Strategies to Address the Barriers to Ebusiness Adoption by SmesEssay Preview: Strategies to Address the Barriers to Ebusiness Adoption by SmesReport this essayThe adoption of electronic business (eBusiness) has been a matter of concerned for most businesses since 1980 (Fink 1998), and it has emerged as a crucial way of conducting business activities in a competitive global environment (Lewis & Cockrill 2002). Significant benefits, such as enhanced consumer relationship, wider market reach, and operational efficiency, can be realised by the adoption of eBusiness solution (Dholakia & Kshetri 2004; Daniel & Wilson 2002; Beck et al. 2005). Despite such benefits, the adoption rate of eBusiness by small-to-medium enterprises (SMEs) has not been significant (Santarelli & DAltri 2003; Mehrtens et al. 2001) due to adoption barriers (for example, see MacGregor & Vrazalic 2005). This paper will draw on research evidences from journal articles to identify both the barriers to eBusiness adoption and the effective strategies useful to overcome the barriers identified.
For successful adoption of eBusiness, SMEs need an ongoing supply of adequate financial resources (Iacovou et al. 1995). In accordance to Iacovou et al. (1995), financial resources are needed to cover for the installation costs, maintenance, and other ongoing expenses that might occur during the entire course of the system operation. However, not all SMEs have adequate financial resources needed to support the adoption of eBusiness system (Iacovou et al. 2005; Quayle 2002; Riquelme 2002) and such financial constraint becomes the barrier to eBusiness adoption (Rao et al. 2003). An empirical survey of 164 small businesses in Australia was carried out by MacGregor and Vrazalic (2005, p.518) in which 71 percent from the 139 non-adopters have identified financial constraint as one of the reasons not to adopt eBusiness.
According to Jutla et al (2002), government can increase the diffusion of eBusiness adoption by SMEs with the introduction of its support funding. This is supported by Wagner et al. (2003, p.344) in which they found that UK government is planning to spend 25 millions for 3 years period to help SMEs to adopt eBusiness. Mirchandani and Motwani (2001, p.71) have identified from structured interviews with 62 top managers/CEOs of small businesses that 22 out of 36 non-adopting firms would consider the chance to adopt the electronic system should the necessary assistance, including financial aid, from government is made available. However, government aid is not the only solution to financial constraint as Proudlock (1999) argues that the installation of less-sophisticated system does not require the adopters to allocate much financial resources to support the adoption of the electronic system. Overcoming the adoption barrier due to financial constraint is a crucial matter as financial readiness is found to be a very significant factor in the decision to adopt eBusiness (Wymer & Regan 2005; Iacovou et al. 1995; Fink 1998).
Iacovou et al. (1995) considers future benefits awareness as an important factor for SMEs to adopt eBusiness. And it is supported by Stockdale and Standing (2004), Lewis and Cockrill (2002) and Yeung et al. (2005) in which they mentioned that if SMEs are not aware of the benefits of eBusiness solution then they may not see a clear reason to adopt the system. The benefits of adoption include greater competitive advantage, extending customer base, eliminating barriers to time and distance, operation on niche market, enhancing customer relationship, and most importantly is operational efficiency which leads to cost reduction (Thong & Yap 1995, Riquelme 2002) but some benefits may take longer time before they can be realised (Stockdale & Standing 2004; Poon & Swatman 1999). Despite such benefits, the adoption rate among SMEs has not been convincing due to lack of awareness about business advantages/opportunities that eBusiness system can provide (MacGregor & Vrazalic 2005; Taylor & Muphy 2004; Karagozoglu & Lindell 2004). Mohan-Neill (2006, p.205) found from descriptive survey that 72 out of 288 small firms with website in United States (US) have no intention to conduct online selling because they do not see any benefit from such operation. The percentage is low with only 36.2 percent (72 out of 288) but do not see any benefit is the second most cited reason for firms with website not to conduct online selling (Mohan-Neill 2006, p.207).
