Factors affecting E-commerce Adoption by SMEs in Developing Countries:
Journal Article Review
The world now is known as a global village and a lot of people are making use of technology
in diverse ways to enhance their way of life. New businesses have sprung up which sorely
operate on some form of technology and as a result, existing traditional brick and mortar
businesses have incorporated some form of information technology (IT) in their business
operations. Some businesses incorporate IT with the intent of improving business processes,
and others to take their business beyond their demographical locations. The purpose of this
article review is to explore the adoption of e-Commerce technologies by Small and Medium
Enterprises (SMEs) in developing countries – Malaysia, Botswana and Indonesia.
The subject of the articles under review is the adoption of e-Commerce technologies in
developing countries. All three articles examine previous work, identify a gap, then develop an
understanding of the determining factors in e-commerce use by Small and Medium Enterprises
(SME). A common attribute of all three articles is some level of explanation on the benefit
SMEs derive from using technology in their operations as explained in the study by Quaddus
and Hofmeyer (2007). All three articles recognise that lack of IT knowledge has a significant
effect on the adoption and use if IT by SMEs in developing countries.
The study by Kurnia et al. (2015), which examines e-Commerce technology adoption by
grocery retailers in Malaysia, recognises that less attention has been paid to the e-commerce
sector of the country even though it contributes massively to the Malaysian economy by
contributing 32.5% its gross domestic product. Kurnia et a.l (2015) examined the technology
adoption model (TAM) and diffusion of Innovation (DOI) as two of the popular theories in the
study of technology adoption. These theories however fail to address constructs such as
environmental pressure and industry characteristics. Using the DOI and NIP frameworks, the
study examines the organisational, industrial, national readiness and environmental pressure
that influence the adoption of e-Commerce technologies in the Malaysian grocery SME retail
sector.
The study by Olatokun and Kebonye (2010) investigates the factors leading to e-Commerce
adoption by Botswanan SMEs as well as the kind of technologies used. The study categorizes
the SMEs into restaurants and hotels, wholesale and retail, manufacturing, and
education/training and draws conclusions from a survey of 120 respondents. According to the
study, most SMEs in Botswana used e-commerce tools for competitive advantage and found
the point of sale to be the most widely used e-commerce tool with threat to security being the
main factor affecting the use of e-commerce by the SMEs.
Similarly, the study by Rahayu and Day (2015) investigates factors influencing SMEs in
developing countries, particularly Indonesia, with the aim that being the 4th largest population
in the world (United States Census Bureau, 2021) Indonesia will be a representation for most
Asian countries. According to the study, about 95% of businesses in Indonesia are SMEs and
the findings will make a big difference in the economy of the country. Rahayu and Day (2015)
however, did not specify the category of SMEs being investigated.
The articles recognize prior knowledge on e-commerce adoption and the study by Kurnia et al.
(2015) and Rahayu and Day (2015), outline the contributions of SMEs in both Indonesia and
Malaysia. Although all three studies come across as addressing similar issues, each has unique
approaches in the theories and methodology used. In researching SME e-commerce technology
adoption in Malaysia, Kurnia et a.l (2015) adopted the Diffusion of Innovation (OI) and
National Institutional Perspective (NIP) theories which agree with the Technology,
Organisations and Environment (TOE) model used by Rahayu and Day (2015). In their
argument, these models address organisational characteristics and have a high explanatory
power which could enable the comprehensive study of IT adoption (Molla & Licker, 2005).
In each article, the definition of SME was done to fit the setting, which is the country whose
SME sector is being assessed. The articles in this review used the quantitative methodology,
with each using a different sampling technique. Kurnia et a.l (2015) used questionnaires in
conducting surveys with 150 respondents. A purposive sampling method, which expedited
access to the target population, was used to select respondents - mangers and business owners
- who fit the criteria and already have an e-Commerce adoption behaviour. Olatokun and
Kebonye (2010) used the stratified random sampling technique in selecting SMEs qualified for
the survey and likewise, Kurnia te al. (2015), the questionnaire design process was explicitly
done by first running a pilot test with SME experts to identify loopholes and revise the
questionnaires where necessary. The study by Kurnia te al. (2015) and Rahayu and Day (2015)
both indicate the sources of their data, but Rahayu and Day (2015) does not state the sampling
technique used in the study. Unlike the other two, Rahayu and Day (2015) used an online
questionnaire for the purposes of cutting cost and speeding up the data collection process.
