
had done so.
There are many studies e xamining the perceived barriers of SME to the adoption of
E-commerce technology (see Lawrence 1997, Ratnasingam 2000, Aldridge et al.. 1997
as examples). While these studies provide a valuable insight into small business thinking
with respect to E-commerce, none distinguish between stand-alone SMEs and SMEs that
are part of a strategic alliance.
Journal of Systems & Information Technology 7
28
Accordingly, this paper examines whether the perception of ba rriers to electronic
commerce adoption differs between stand-alone SMEs and those that have become par t
of some form of strategic alliance. T he paper begins by examining the nature of SMEs,
in particular their acquisition and use of E-commerce technologies. T he paper
particularly focuses on barriers to E-commerce adoption by SMEs. The paper then
examines the role of strategic alliances in the small business environment. Finally the
paper presents a study of 120 Swedish SMEs (62 that are part of a strategic alliance, 58
that are not) that have not ad opted electronic commerce. The study compares the rating
of barriers to .E-commerce adoption across the two groups.
THE NATURE OF SMES
The special circumstances of small businesses have been the topic of many
governmental committee findings as well as research initiatives. In a discussion of small
business performance, Westhead & Storey (1996, p.18) state:
“… the small firm is not a scaled down’ version of a large firm. In short, theories
relating to SMEs must consider the motivations, constraints and uncertainties facing
smaller firms and recognise that these differ from those facing large firms”
Indeed, there are many factors influencing enterprise scale, including eco nomies of
scale, transaction costs and market structure. This apparent inappropriateness of
applying large firm c oncepts to small organisations presents the researcher with the
critical question: just how do small firms differ from their larger counterparts? Early
studies (Brigham & Smith 1967, Walker 1975) suggest that small businesses tend to be
more risky than their larger counterparts. Klatt (1973) and Cochran (1981) found small
businesses were subject to higher failure rates while Markland (1974) and Rotch (1987)
found small businesses tended to keep less adequate records than their larger
counterparts.
These early suggestions have been supported by more recent studies that have found
most SMEs lack technical expertise (Barry & Milner 2002), most lack adequate capital
to undertake technical enhancements (Gaskill et al.. 1993, Raymond 2001), most SME s
suffer from inadequate organisational planning (Tetteh & Burn 2001, Miller & Besser
2000) and many SMEs differ from their larger counterparts in the extent of the
product/service range available to customer (Reynolds et al.. (1994).
A number of recent studies (see Reynolds et al.. 1994, Murphy 1996, Bunker &
MacGregor 2000) have examined the differences in management style between large
businesses and SMEs. These studies have shown that among other characteristics, SMEs
tend to have a small management team (often one or two individuals), they are strongly
influenced by the owner and the owner’s personal idiosyncrasies, they have little control
over their environment (this is supported by the studies of Westhead & Storey 1996 and
Hill & Stewart 2000) and they have a strong desire to remain independent (this is
supported by the findings of Dennis 2000 and Drakopolou-Dodd et al.. 20 02).
Based on an extensive review of the literature, a summary of the features unique to
SMEs is shown in Table 1. An analysis of the features revealed that they could be
classified as being internal or external to the b usiness. Internal features include
management, decision making and planning processes, and the acquisition of resources,
while external features are related to the market (products/services and customers) and
the external environment (risk taking and uncertainty).
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