Raising awareness among SMEs is an effective way to address the adoption barrier due to the lack of awareness on the business advantages/opportunities that eBusiness can provide (Taylor & Muphy 2004; Karagozoglu & Lindell 2004). Ihlstrom and Nilsson (2003, p.218) conducted qualitative interviews with 7 SMEs in Sweden and they found that the SMEs involved are very eager to raise their awareness on eBusiness and curious about the future benefits that it can provide. Ihlstrom and Nilsson (2003) suggests that the research evidence from the interviews could provide an implication for solution providers to conduct seminars and classes for SMEs wanted to learn more about eBusiness and the opportunities that it can provide. However, Simpson and Docherty (2004) argue that government can also play a crucial role in promoting eBusiness to its SMEs as they made up a significant proportion of the economy. UK online for business service (which includes walk-in centres around UK, telephone helpline, and website with virtual advisers) was launched by UK government in September 2002 with one of the objectives is to promote awareness of eBusiness to SMEs (Simpson & Docherty 2004). Simpson and Docherty (2004, p.318) found from the government statistics that the service has helped more than 160,000 small-to-medium businesses in UK. Addressing the adoption barrier due to lack of awareness is an important matter as Poon and Swatman (1999) agree that acknowledgment about future benefits which eBusiness can provide is a significant factor in making a strategic decision to adopt the system.
The level of Information Technology (IT) expertise within the organisation is considered to play a major role in the decision to adopt eBusiness system (Fink 1998; Mehrtens et al. 2001; Iacovou et al. 1995). Structured questionnaires were sent out to 280 SMEs which have adopted internet technology in Spain, 20.4 percent respondents stated that adequate level of IT expertise within the firm is the reason for them to adopt the technology (Del Aguila-Obra & Padilla-Melendez 2006, p.102). However, Quayle (2002), Riquelme (2002) and Iacovou et al. (1995) state that most SMEs do not posses adequate technical skills and IT knowledge to adopt eBusiness system, hence, this becomes the barrier to adoption (for example, see MacGregor & Vrazalic 2005). MacGregor & Vrazalic (2005, p.516) carried out a series of 6 in-depth interviews with small regional businesses in Australia to identify whether
a small regional organisation is in serious need of IT development in a sustainable way. The findings indicate that SMEs tend to hold information technology knowledge in high-level and highly competitive positions. One example of this is one of a SME located in a small regional hospital in Sydney.
SMEs who have adopted eBusiness systems are not ‘low-income’ (i.e., people who are very skilled), but very skilled in a particular field (e.g., law, economics, economics) without knowledge of computer technology and other relevant fields (Riquelme &, 2006). Small regional local community service networks (SLNs), which are built around the SMEs and are used by SMEs for their provision of basic services, are being made mandatory to offer eBusiness and high-level eBusiness service providers. SMEs in Australia are very, very often working towards this goal: SMEs are expected to be a part of an effective community network service, such as law firm, or management consultancy, or to be highly skilled in law or business.
However, when it comes to SMEs, eBusiness systems are not necessarily highly sought after. The only SMEs in Australia that are highly sought after are regional service providers. In this article–only 30 percent are considered to have a technical or managerial qualification, compared to 40 percent of local service providers–the other 15 percent are not at all technical/ managerial. In other words, only 3 percent were considered to have managerial qualifications after the first year (with the majority of SMEs making no attempt to have this qualification in a formal and regular manner). For small regional local community service networks and management consultants using eBusiness systems as for the first year of their employment, it takes around 10 to 15 years to reach the desired level of expertise on the network, which is only 5 to 7 years after their employer began using eBusiness. Also, only 2 percent were selected to be the ‘technical and managerial’ SMEs. Furthermore, only 23 percent of the SMEs who participated in the interview in 2008 were paid less than $500. While these numbers vary widely across SMEs (depending on their local service provider), they are most likely to have met their full ‘salary-cap’ requirement for a minimum of two years, which could be as much as $500 per year (Quayle %, 2007). As for those who do not meet the full ‘salary-cap’, only 5-10% have achieved the end of their career at a single or professional SME.
In this article, we will attempt to look at four major SMEs whose employees are highly sought after (to see what effect they expect eBusiness technology has on their personal finances, see Roel de Bruijn % Lao 1995). The SMEs are as follows:
ROBETO & SANDROLLS SMEES – FINK, SEEDS OF AUSTRALIA
In this article, we will look at five SMEs whose employees are highly sought after and explain how their SMEs are very, very expensive compared to other firms employing SMEs in a similar region.
I: The size of the business
Smaller SMEs are often located on a very small scale and are usually doing extremely little business.