In the findings, external pressure by customers and competitors was one of the factors that
influenced the adoption of e-Commerce technologies in SMEs in the three developing countries
discussed in the articles. In their study, Kurnia te al. (2015) and Olatokun and Kebonye (2010)
found external pressure to positively affect the adoption of e-commerce technology by SMEs
in both Malaysia and Botswana. However, external pressure did not have a positive influence
on SMEs in Indonesia in adopting e-commerce technology. This disparity is attributed to the
fact that most Indonesian customers visit websites of businesses and place orders via telephone
and as a result, these businesses are not pressured to adopt further e-commerce technologies.
Perceived benefit on the other hand, is seen to positively influence e-commerce adoption by
SMEs in Indonesia. This, however, is not the case among Malaysian SMEs. Kurnia te al. (2015)
found that Managers and business owners of Malaysian SMEs did not perceive the benefits of
e-commerce and further explained that this could be as a result of the lack of knowledge of
technology among these managers and business owners.
The articles in this review have contributed immensely to knowledge on e-commerce
technology adoption, especially in developing countries. In comparing literature on ecommerce adoption in developed countries, it was clear that some constructs or factors did not
have the safe effects on e-commerce adoption by businesses in developing countries. Kurnia te
al. (2015) did not find perceived benefit to be a determinant of email and internet adoption,
contrary to other studies that attributed the adoption of extranet in small businesses in New
Zealand to perceived benefit (Al-Qirim, 2007). Olatokun and Kebonye (2010) found poor
internet infrastructure and connectivity as one of the factors negatively affecting e-commerce
adoption in Botswana. The above factors are very unlikely to be barriers to the adoption of ecommerce in developed countries as they have well-laid out infrastructure and policies to
encourage small businesses in adopting e-commerce technologies. The articles highlight the
important areas that need to be addressed in SME’s adoption and use of e-commerce
technologies.
The study by Olatokun and Kebonye (2010) failed to include the statistics of the contribution
of was limited to SMEs in Gaborone and so cannot be a total representation of SMEs in the
whole of Botswana. Although the researchers had a large sample space in each of the countries
studied, the use of qualitative methodology for the entirety of each article, may not have
captured all the issues. A mixed method approach would have captured some issues from the
perspective of the respondents. The research could have had more depth and the findings would
be a true representation of the respondents.
In conclusion, Developing countries may have a lot in common in terms of the way and quality
of life of the people, but the findings in the articles prove that each country has peculiar issues
when it comes to technology adoption.
References
Al-Qirim, N. (2007). The adoption of ecommerce communications and applications
technologies in small businesses in New Zealand. Electronic Commerce Research and
Applications: Intelligent Agents in E-services, 6, 462–473.
Kurnia, S., Choudrie, J., Mahbubur, R. M., & Alzougool, B. (2015). E-commerce technology
adoption: A Malaysian grocery SME retail sector study. Journal of Business
Research, 68(9), 1906-1918.
Molla, A., & Licker, P. S. (2005). eCommerce adoption in developing countries: a model and
instrument. Information & management, 42(6), 877-899.
Olatokun, W., & Kebonye, M. (2010). e-Commerce technology adoption by SMEs in
Botswana. International Journal of Emerging Technologies & Society, 8(1), 2010, 42
– 56.
Quaddus, M., & Hofmeyer, G. (2007). An investigation into the factors influencing the
adoption of B2B trading exchanges in small business. European Journal of
Information Systems, 16(3), 202–215.
Rahayu, R. & Day, J. (2015), Determinant Factors of E-commerce Adoption by SMEs in
Developing Country: Evidence from Indonesia. Procedia-Social and Behavioural
Sciences, Volume 195, 142-150.
U. S. Census Bereau (2021). Retrieved August 10, 2021, from
https://www.census.gov/popclock/print.php?component=counter